Foreclosure investors accused of rigging bids invested $140M in Palm Beach

Federal prosecutors allege the investors conspired to rig bids submitted through online foreclosure auctions

November 14, 2017 02:00 PM

(Credit: Getty Images)

Three real estate investors who allegedly rigged bids through online foreclosure auctions have reportedly spent nearly $140 million to purchase foreclosed properties at judicial sales in Palm Beach County.

Between 2012 and 2015, Christopher Graeve and Stuart Hanki of Palm Beach Gardens-based Prodigy Capital and Avi Stern won 1,363 properties, but forfeited $427,000 in deposits after walking away from 109 of the more than 1,000 deals, according to the Daily Business Review.

Auction records reveal Stern won 461 properties via bids totaling more than $53 million, Graeve won 755 properties with bids totaling nearly $74.7 million, and his company with Hankin won 147 bids totaling nearly $21.6 million, according to the newspaper.

Cozen O’Connor’s Miami partner Jeffrey Gilbert said online auctions’ policies and procedures are “designed to prevent” abandoning deals.

Graeve forfeited 68 times on bids totaling $5.3 million, which means he lost $266,410 in deposits. Stern forfeited 27 times on offers totaling $2 million, which would require about $102,210 in deposits. And Prodigy Capital forfeited 14 times on nearly $1.2 million in bids, leaving behind $58,160.

The case is Florida’s first bid-rigging indictment of foreclosure auctions. The three investors were indicted earlier this month and now face a penalty of up to 10 years in prison and a fine of up to $1 million.

Attorneys for the investors told the Daily Business Review the allegations are a stretch.

Palm Beach, Miami-Dade and Broward counties moved their foreclosure auctions online seven years ago. [DBR]Amanda Rabines

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