Hearing set on new trial in Andrew Katakis’ bid-rigging case

Whether former Modesto real estate investor Andrew Katakis deserves a new trial might hinge on a hearing in federal court scheduled for Nov. 30.

Katakis, 51, was convicted in March 2014 after a four-week trial on a charge of rigging bids at foreclosure auctions in San Joaquin County. He also was found guilty of obstructing an investigation, but the trial judge threw out that verdict and appellate justices in August upheld the decision, calling prosecutors’ trial strategy “half-baked.”

Saying that prosecutorial misconduct “permeated” the trial, “irreparably tainting” evidence and “poison(ing) the jurors’ minds against him,” Katakis’ new lawyers asked for a new trial and will get a chance to make their case at the Nov. 30 hearing. Katakis also deserves another chance, his new attorneys contend in court briefs, because instructions to jurors were convoluted and his former attorney failed to call witnesses who could have helped prove his innocence.

“Due process requires that Katakis have a fair shot at maintaining his innocence without the government’s damaging misstatements,” one document reads.

Katakis, who owned California Equity Management Group in downtown Modesto and was managing partner of Lenders Financial Group LLC, said he was duped by middlemen. He and others were accused of cheating at auctions of repossessed homes during the mortgage meltdown in 2008 and 2009 by freezing out honest buyers, splitting proceeds among members of their group and defrauding lenders.

Prosecutors contend that “overwhelming evidence,” not their missteps, prompted jurors to find him guilty. “Katakis was involved in the conspiracy from the very beginning,” bribed an auctioneer, created a bookkeeping code identifying illegal payoffs in an attempt to fool his own accountant and “made more than $1.9 million in profits flipping rigged houses,” says a prosecution brief.

Jurors showed they were not prejudiced against Katakis by failing to convict him on a charge of mail fraud, prosecutors noted; they deadlocked on that count. Although appellate justices agreed to throw out Katakis’ obstruction verdict, they noted that evidence was “truly overwhelming” that he had tried to thwart the investigation, prosecutors said, arguing that he doesn’t deserve a new trial.

“The jury rightly concluded that Katakis – an astute businessman, licensed private investigator and self-described ‘control freak’ – not only knew about the conspiracy, but willingly participated in it, until the FBI shut it down,” a document says. Seven conspirators testified of his involvement, and he instructed two men “to tell anyone who asked about the bid-rigging investigation that Katakis knew nothing about it,” prosecutors contend.

Authorities failed to prove that Katakis destroyed emails, but prosecutors said it’s clear that he tried, and jurors weren’t given an attempted-obstruction option.

His former attorney, Paul Pfingst, was San Diego County’s district attorney for eight years, is highly respected and succeeded in getting Katakis off on two of three charges, prosecutors said. Pfingst “deserves deference” for choosing to concentrate on strategy other than testimony from witnesses Katakis now wants to call, authorities said; some would offer “rank hearsay” statements that are likely inadmissible, they contended.

Katakis’ new attorneys say none of the seven witnesses directly linked him to the conspiracy, and one testified that Katakis told him not to accept money for refraining from bidding.

The prosecution “larded the record with false and inflammatory (email-scrubbing) evidence because it knew that its bid-rigging case against Katakis was weak,” his attorneys argued.

The Nov. 30 hearing is scheduled for 10 a.m. before Judge William Shubb in Sacramento’s federal courthouse, 501 I St.

This story was originally published November 11, 2015 at 7:32 AM with the headline "Hearing set on new trial in Andrew Katakis’ bid-rigging case."