To Whom it May Concern
On February 3, 2011 I attended the auction on the courthouse steps @ 220 W. Broadway, San Diego Ca 92101. This is a regular event for me and my partners and we have been attending the sale and purchasing properties for years, for myself it has been about 5 yrs. While I have seen some questionable tactics used by the auctioneer in order to direct properties to certain parties I have never before witnessed the blatant fraud that the auctioneer perpetrated just a few days ago.
I along with several others were intending to bid on a property referenced below;
2/3/2011 10:00:00 AM
7780 PARKWAY DR. #1504
At the South entrance to the County Courthouse, 220 West Broadway, San Diego, CA 92101
Recon Trust Company N.A.
This property (a condominium) has a value in excess of $225,000 in my opinion. In addition to an investor I am also a California Real Estate Broker with many years experience placing a value on properties in this geographical area just as one must be competent at doing in order to maintain any degree of success at Trustee Sales. Furthermore, this is a condominium, it is not a unique property where the value may be argued as more subjective or being “in the eyes of the beholder”. This condominium is worth an amount very close to what similar condominiums are selling for in the same or neighboring complexes, less perhaps the cost of carpet and paint or other interior renovations. That said if it were in terrible condition an experienced “rehabber” can “do” that condo including a new kitchen for $15,000 or less and that is of course assuming it is in need of a total makeover.
As a R.E. Broker I am also a member of the San Diego MLS. As such I can tell you that in the MLS there is an identical unit (MLS# 100007379) 7780 Parkway Dr. #1102 which is currently pending @ $220,000 as a short sale. (Let us assume that anyone reading this is versed on real estate terms) Now anyone familiar with listing practices on a short sale knows it is all too common for the listing agent to enter a price lower than the actual value of the property in order to motivate potential buyers. Not just motivate buyers to submit offers but to wait for what sometimes is a very lengthy process of the short sale.
However, for the sake of this argument let’s assume that the actual value of the property that is currently listed is in fact $220,000.00. Now lets look at the property that sold at auction downtown. That property sold for one dollar over the opening bid price of $94,491.39. So consider the following;
On any given day there are 40-70 participants at the auction. They tend to be very aggressive in bidding up a property in effect “squeezing” the profit margin to the point where the winner may make a 10-20% profit in general on their properties. This of course can and does vary but my point is that no one ever lets a $220,000 condo sell to another person for $94,492.39.
It fly’s in the face of common sense that market participants as a whole would “pass” on a potential $100,000 profit after costs of sale on this or any other property. That being said how is it that this property sold for a dollar over the opening bid?
The actual winner of the bid was not at the auction. That is correct, the winner of the bid was not actually in attendance and this is where the fraud comes into play.
The auctioneer always (with the exception of this property) opens the bidding by making the disclosures about there being no warranties and such. Then he may say that he is bidding on behalf of the beneficiary. On this particular sale he opened the bidding by saying that he WOULD be bidding on this property. He went on to say that his high bid was $180,000 and asked if anyone wanted to bid over that. Now typically he would say going once, twice, third and final, and announce the property sold to the highest bidder. On this particular property after announcing that he was going to bid up to $180,000 and asking if anyone else wanted to bid (as I was about to inform him that I would bid one hundred dollars over that $180,000 bid price) he gave the file back to his assistant and told her to “put it down for a dollar over”.
At a bid price of $180,000 I wasn’t excited about the potential profit but it was a large condo in a sought after location so I was willing to accept my anticipated position of a sales price of 225K and hopefully net about 20K after costs. Nevertheless, as the auctioneer had never announced “going once, twice, ect” I was about to raise my hand and bid but that is when he gave the file to his assistant and told her to put it down for a dollar over the opening bid. The auctioneer then immediately stopped the auction saying he had to go and call his client. Presumably the person(s) on whose behalf he was bidding. Perhaps he just went into the men’s room in the courthouse so he didn’t attract attention as he rejoiced his seemingly successful fraud?
