Wednesday, May 29, 2013

Father-Son Duo Object To Getting 20 Months For Roles In Alabama Foreclosure Sale Bid Rigging Racket; Prosecutor: 'Perps Won Race To The Courthouse - They Got The Best Deal!' Ex-Homeowner/Victim: 'I Was Sick & Had No Insurance - I Could Have Used The Extra Cash From A Larger Surplus Check!'

In Mobile, Alabama, the Press Register reports:

  • A federal judge Monday ordered almost two years in prison for a father-son investment team, the first area defendants in a long-running antitrust investigation to face incarceration for rigging foreclosure auctions.

    In addition to the prison terms, a year and eight months, U.S. District Judge Ginnie Granade ordered defendants Jason R. Brannon and Robert M. Brannon to pay $23,173 to homeowners who received less money from foreclosure sales than they would have gotten from a fair and open property auction.

    Deana Timberlake-Wiley, a trial attorney in the Justice Department’s Antitrust Division said her office calculated the figure using a formula it has applied to foreclosure-rigging cases across the country. The Department of Justice website lists some 45 defendants in active cases.

    “The formula that we use is very conservative,” she said.
  • Defense attorneys Arthur Madden and Bradley Murray argued that their clients had cooperated completely and deserved leniency.

    “From the moment word of an FBI investigation got out … the Brannons stopped their activities,” said Madden, who represents Jason Brannon. “It’s a crime. They did wrong. They admit it.”
  • Prosecutors have said the conspiracy operated like this: The investors would decide among themselves who would bid on a particular property put up for sale after the homeowner could not make mortgage payments. The collusion would artificially suppress the prices that the properties would fetch.

    The investors would hold a second, secret auction among themselves, writing their bids on a piece of paper. The highest bidder would get the property, and the others received payouts according to a formula based on their offers.
  • Under state law, money from a foreclosure auction is used to pay off the outstanding mortgage to make the mortgage holder whole. Any money beyond that goes to the homeowner who lost the house. The rigged auctions reduced the money that those homeowners received.

    Prosecutors put on testimony from four area residents who lost homes in foreclosure. Deborah Adkinson testified that she, herself, had bought a Theodore home at a foreclosure sale 15 years earlier but fell behind in her mortgage payments when she developed Crohn’s disease and lost her job of 18 years.

    She said she was barely well enough to get out of bed when someone came to her house and told her she no longer owned it and would have to get out. She testified that no one informed her that she had a right to buy the house back even after the foreclosure sale. She said she believed she had to move out right away.

    “I honestly thought that’s how it worked,” she said.

    Adkinson testified that she would have benefited from a larger surplus check after the winning bidder won the auction. “I could have got medical help,” she said. “I had no insurance.”
  • Madden argued that the Brannons were bit players in the conspiracy compared to some of the other investors, including ones given sweetheart deals by the Justice Department.

    “The major players have either been granted immunity or not been charged,” he said.

    Said [federal prosecutor] Timberlake-Wiley: “They were the earliest cooperators. They got the best deal.”(1)

    The prosecutor faulted the defendants for failing to take responsibility. “They’ve never shown any remorse,” she said. “They’ve always acted like this was just the cost of doing business.”
For the story, see Judge orders prison for father-son investment team in Mobile property auction rigging case.

For the U.S. Department Of Justice press release, see Two Alabama Real Estate Investors and Their Company Sentenced for Their Roles in Bid-Rigging and Mail Fraud Conspiracies Involving Real Estate Purchased at Public Foreclosure Auctions.

(1) See United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring) for one Federal judge's observations on the so-called "race to the courthouse/prosecutor's office" that frequently takes place during the early stages of these "multi-target" criminal probes and conspiracy prosecutions:
  • When a conspiracy is exposed by an arrest or execution of search warrants, soon-to-be defendants know that the first one to "belly up" and tell what he knows receives the best deal. The pressure is to bargain and bargain early, even if an indictment has not been filed.

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