DOJ FILES LAWSUIT TO STOP GE FROM SELLING APPLIANCE BUSINESS TO ELECTROLUX

FROM:  U.S. JUSTICE DEPARTMENT
Wednesday, July 1, 2015
Justice Department Files Antitrust Lawsuit to Stop Electrolux from Buying General Electric's Appliance Business

The Department of Justice filed a civil antitrust lawsuit today seeking to block the acquisition of General Electric Company’s appliance business by AB Electrolux and Electrolux North America Inc., whose brands include Frigidaire.  The department said that the $3.3 billion acquisition would combine two of the leading manufacturers of ranges, cooktops and wall ovens sold in the United States, eliminating competition that has benefited American consumers through lower prices and more options.  According to the department’s complaint, purchasers in the United States spent over $4 billion on these major cooking appliances in 2014.

“Electrolux’s proposed acquisition of General Electric’s appliance business would leave millions of Americans vulnerable to price increases for ranges, cooktops and wall ovens, products that serve an important role in family life and represent large purchases for many households,” said Deputy Assistant Attorney General Leslie C. Overton of the Justice Department’s Antitrust Division.  “This lawsuit also seeks to prevent a duopoly in the sale of these major cooking appliances to builders and other commercial purchasers, who often pass on price increases to home buyers or renters.”  

The Antitrust Division’s lawsuit, which seeks to prevent the companies from merging and to preserve their existing head-to-head competition, was filed in the U.S. District Court for the District of Columbia.

Electrolux North America Inc. is an Ohio corporation headquartered in Charlotte, North Carolina.  Electrolux North America Inc. makes and sells major appliances, including those under the brand names Frigidaire, Tappan and Electrolux.  Electrolux’s annual major-appliance sales in the United States total approximately $2.6 billion.  Electrolux North America Inc. is a wholly owned subsidiary of defendant AB Electrolux.

General Electric Company is a New York corporation headquartered in Fairfield, Connecticut.  General Electric’s appliance business is based in Louisville, Kentucky.  It makes and sells major appliances, including those under the brand names GE Monogram, GE Café, GE Profile, GE, GE Artistry and Hotpoint.  In the United States, General Electric’s annual major appliance sales total approximately $3.4 billion.

COMPANY PLEADS GUILTY TO PRICE FIXING, BID RIGGING OF AUTO PARTS

FROM:   U.S. JUSTICE DEPARTMENT
YAMADA MANUFACTURING CO. AGREES TO PLEAD GUILTY TO PRICE FIXING AND BID RIGGING ON AUTOMOBILE PARTS INSTALLED IN U.S. CARS

Company Agrees to Pay $2.5 Million Criminal Fine

WASHINGTON — Yamada Manufacturing Co. Ltd. has agreed to plead guilty and to pay a $2.5 million criminal fine for its role in a conspiracy to fix prices and rig bids for manual (non-electric or non-hydraulic-powered) steering columns installed in cars sold in the United States and elsewhere, the Department of Justice announced today.

According to a one-count felony charge filed today in U.S. District Court of the Southern District of Ohio in Cincinnati, Yamada Manufacturing, based in Kiryu City, Gunma Prefecture, Japan, conspired to rig bids and fix prices of steering columns sold to certain subsidiaries of Honda Motor Co. Ltd. in the United States and elsewhere.  According to the charge, Yamada carried out the conspiracy from at least as early as the fall of 2007 and continuing until as late as September 2012.  Yamada Manufacturing has agreed to cooperate in the department’s ongoing investigation. The plea agreement is subject to court approval.

“Yamada’s collusion deprived Honda and its U.S. customers the benefits of freely set prices for manual steering columns, a simple but necessary auto part,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “Companies that conspire to undermine competition and harm U.S. consumers will continue to be held accountable for their crimes.”

According to the charge, Yamada Manufacturing, and others participating in the scheme, conspired through a meeting and conversations in which they discussed and agreed upon bids and price quotations to be submitted to Honda.  Based on those discussions, Yamada Manufacturing and its co-conspirators sold steering columns to Honda at collusive and non-competitive prices and employed measures to keep their conduct secret.

Including Yamada Manufacturing, 35 companies and 29 executives have pleaded guilty or agreed to plead guilty in the division’s ongoing investigation into price fixing and bid rigging in the auto parts industry and have agreed to pay a total of more than $2.5 billion in criminal fines.

Yamada Manufacturing is charged with one count of price fixing and bid rigging in violation of the Sherman Act, which carries maximum penalties of a $100 million criminal fine for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

The charges are the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charges were brought by the Antitrust Division’s Chicago Office and the FBI’s Cincinnati Field Office with assistance from the U.S. Attorney’s Office for the Southern District of Ohio.

FORMER EXEC PLEADS GUILTY IN CASE INVOLVING PRICE FIXING OF CERTAIN POSTERS SOLD THROUGH AMAZON MARKETPLACE

FROM:  U.S. JUSTICE DEPARTMENT

MONDAY, APRIL 6, 2015

FORMER E-COMMERCE EXECUTIVE CHARGED WITH PRICE FIXING IN THE ANTITRUST DIVISION’S FIRST ONLINE MARKETPLACE PROSECUTION

WASHINGTON — A former executive of an e-commerce seller of posters, prints and framed art has agreed to plead guilty for conspiring to fix the prices of posters sold online, the Department of Justice announced.

A one-count felony charge was filed today in the U.S. District Court of the Northern District of California in San Francisco against David Topkins.  According to the charge, Topkins and his co-conspirators fixed the prices of certain posters sold online through Amazon Marketplace from as early as September 2013 until in or about January 2014.  Topkins also has agreed to pay a $20,000 criminal fine and cooperate with the department’s ongoing investigation.  The plea agreement is subject to court approval.

“Today’s announcement represents the division’s first criminal prosecution against a conspiracy specifically targeting e-commerce,” said Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division.  “We will not tolerate anticompetitive conduct, whether it occurs in a smoke-filled room or over the Internet using complex pricing algorithms.  American consumers have the right to a free and fair marketplace online, as well as in brick and mortar businesses.”

According to the charge, Topkins and his co-conspirators agreed to fix the prices of certain posters sold in the United States through Amazon Marketplace.  To implement their agreements, the defendant and his co-conspirators adopted specific pricing algorithms for the sale of certain posters with the goal of coordinating changes to their respective prices and wrote computer code that instructed algorithm-based software to set prices in conformity with this agreement.

“These charges demonstrate our continued commitment to investigate and prosecute individuals and organizations seeking to victimize online consumers through illegal anticompetitive conduct,” said Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office.  “The FBI is committed to investigating price fixing schemes and remains unwavering in our dedication to bring those responsible for theses illegal conspiracies to justice.”

Topkins is charged with price fixing in violation of the Sherman Act, which carries a maximum sentence of 10 years and a fine of $1 million for individuals.  The maximum fine for an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

This prosecution arose from an ongoing federal antitrust investigation into price fixing in the online wall décor industry, which is being conducted by the Antitrust Division’s San Francisco Office with the assistance of the FBI’s San Francisco Field Office.

