FROM: U.S. DEPARTMENT OF JUSTICE ANTITRUST DIVISION, MAIL FRAUD, REAL ESTATE FORECLOSURE AUCTIONS
WASHINGTON — A real estate investor pleaded guilty today to conspiring to commit mail fraud at public real estate foreclosure auctions held in Raleigh, N.C., and surrounding areas, the Department of Justice announced. This is the second charge in the department’s ongoing investigation into real estate foreclosure auctions in eastern North Carolina.
According to the one-count felony charge filed on Oct. 4, 2012, in the U.S. District Court for the Eastern District of North Carolina, in Greenville, real estate investor, Darren K. Phillips, conspired with a group of real estate speculators to participate in a scheme to defraud financial institutions, homeowners and others with a legal interest in select properties, and to obtain money and property from financial institutions, homeowners and others with a legal interest in rigged properties through false and fraudulent pretenses or representations. According to the plea agreement, Phillips has agreed to cooperate with the department’s ongoing investigation.
The primary purpose of the conspiracy was to fraudulently acquire title to rigged foreclosure properties offered through public auctions at artificially suppressed prices, to make and receive payoffs from co-conspirators and to divert money away from financial institutions, homeowners and others with a legal interest in the rigged foreclosure properties, the department said in court papers. The conspiracy resulted in mortgage holders, some of which were financial institutions, receiving a lower price for the foreclosure property. Philips is charged with participating in the conspiracy beginning at least as early as February 2001 and continuing until at least May 2004.
"By artificially suppressing auction prices through payoffs and other illegal actions, the conspirators profited at the expense of homeowners and financial institutions," said Scott D. Hammond, Deputy Assistant Attorney General in charge of the Antitrust Division’s criminal enforcement program. "The division will continue to work with our law enforcement partners to investigate anticompetitive practices in real estate foreclosure auctions in North Carolina and elsewhere."
Phillips is charged with conspiracy to commit mail fraud affecting a financial institution, which carries a maximum sentence of 30 years in prison and a $1 million fine.
Phillips is the second person to be charged in this investigation. In September 2010, Christopher Deans, a real estate speculator from Raleigh, pleaded guilty in the U.S. District Court in Greenville in connection with the investigation.
