Real Estate Investor Pleads Guilty to Bid Rigging in California Foreclosure Auctions

Real estate speculators suppressed competition and obtained foreclosed properties at noncompetitive prices, generating illicit profits through a secret auction process.

Key Takeaways:

• Walter Daniel Olmstead, 39, pleaded guilty to conspiring with a group of real estate speculators to rig bids at public foreclosure auctions in San Joaquin County, California.
• The primary purpose of the conspiracy was to suppress competition and obtain selected real estate at noncompetitive prices, generating illicit profits through a secret auction process.
• Seven individuals, including Olmstead, have pleaded guilty in connection with this investigation, with others being Anthony B. Ghio, John R. Vanzetti, Theodore B. Hutz, Richard W. Northcutt, Yama Marifat, and Gregory L. Jackson.
• Olmstead participated in the scheme from November 2008 to July 2009, with the conspirators holding a second, private auction after the public foreclosure auction to determine the winning bidder.
• The division of illicit profits among conspirators was based on their individual bids in the private auction.
• Sharis A. Pozen, Acting Assistant Attorney General, stated that the Antitrust Division is committed to investigating and prosecuting bid rigging conspiracies that harm consumers.
• U.S. Attorney Wagner emphasized the importance of ensuring the real estate foreclosure auction process is fair and open to benefit consumers through competition.

Statistics:

• Seven individuals have pleaded guilty in connection with this investigation.
• The scheme occurred from November 2008 to July 2009.
• The maximum penalty for bid rigging is 10 years in prison and a $1 million fine, which may be increased to twice the gain derived from the crime or twice the loss suffered by the victims, if either of those amounts is greater than the statutory maximum fine.
• The maximum sentence for conspiracy to commit mail fraud is 30 years in prison and a $1 million fine.

Sources:

• U.S. Department of Justice
• Federal Bureau of Investigation (FBI)
• President Barack Obama's Financial Fraud Enforcement Task Force
• U.S. Attorney's Office for the Eastern District of California
• Antitrust Division's San Francisco Office