AG HOLDER PRAISES COURT DECISION THAT AMERICAN EXPRESS VIOLATED ANTITRUST LAWS

FROM:  U.S. JUSTICE DEPARTMENT
THURSDAY, FEBRUARY 19, 2015
U.S. DISTRICT COURT RULES THAT AMERICAN EXPRESS
VIOLATED ANTITRUST LAWS

WASHINGTON — Attorney General Eric Holder today praised the decision by a judge in the United States District Court in the Eastern District of New York who found in favor of the Justice Department’s lawsuit claiming that American Express’ rules for merchants violate antitrust laws.

“Today’s decision is a triumph for fair competition and for American consumers,” said Attorney General Holder.  “By recognizing that American Express’s rules harm competition, the court vindicates the promise of robust marketplaces that is enshrined in our antitrust laws.  I salute the hardworking men and women who led the lengthy investigation and trial with uncommon skill and unwavering dedication.  With this achievement, we are sending an unambiguous message that the Department of Justice is prepared to litigate any case, no matter how complex, in its pursuit of justice and protection for the American people.”

The United States Department of Justice and 17 state attorneys general sued American Express, Visa Inc. and MasterCard International Inc., in 2010 to eliminate restrictions that the three credit card networks imposed on merchants.  Over the course of a seven week trial during the summer of 2014, the department argued that these restrictions obstruct merchants from using competition to try to keep credit card fees from increasing.  The civil case, brought under Section 1 of the Sherman Antitrust Act, sought to end the violation and to restore competition.

The trial focused on credit card “swipe fees” which generate over $50 billion annually for credit card networks.  Millions of merchants of all sizes and in scores of industries pay those fees.  Despite these large fee revenues, the Justice Department argued that price competition over merchant swipe fees has been almost non-existent and for decades the credit card networks have not competed on price.  Today’s decision was rendered by Judge Nicholas G. Garaufis.

“Merchants pay over $50 billion in credit card swipe fees each year.  The department and the attorneys general of 17 states brought this case because competition over those fees was being suppressed,” said Deputy Assistant Attorney General for the Antitrust Division Leslie C. Overton.  “The Court’s ruling establishes that the American Express anti-steering rules block merchants from using competition to keep credit card swipe fees down, which means higher costs to those merchants’ customers.  I am proud of the outstanding work done by the investigative and trial teams.  As today’s decision reaffirms, the Antitrust Division remains committed to ensuring that competition is not restricted in this important sector of the economy.”

Settlements with Visa and MasterCard were filed at the same time the case against American Express was begun; the settlements prohibit the two networks from continuing their rules and practices that had obstructed competition.  The court approved the settlements on July 20, 2011, and they applied immediately to Visa and MasterCard.  American Express was not a party to the settlements, and the litigation against American Express continued.

The department argued that the principal reason for an absence of price competition among credit card companies has been rules imposed by each of the networks that limit merchants’ ability to take advantage of a basic tool to keep prices competitive.  That tool – commonly used elsewhere in the economy – is merchants’ freedom to “steer” transactions to a network willing to lower its price.  Each network has long prohibited such steering to lower-cost cards.  Now that Visa and MasterCard have reformed their anti-steering rules, American Express rules stood as the last barrier to competition.

At trial, an array of merchants came forward to explain both the substantial costs they incur when their customers pay with credit cards and their inability to ignite competition among the networks to reduce those costs.  In fact, the rules not only prevent merchants from offering their customers lower prices or other incentives for choosing a less costly card, they even block merchants from providing consumers with truthful price information about the cost of swipe fees of different credit cards.

Closing arguments in the trial took place on Oct. 9, 2014.  Craig Conrath was the lead trial attorney for the United States.  The 17 plaintiff states were Arizona, Connecticut, Idaho, Illinois, Iowa, Maryland, Michigan, Missouri, Montana, Nebraska, New Hampshire, Ohio, Rhode Island, Tennessee, Texas, Utah and Vermont.  The court also entered a scheduling order instructing the parties to submit, within 30 days, a joint proposed remedial order.

BERKSHIRE HATHAWAY WILL PAY $896,000 PENALTY FOR VIOLATING PREMERGER RULES

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, August 20, 2014

Berkshire Hathaway to Pay $896,000 Civil Penalty for Violating Antitrust Premerger Notification Requirements

Violation Occurred When Berkshire Hathaway Acquired Voting Securities of USG Corporation

Berkshire Hathaway Inc. has agreed to pay an $896,000 civil penalty to settle charges that it violated premerger reporting and waiting requirements when it acquired voting securities of USG Corp., the Department of Justice announced today.

The Justice Department’s Antitrust Division, at the request of the Federal Trade Commission, filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., against Berkshire Hathaway for violating the notification requirements of the Hart-Scott-Rodino (HSR) Act of 1976.   At the same time, the department filed a proposed settlement that, if approved by the court, will settle the charges.

Berkshire Hathaway is a Delaware corporation with its headquarters in Omaha, Nebraska.   As a result of its acquisition of USG voting securities in December 2013, Berkshire Hathaway held approximately 28 percent of USG voting securities, valued at more than $950 million.    

USG is a Delaware corporation with its headquarters in Chicago, Illinois.

The HSR Act of 1976, an amendment to the Clayton Act, imposes notification and waiting period requirements for transactions meeting certain size thresholds so that they can undergo premerger antitrust review.

Federal courts can assess civil penalties for premerger notification violations under the HSR Act in lawsuits brought by the Department of Justice.   For a party in violation of the HSR Act the maximum civil penalty is $16,000 a day.

AUTO PARTS PRICE FIXING CONSPIRACY RESULTS IN EXECUTIVE INDICTMENT

FROM:  U.S. JUSTICE DEPARTMENT 

JAPANESE AUTOMOTIVE PARTS MANUFACTURER EXECUTIVE INDICTED FOR

ROLE IN CONSPIRACY TO FIX PRICES AND FOR OBSTRUCTION OF JUSTICE

WASHINGTON — A Detroit federal grand jury returned a two-count indictment against an executive of a Japanese manufacturer of automotive parts for his participation in a conspiracy to fix prices of heater control panels and for obstruction of justice for ordering the destruction of evidence related to the conspiracy, the Department of Justice announced today.

The indictment, filed today in the U.S. District Court for the Eastern District of Michigan, charges Hitoshi Hirano with participating in a conspiracy to suppress and eliminate competition in the automotive parts industry by agreeing to rig bids for, and to fix, stabilize and maintain the prices of heater control panels sold to Toyota Motor Corp. and Toyota Motor Engineering & Manufacturing North America Inc. (collectively, Toyota) for installation in vehicles manufactured and sold in the United States and elsewhere.  Hirano, who served as an executive managing director at Tokai Rika Co. Ltd., was also charged with knowingly and corruptly persuading, and attempting to persuade, employees of Tokai Rika to destroy documents and delete electronic data that may contain evidence of antitrust crimes in the United States and elsewhere.

