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GEORGIA

Real Estate Investors Plead Guilty to Bid Rigging and Fraud

On June 29, 2016, two Georgia real estate investors pled guilty to criminal antitrust violations, mail fraud and conspiracy related to allegations of bid rigging and fraud at public foreclosure sales. According to the indictment, Jon Stovall Jr. and Michael Stock conspired with other real estate investors in Georgia to refrain from bidding against each other at public real estate foreclosure auctions in order to artificially suppress the prices. The parties arranged payoffs among themselves to share the profits, prosecutors said.

Stock and Stovall are among 20 defendants who have been hit with charges originating from a DOJ investigation into bid-rigging and fraud in the Atlanta area; 18 have either pled guilty or agreed to do so. According to Principal Deputy Assistant Attorney General Renata Hesse, head of the DOJ's Antitrust Division, foreclosure auction fraud “take[s] money that rightfully belonged to homeowners and lenders.” By suppressing prices at these auctions, Stovall and Stock seized money from “the bank, and more importantly, the home owner in financial distress.”

According to the indictment, after purchasing the foreclosed homes from the bank, the co-conspirators would conduct “secret, second auctions, open only to members of the conspiracy, to bid for title to rigged foreclosure properties.” They would then distribute the surplus profits among the rest of the group. Prosecutors allege that the fraud had been ongoing in Georgia since October 2008.

Under the plea agreement, the government recommended a prison sentence of eight months, along with fines and restitution in excess of $65,000 for Stovall and Stock.

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