COMPANY AND OWNER PLEAD GUILTY IN CASE INVOLVING RIGGING BIDS AT FORECLOSURE AUCTIONS

FROM:  U.S. JUSTICE DEPARTMENT

GEORGIA REAL ESTATE INVESTMENT COMPANY AND OWNER PLEAD GUILTY TO CONSPIRACIES TO RIG BIDS AND COMMIT MAIL FRAUD FOR THE PURCHASE OF REAL ESTATE AT PUBLIC FORECLOSURE AUCTIONS

First Charges Filed in Georgia Real Estate Foreclosure Auctions Investigation

WASHINGTON — A Georgia real estate investor and his company pleaded guilty today for their role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Georgia, the Department of Justice announced.

Separate felony charges were filed on Sept. 25, 2013, in the U.S. District Court for the Northern District of Georgia in Atlanta, against Penguin Properties LLC and its owner, Seth D. Lynn.

According to court documents, from at least as early as Feb. 6, 2007 until at least Jan. 3, 2012, Penguin Properties and 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, Ga.  Penguin Properties and Lynn were also charged with a conspiracy to use the mail to carry out a scheme to fraudulently acquire title to selected Fulton County properties sold at public auctions, to make and receive payoffs and to divert money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy.  The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions.

Charges were also brought against Penguin Properties and Lynn for their involvement in similar conspiracies in DeKalb County, Ga., from at least as early as July 6, 2004 until at least Jan. 3, 2012.

“Today’s charges are the first to be filed in the state of Georgia in the Antitrust Division’s ongoing investigation into anticompetitive conduct in real estate foreclosure auctions,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “The division’s investigation has already resulted in dozens of guilty pleas in other states, and the division remains committed to eliminating anticompetitive practices at foreclosure auctions.”

The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at Fulton and DeKalb County public foreclosure auctions at non-competitive prices.  When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.  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.

“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.”

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.  The maximum fine for a Sherman Act charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either amount is greater than the statutory maximum fine.  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 respective maximum fines for the conspiracy to commit mail fraud charge may be increased to twice the gross gain the conspirators derived from the crime or twice the gross loss caused to the victims of the crime by the conspirators.

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.  Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should call 404-331-7113 or visit www.justice.gov/atr/contact/newcase.htm.

Today’s 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.  With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.  Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants.

PEST CONTROL COMPANY AND OWNER CHARGED WITH UNLAWFUL APPLICATION OF PESTICIDES

FROM:  U.S. JUSTICE DEPARTMENT
Wednesday, September 11, 2013
Pest Control Company and Its Owner Charged with Unlawful Application of Pesticides and Falsification

A pest control services company and its owner have been charged today in the U.S. District Court for the Middle District of Georgia with conspiracy, unlawful use of pesticides, false statements, falsification of records and mail fraud, announced Robert G. Dreher, Acting Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division and Michael J. Moore, U.S. Attorney for the Middle District of Georgia.

Steven A. Murray, 54, of Pelham, Ala., and his company, Bio-Tech Management Inc., were charged in a felony indictment with one count of conspiracy, 10 counts of making false statements, 20 counts of falsifying records, 10 counts of mail fraud and 10 counts of unlawful use of a pesticide.

The indictment alleges that from October 2005 to June 2009, Steven Murray and Bio-Tech repeatedly misapplied the registered pesticide Termidor SC in nursing homes in the state of Georgia and falsified documents to conceal the unlawful use.  The indictment further alleges that Murray and Bio-Tech sent invoices through the U.S. Mail to their nursing home clients to solicit payment for the unlawful pesticide applications.  

According to the indictment, Steve Murray and Bio-Tech provided monthly pest control services to nursing homes in Georgia by spraying pesticides in and around their clients’ facilities.  The indictment alleges that, at the direction of Murray, Bio-Tech employees routinely applied the pesticide Termidor indoors more than twice a year, contrary to the manufacturer’s label instructions.  The indictment further alleges that after the Georgia Department of Agriculture made inquiries regarding Bio-Tech’s misuse of Termidor and other pesticides, Murray directed several of his Bio-Tech employees to alter company service reports with the intent to obstruct an investigation.        

U.S. Environmental Protection Agency (EPA) regulations require that all pesticides be registered, properly labeled, and applied as specified by manufacturer’s labeling to protect public health and the environment.

A criminal indictment is not a finding of guilt.  An individual or company charged by criminal indictment is presumed innocent unless and until proven guilty in a court of law.

The falsifying records and mail fraud charge carry a maximum sentence of 20 years in prison and $250,000 fine per count.  The false statements charges each carry a maximum sentence of five years in prison and a $250,000 fine.

These cases are being investigated by Special Agents of the EPA’s Criminal Investigations Division in Atlanta and prosecuted by Trial Attorneys Richard J. Powers and Adam C. Cullman of the Justice Department’s Environment and Natural Resources Division, Environmental Crimes Section.

NORTH CAROLINA REAL ESTATE INVESTOR PLEADS GUILTY TO MAIL FRAUD SCHEME

FROM: U.S. DEPARTMENT OF JUSTICE ANTITRUST DIVISION
WASHINGTON — A real estate investor pleaded guilty today to conspiring to commit mail fraud at public real estate foreclosure auctions held in Raleigh, N.C., and surrounding areas, the Department of Justice announced. This is the second charge in the department’s ongoing investigation into real estate foreclosure auctions in eastern North Carolina.

