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JEANE HAMILTON (CSBN 157834)
ALBERT B. SAMBAT (CSBN 236472)
DAVID J. WARD (CSBN 239504)
CHRISTINA M. WHEELER (CSBN 203395)
MANISH KUMAR (CSBN 269493)
U.S. Department of Justice
Antitrust Division
450 Golden Gate Avenue
Box 36046, Room 10-0101
San Francisco, CA 94102
Jeane.Hamilton@usdoj.gov
Telephone: (415) 436-6660

Attorneys for the United States

E-filing

FILED

JUN 30 2011

RICHARD W. WIEKING
CLERK, U.S. DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
OAKLAND

 

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

OAKLAND DIVISION



UNITED STATES OF AMERICA,     

v.



JORGE WONG,

              Defendant.


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Criminal No. CR11-00428 SBA

INFORMATION

VIOLATIONS: 15 U.S.C. § 1 –
Bid Rigging (Count One);
18 U.S.C. § 1349 – Conspiracy to
Commit Mail Fraud (Count Two)

DOCKET NUMBER: 1
FILED: 06/30/11



The United States of America, acting through its attorneys, charges:

JORGE WONG,

the defendant herein, as follows:

BACKGROUND

1. When California homeowners default on their mortgages, the lender or loan servicer can institute foreclosure proceedings through a non-judicial public foreclosure auction.  These public auctions typically take place at or near the county courthouse.  At the auction an auctioneer sells the property to the bidder offering the highest purchase price.  Proceeds from the sale are then used to pay off the mortgage and other debt attached to the property.  Proceeds remaining from the sale are then paid to the homeowner.

COUNT ONE: 15 U.S.C. § 1 – Bid Rigging

THE COMBINATION AND CONSPIRACY

2. Beginning as early as March 2009 and continuing until in or about January 2011, the defendant JORGE WONG and co-conspirators entered into and engaged in a combination and conspiracy to suppress and restrain competition by rigging bids to obtain selected real estate offered at Alameda County, California public real estate foreclosure auctions in the Northern District of California, in unreasonable restraint of interstate trade and commerce, in violation of the Sherman Act, Title 15, United States Code, Section 1.

3. The charged combination and conspiracy consisted of a continuing agreement, understanding, and concert of action among the defendant and co-conspirators, the substantial terms of which were:

  1. to suppress competition by agreeing to refrain from full competitive bidding against each other to obtain selected real estate offered at Alameda County, California public real estate foreclosure auctions;
  2. to make payoffs to one another in return for suppressing competition for selected real estate offered at public real estate foreclosure auctions; and
  3. to obtain title to selected real estate sold at non‑competitive, rigged prices.

4. For the purpose of forming and carrying out the charged combination and conspiracy, the defendant and co-conspirators did those things that they combined and conspired to do, including, among other things: 

  1. agreeing, during meetings, conversations, and communications, to rig bids to obtain selected real estate offered at Alameda County, California public real estate foreclosure auctions;
  2. designating, in various ways, which conspirator would win the selected real estate at the public real estate foreclosure auctions for the group of conspirators;
  3. bidding at non‑competitive amounts or refraining from bidding for the selected real estate at the public real estate foreclosure auctions;
  4. in some instances, engaging in direct negotiations with one or more co‑conspirators to pay one another not to compete for selected real estate at the public real estate foreclosure auctions;
  5. in many other instances, holding secret private auctions, at or near the courthouse steps where the public auctions were held, open only to members of the conspiracy, to rebid for the selected real estate obtained at the public real estate foreclosure auctions;
  6. awarding selected real estate to the conspirators who submitted the highest bids at the private auctions; and
  7. distributing the proceeds of the private auctions, including cash payoffs, based upon a predetermined formula agreed upon by the members of the conspiracy.

5. Various entities and individuals, not made defendants in this Information, participated as co-conspirators in the offenses charged in this Information and performed acts and made statements in furtherance of them.