I considered the peculiar behavior he exhibited during the sale and the sequence of events including never announcing the property sold but didn’t think much of it until the next day when another regular at the auction with whom I am acquainted called me and asked how I (or anyone) could possibly let this property go to another party without so much as a bid? It was then that I began to associate the inconsistencies of that particular sale and realized that it was in all likelihood a fraudulent sale.
So, to summarize;
The auctioneer announced he was bidding on the property. He announced that his high bid was $180,0000. He asked if anyone wanted to bid over that. (So he didn’t actually open the bidding by placing a bid…he just announced that he WOULD bid…but didn’t. Then he failed to acknowledge interested parties approaching him to bid and he gave the file back to his assistant (without ever announcing the property sold) then I specifically heard him tell his assistant to “put it down for a dollar over”, this being another of the peculiarities of which I had taken note but assumed there was a reasonable explanation…which of course there was…he was perpetrating a fraudulent sale by influencing the bidding, never placing a bid, and “taking” the property for one dollar over the amount designated by the beneficiary as the opening bid.
Lets assume that the cameras outside the courthouse (let’s first assume that there are cameras) caught this event on tape with sound. That would leave us with no doubt as to what transpired during that sale. But then assuming there are no cameras how is it that a person not even in attendance is able to acquire this or any property with nothing less than a what would be considered a spectacular profit margin given the circumstances of the auction which I’ve already mentioned i.e. aggressive knowledgeable bidders willing to anticipate a 10-20% profit margin? (Anyone with a foreclosure tracking service such as ForeclosureRadar and access to the MLS can track these sales as I do so these are not numbers I am pulling out of the air or my opinion, they are verifiable.) How could that possibly happen? Simply put without the auctioneer manipulating the sale it does not happen…not on a condo in La Mesa.
So who is it that was damaged? Well certainly the company for whom the auctioneer is either an agent or employee. The beneficiary got their money but they have a responsibility to the mortgagee for a fair and legal foreclosure action. One must understand that any monies bid over the “opening bid” go to pay back the debt to the foreclosing beneficiary on the property first and the balance goes to the mortgagee or the estate thereof. So do I as a bidder have an actionable cause…perhaps. But I and the other bidders might only have “damages” in the amount of the anticipated profit which in my case might be extrapolated from the last ten properties I have purchased and the profit earned. However, there was never a guarantee that I would have been the successful bidder so it is questionable (in my layperson opinion) that I have standing to pursue the matter in the courts and if do have standing my damages (anticipated profit from the sale as evidenced by my historical average?) probably is not such that I would want to pay a retainer and contest the issue. Rather, a fair playing ground is my goal.
No, amongst all those who were damaged by the auctioneers actions were primarily the mortgagee or owner of the condo (Frank Gordon) or his estate. I have focused on verifiable facts up to this point but if the owner was a senior citizen then this could possibly be construed as elder abuse as well. Nevertheless, the condo opens for $94,491.23 and gets bid up to $180,000. The difference between what was owed to the beneficiary and the sales price would have been sent to the previous owner.
Remember, the auctioneer never bid on the property. He announced that he WOULD bid up to a price that would have been rather high for the property but then he asked if anyone wanted to bid OVER that amount and then immediately gave the “file” to his girlfriend and said “put it down for a dollar over”. So where was the bid?..that’s the fraud…there wasn’t a bid and the auctioneer “stole” the property along with whomever’s name was on the cashiers checks the auctioneer used to pay for the property.
I am sending this e-mail to the City Attorney’s Office, The District Attorney’s Office, the auction company, and an attorney of my choosing along with several local TV stations.
At this time I choose keep my identity confidential lest no action is taken against the auctioneer and he suddenly stops “hearing” me when I bid…another of his tricks to manipulate the auction to his chosen outcome.
Feel free to contact me via this e-mail address.