A federal judge in Mobile sentenced a local man to probation this week for his role in a years-long conspiracy that rigged real estate foreclosure auctions, cheating banks and other lienholders out of tens of thousands of dollars.
Chief U.S. District Judge William Steele sentenced Steven J. Cox to three years of probation for conspiracy to violate the Sherman Antitrust Act and conspiracy to commit mail fraud. Steele also fined Cox $10,000 and ordered him to immediately pay $15,558, the remaining balance of the $82,101 he owed to lienholders who were cheated through the rigged auctions.
Cox pleaded guilty to the charges back in 2012, but federal prosecutors requested that his sentencing be postponed eight separate times over the following years. Court filings indicate prosecutors delayed the sentencing because Cox was helping build cases against other people and businesses involved in the broader scheme. Ten individuals and two businesses have now pleaded guilty in connection with the conspiracy, including Chad E. Foster, whose sentencing was scheduled for late September.
According to court records, Cox and other conspirators would designate a single bidder to win properties at public foreclosure auctions held at Mobile Government Plaza, suppressing competition and keeping prices artificially low. After the designated bidder won a property cheaply, participants would then hold a secret second auction among themselves. The winning bidder in that private auction would pay off the others for staying out of the public bidding, with proceeds distributed according to a predetermined formula.
An attorney representing one of the earliest defendants charged in the scheme, back in 2011, described the arrangement as a “complicated formula” rooted in an informal “gentlemen’s agreement” that grew more structured as more people became involved. Because the scheme subverted the competitive nature of public auctions, it depressed sale prices and left banks and other institutions holding liens on the properties shortchanged.
The case is part of a broader federal crackdown on bid-rigging at foreclosure auctions across Mobile and other Alabama counties, an effort that has resulted in guilty pleas from a dozen individuals and businesses tied to the scheme so far. Prosecutors have continued pursuing additional sentencings as the investigation winds down, with more defendants expected to face federal courtrooms in the coming months.