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Investors Accused of Rigging Foreclosure Auctions Purchased Nearly 1,300 Properties

  • Investors Accused of Rigging Foreclosure Auctions Purchased Nearly 1,300 Properties

    Investors Accused of Rigging Foreclosure Auctions Purchased Nearly 1,300 Properties

    Three real estate investors who have been accused of rigging auctions in Palm Beach County placed a total of 1,363 winning bids, but backed out of 109 of those deals which resulted in over $400,000 in deposits being forfeited.
    Federal prosecutors from the Justice Department’s Antitrust Division are now looking into the three defendants named Avi Stern, Christopher Graeve and Stuart Hankin, but are not providing details on the reasons behind their investigation. The prosecutors allege that the three conspired together to try and cheat an online bidding system. They also say that the men were investors trying to game the system after many properties were placed in foreclosure during the housing market collapse.
    As a result of the investigation, a federal grand jury charged the three men with conspiracy to restrain trade, marking the first indictments for foreclosure auction bid-rigging in Florida.
    Attorneys for the three men say the allegations are spurious at best, claiming that they did not influence any of the foreclosures. They also say that the thousands of dollars left behind in deposits after the investors walked away from the sales were a natural part of the business.
    But, other real estate experts say that the over 100 deals cast aside by the three men points to potential misconduct. At the very least, experts say the action violates the spirit of the online bidding system, which is designed to prevent purchases from being abandoned after the auction is over.
    Lender attorneys say that the pattern may have been caught sooner by federal agencies if Florida courts weren’t already inundated with foreclosure cases. Once the trial begins, federal prosecutors are likely to produce text and phone records in order to prove that the men cooperated in a coordinated attempt to rig the bidding process. However, the defense will argue that even if the three men talked together, the bidding process itself was open and available to the public, where a large number of variables could have affected the sales outside of any individual collusion from the trio.