“The Antitrust Division will not tolerate executives directing their subordinates to engage in illegal cartels and conspiracies,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program.  “Attempts to then obstruct justice and destroy evidence will give rise to additional charges.”

The indictment alleges, among other things, that from at least as early as October 2003 and continuing until at least February 2010, Hirano and others attended conspiratorial meetings with co-conspirators and reached collusive agreements to rig bids, allocate the supply and fix the prices for heater control panels sold to Toyota.  According to the indictment, Hirano participated directly in the conspiratorial conduct, and directed, authorized and consented to his subordinates’ participation.  In addition, the indictment charges that in February 2010, after Hirano learned that the FBI had searched Tokai Rika’s U.S. subsidiary, he knowingly and corruptly persuaded employees at Tokai Rika to destroy paper documents and delete electronic data intending to prevent the grand jury from obtaining evidence of antitrust crimes.

Tokai Rika is a manufacturer of automotive parts, including heater control panels, based in Nagoya, Japan.  Tokai Rika pleaded guilty on Dec. 12, 2012, for its role in the conspiracy and to obstruction of justice, and was sentenced to pay a $17.7 million criminal fine.

Heater control panels are located in the center console of an automobile and control the temperature of the passenger compartment of a vehicle.  Heater control panels differ by function and design for a particular vehicle model.  Examples include automatic heater control panels, which maintain the temperature within the vehicle to a designated temperature point, and manual heater control panels, which regulate the temperature through manual controls operated by vehicle occupants.

Including Hirano, 34 individuals have been charged in the government’s ongoing investigation into price fixing and bid rigging in the auto parts industry, 24 of whom have pleaded guilty or agreed to plead guilty.  Of those, 22 have been sentenced to serve prison terms ranging from a year and one day to two years. Additionally, 27 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.3 billion in fines.

Hirano is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.  The maximum penalty for obstruction of justice is 20 years in prison and a $250,000 criminal fine for individuals.

This indictment is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by four of the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charges were brought by the Antitrust Division’s Washington Criminal I Section and the FBI’s Detroit Field Office, with the assistance of the FBI headquarters’ International Corruption Unit.

FIRST EVER EXTRADITION ON ANTITRUST CHARGE

FROM:  U.S. JUSTICE DEPARTMENT 
Former Marine Hose Executive Extradited from Germany to Face Charges of 
Participating in Worldwide Bid-Rigging Conspiracy

WASHINGTON — Romano Pisciotti, an Italian national, was extradited from Germany on a charge of participating in a conspiracy to suppress and eliminate competition by rigging bids, fixing prices and allocating market shares for sales of marine hose sold in the United States and elsewhere, the Department of Justice announced today. This marks the first successfully litigated extradition on an antitrust charge.

Pisciotti, a former executive with Parker ITR Srl, a marine hose manufacturer headquartered in Veniano, Italy, was arrested in Germany on June 17, 2013. He arrived in the Southern District of Florida, in Miami, yesterday and is scheduled to make his initial appearance today in the U.S. District Court for the Southern District of Florida in Ft. Lauderdale, at 11:00 a.m. EDT.

“This first of its kind extradition on an antitrust charge allows the department to bring an alleged price fixer to the United States to face charges of participating in a worldwide conspiracy,” said Assistant Attorney General Bill Baer in charge of the Department of Justice’s Antitrust Division. “This marks a significant step forward in our ongoing efforts to work with our international antitrust colleagues to ensure that those who seek to subvert U.S. law are brought to justice.”

Marine hose is a flexible rubber hose used to transfer oil between tankers and storage facilities. During the conspiracy, the cartel affected prices for hundreds of millions of dollars in sales of marine hose and related products sold worldwide.

According to a one-count felony indictment filed under seal on Aug. 26, 2010, and ordered unsealed on Aug. 5, 2013, in U.S. District Court in the Southern District of Florida, Pisciotti carried out the conspiracy by agreeing during meetings, conversations and communications to allocate shares of the marine hose market among the conspirators; use a price list for marine hose in order to implement the conspiracy; and not compete for customers with other marine hose sellers either by not submitting prices or bids or by submitting intentionally high prices or bids, all in accordance with the agreements reached among the conspiring companies. As part of the conspiracy, Pisciotti and his conspirators provided information received from customers in the United States and elsewhere about upcoming marine hose jobs to a co-conspirator who served as the coordinator of the conspiracy. That coordinator acted as a clearinghouse for bidding information that was shared among the conspirators, and was paid by the manufacturers for coordinating the conspiracy. The department said the conspiracy began at least as early as 1999 and continued until at least May 2007. Pisciotti was charged with joining and participating in the conspiracy from at least as early as 1999 until at least November 2006.

Pisciotti is charged with violating the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

As a result of the department’s ongoing marine hose investigation, five companies, including Parker ITR; Bridgestone Corp. of Japan; Manuli SPa of Italy’s Florida subsidiary; Trelleborg of France; and Dunlop Marine and Oil Ltd, of the United Kingdom, and nine individuals have pleaded guilty.

The investigation is being conducted by the Antitrust Division’s Washington Criminal I Section, the Defense Criminal Investigative Service (DCIS) of the Department of Defense’s Office of Inspector General, the U.S. Navy Criminal Investigative Service and the Federal Bureau of Investigation. The U.S. Marshals Service and other law enforcement agencies from multiple foreign jurisdictions are also investigating or assisting in the ongoing matter. The Criminal Division’s Office of International Affairs provided assistance.

CHILEAN SHIPPING SERVCIES COMPANY PLEADS GUILTY IN ANTITRUST CASE

FROM:  U.S. JUSTICE DEPARTMENT

SOUTH AMERICAN COMPANY AGREES TO PLEAD GUILTY TO PRICE FIXING
ON OCEAN SHIPPING SERVICES FOR CARS AND TRUCKS

First Charges in the Department’s Antitrust Investigation Involving Ocean Shipping Services; Conspiracy Affected Global Cargo Shipments, Including at Port of Baltimore

WASHINGTON — Compañía Sud Americana de Vapores S.A. (CSAV), a Chilean corporation, has agreed to plead guilty and to pay an $8.9 million criminal fine for its involvement in a conspiracy to fix prices, allocate customers and rig bids of international ocean shipping services for roll-on, roll-off cargo, such as cars and trucks, to and from the United States and elsewhere, the Department of Justice announced today.

According to a one-count felony charge filed today in U.S. District Court for the District of Maryland in Baltimore, CSAV engaged in a conspiracy to suppress and eliminate competition by allocating customers and routes, rigging bids and fixing prices for the sale of international ocean shipping services of roll-on, roll-off cargo to and from the United States and elsewhere, including the Port of Baltimore.  CSAV participated in the conspiracy from at least January 2000 to September 2012.  CSAV has also agreed to cooperate with the department’s ongoing antitrust investigation.  The plea agreement is subject to court approval.

Roll-on, roll-off cargo is non-containerized cargo that can be both rolled onto and rolled off of an ocean-going vessel.  Examples of this cargo include new and used cars and trucks, as well as construction, mining and agricultural equipment.

