Two Northern California real estate investors have agreed to plead guilty today for their role in a conspiracy to rig bids at public real estate foreclosure auctions in Northern California.
California real estate investors John Michael Galloway and Nicholas Diaz each pled guilty to one count of bid rigging in U.S. District Court for the Northern District of California in Oakland on Wednesday, November 16. Both were charged in an indictment returned by a federal grand jury in the Northern District of California on December 3, 2014.
According to court documents, between June 2008 and January 2011, John Michael Galloway and Nicholas Diaz conspired with others not to bid against one another, instead designating a winning bidder to obtain selected properties at public real estate foreclosure auctions in Contra Costa County. The selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. The private auctions often took place at or near the courthouse steps where the public auctions were held.
The department said that the primary purpose of the conspiracies was to suppress and eliminate competition in order to obtain selected real estate offered at Contra Costa County public foreclosure auctions at noncompetitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.