A federal crackdown on foreclosure bid-rigging has led to a flurry of indictments in recent months, especially in hard-hit areas such as Stockton and Sacramento, reports the Daily Journal. U.S. Attorney Benjamin B.Wagner of the Eastern District of California has prosecuted several cases, as part of a crackdown by President Barack Obama's Financial Fraud Enforcement Task Force. Foreclosed properties have piled up in California, which has the second highest foreclosure rate in the country, behind Nevada.
Bid-riggers conspire not to bid against a designated bidder among them at a public auction. After the designated bidder buys the property, the group then holds a private auction, at which each conspirator bids the amount above the public auction price each is willing to pay. The highest bidder gets the property. The difference between the price at the public auction and that at the second auction is the group's illicit profit, whichA federal crackdown on foreclosure bid-rigging has led to a flurry of indictments in recent months, is divided among the conspirators in payoffs.