TRADE AND COMMERCE

6. During the period covered by this Information, the business activities of the defendant and co-conspirators that are the subject of this Information were within the flow of, and substantially affected, interstate trade and commerce.  For example, mortgage holders located in states other than California received proceeds from the public real estate foreclosure auctions that were subject to the bid-rigging conspiracy.

JURISDICTION AND VENUE

7. The combination and conspiracy charged in this Information was carried out, in part, in the Northern District of California, within the five years preceding the filing of this Information.

All in violation of Title 15, United States Code, Section 1.

COUNT TWO: 18 U.S.C. § 1349 – Conspiracy to Commit Mail Fraud

THE CONSPIRACY

8. Beginning as early as March 2009 and continuing until in or about January 2011 in Alameda County in the Northern District of California, the defendant JORGE WONG and co‑conspirators did willfully and knowingly combine, conspire, and agree with each other to violate Title 18, United States Code, Section 1341, namely, to knowingly devise and intend to devise a material scheme or artifice to defraud financial institutions and others and to obtain money and property by materially false and fraudulent pretenses and, for the purpose of executing or attempting to execute such scheme or artifice, to knowingly use and cause to be used the United States Postal Service or any private or commercial interstate carrier, in violation of Title 18, United States Code, Section 1349.  

9. It was an object of the conspiracy that the defendant and his co-conspirators suppress competition by acquiring title to selected real estate at prices lower than would have resulted from fully competitive auctions, carried out by making payoffs to co-conspirators through direct negotiations or by holding second, private auctions and dividing the profits of the scheme (the difference between the public auction prices and the prices paid at the private auctions) among themselves.  In other words, the defendant and co-conspirators manipulated the sales price of selected real estate, causing false, artificially low sales prices to be reported and paid to victims of the scheme.  It was a further object of the conspiracy that the defendant and co-conspirators obtain title to the fraudulently acquired real estate, including recorded proof of title, in order to permit later sale of the fraudulently acquired real estate and receive additional profits from those sales.

MEANS AND METHODS

The principal means and methods used to accomplish the conspiracy were as follows:

10. Each and every allegation contained in Paragraphs 4 and 5 of Count One of this Information is here realleged as if fully set forth in this Count.

11. For the purpose of executing the scheme or artifice to defraud, the defendant and co-conspirators did knowingly cause Trustee’s Deeds Upon Sale for the fraudulently obtained real estate to be sent or delivered by the United States Postal Service or a private or commercial interstate carrier.  These mailings were foreseeable to the defendant in the ordinary course of business.

OVERT ACTS

12. In addition to causing the use of the United States Postal Service or a private or commercial interstate carrier in furtherance of the conspiracy and to effect the illegal objects thereof, the defendant and co-conspirators, in the manner described in Count One, Paragraph 4, and for the purpose of carrying out the charged conspiracy, on multiple occasions paid out and received substantial sums in payoffs in exchange for their agreement not to compete at the Alameda County, California public real estate foreclosure auctions in the Northern District of California.

JURISDICTION AND VENUE

13. The combination, conspiracy, and agreement to violate Title 18, United States Code, Section 1341 charged in this Information was carried out, in part, in the Northern District of California, within the five years preceding the filing of this Information.

All in violation of Title 18, United States Code, Section 1349.



__/s/_____________________________
Christine A. Varney
Assistant Attorney General


__/s/_____________________________
Scott D. Hammond
Deputy Assistant Attorney General


__/s/_____________________________
John F. Terzaken
Director of Criminal Enforcement
United States Department of Justice
Antitrust Division



__/s/_____________________________
Melinda L. Haag
United States Attorney
Northern District of California
__/s/_____________________________
Phillip H. Warren
Chief, San Francisco Office


__/s/_____________________________
Peter K. Huston
Assistant Chief, San Francisco Office


__/s/_____________________________
Albert B. Sambat
Jeane Hamilton
David J. Ward
Christina M. Wheeler
Manish Kumar
Trial Attorneys
United States Department of Justice
Antitrust Division