According to the one-count felony charge filed on Oct. 4, 2012, in the U.S. District Court for the Eastern District of North Carolina, in Greenville, real estate investor, Darren K. Phillips, conspired with a group of real estate speculators to participate in a scheme to defraud financial institutions, homeowners and others with a legal interest in select properties, and to obtain money and property from financial institutions, homeowners and others with a legal interest in rigged properties through false and fraudulent pretenses or representations. According to the plea agreement, Phillips has agreed to cooperate with the department’s ongoing investigation.

The primary purpose of the conspiracy was to fraudulently acquire title to rigged foreclosure properties offered through public auctions at artificially suppressed prices, to make and receive payoffs from co-conspirators and to divert money away from financial institutions, homeowners and others with a legal interest in the rigged foreclosure properties, the department said in court papers. The conspiracy resulted in mortgage holders, some of which were financial institutions, receiving a lower price for the foreclosure property. Philips is charged with participating in the conspiracy beginning at least as early as February 2001 and continuing until at least May 2004.

"By artificially suppressing auction prices through payoffs and other illegal actions, the conspirators profited at the expense of homeowners and financial institutions," said Scott D. Hammond, Deputy Assistant Attorney General in charge of the Antitrust Division’s criminal enforcement program. "The division will continue to work with our law enforcement partners to investigate anticompetitive practices in real estate foreclosure auctions in North Carolina and elsewhere."

Phillips is charged with conspiracy to commit mail fraud affecting a financial institution, which carries a maximum sentence of 30 years in prison and a $1 million fine.

Phillips is the second person to be charged in this investigation. In September 2010, Christopher Deans, a real estate speculator from Raleigh, pleaded guilty in the U.S. District Court in Greenville in connection with the investigation.

Today’s plea arose from an ongoing federal antitrust investigation of fraud and bidding irregularities in certain real estate foreclosure auctions in the Eastern District of North Carolina. The investigation is being conducted by the Antitrust Division’s Atlanta Field Office and the FBI’s Atlanta Field Office, with assistance from the U.S. Attorney’s Office for the Eastern District of North Carolina. Anyone with information concerning bid rigging or fraud related to real estate foreclosure auctions should contact the Antitrust Division’s Atlanta Field Office at 404-331-7100, or visit www.justice.gov/atr/contact/newcase.htm.

Today’s plea is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. One component of the task force is the national Mortgage Fraud Working Group, co-chaired by Benjamin B. Wagner, U.S. Attorney for the Eastern District of California. For more information on the task force, visit www.StopFraud.gov.

REFUSE COMPANY PRESIDENT IN ILLIONOIS SENTENCED FOR MAIL AND WIRE FRAUD

Everyone in America knows that local governments and private contractors conspire to steal from the people on a regular basis. We all know it but seldom do these crimes see the light of day. The following case which is quoted from the Department of Justice web site shows in a very concrete way how such crimes are committed:

“WASHINGTON — A former president of an Illinois refuse disposal container repair company was sentenced today for his role in a conspiracy to commit mail and wire fraud in connection with bids on a contract for the repair of refuse carts for the city of Chicago, the Department of Justice announced today.
Douglas E. Ritter, an Illinois resident, was sentenced by U.S. District Court Judge Ruben Castillo to serve 16 months in prison and to pay $35,303 in restitution for his participation in a conspiracy to defraud the city of Chicago on a contract for the repair of refuse carts from as early as November 2004 to as late as September 2008. Ritter, along with his business partner Steven Fenzl, was charged in an indictment filed on April 21, 2009, in U.S. District Court in Chicago. Ritter pleaded guilty to the conspiracy on June 3, 2010. Fenzl, a California resident, was found guilty by a jury on Sept. 28, 2010, of one count of conspiracy to commit mail and wire fraud, two counts of mail fraud and one count of wire fraud. Fenzl is scheduled to be sentenced on June 15, 2011.
According to the indictment, Ritter, Fenzl and their co-conspirator conspired to deceive city of Chicago officials about the number of legitimate, competitive bids submitted for the contract. Specifically, Ritter and his co-conspirators fraudulently induced other companies to submit bids for the contract at prices determined by Ritter and his co-conspirators and greater than the price for which Ritter's company had submitted a bid. The department said that included in these bids were fraudulent documents indicating that, if awarded the contract, the bidder would enter into subcontracts to purchase goods or services for a specified percentage of the contract from a minority-owned business and a women-owned business, as required by the city of Chicago. According to the indictment, Ritter and his co-conspirators also fraudulently certified to the city on Ritter's company's bid that it had not entered an agreement with any other bidder relating to the price named in any other bid submitted to the city for the contract.
Today's sentencing resulted from an ongoing investigation of the refuse cart repair industry being conducted by the Antitrust Division's Chicago Field Office and the city of Chicago's Office of Inspector General.”

Anyone who believes that contracting out public services to private companies leads to free enterprise capitalism full of integrity and a devotion to looking out for the greater good, is not quite right in the head. Business is all about maximizing the profit of the individual no matter what he/she has to do or who he/she has to steal from. I was told when I was a young naive manager at a large retailer that in the world of business there is only one thing to know and that is "Everyone steals if they think they can get away with it".