Real estate investor sent to prison for rigging bids at foreclosure auctions
October 4, 2017
• Gets 14 months for his scheme
• “Reflects the seriousness of offenses that subvert the competitive process”
A real estate investor has been sentenced to prison for his role in a conspiracy to rig bids at public real estate foreclosure auctions in Northern California.
Brian McKinzie was charged in June 2011 by a federal grand jury and pleaded guilty in October 2016 to two counts of bid rigging at real-estate foreclosure auctions in Alameda and Contra Costa counties.
In addition to prison Mr. McKinzie was ordered to pay a criminal fine of $10,000 and $652,824.43 in restitution.
“Today’s sentence reflects the seriousness of offenses that subvert the competitive process,” says U.S. Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division.
Between November 2008 and January 2011, Mr. McKinzie and other bidders at the auctions conspired not to bid against one another for selected properties, instead designating a winning bidder to win the property at the auction. The members of the conspiracy then held second, private auctions, known as “rounds,” to award the properties to members of the conspiracy and determine payoffs for other conspirators who had agreed not to bid against each other at the public auctions. The private auctions often took place at or near the courthouse steps where the public auctions were held.
When real estate properties are sold at public auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with the remaining proceeds, if any, paid to the homeowner.