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Investor pleads guilty of bid rigging at foreclosure auctions
November 02, 2012, 05:00 AM By Michelle Durand Daily Journal Staff

A real estate investor pleaded guilty yesterday to bid rigging at public foreclosure auctions in San Mateo and San Francisco counties over a two-year span, according to the Department of Justice.

Norman Montalvo, of Concord, conspired with others at the auctions, including the one held outside the Redwood City courthouse, to designate a winning bidder for selected properties rather than compete against each other, according to court documents.

Those involved kept the wining price low which, in turn, federal prosecutors say, damaged the real estate market and defrauded those expecting a level playing field.

The investors "illegally restrained competition ... by falsely creating the appearance of unfettered bidding while they were secretly colluding to suppress prices,” said Scott D. Hammond, deputy assistant attorney general of the antitrust division, in an announcement of Montalvo’s plea.

Montalvo was also charged with conspiring to use the mail to carry out the scheme, make and receive payoffs and divert co-conspirators money that would have otherwise gone to mortgage holders and others.

When property is auctioned, the proceeds pay off the mortgage and debt with any remaining money going to the homeowner. Squelching competitive bids limits how much money is available for both.

Montalvo is accused of committing bid rigging and mail fraud in San Mateo and San Francisco counties as early as June 2008 until approximately September 2010. He is the 26th person to plead guilty or agree to plead guilty as part of the DOJ’s ongoing antitrust investigation at public real estate auctions in Northern California, including those in San Mateo County.

Montalvo’s plea is proof the effort is working, said Joel Moss, acting special agent in charge of the FBI’s San Francisco division.

"Criminals who take advantage of the real estate auction process will be brought to justice,” he said in a prepared statement.

Montalvo faces up to a decade in federal prison and $1 million fine for violating the antitrust law known as the Sherman Act and up to 30 years and a similar fine for each count of conspiring to commit mail fraud. The government can also go after the proceeds made by the fraud.


Anyone with information about bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at (415) 436-6660 or visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at (415) 553-7400.


Michelle Durand can be reached by email: michelle@smdailyjournal.com or by phone: (650) 344-5200 ext. 102.


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