Yesterday was a big day for sentencings in the real estate foreclosure investigation being handled by the San Francisco office of the Antitrust Division. According to a DOJ press release, ten individuals were sentenced in the U.S. District Court for the Eastern District of California in Sacramento. The sentences ranged from probation to eight months in prison and fines up to $1 million, plus restitution:
Anthony B. Ghio of Stockton, California, was sentenced to serve five months in prison and ordered to pay a $1 million criminal fine and $214,544 in restitution to the victims of the crime.
John R. Vanzetti of Stockton, California, was sentenced to serve five months in prison and ordered to pay a $1 million criminal fine and $271,454 in restitution to the victims of the crime.
Theodore B. Hutz of Stockton, California, was sentenced to serve five months in prison and ordered to pay a $250,000 criminal fine and $76,670 in restitution to the victims of the crime.
Richard Northcutt of Stockton, California, was sentenced to serve seven months in prison and ordered to pay a $1 million criminal fine and $614,982 in restitution to the victims of the crime.
Kennen A. Swanger of Alta, California, was sentenced to serve five months in prison and ordered to pay a $5,000 criminal fine.
Wiley C. Chandler of Stockton, California, was sentenced to serve seven months in prison and ordered to pay a $500,000 criminal fine and $614,982 in restitution to the victims of the crime.
Walter Daniel Olmstead of San Francisco, California, was sentenced to serve eight months in prison and ordered to pay a $29,687 in restitution to the victims of the crime.
Gregory L. Jackson of Lodi, California, was sentenced to pay a $150,000 criminal fine and $20,900 in restitution to the victims of the crime.
Robert Rose of Danville, California, was sentenced to pay a $100,000 criminal fine and $24,128 in restitution to the victims of the crime.
Anthony B. Joachim of Stockton, California, was sentenced to pay a $175,000 criminal fine and $94,154 in restitution to the victims of the crime.
The bid rigging schemes appear to fit the typical auction collusion pattern. The defendants determined ahead of time which bidder (among themselves) would win certain property. After the rigged public auction, the ring members held a second private auction. At this auction, bidding was competitive. The difference between the public auction price and the private auction price was divided up among the ring members. The losers, of course, were the banks and homeowners who received depressed prices for property at the public auction.
I did not look through the plea agreements for each individual, but the agreement for defendant Hutz was typical. Each defendant had pled guilty as far back as 2010 and agreed to cooperate with the Antitrust Division in return for a § 5K1.1 downward departure. Under his plea agreement, defendant Hutz had a guideline sentencing range of 12-18 months. He was sentenced to five months. (Plea agreement of Theodore B. Hutz, filed June 24, 2010, available at here.)
B. Stipulations Affecting Guidelines Calculations: The government and the defendant agree that there is no material dispute as to the following Sentencing Guidelines variables and therefore stipulate and agree to the following:
§ 2R1.1(a) Base Offense Level 12
(b) (1) Bid Rigging +1
(b) (2) (A) volume of commerce > $1 million +2
Total 15
(c) (1) Fine 1 – 5% of $6 million
After a two point reduction for acceptance of responsibility, the Guidelines calculation results in an offense level of 13, for a jail term of 18 to 24 months and a fine between $60,000 and $300,000.The government agrees to recommend at the time of sentencing that the defendant’s sentence of imprisonment be reduced to reflect his substantial assistance to the government in the investigation and prosecution of others, pursuant to U.S.S.G. § 5K1.1.
Two other real estate investors, Andrew B. Katakis and Donald M. Parker, were convicted at trial of bid rigging in March 2014. At that trial, the jury found W. Theodore Longley, an auctioneer who worked on behalf of various trustee companies to sell foreclosed houses at public auctions in San Joaquin County, not guilty on both counts.
The San Francisco office has several more upcoming real estate auction collusion trials.
Thanks for reading.