Thursday, August 9, 2018
Federal Conviction Affirmed in Massive Bid-Rigging Scheme
By a MetNews Staff Writer
A man convicted of bid rigging in connection with foreclosure sales failed to persuade the Ninth U.S. Circuit Court of Appeals that all the government proved was something he admits, and is not illegal: that he bought properties at private auctions conducted by winning bidders at public auctions.
Appellant Glenn Guillory was indicted in December 2014, along with four other real estate investors who, it was alleged, conspired to not compete at public foreclosure auctions in Contra Costa County, with the designated winning bidder then conducting a second private auction, known as “rounds.” The misconduct was said to have occurred from June 2008 to January 2011, at the height of the mortgage crisis, reaching major proportion.
Guillory was convicted on April 17, 2017, of conspiring to rig bids, in violation of the Sherman Act, and was sentenced by Chief District Judge Phyllis J. Hamilton of the Northern District of California to 18 months in prison, three years of supervised release, and a $20,000 fine.
In his appeal, Guillory argued:
“The government’s evidence certainly showed that Mr. Guillory participated in rounds: indeed, he admitted to it. But participation in a secondary market is not ipso facto evidence of a conspiracy not to bid in the first place. Evidence of that agreement was conspicuously absent from the government’s case—aside from the speculative third-hand testimony of two witnesses who cut deals with the government.”
The appellant contended there was a solid reason for him to favor bidding at rounds. Public foreclosure auctions, he said, “come with extreme risk.” He explained that there is short notice of them and that foreclosing lenders “provide little to no relevant information about the properties (and do not warrant what information they do provide),” adding that they conceal “the hidden horrors of properties.”
These “horrors,” he said, include lack of clear title, tax liens, and presence of squatters in the homes. In connection with properties sold on the secondary market, Guillory set forth, there was an opportunity to conduct investigations including running title reports and inspecting the premises.
His opening brief asserts:
“The government misled the jury by incorrectly stating the law and leading it to believe the government only needed to prove Mr. Guillory’s participation in rounds for a conviction.”
The reply brief declares:
“The government is partially correct in characterizing its evidence as ‘overwhelming.’ All of its evidence…overwhelmingly prove[s] what Mr. Guillory admits: that he participated in rounds.”
Unpersuaded, a three-judge panel on Tuesday said, in a memorandum opinion:
“The government adduced sufficient evidence to support Guillory’s conviction. Jurors were provided with more than one co-conspirator’s testimony regarding Guillory’s participation in bid-rigging, as well as Guillory’s own testimony, and we will not second-guess the jury’s credibility assessments.”
The opinion says that “a rational trier of fact could, and did, find the essential elements of the crime, including that Guillory was willfully and knowingly involved in the conspiracy to rig bids.”
It rejects the contention that Hamilton erred in failing to provide an instruction relating to “rounds,” saying:
“The jury instructions, as a whole, included a clear definition of the specific crime of bid-rigging and all of the elements that a jury was required to find in order to convict Guillory of that crime….Further, because there was sufficient evidence to support the conviction, any error would not have affected Guillory’s substantial rights.”
Guillory’s lawyers on appeal, Jarod M. Bona and Aaron R. Gott of the La Jolla firm of Bona Law PC, asserted that, due to being beset by health problems, their client’s trial lawyer committed various enumerated errors, thus providing ineffective assistance of counsel. The opinion does not address the issue on the merits, saying that such a challenge is better mounted in a petition for a writ of habeas corpus.
Bona argued for Guillory before the Ninth Circuit panel—comprised of Judges A. Wallace Tashima, Susan Graber, and Andrew Hurwitz—on July 11 in Pasadena.
The questioning presaged a victory for the prosecution. At one point, Bona queried, “Does that make sense?” and Wallace told him: “No, it doesn’t.”
“The government had wiretaps, photographs, undercover officers. It was a major investigation.
“They infiltrated the entire foreclosure process—yet, they did not introduce any direct evidence that Guillory actually agreed to rig bids for the primary foreclosure auctions.”
The judges signaled rejection of that proposition.
‘Winks and Nods”
Hurwitz made note of testimony that in response to “winks and nods” from “other people,” Guillory “would stop bidding” at public auctions.
He asked why, if this were believed by jurors, that isn’t “enough to excluded the possibility of innocent conduct.” Bona responded that “no piece of evidence connected Mr. Guillory to those signals.”
Hurwitz also alluded to testimony of a witness who was asked why, after a property was acquired at a public auction, the successful bidder then put it up for resale. The judge recited that the witness responded:
“Because we reached an agreement with Glenn [Guillory] that he would be part of the round if he stopped bidding at the public auction.”
That testimony, Bona represented, was based on “speculation and assumption” on the witness’s part.
Government Attorney Argues
However, Department of Justice antitrust attorney Mary Helen Wimberly, in her turn at the lectern, contradicted Bona, saying that the testimony was based on the witness’s “direct experience with Mr. Guillory” at a round.
Graber told Bona that she thought there had been testimony that no person was admitted to a round who had not been present at the auction; he disclaimed such awareness but expressed uncertainty; she said she would ask his opposing counsel.
Wimberly assured her: “You were not mistaken, Judge Graber,” citing testimony that “just the people who are part of the bid rigging” could participate at the subsequent private auction.
The case is U.S. v. Guillory, No. 17-10407.
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