How sleazy can this get? Prosecutors in the Hannity-related case alleged that conspirators rigged public foreclosure auctions and then conducted second, private auctions among themselves. If that sounds sick to you, join the crowd. (Details are provided below.)
The document in question is a criminal information, which is pretty much the same as an indictment, in the Northern District of Georgia, styled United States v. Jeffrey Wayne Brock, et al. Brock is a real-estate broker who spent six months in federal prison after pleading guilty in a foreclosure-fraud scheme connected to one of Hannity's 20-plus shell companies.
Here is how the government set the scene for its case against Brock and his conspirators. This is much like the scenario we encountered in Alabama and applies in hundreds of thousands of foreclosures across the country -- and many states likely have little oversight in the process:
When Georgia homeowners default on their mortgages, the mortgage holder, some of whom are financial institutions, can institute foreclosure proceedings through a nonjudicial public real estate foreclosure auction ("public auction"). These public auctions typically take place at the county courthouse. At the auction, an auctioneer sells the property to the bidder offering the highest purchase price. Proceeds from the sale are then used to pay off the mortgage and other debt attached to the property. Any remaining proceeds are paid to the homeowner.
The highest bid usually is equal to the amount owed on the mortgage, and the top bidder usually is a bank or financial institution. But that's not how it worked in our Alabama case. A house-flipping outfit called Spartan Value Investors (of Birmingham) bought the property at auction for about $8,000 more than was owed on the mortgage. In roughly two weeks, Spartan sold the property to another house-flipping company called JAG Investment Strategies (also of Birmingham) -- making a handsome profit of more than $24,100 in a very short time.
Did something underhanded unfold in our case? Well, we know it amounted to a civil case of wrongful foreclosure, which under Alabama law essentially means the foreclosure was conducted with an ulterior motive -- for a reason other than to collect on a debt. And that could have involved any, or all, of the entities involved in the process.
15. For the purpose of forming and carrying out the charged combination and conspiracy, defendants JEFFREY WAYNE BROCK, DAVID WALLACE DOUGHTY, and STANLEY RALPH SULLIVAN and co-conspirators did those things that they combined and conspired to do, including, among other things:
a. purchasing rigged foreclosure properties at public auctions at artificially suppressed prices;
b. negotiating payoffs with each other and with one or more co-conspirators in exchange for agreements not to compete at public auctions;
c. conducting secret, second auctions, open only to co-conspirators, to bid for title to rigged foreclosure properties;
d. awarding rigged foreclosure properties to co-conspirators who submitted the highest bids at the secret, second auctions;
e. transferring title to rigged foreclosure properties into the names of coconspirators who submitted the highest bids at the secret, second auctions;
f. distributing payoffs to co-conspirators that otherwise would have gone to financial institutions, homeowners, and others with a legal interest in the rigged foreclosure properties, in an amount based on a predetermined formula agreed upon by co-conspirators or through direct negotiations between co-conspirators;
g. making and causing to be made materially false and misleading pretenses and representations to agents of the foreclosing financial institutions and others involved in the auction and sale of the rigged foreclosure properties; and
h. causing artificially suppressed purchase prices to be reported and paid to financial institutions and others with a legal interest in rigged foreclosure properties.
Note highlighted item (c) above. In reporting on the Hannity story, I've seen no references so far to secret, second auctions that were open only to those in on the conspiracy. That is is a level of chicanery and deceit that makes the jaw drop.
Re: item (f)., it drives home the point that these are not victimless crimes -- and the victims are not faceless financial institutions that aren't likely to draw much sympathy. In quite a few cases, the victims include homeowners -- people who have worked to own and maintain a home, and after unfortunate circumstances that caused their mortgage to go into default, still were lawfully entitled to a share of foreclosure proceeds (depending on the amount of the bid, claims by creditors, etc.). These are people who need every penny to get back on their feet. But Jeff Brock and Co. flat-out stole their funds.
In our Alabama case, we timely paid on our mortgage for almost 25 years and would, by now, almost have it paid off if political thugs had not cheated us out of our jobs (me, at UAB; Carol, at Infinity Insurance) because of my reporting on this blog. The roughly $8,000 in excess of the mortgage debt legally was ours. But we did not see a dime of it. That is part of a federal lawsuit in what we call "The House Case," and we intend to report our experience to federal authorities for possible criminal prosecution.
We encourage others who might have been the victims of fraudulent foreclosures in Alabama to do the same. The U.S. Department of Justice (DOJ) has stated in public documents that Georgia has an ongoing problem with foreclosure fraud. There is no reason to think neighboring Alabama doesn't have a similar problem. When it comes to corruption and college football, Alabama almost always ranks near No. 1.
Here is information, from a DOJ press release, on reporting possible fraud related to a foreclosure:
Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information about the task force, please visit www.StopFraud.gov. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Washington Criminal II Section of the Antitrust Division at 202-598-4000, call the Antitrust Division’s Citizen Complaint Center at 888-647-3258, or visit http://www.justice.gov/atr/report-violations.