“Today’s charges are the f

irst to be filed in the Antitrust Division’s investigation into bid rigging and price fixing of ocean shipping services,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “Because of the growth in the automobile ocean shipping industry over the past 40 years, the conspiracy substantially affected interstate and foreign commerce.  Prosecuting international price-fixing conspiracies remains a top priority for the division."

According to the charge, CSAV and its co-conspirators carried out the conspiracy by, among other things, agreeing – during meetings and communications – on prices, allocating customers, agreeing to refrain from bidding against one another and exchanging customer pricing information.  The department said the companies then charged fees in accordance with those agreements for international ocean shipping services for certain roll-on, roll-off cargo to and from the United States and elsewhere at collusive and non-competitive prices.

CSAV is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Today’s charge is the result of an ongoing federal antitrust investigation into price fixing, bid rigging, and other anticompetitive conduct in the international ocean shipping industry, which is being conducted by the Antitrust Division’s National Criminal Enforcement Section and the FBI’s Baltimore Field Office, along with assistance from the U.S. Customs and Border Protection, Office of Internal Affairs, Washington Field Office/Special Investigations Unit.

FORMER AIRLINE FUEL SUPPLY COMPANY EMPLOYEE PLEADS GUILTY IN ANTITRUST CASE

FROM:  U.S. JUSTICE DEPARTMENT 
FORMER EMPLOYEE OF FLORIDA AIRLINE FUEL SUPPLY COMPANY PLEADS GUILTY TO OBSTRUCTING FEDERAL INVESTIGATION

WASHINGTON — A former employee of a Florida-based airline fuel supply service company pleaded guilty today to obstructing an investigation into fraud and anticompetitive conduct in the airline charter services industry, the Department of Justice announced.

Craig Perez, a former employee of Aviation Fuel International Inc. (AFI), pleaded guilty to a felony charge filed today in U.S. District Court for the Western District of Missouri in Kansas City.  The charge against Perez stems from the U.S. Department of Defense’s Office of the Inspector General’s Defense Criminal Investigative Service (DCIS)’s investigation into kickback payments made by AFI and its employees to Wayne Kepple, the former vice president of ground operations for Ryan International Airlines.

Ryan provided air passenger and cargo services for corporations, private individuals and the U.S. government, including the U.S. Department of Defense, the U.S. Department of Homeland Security and the U.S. Marshals Service.

According to court documents, Perez worked for AFI from June 2007 until March 2008 and was vice president of services.  During that time, Kepple received kickback payments from AFI on aviation fuel, services and equipment sold by AFI to Ryan.  In November 2011, a federal agent with DCIS contacted Perez to interview him in relation to its investigation of AFI.  After speaking with the federal agent, and with full knowledge of the purpose of the interview, Perez knowingly destroyed relevant files from his laptop computer relating to his employment at AFI with the intent to impede, obstruct and influence the investigation of AFI and his involvement in that conduct.

“The Antitrust Division will hold accountable those who attempt to conceal their illegal actions and obstruct a government investigation,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “Destroying evidence in an attempt to undermine a federal investigation is a crime the division takes very seriously.”

Perez is charged with obstruction of justice, which carries a maximum penalty of 20 years in prison and a $250,000 criminal fine for individuals.  He has agreed to cooperate in the ongoing investigation.

Today’s plea is the fifth to arise out of the Antitrust Division’s ongoing investigation into fraud and anticompetitive conduct in the airline charter services industry.  The other four individuals have been ordered to serve sentences ranging from 16 to 87 months in prison and to pay more than $580,000 in restitution.  A sixth individual, Sean Wagner, the owner and operator of AFI, and AFI itself were indicted on Aug. 13, 2013.

The investigation is being conducted by the Antitrust Division’s National Criminal Enforcement Section and the U.S. Department of Defense’s Office of Inspector General’s Defense Criminal Investigative Service, headed by Special Agent in Charge John F. Khin.

DENSO CORP. EXECUTIVE PLEADS GUILTY TO OBSTRUCTING PRICE-FIXING INVESTIGATION

FROM:  U.S. JUSTICE DEPARTMENT 
FORMER DENSO CORP. EXECUTIVE AGREES TO PLEAD GUILTY TO
OBSTRUCTING AUTOMOTIVE PARTS INVESTIGATION

Executive Agrees to Serve One Year in a U.S. Prison

WASHINGTON — A former executive of Japan-based Denso Corp. has agreed to plead guilty to obstruction of justice charges in connection with the Antitrust Division’s investigation into a conspiracy to fix the prices of heater control panels installed in cars sold in the United States and elsewhere, the Department of Justice announced today.  The executive has also agreed to serve one year and one day in a U.S. prison.

A one-count felony charge was filed today in U.S. District Court for the Eastern District of Michigan in Detroit against Kazuaki Fujitani, a former director of Denso Corp. in Japan.  According to the charge, Fujitani, who was general manager of the Toyota Sales Division at the time of the offense, deleted numerous e-mails and electronic documents in February and March 2010 upon learning that the FBI had executed a search warrant on Denso’s U.S. subsidiary.  The deleted documents contained communications between Denso and one or more of its competitors regarding requests for price quotation made by Toyota for heater control panels for the Toyota Avalon.  The plea agreement is subject to court approval.

“Today’s charge demonstrates the Antitrust Division’s commitment to protecting the integrity of grand jury investigations,” said Brent Snyder, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program.  “The division will vigorously prosecute individuals who destroy evidence in an attempt to conceal their participation in illegal conspiracies.”

In March 2012, Denso pleaded guilty and was sentenced to pay a $78 million criminal fine for its role in conspiracies to fix the prices of heater control panels and electronic control units.
           
Including Fujitani, 29 individuals have been charged in the department’s ongoing investigation into price fixing and bid rigging in the auto parts industry.  Additionally, 26 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of over $2.25 billion in fines.

Fujitani is charged with obstruction of justice, which carries a maximum penalty of 20 years in prison and a criminal fine of $250,000 for individuals.

Today’s charge arose from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charge was brought by the National Criminal Enforcement Section and the San Francisco Office of the Antitrust Division, with the assistance of the Detroit Field Office of the FBI.

JAPAN-BASED AUTOMOBILE PARTS COMPANY PLEADS GUILTY TO PRICE FIXING

FROM:  JUSTICE DEPARTMENT 
AISAN INDUSTRY CO. LTD. AGREES TO PLEAD GUILTY TO PRICE FIXING ON AUTOMOBILE PARTS INSTALLED IN U.S. CARS

Company Agrees to Pay $6.86 Million Criminal Fine

WASHINGTON — Aisan Industry Co. Ltd., an Obu, Japan-based company, has agreed to plead guilty and to pay a criminal fine of $6.86 million for its role in a price-fixing conspiracy involving electronic throttle bodies sold in the United States and elsewhere, the Department of Justice announced today.

