An ongoing federal investigation has nabbed two more local real estate investors who rigged bids at foreclosure auctions here. Paul Chen was part of a ring of conspirators in Fulton County, while Ira Eisenberg was part of a DeKalb County ring, the Justice Department says.
Credit: Lois Norder
Credit: Lois Norder
About a dozen people here have been convicted in local schemes, which went on for years. But so far, apparently all those convicted were buyers - not those "criers" who conduct the sales on behalf of the mortgage holder.
One of the men who pleaded guilty in a Gwinnett County bid-rigging scheme suggests that "criers" at least knew about bid-rigging. Kevin Shin told the court that after attending a number of auctions, he noticed that a group of purchasers he called insiders seemed to know one another and the criers conducting the auctions. That group seemed to control who won many of the auctions, and then would reconvene on the side afterward and hold a second auction amongst themselves.
"The criers facilitated this in many instances by allowing an insider to attend these second auctions rather than immediately paying for the property" as others were required to do, according to a sentencing memorandum for Shin. Frustrated by the process, eventually Shin accepted the invitation of an insider to participate in the second auction. In November, he was sentenced to 45 days in federal prison.
Some critics have told Watchdog that the foreclosure auction process in Georgia needs an overhaul to prevent abuse. Sales are conducted on the courthouse steps, which were crowded with bidders after the real estate crash. But multiple sales by multiple parties can occur simultaneously, making it difficult for anyone to figure out what's going on. There is no court supervision, because Georgia has a nonjudicial foreclosure process.
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