Two More Real Estate Investors Nabbed in Georgia Foreclosure Bid-Rigging Scheme

Two More Real Estate Investors Nabbed in Georgia Foreclosure Bid-Rigging Scheme

Two more Georgia real estate investors pleaded guilty on Monday, Jan. 4 to bid-rigging and mail fraud conspiracies which were connected to a years-long fraudulent foreclosure auction scheme.

Paul Chen, of Fulton County, and Ira Eisenberg, of DeKalb County, both appeared in court and admitted that they had agreed not to bid against others in certain public real estate foreclosure auctions, according to the Atlanta Business Journal. The two individuals also admitted that they had worked together to “defraud mortgage holders and homeowners using the mail system,” said the U.S. Justice Department.

Around a dozen local people in the foreclosure auction ring have already been convicted for conspiring together and rigging bids at auctions for years on end, reported AJC.com.

All of those convicted thus far have been buyers and not “criers,” who conduct the auction sales on behalf of the mortgage holder. Neither Chen nor Eisenberg were “criers,” leaving many to wonder if authorities are setting their sights on the unfortunate participants in a bad situation rather than the real culprits.

Kevin Shin, one of the convicted buyers, reportedly said that the “criers” in Gwinnett County auctions “at least knew about bid-rigging” taking place. Shin stated that after attending multiple local auctions, he noticed that a group of buyers seemed to know each other and seemed to know the “criers” in the auction. This group “seemed to control who won many of the auctions” and would subsequently convene after each auction to hold a second auction among themselves.

Shin explained that he became very frustrated with the process and he accepted an invitation by one of the “insiders” to participate in a secondary auction; he, and other buyers, were nabbed by federal authorities and sentenced to 45 days in federal prison.

The group would collect revenue from payoffs and from these secondary auctions, which was then divided among themselves instead of going to the mortgage holders and homeowners.

One of the buyers admitted to participating in one of the secondary auctions as far back as 2009, and it’s believed that the rings were operating until at least Feb. 2011, and possibly even after that. Considering that foreclosure rates were at an all-time high during 2013 — with one in every 96 homes being foreclosed, instead of the normal annual rate of one in every 200 — it’s possible that more bid-rigging occurred without detection.

“Sales are conducted on the courthouse steps, which were crowded with bidders after the real estate crash,” explained AJC.com. “Multiple sales by multiple parties can occur simultaneously, making it difficult for anyone to figure out what’s going on.”


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