Real Estate Investor Sentenced to 14 Months in Prison for Rigging Bids at Northern California Public Foreclosure Auctions

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A real estate investor was sentenced today for his role in a conspiracy to rig bids at public real estate foreclosure auctions in Northern California, the Department of Justice announced.

Brian McKinzie was charged on June 30, 2011, in an indictment returned by a federal grand jury in the Northern District of California. McKinzie pleaded guilty on Oct. 26, 2016, to two counts of bid rigging at real-estate foreclosure auctions in Alameda and Contra Costa County. Today, McKinzie was sentenced to serve 14 months in prison and to serve three years of supervised release. In addition to his term of imprisonment, McKinzie was ordered to pay a criminal fine of $10,000 and $652,824.43 in restitution.

“Today’s sentence reflects the seriousness of offenses that subvert the competitive process,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division.  “The Division remains firm in its resolve to seek prison terms for individuals who commit antitrust crimes.”  

Between November 2008 and January 2011, McKinzie and other bidders at the auctions conspired not to bid against one another for selected properties, instead designating a winning bidder to win the property at the auction. The members of the conspiracy then held second, private auctions, known as “rounds,” to award the properties to members of the conspiracy and determine payoffs for other conspirators who had agreed not to bid against each other at the public auctions. The private auctions often took place at or near the courthouse steps where the public auctions were held.

When real estate properties are sold at public auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with the remaining proceeds, if any, paid to the homeowner.

The sentence is a result of the division’s ongoing investigation into bid rigging at public real estate foreclosure auctions in California’s San Francisco, San Mateo, Alameda and Contra Costa counties. These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Office.

Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-934-5300 or call the FBI tip line at 415-553-7400.

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