Investors Admit to Bid-Rigging at Auctions

July 1, 2011

Eight California real estate investors will plead guilty to a bid-rigging scam in which they purchased foreclosed properties at auctions, federal officials say. The auctions occurred in two San Francisco Bay area counties.

Officials say that from 2008 to 2011, the eight investors conspired--or made payoffs--to not bid against each other for properties sold at foreclosure auctions. Once an investor would buy a property at an artificially low price, the men would hold a private auction to resell the property, splitting the extra money paid by the winning bidder.

"While the country faces unprecedented home foreclosure rates, the collusion taking place at these auctions is artificially driving down foreclosed home prices and is lining the pockets of the colluding real estate investors," said Christine Varney, assistant attorney general in charge of the antitrust division.

Source: “Calif. Investors to Plead Guilty in Bid-Rigging at Public Auctions of Foreclosed Properties,”Associated Press (June 30, 2011)