Father and son Robert and Jason Brannon were each sentenced to 20 months in prison this month in Mobile, Ala., after pleading guilty to participating in 17 rigged bids. The two opened a real estate investment company in 2003, after Robert Brannon sold a portion of the family farm. When they began attending auctions to acquire rental properties, they discovered that some speculators were rigging the bids and joined in the conspiracy, according to court documents.
In addition to the jail time, the Brannons were ordered to pay restitution of almost $22,000 each, their cut from the rigged auctions.
In April, real estate investor Mohammed Rezaian pleaded guilty to participating in similar scams in Northern California. He has agreed to cooperate in the prosecution of other perpetrators and pay a fine of $213,000. He also faces a little less than two years in prison when sentenced sometime next year. Neither he nor his lawyers returned phone calls.
Federal officials say they expect to charge a few more people in the coming months but that cases are expected to soon drop off now that the heated foreclosure market of late 2008 and 2009 has cooled.
Madeline Schnapp, an economist with PropertyRadar, a company that tracks foreclosures, said sales at auctions have fallen from a height of about 30,000 a month to about 5,000 a month in California as government programs and new laws have made it more difficult for banks to begin foreclosure proceedings.
“There’s not much of a supply now,” she said.
Paul Pfingst, a lawyer who represents another investor charged in participating in a Central California ring, says illegal temptation got the better of many speculators who couldn’t resist victimizing seemingly unsympathetic banks. His client, Andrew Katakis, is accused of participating along with four others in a $2.5 million conspiracy to rig bids in the Stockton area, which has led the nation in foreclosures.
“The amount of money and properties that were changing hands was staggering,” said Pfingst, who maintains his client’s innocence. “It caused many people to cross from legality to illegality.”