A Tracy man on Friday pleaded guilty to conspiring with a group of real estate speculators who agreed not to bid against each other at public foreclosure auctions in San Joaquin County, the U.S. attorney's office in Sacramento reported.
Real estate investor Walter Daniel Olmstead, 39, pleaded guilty to federal charges of conspiring to rig bids and commit mail fraud at the real estate foreclosure auctions.
Olmstead participated in the scheme from November 2008 to July 2009, according to his plea agreement.
"By rigging public auctions of foreclosed properties, the defendants who have pleaded guilty as a result of this investigation illegally manipulated the market for residential real estate," said U.S. Attorney Benjamin Wagner in a news release.
The conspiracy's primary purpose was to suppress and restrain competition and to obtain selected real estate at the foreclosure auctions at noncompetitive prices, according to court documents.
After the conspirators' designated bidder bought a property at a public auction, the conspirators would hold a private auction where they would bid a higher amount than the public auction price. The conspirator with the highest bid in the private auction got the property.
Federal prosecutors said the difference between the price at the public auction and at the private auction was the group's illicit profit. It was divided among the conspirators in payoffs.
As of Friday, seven people have pleaded guilty in connection with this investigation: Anthony Ghio, John Vanzetti, Theodore Hutz, Richard Northcutt, Yama Marifat and Gregory Jackson.
Bid rigging at real estate foreclosure auctions eliminates competition in the marketplace and harms consumers, said Sharis Pozen, acting assistant attorney general in charge of the U.S. Department's Antitrust Division.
"The division will work with its law enforcement partners to ensure that the real estate foreclosure auction process is fair and open, so that consumers will benefit from competition," Pozen said in the news release.
For the bid-rigging charge, Olmstead faces a maximum sentence of 10 years in federal prison and a $1 million fine. Prosecutors said the fine may be increased to twice the profits made in the crime or twice the loss suffered by the victims, if either of those amounts is more than the maximum fine.
The mail fraud charges have a maximum sentence of 30 years in prison and a $1 million fine.
Anyone with information about bid rigging or fraud in real estate foreclosure auctions should call one of the following:
• The Antitrust Division's San Francisco office at (415) 436-6660 or visit www.justice.gov/atr/contact/newcase.htm
• The U.S. attorney's office in Sacramento at (916) 554-2700
• The FBI's Sacramento office at (916) 481-9110
Bee staff writer Rosalio Ahumada can be reached at rahumada@modbee.com or (209) 578-2394.
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