According to a one-count felony charge filed today in U.S. District Court for the Eastern District of Michigan in Detroit, Aisan engaged in a conspiracy to rig bids for, and to fix, stabilize and maintain the prices of electronic throttle bodies sold to Nissan Motor Co. Ltd. and certain of its subsidiaries in the United States and elsewhere.  In addition to the criminal fine, Aisan has also agreed to cooperate with the department’s ongoing auto parts investigations. The plea agreement is subject to court approval.

“The Antitrust Division will continue to hold companies accountable for anticompetitive conduct that impacts the automobile industry in the United States,” said Brent Snyder, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program.  “To date, 25 companies have been charged as part of the Antitrust Division’s ongoing auto parts investigation.”

According to the charges, Aisan and its co-conspirators carried out the price-fixing conspiracy through meetings and conversations in which they discussed and agreed upon bids and price quotations for electronic throttle bodies.  Aisan’s involvement in the conspiracy to fix prices of electronic throttle bodies lasted from at least as early as October 2003 until at least February 2010.

Aisan manufactures and sells automotive electronic throttle bodies, which are part of the air intake system in an engine that controls the amount of air flowing into an engine’s combustion chamber.  By controlling air flow within an engine, the electronic throttle body controls engine speed.

Including Aisan, 25 corporations have pleaded guilty or agreed to plead guilty in the department’s investigation into price fixing and bid rigging in the auto parts industry.  The companies have agreed to pay a total of more than $1.8 billion in fines.  Additionally, 28 individuals have been charged.

Aisan is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Today’s prosecution arose from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charges were brought by the San Francisco Office of the Antitrust Division with assistance provided by the National Criminal Enforcement Section of the Antitrust Division, the Detroit Field Office of the FBI, and the FBI headquarters’ International Corruption Unit.

AUTO PARTS MANUFACTURER AGREES TO PLEAD GUILTY TO PRICE-FIXING

FROM:  JUSTICE DEPARTMENT 
Company Agrees to Pay $56.6 Million Criminal Fine

WASHINGTON — Koito Manufacturing Co. Ltd., a Tokyo-based company, has agreed to plead guilty and to pay a total of $56.6 million in criminal fines for its roles in separate price-fixing conspiracies involving automobile lighting fixtures and lamp ballasts installed in cars sold in the United States and elsewhere, the Department of Justice announced today.

According to a two-count felony charge filed today in U.S. District Court for the Eastern District of Michigan in Detroit, Koito engaged in separate conspiracies to rig bids for, and to fix, stabilize and maintain the prices of automobile lighting fixtures and automotive high-intensity discharge (HID) lamp ballasts sold to automakers in the United States and elsewhere.  In addition to the criminal fine, Koito has also agreed to cooperate with the department’s ongoing auto parts investigations.  The plea agreement is subject to court approval.

“The conspirators engaged in long-term conspiracies to fix the prices of essential components used in the production of automobiles,” said Brent Snyder, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program.  “Today’s criminal fine demonstrates the Antitrust Division’s continued commitment to hold companies accountable for collusive behavior that impacts American consumers.”

According to the charges, Koito and its co-conspirators sold the lighting fixtures and ballasts at noncompetitive prices to automakers in the United States and elsewhere.  Koito and its co-conspirators carried out the conspiracies through meetings and conversations in which they discussed and agreed upon bids and price quotations and agreed to allocate among the companies certain sales of automotive lighting fixtures and HID lamp ballasts sold to automobile and component manufacturers.  Koito’s involvement in the conspiracy to fix prices of automotive lighting fixtures lasted from at least as early as June 1997 until about July 2011.  Koito’s involvement in the conspiracy to fix prices of automotive HID lamp ballasts lasted from at least as early as July 1998 until at least February 2010.

Koito manufactures and sells automotive lighting fixtures, which include automobile headlamps and rear combination lamp assemblies that employ various bulb technologies and are used for forward illumination, visibility and to signal various vehicular functions, such as braking, reversing direction and turning.

Koito also manufactures and sells HID lamp ballasts – electrical devices that are essential for the operation of an HID headlamp.  HID lamp ballasts regulate the electrical current used to ignite and control the electrical arc that generates the intensely bright light emitted by an automotive HID headlamp fixture.

Including Koito, 24 corporations have pleaded guilty or agreed to plead guilty in the department’s investigation into price fixing and bid rigging in the auto parts industry, and have agreed to pay a total of more than $1.8 billion in fines.  Additionally, 26 individuals have been charged.

Koito is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Today’s prosecution arose from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charges were brought by the National Criminal Enforcement Section, with the assistance of the Detroit Field Office of the FBI and the FBI headquarters’ International Corruption Unit.

RBS SECURITIES JAPAN LTD SENTENCED FOR MANIPULATION OF YEN LIBOR

FROM:  JUSTICE DEPARTMENT 

WASHINGTON — RBS Securities Japan Limited, a wholly owned subsidiary of The Royal Bank of Scotland plc (RBS) that engages in investment banking operations with its principal place of business in Tokyo, Japan, was sentenced today for its role in manipulating the Japanese Yen London Interbank Offered Rate (LIBOR), a leading benchmark used in financial products and transactions around the world.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Deputy Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office made the announcement.

RBS Securities Japan was sentenced by U.S. District Judge Michael P. Shea in the District of Connecticut.  RBS Securities Japan pleaded guilty on April 12, 2013, to one count of wire fraud for its role in manipulating Yen LIBOR benchmark interest rates.  RBS Securities Japan signed a plea agreement with the government in which it admitted its criminal conduct and agreed to pay a $50 million fine, which the court accepted in imposing sentence.  In addition, RBS plc, the Edinburgh, Scotland-based parent company of RBS Securities Japan, entered into a deferred prosecution agreement (DPA) with the government requiring RBS plc to pay an additional $100 million penalty, to admit and accept responsibility for its misconduct as set forth in an extensive statement of facts and to continue cooperating with the Justice Department in its ongoing investigation.  The DPA reflects RBS plc’s cooperation in disclosing LIBOR misconduct within the financial institution and recognizes the significant remedial measures undertaken by new management to enhance internal controls.

Together with approximately $462 million in regulatory penalties and disgorgement – $325 million as a result of a Commodity Futures Trading Commission (CFTC) action and approximately $137 million as a result of a U.K. Financial Conduct Authority (FCA) action – the Justice Department’s criminal penalties bring the total amount of the resolution with RBS and RBS Securities Japan to approximately $612 million.

“Today’s sentencing of RBS is an important reminder of the significant consequences facing banks that deliberately manipulate financial benchmark rates, and it represents one of the numerous enforcement actions taken by the Justice Department in our ongoing LIBOR investigation” said Acting Assistant Attorney General Raman. “As a result of the department’s investigation, we have charged five individuals and secured admissions of criminal wrongdoing by four major financial institutions.  Our enforcement actions have had a lasting impact on the global banking system, and we intend to continue to vigorously investigate and prosecute the manipulation of this cornerstone benchmark rate.”

“By colluding to manipulate the Yen LIBOR benchmark interest rate, RBS Securities Japan reaped higher profits for itself at the expense of unknowing counterparties, and in the process undermined the integrity of a major benchmark rate used in financial transactions throughout the world,” said Deputy Assistant Attorney General Snyder.  “Today’s sentence, in conjunction with the department’s agreement with parent company RBS, demonstrates the Antitrust Division’s commitment to prosecuting these types of far-reaching and sophisticated conspiracies.”

