Two real estate investors from San Rafael and Sacramento have agreed to plead guilty in federal court in San Francisco to charges rigging bids at real estate foreclosure auctions, the U.S. Justice Department announced today.
Simultaneously with the announcement of the planned pleas, federal antitrust prosecutors filed four criminal charges in U.S. District Court in San Francisco against Michael Navone of San Rafael and two against Florence Fung of Sacramento.
Justice Department spokesman Daniel Stratton said Navone and Fung have both agreed to plead guilty to all charges in the filings. He said no dates have been set yet for the plea hearings.
Navone and Fung are both accused of one count of conspiring to rig bids at public auctions of foreclosed property in San Mateo County between October 2009 and January 2011, and one count of conspiring to commit mail fraud by mailing documents related to the rigged sales.
Navone is additionally charged with two other bid-rigging and mail-fraud conspiracy counts in connection with auctions in San Francisco during the same period.
The charging documents allege that Navone, Fung and other unnamed conspirators would designate a winning bidder for certain properties, and others in the scheme would agree either to refrain from bidding or to stop bidding at a certain point on those properties.
The conspirators allegedly gave and received payoffs to reward those who agreed not to compete, and the bidding sometimes resulted in suppressed prices for the properties, according to the documents.
Proceeds from foreclosure auctions are used to pay off the mortgage and other debts attached to the property, and any remaining funds are paid to the homeowner. The charges allege the scheme diverted money from banks and homeowners to the conspirators.
The Justice Department said Navone and Fung are the 39th and 40th defendants to plead guilty or agree to plead guilty in its ongoing probe of bid rigging and fraud at foreclosure auctions in Alameda, Contra Costa, San Francisco and San Mateo counties.
Navone’s case was assigned to U.S. District Judge Susan Illston and Fung’s to U.S. District Judge Thelton Henderson of San Francisco.
The bid-rigging conspiracy charges each carry a maximum sentence of 10 years in prison and a maximum fine of either $1 million or twice the amount of either the gain to the defendant or loss to the victims.
The mail-fraud conspiracy counts have a maximum sentence of 30 years and a $1 million fine.
The plea agreements will not be made public until the plea hearings, Stratton said.
Justice Department antitrust division chief Bill Baer said in a statement, “Instead of competing at real estate foreclosure auctions, the conspirators agreed not to bid against one another and determined among themselves who would submit the winning bid, stifling honest and fair competition.”
Anyone with information concerning foreclosure auction bid rigging or fraud is asked to contact the antitrust division’s San Francisco office at (415) 436-6660 or the FBI’s local tip line at (415) 553-7400.
Julia Cheever, Bay City News