Georgia Real Estate Investor Nabbed for Fraud

A Georgia real estate investor and his company pled guilty last week for conspiring to rig bids and commit mail fraud at public real estate foreclosure auctions in Georgia, the Department of Justice announced.

Separate felony charges were initially filed on September 25, in the U.S. District Court for the Northern District of Georgia in Atlanta. Charges were also brought against Penguin Properties and Lynn for their involvement in similar conspiracies in DeKalb County, Georgia.

According to court documents, from at least as early as July 6, 2004 until at least January 3, 2012, Lynn conspired with others not to bid against one another, but instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in Fulton County, Georgia.

Penguin Properties and Lynn were also charged with a conspiracy to use the mail to carry out a scheme to fraudulently acquire title to select Fulton County properties sold at public auctions, which would allow all of the parties involved to make and receive payoffs and to divert money to co-conspirators that should have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy.

“Today’s charges are the first to be filed in the state of Georgia in the Antitrust Division’s ongoing investigation into anti-competitive conduct in real estate foreclosure auctions,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.

According to court documents, these conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals, and a $100 million fine for corporations. A count of conspiracy to commit mail fraud carries a maximum penalty of 20 years in prison and a fine of $250,000 for an individual, and a fine of $500,000 for a corporation.

“The core of this case was about an unlevel field and one of unfairness with regard to the auction/bidding process of foreclosed properties,” said Mark F. Giuliano, special agent in charge of the FBI Atlanta field office. “The FBI remains committed in providing investigative resources to the U.S. Department of Justice’s antitrust effort to address such matters.”

The investigation is being conducted by Antitrust Division attorneys in Atlanta and the FBI’s Atlanta division, with the assistance of the Atlanta field office of the Housing and Urban Development Office of Inspector General and the U.S. Attorney’s Office for the Northern District of Georgia.

The charges were brought in connection with the president’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes.

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