“The manipulation of LIBOR impacts financial products the world over, and erodes the integrity of the financial markets,” said Assistant Director in Charge Parlave.  “Without a level playing field in our financial marketplace, banks and investors do not have a threshold to which they can measure their hard work.  I commend the Special Agents, forensic accountants and analysts, as well as the prosecutors, for the significant time and resources they committed to investigating this case.”

According to court documents, LIBOR is an average interest rate, calculated based upon submissions from leading banks around the world, reflecting the rates those banks believe they would be charged if borrowing from other banks.  LIBOR serves as the primary benchmark for short-term interest rates globally, and is used as a reference rate for many interest rate contracts, mortgages, credit cards, student loans and other consumer lending products.  The Bank of International Settlements estimated that as of the second half of 2009, outstanding interest rate contracts were valued at approximately $450 trillion.

LIBOR is published by the British Bankers’ Association (BBA), a trade association based in London.  At the time relevant to the conduct in the criminal information, LIBOR was calculated for 10 currencies at 15 borrowing periods, known as maturities, ranging from overnight to one year.  The LIBOR for a given currency at a specific maturity is the result of a calculation based upon submissions from a panel of banks for that currency (the Contributor Panel) selected by the BBA.

According to the plea agreement, at various times from at least 2006 through 2010, certain RBS Securities Japan Yen derivatives traders engaged in efforts to move LIBOR in a direction favorable to their trading positions, defrauding RBS counterparties who were unaware of the manipulation affecting financial products referencing Yen LIBOR.  The scheme included efforts to manipulate more than one hundred Yen LIBOR submissions in a manner favorable to RBS Securities Japan’s trading positions.  Certain RBS Securities Japan Yen derivatives traders, including a manager, engaged in this conduct in order to benefit their trading positions and thereby increase their profits and decrease their losses.

The prosecution of RBS Securities Japan is being handled by Deputy Chief Patrick Stokes and Trial Attorney Gary Winters of the Criminal Division’s Fraud Section, and New York Office Assistant Chief Elizabeth Prewitt and Trial Attorneys Eric Schleef and Richard Powers of the Antitrust Division.  Deputy Chiefs Daniel Braun and William Stellmach and Trial Attorney Alex Berlin of the Criminal Division’s Fraud Section, Trial Attorneys Daniel Tracer and Kristina Srica of the Antitrust Division, Jeremy Verlinda of the Antitrust Division’s Economic Analysis Group, Assistant U.S. Attorneys Eric Glover and Liam Brennan of the U.S. Attorney’s Office for the District of Connecticut, and the Criminal Division’s Office of International Affairs have also provided valuable assistance in this matter.  The investigation is being conducted by special agents, forensic accountants and intelligence analysts of the FBI’s Washington Field Office.

The investigation leading to these cases has required, and has greatly benefited from, a diligent and wide-ranging cooperative effort among various enforcement agencies both in the United States and abroad.  The Justice Department acknowledges and expresses its deep appreciation for this assistance.  In particular, the CFTC’s Division of Enforcement referred this matter to the department and, along with the FCA, has played a major role in the investigation.  Various agencies and enforcement authorities from other nations are also participating in different aspects of the broader investigation relating to LIBOR and other benchmark rates, and the department is grateful for their cooperation and assistance.  In particular, the Securities and Exchange Commission has played a significant role in the LIBOR investigation, and the department expresses its appreciation to the United Kingdom’s Serious Fraud Office for its assistance and ongoing cooperation.

This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force.  President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.

TWO REAL INVESTORS PLEAD GUILTY FOR ROLES IN BID RIGGING REAL ESTATE FORECLOSURE AUCTIONS

FROM:  U.S. JUSTICE DEPARTMENT 
TWO NORTHERN CALIFORNIA REAL ESTATE INVESTORS AGREE TO PLEAD GUILTY TO BID RIGGING AT PUBLIC REAL ESTATE FORECLOSURE AUCTIONS
 Investigation Has Yielded 40 Plea Agreements to Date

WASHINGTON — Two Northern California real estate investors have agreed to plead guilty for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.

Felony charges were filed today in the U.S. District Court for the Northern District of California, in San Francisco, against Florence Fung of Sacramento, Calif, and Michael Navone of San Rafael, Calif.  Fung and Navone are the 39th and 40th individuals to plead guilty or agree to plead guilty as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California.

According to court documents, Fung and Navone conspired with others, for various lengths of time between February 2009 and January 2011, not to bid against one another, but instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in San Mateo County.  Fung and Navone also were charged with conspiring to use the mail to carry out schemes to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs and to divert money to co-conspirators that would have gone to mortgage holders and others.  Navone was also charged with participating in similar conspiracies in San Francisco County beginning as early as October 2009 until about January 2011.

“Instead of competing at real estate foreclosure auctions, the conspirators agreed not to bid against one another and determined among themselves who would submit the winning bid, stifling honest and fair competition,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The Antitrust Division and its partners at the FBI continue to remain committed to holding accountable investors who attempt to subvert the competitiveness of the bidding process.”

The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at San Mateo and San Francisco county public foreclosure auctions at non-competitive prices.  When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner. According to court documents, these conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.

“The FBI continues to join the Antitrust Division in holding criminals accountable for bid rigging and fraudulent practices at public real estate foreclosure auctions,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office.  “Anticompetitive practices disrupt a fair marketplace and the FBI will investigate these types of crimes.”

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.  The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than $1 million.  A count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine.  The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud.

Today’s charges are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa, and Alameda counties, Calif.  These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Office.  Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.html or call the FBI tip line at 415-553-7400.

Today’s charges were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.  Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,900 mortgage fraud defendants.

JUSTICE REQUIRES DIVESTITURE FROM GANNETT CO. INC. IN ORDER TO ACQUIRE BELO CORP.

FROM:  U.S. JUSTICE DEPARTMENT 
Divestiture Will Preserve Broadcast Television Competition in St. Louis

WASHINGTON — The Department of Justice announced today that it will require Gannett Co. Inc., Belo Corp. and Sander Media LLC to divest their interests in KMOV–TV, a CBS affiliate in St. Louis, in order to proceed with Gannett’s acquisition of Belo, and Sander’s related acquisition of six Belo television stations that Gannett cannot hold under Federal Communications Commission (FCC) rules.  The department said that, without the required divestiture, Gannett would have gained a dominant position in broadcast television spot advertising in the St. Louis area, resulting in higher prices advertisers.

In addition to acquiring the six stations from Belo, Sander will enter into several agreements with Gannett in order to both finance purchasing the stations and facilitate operating the stations.  KMOV-TV is one of the six stations Sander would acquire from Belo and would be subject to agreements between Sander and Gannett.  These agreements, however, do not include any joint negotiation of retransmission rights in St. Louis.  The Gannett-Belo acquisition is valued at approximately $2.2 billion.

