A US District judge has ruled that M&B Builders, an Alabama company, must pay a fine totaling a quarter of a million dollars plus restitution for rigging real estate auctions. A sentencing hearing for Harold H. Buchman, co-owner of M&B, is set for April. Buchman may face a prison term, as well as hefty fines.
The auction scheme was ruled a violation of the Sherman Anti-Trust Act. At auctions in which banks attempted to sell foreclosed homes, one of the conspirators would purchase homes at extremely low prices. The homes would then be re-sold at a subsequent, secret auction, and the original winning bidder would then pay investors who had agreed not to offer competing bids.
In effect, the conspiracy circumvented the competitive bidding process, keeping home prices artificially low and causing the banks to receive less money than they would otherwise have had at a legitimate public auction.
An M&B attorney, while unhappy with the result, felt that this resolution at least left his client in a survivable position. The Press-Register report notes that the Obama Administration is seeking to crack down on white collar crime, such as bid riggingand other types of fraud in the financial and real estate sectors.
For more information, read the Press-Register article here.