Modesto businessman Katakis, fellow defendant found guilty of rigging bids on foreclosed homes
03/11/2014 3:18 PM
03/11/2014 6:28 PM
Jurors pronounced Modesto businessman Andrew Katakis guilty Tuesday of rigging bids at public foreclosure auctions and destroying evidence to throw off federal investigators.
Another defendant, Donald Parker, was found guilty of bid rigging, while an auction crier, Ted Longley, was cleared in the conspiracy.
Eleven others were convicted earlier in plea bargains, and some testified against the men, saying they cheated at auctions of repossessed homes in San Joaquin County during the mortgage meltdown in 2008 and 2009, defrauding lenders and freezing out honest buyers while splitting proceeds among members of their group.
Katakis helped finance most of the 254 homes scrutinized by the FBI and other agencies. He said he was not directly involved and had been duped by a middle man, and his attorney said authorities ignored evidence pointing to Katakis’ innocence.
When Katakis learned from Oak Valley Community Bank that authorities wanted his records, he bought scrubbing software and erased computer files and email, prosecutors said.
Katakis was the owner of California Equity Management Group Inc. and managing partner of Lenders Financial Group LLC, real estate investing companies based in Modesto. Parker owned and worked for several real estate investing companies based in and around Sacramento and Stockton.
“Today’s convictions send a clear signal that conspirators who illegally seek to line their pockets at the expense of distressed homeowners will be held accountable for their crimes,” said Bill Baer, assistant attorney general in charge of the Department of Justice’s Antitrust Division, in a news release.
“The depressed real estate market in the Central Valley provided opportunities for fraud, including bid-rigging at foreclosure auctions,” said Benjamin B. Wagner, U.S. attorney for the Eastern District of California, in the release.
Jurors began deliberating at noon March 5 and continued huddling for the rough equivalent of four days before handing up the verdicts, which may result in federal prison terms.
The jury could not reach a unanimous decision on whether the men had committed mail fraud as part of the scheme.
Comments from either side were not forthcoming. In the trial, a prosecutor said Katakis’ crimes amounted to bank robbery and were fueled by “greed, arrogance and control.”
Katakis and Parker were convicted of bid rigging in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine for individuals, according to the Department of Justice. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine. The obstruction of justice conviction carries a maximum sentence of 20 years in prison and a $250,000 fine.
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