North Carolina Department of Justice
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Cooper stops firms accused of rigging real estate bids

Release date: 2/15/2006

Raleigh: Two more Triangle real estate firms have agreed to pay refunds to unsuspecting homeowners and to stop rigging bids to keep public auction prices artificially low, Attorney General Roy Cooper announced today.

“Rigging bids is unfair and illegal, and it costs homeowners who are trying to get out of debt money they can’t afford to lose,” said Cooper. “My office will continue to root out these schemes so that public auctions stay fair.”

Under settlements approved by the court, B.P. Properties, Inc. (formerly known as Synergy Properties) and Research Triangle Park Investments, Inc. have agreed to stop the illegal bidding and will repay sellers nearly $60,000 for money lost due to unfair bidding. Cooper alleged that the firms conspired to fix prices and rig bids for public auctions of real estate at courthouses in Wake and Orange counties.

These settlements are the result of an investigation Cooper’s Consumer Protection Division began more than a year ago that uncovered that some bidders on foreclosed property were paying competitors to stay out of the auctions so that the properties would sell at artificially low prices.

As a result of that investigation, Cooper filed 10 lawsuits against 26 people and firms in July 2005 accusing them of making or accepting payments not to bid on properties being auctioned at courthouses in Wake, Durham, Orange and Johnston counties. Defendants in nine of the cases settled then by repaying sellers nearly $800,000 and agreeing to stop the illegal bidding, with Synergy Properties (now B.P Properties) refusing to settle at the time. The settlement announced today with Synergy leaves only one of those defendants, Gilles Lemay, yet to resolve charges of fraud and deceptive practices.

After pursuing these initial cases, Cooper also began looking into allegations of bid rigging by Research Triangle Park Investments.

The conspiracies involved properties that were up for auction through county Clerks of Superior Court due to foreclosure. An owner whose property was expected to sell, for example, at $100,000 to settle a $90,000 debt would expect to make enough money through competitive bidding to pay a creditor and keep any remaining money. In a rigged auction, however, collusion among the bidders would keep bids artificially low, meaning the winning bidder might pay only $75,000 after paying a few thousand dollars to competitors to keep them away. That would cost the property seller $10,000 and the creditor $15,000.

Under the agreements announced today, B.P. Properties and its owners Robert C. Potts, John R. Allen and Thomas F. Howlett will pay $18,200 to provide refunds to sellers plus nearly $3,000 in penalties and fees for not properly registering the company to do business in the state. RTP Investments and its owners Suzanne L. DeMarrais, Raymond M. Strong, Jr., the Kassel Group, LLC, and Stephen J. Lewis will pay $40,814 to provide refunds to sellers.

Payments will go to the Clerk of Superior Court in the county where the auction took place. The Attorney General’s office will write to property owners and creditors to tell them how to claim their share of the payments. Any payments not claimed within a year will go to the state unclaimed property fund so that owners and creditors will be able to claim their money.