CONTRA COSTA COUNTY (BCN) — Two real estate investors pleaded guilty on Wednesday for conspiring to rig bids at public real estate foreclosure auctions in Contra Costa County, Department of Justice officials said.
John Michael Galloway and Nicholas Diaz each pleaded guilty to one count of bid rigging in U.S. District Court for the Northern District of California in Oakland.
The two were charged in an indictment returned by a federal grand jury on Dec. 3, 2014, according to the Department of Justice.
Between June 2008 and January 2011, Galloway and Diaz conspired with others not to bid against each other, but to designate a winning bidder for particular properties, which were then auctioned off at private auctions near the courthouse steps where the public auctions were held.
The conspiracies were intended to eliminate competition and lower prices for these properties, which can negatively affect those whose homes have been foreclosed upon, Department of Justice officials said.
The proceeds of properties sold at public foreclosure auctions are used to pay off the mortgage and other debt attached to the property, and any remaining proceeds are paid to the homeowner.
The Department of Justice’s Antitrust Division, the FBI and President Barack Obama’s Financial Fraud Enforcement Task Force have been investigating bid rigging at public real estate foreclosure auctions in San
Francisco, San Mateo, Contra Costa and Alameda counties, resulting in 59 guilty pleas and agreements to plead guilty, department officials said.
Indictments are pending against 16 real estate investors.
Since 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants, department officials said.