FOR IMMEDIATE RELEASE	CONTACT: Lauren Horwood
February 4, 2011	PHONE: (916) 554-2706
www.usdoj.gov/usao/cae	usacae.edcapress@usdoj.gov
Docket #: 2:11-cr-00038 MCE

SACRAMENTO, Calif. — A Stockton man pleaded guilty today in U.S. District Court in Sacramento to conspiring to rig bids and commit mail fraud at public real estate foreclosure auctions held in San Joaquin County, Christine Varney, Assistant Attorney General of the Department of Justice’s Antitrust Division, and Benjamin B. Wagner, U.S. Attorney for the Eastern District of California, announced.

Richard W. Northcutt 56, of Stockton, admitted in his guilty plea that he conspired with a group of real estate speculators to not bid against each other at certain public real estate foreclosure auctions in San Joaquin County. The primary purpose of the conspiracy was to obtain selected real estate at noncompetitive prices.

According to the court documents, after the conspirators’ designated bidder bought a property at a public auction, they would hold a second, private auction, at which each participating conspirator would bid the amount above the public auction price he or she was willing to pay. The conspirator who bid the highest amount at the end of the private auction won the property. The difference between the price at the public auction and that at the second auction was the group’s illicit profit, which was divided among the conspirators. According to his plea agreement, Northcutt participated in the scheme from September 2008 until October 2009.

Northcutt is the fourth person to have pleaded guilty in the U.S. District Court for the Eastern District of California in connection with this investigation. On April 16, 2010, Anthony B. Ghio pleaded guilty to participating in a conspiracy to rig bids at public foreclosure auctions held in San Joaquin County. On June 24, 2010, John R. Vanzetti and Theodore B. Hutz also pleaded guilty in Sacramento to participating in the conspiracy.

“With our law enforcement partners, we are vigorously pursuing bid rigging conspiracies in real estate foreclosure auctions that allow individuals to gain illegal profits and take advantage of adverse situations,” said Assistant Attorney General Varney.  “The Antitrust Division has expanded its investigation into anticompetitive practices in real estate foreclosure auctions beyond the Sacramento area into northern California.”

U.S. Attorney Wagner said: “By rigging public auctions of foreclosed properties, the defendants who have pleaded guilty as a result of this investigation illegally manipulated the market for residential real estate. Improving the transparency and integrity of that market is a principal objective of these prosecutions. The investigation will continue.”

Northcutt pleaded guilty to bid rigging, a violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine. 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. Northcutt also pleaded guilty to conspiracy to commit mail fraud, which carries a maximum sentence of 30 years in prison and a $1 million fine.

These charges arose from an ongoing federal antitrust investigation of fraud and bidding irregularities in certain real estate auctions in San Joaquin County. The investigation is being conducted by the Antitrust Division’s San Francisco Office, the U.S. Attorney’s Office for the Eastern District of California, the FBI’s Sacramento Division and the San Joaquin County District Attorney’s Office. Assistant U.S. Attorney Russell L. Carlberg and trial attorneys Barbara Nelson and Tai Milder from the Antitrust Division’s San Francisco Office are prosecuting the case.

Today’s charges are part of the work being done by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. One component of the FFETF is the national Securities Fraud Working Group, which is tasked with combating investment fraud schemes. For more information on the task force, visit StopFraud.gov.

Anyone with information concerning bid rigging or fraud related to real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at (415) 436-6660 or visit www.justice.gov/atr/contact/newcase.htm, the U.S. Attorney’s Office for the Eastern District of California at (916) 554-2700, or the FBI’s Sacramento Division at (916) 481-9110.

Plea Agreement
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