The department’s Antitrust Division filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to block the proposed acquisition and related agreements between Gannett and Sander, including an option for Gannett to assign or acquire the Belo stations sold to Sander, a financing guarantee and a long-term shared services agreement.  At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit.

“Gannett’s KSDK–TV and Belo’s KMOV–TV compete head-to-head in the sale of broadcast television spot advertising in the St. Louis area, and this rivalry constrains advertising rates,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “The full divestiture required by the department will ensure that KMOV-TV will remain a vigorous competitor in St. Louis.”

The department’s complaint alleges that the proposed acquisition would lessen competition in broadcast television spot advertising in the St. Louis Designated Market Area (DMA).  Even though the two stations would maintain separate sales forces, the various agreements between Gannett and Sander, KMOV–TV’s new owner, would align the incentives of the two stations.  To remedy this harm, the proposed settlement requires Gannett, Belo and Sander to divest all assets primarily used in the operation of KMOV–TV to an independent purchaser to be approved by the United States.  That purchaser will not be permitted to have any agreements with Gannett concerning KMOV-TV that could limit competition with KSDK-TV, including options to acquire or assign, financing agreements and shared services or joint sales agreements.

Gannett, a Delaware corporation with headquarters in McLean, Va., owns and operates 23 broadcast television stations nationwide, 12 of which are in the top 25 markets, as well as numerous newspapers.  Gannett’s KSDK–TV is the NBC affiliate in St. Louis.

Belo, a Delaware corporation with headquarters in Dallas, owns and operates 20 broadcast television stations nationwide, nine of which are in the top 25 markets.  Belo’s KMOV–TV is the CBS affiliate in St. Louis.

Sander, a Delaware limited liability company with headquarters in Scottsdale, Ariz., has no current business activity other than preparing to acquire six Belo stations, including KMOV–TV in St. Louis, as part of the transactions between Gannett, Belo and Sander.

As required by the Tunney Act, the proposed settlement, along with a competitive impact statement, will be published in the Federal Register.  Any person may submit written comments concerning the proposed settlement during a 60‑day comment period to Scott A. Scheele, Chief, Telecommunications and Media Enforcement Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 7000, Washington, D.C. 20530.  At the conclusion of the 60‑day comment period, the U.S. District Court for the District of Columbia may approve the proposed settlement upon finding that it is in the public interest.

GRAND JURY RETURNS INDICTMENT AGAINST 6 INVESTORS FOR ROLES IN TAX LIEN SALE BID RIGGING

FROM:  U.S. JUSTICE DEPARTMENT 
Investigation Has Yielded 20 Charges to Date

WASHINGTON — A federal grand jury in Newark, N.J., returned an indictment against six investors for their roles in a conspiracy to rig bids at auctions conducted by New Jersey municipalities for the sale of tax liens, the Department of Justice announced.

The indictment, filed today in U.S. District Court for the District of New Jersey in Newark, charges four individuals, Joseph Wolfson, Gregg Gehring, James Jeffers Jr. and Robert Jeffrey, and two entities, Betty Simon Trustee LLC and Richard Simon Trustee, with participating in a conspiracy to rig bids at tax lien auctions in New Jersey.  According to the indictment, from at least as early as 1998 and continuing until as late as February 2009, the investors participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders which liens each would bid on.  The indictment alleges that the investors proceeded to submit bids in accordance with the agreements and purchased tax liens at collusive and non-competitive interest rates.

Joseph Wolfson, of Margate, N.J., was a part-owner of two entities that invested in municipal tax liens, Betty Simon Trustee and Richard Simon Trustee, both of Northfield, N.J.  Gregg Gehring, of Newton, N.J., was employed by a major tax lien investment company as a vice president.  James Jeffers Jr., of Burlington, N.J., was a bidder for Crusader Servicing Corp., which pleaded guilty to its role in the conspiracy in September 2012, and also a bidder for Crusader’s successor corporation. Robert Jeffrey, of Bradenton, Fla., was a bidder for both Crusader and its successor corporation.

“The individuals and entities charged today demonstrated a blatant disregard for the competitive process by allocating the purchase of certain municipal tax liens by, from time to time, flipping a coin, drawing numbers out of a hat or drawing from a deck of cards,” said Leslie C. Overton, Deputy Assistant Attorney General for the Antitrust Division.  “The Antitrust Division remains committed to prosecuting those who thwart the competitive bidding process.”

The department said that the primary purpose of the conspiracy was to suppress and restrain competition in order to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates.  When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes.  If the taxes remain unpaid after a waiting period, the lien may be sold at auction.  State law requires that investors bid on the interest rate delinquent property owners will pay upon redemption.  By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent.  If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.  Since the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate.  Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition, the department said.

The indictment alleges, among other things, that from at least as early as 1998 and continuing until as late as February 2009, prior to the commencement of certain tax lien auctions in New Jersey, the investors and their co-conspirators agreed not to compete for the purchase of certain municipal tax liens.

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.  The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the $1 million statutory maximum.

Including today’s charges, 20 individuals and entities have been charged as part of an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions in New Jersey.  To date, 11 individuals – Isadore H. May, Richard J. Pisciotta Jr., William A. Collins, Robert W. Stein, David M. Farber, Robert E. Rothman, Stephen E. Hruby, David Butler, Norman T. Remick, Robert U. Del Vecchio Sr., and Michael Mastellone – and three companies, DSBD LLC, Crusader Servicing Corp., and Mercer S.M.E. Inc., have pleaded guilty aspart of this investigation.

Today’s charge is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants.  For more information on the task force, visit www.stopfraud.gov.

This ongoing investigation is being conducted by the Antitrust Division’s New York Field Office and the FBI’s Atlantic City, N.J., office.

ICAP BROKERS FACE FELONY CHARGES FOR ALLEGED LONG-RUNNING MANIPULATION OF LIBOR INTEREST RATES

FROM:  U.S. JUSTICE DEPARTMENT 

WASHINGTON — Two former derivatives brokers and a former cash broker employed by London-based brokerage firm ICAP were charged as part of the ongoing criminal investigation into the manipulation of the London Interbank Offered Rate (LIBOR), the Justice Department announced today.

Darrell Read, who resides in New Zealand, and Daniel Wilkinson and Colin Goodman, both of England, were charged with conspiracy to commit wire fraud and two counts of wire fraud in a criminal complaint unsealed in Manhattan federal court earlier today. They each face a maximum penalty of 30 years in prison for each count upon conviction.

“By allegedly participating in a scheme to manipulate benchmark interest rates for financial gain, these defendants undermined the integrity of the global markets,” said Attorney General Eric Holder. “They were supposed to be honest brokers, but instead, they put their own financial interests ahead of that larger responsibility.  And as a result, transactions and financial products around the world were compromised, because they were tied to a rate that was distorted due to the brokers’ dishonesty.  These charges underscore the Justice Department’s determination to hold accountable all those whose conduct threatens the integrity of our financial markets.”

