A Burlingame real estate investor pleaded guilty to mail fraud and rigging bids at public foreclosure auctions in San Mateo and San Francisco counties by agreeing not to bid against others, according to the Department of Justice.

Gilbert Chung's plea makes him the 27th person to do so as part of the department's ongoing investigation into fraud and bid rigging at foreclosure auctions throughout Northern California, the DOJ announced yesterday.

Between January 2010 until December 2010, Chung and others conspired not to bid against each other but instead designated a winner to obtain chosen properties in the two counties, according to court documents.

Doing so kept the winning bid low which in turn, federal prosecutors contend, damaged the real estate market and defrauded those who expected all investors to have a level playing field.

"The conspirators went to great lengths to suppress competition and prices at these foreclosure auctions,” said Bill Baer, assistant attorney general in charge of the DOJ's antitrust division, in a prepared statement.

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.

Chung pleaded guilty for his role which also included charges of conspiring to use the mail to carry out schemes to fraudulently acquire title to selected properties sold, to make and receive payoffs and to divert to co-conspirators money that would have otherwise gone to mortgage holders and others.

Chung and his co-conspirators used the U.S. Postal Service to transmit the trustee's deeds upon sale and other title documents used in the conspiracy.

For their roles, the investors face 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.

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@smdailyjournal.com

(650) 344-5200 ext. 102.