Seven Coast professionals, including Biloxi businessman Ivan Spinner and inactive real estate agent Kim Foster, will spend four months each in prison for conspiring to rig bids at foreclosure auctions held at South Mississippi courthouses.
Federal prosecutors recommended reduced sentences for the seven investors, who have cooperated with the investigation.
The real estate investors told the judge that they had no idea what they were doing was illegal. They would meet before an auction and decide who would bid on a property. The other investors would then get paid to sit out the bidding.
They said some bank trustees who conducted the auction, also attorneys, would even ask beforehand, “Have y’all decided who is going to get this one?”
The other five investors going to prison in the case are retired insurance agent Terry Tolar and former loan officer Chad Nichols, both of Gulfport; Biloxi businessman Kevin C. Moore; and brothers Jason and Shannon Boykin, who are from Biloxi and Pascagoula, respectively.
Each of the investors also must pay fines ranging from $20,000 to $48,000, along with restitution based on their individual transactions. Judge Louis Guirola Jr., who sentenced the investors, will set restitution amounts in the next 90 days.
The investors admitted spending a total of more than $5.4 million on real estate and payoffs during the multi-year conspiracy, which began as early as 2010 for one defendant and ended for most in 2017, when they were caught.
Prosecutors recommended reduced sentences for each of the defendants, saying they had cooperated with investigators and turned over documentation from the bid-rigging scheme. Guirola accepted the recommendations in each case.
Without reduced sentences, the maximum sentence any of the defendants could have served under federal sentencing guidelines would have been 18 months.
Guirola said he believed all the defendants were remorseful. He said he also reviewed letters of support about their various contributions to the community. For example, Foster, who served in the Navy, helped organize Honor Flights that gave Coast veterans of World War II trips to Washington.
Foster and Terry Tolar both said bank trustees should warn bidders beforehand about potential violations of the law, in this case the Sherman Act. The investors said they had never even heard of the law. What the government calls bid rigging has been the practice for decades at South Mississippi auctions, they said, and is also common in other parts of the country.
“I don’t want anyone else to go through what I went through,” Foster told the judge, who agreed the executive branch of the federal government should consider public warnings of some sort.
Even so, Guirola said before sentencing the investors: “These are all educated, intelligent accomplished professionals. Even if they didn’t know it was against the law, they had to know it was wrong,”
Prosecutors from the Antitrust Division of the U.S. Justice Department told Guirola before sentencing that the severity of the crime called for some prison time. The Antitrust Division has been cracking down on bid rigging at foreclosure auctions and prosecuting cases in other states, too.
Two additional Coast investors also have pleaded guilty in the conspiracy and will be sentenced at a later date, bringing to nine the total number of defendants.
Prosecutors say the conspiracy suppressed the prices for which properties sold. Banks lost money, as did any property owners owed proceeds. The DOJ’s Antitrust Division has been cracking down on the practice nationwide.
Jason Boykin said the bid rigging started years ago for him and his brother, who worked together. He said an older man approached them at an auction and offered them $1,000 not to bid on a property, saying this was done all the time and was not illegal.
“We thought it was part of the norm,” Boykin said, explaining he and his brother got “caught up” in the practice.
Guirola told the brothers, “When someone comes around and offers you $1,000 and it’s too good to be true, it probably ain’t.”