“These three men are accused of repeatedly and deliberately spreading false information to banks and investors around the world in order to fraudulently move the market and help their client fleece his counterparties,” said Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.  “Our criminal investigation of the manipulation of LIBOR by some of the largest banks in the world has led us from New York to London, to Tokyo, and other financial hubs around the globe.  These important charges are just the latest law-enforcement action in the Criminal Division and Antitrust Division’s global LIBOR investigation, and reflect the Department’s continued dedication to detecting, and prosecuting, financial fraudsters who affect U.S. markets, whether they work at a bank, or a brokerage, and whether they carry out their fraud from a desk in the United States, or abroad.”
“The complaint unsealed today charges Colin Goodman, Daniel Wilkinson and Darrell Read for conspiring to manipulate benchmark interest rates that determined the profitability of their client’s trades,” said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program.  “In exchange for bigger bonus checks, the three defendants undermined financial markets around the world by compromising the integrity of globally used interest rate benchmarks.  The Department continues to demonstrate its commitment to protecting the interest of American citizens in free and fair financial markets.”

“Corporate and securities fraud involving the manipulation of these rates causes a worldwide impact on trading positions and erodes the integrity of the market and confidence in Wall Street,” said Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office.  “Unraveling such complex financial schemes is difficult and time consuming.  Today’s charges are the result of the hard work of the FBI special agents and forensic accountants who dedicated significant time and resources to investigating this case.”

According to the criminal complaint, LIBOR is an average interest rate, calculated based on submissions from leading banks around the world, reflecting the rates those banks believe they would be charged if borrowing from other banks.  LIBOR is published by the British Bankers’ Association (BBA), a trade association based in London.  At the time relevant to the criminal complaint, LIBOR was calculated for 10 currencies at 15 borrowing periods, known as maturities, ranging from overnight to one year.  The published LIBOR “fix” for a given currency at a specific maturity is the result of a calculation based upon submissions from a panel of banks for that currency (the contributor panel) selected by the BBA.

LIBOR serves as the primary benchmark for short-term interest rates globally and is used as a reference rate for many interest rate contracts, mortgages, credit cards, student loans and other consumer lending products.  The Bank of International Settlements estimated that as of the second half of 2009, outstanding interest rate contracts were estimated at approximately $450 trillion.

According to allegations in the criminal complaint filed in this case, between July 2006 and September 2010, Wilkinson was a desk director employed in the London office of ICAP, where he supervised a group of derivatives brokers – including Read – specializing in Yen-based financial products.  Generally, the desk’s clients were derivatives traders at large financial institutions, and the transactions brokered by Wilkinson, Read and others on the desk essentially consisted of bets between traders on the direction in which Yen LIBOR would move.  Between July 2006 and September 2009, the desk’s largest client was a senior trader at UBS (UBS Trader) in Tokyo, to whom Read spoke almost daily.  Because of the large size of the client’s trading positions, even slight moves of a fraction of a percent in Yen LIBOR could generate large profits.  For example, UBS Trader once told Read that a 0.01 percent – or one basis point – movement in the final Yen LIBOR fixing on a specific date could result in $3 million profit for his trading positions.  A significant part of both Read’s and Wilkinson’s compensation was tied to the brokerage fees generated by UBS Trader and paid to ICAP.

Goodman was a cash broker at ICAP’s London office during the relevant time period.  In addition to brokering cash transactions, Goodman distributed a daily email to individuals outside of ICAP, including derivatives traders at several large banks as well as those responsible for providing the BBA with LIBOR submissions at certain banks.  Goodman’s email contained what was termed his “SUGGESTED LIBORS,” purported predictions of where Yen LIBOR ultimately would fix each day across eight specified borrowing periods.  Read and Wilkinson, along with Goodman himself, often referred to Goodman as “lord libor.”

The complaint alleges that Read, Wilkinson and Goodman, together with UBS Trader, executed a sustained and systematic scheme to move Yen LIBOR in a direction favorable to UBS Trader’s trading positions.

According to the criminal complaint, the primary strategy employed by Read, Wilkinson and Goodman to execute the scheme was to use Goodman’s “SUGGESTED LIBORS” email to disseminate misinformation to Yen LIBOR panel banks in hopes that the banks would rely on the misinformation when making their own respective Yen LIBOR submissions to the BBA for inclusion in the published fix.  Rather than providing good faith predictions as to where Yen LIBOR would fix, Goodman instead often used his daily email to set forth predictions which benefitted UBS Trader’s trading positions.

Beginning in or about June 2007, Goodman was paid a bonus through the desk Wilkinson supervised, allegedly intended, at least in part, to reward Goodman for his role in their effort to influence and manipulate the published Yen LIBOR fix.

As a second strategy, Read and Wilkinson allegedly further agreed to contact interest rate derivatives traders and submitters employed at Yen LIBOR panel banks in an effort to cause them to make false and misleading submissions to the BBA at UBS Trader’s behest.

As alleged in the charging document, Read, Wilkinson, Goodman, UBS Trader, and other co-conspirators often executed their scheme through electronic chats and email exchanges.  For example, on June 28, 2007, in an email message, Read told Wilkinson: “DAN THIS IS GETTING SERIOUS [UBS TRADER] IS NOT HAPPY WITH THE WAY THINGS ARE PROGRESSING . . . CAN YOU PLEASE GET HOLD OF COLIN AND GET HIM TO SEND OUT 6 MOS LIBOR AT 0.865 AND TO GET HIS BANKS SETTING IT HIGH. THIS IS VERY IMPORTANT BECAUSE [UBS TRADER] IS QUESTIONING MY (AND OUR) WORTH.”

The complaint alleges that the defendants were aware of the effects that Goodman’s false and fraudulent “SUGGESTED LIBORS” had on submissions by Yen LIBOR panel banks.  For example, on Nov. 20, 2008, Read asked UBS Trader, “you have a really big fix tonight I believe? if Colin sends out 6m at a more realistic level than 1.10 [%] i reckon [the two panel banks] will parrot him, it might mean 6m coming down a bit.” On the following day, Nov. 21, 2008, Goodman moved his suggestion for 6-month Yen LIBOR down by nine basis points.  The two other banks mirrored Goodman’s suggestion, moving their 6-month Yen LIBOR submissions down by nine basis points.

According to allegations in the complaint, Read counseled UBS Trader how to most effectively manipulate Yen LIBOR.  For example, UBS Trader told Read in a July 22, 2009, electronic chat that “11th aug is the big date...i still have lots of 6m fixings till the 10th.”   Read responded to UBS Trader, “if you drop [UBS’s] 6m dramatically on the 11th mate, it will look v fishy... .  I’d be v careful how you play it, there might be cause for a drop as you cross into a new month but a couple of weeks in might get people questioning you.”  UBS Trader replied, “don’t worry will stagger the drops...ie 5bp then 5bp,” and Read told UBS Trader, “ok mate, don’t want you getting into [expletive].”  UBS Trader again assured Read that UBS and two additional panel banks would stagger their drops in coordination, and Read concluded, “great the plan is hatched and sounds sensible.”

A criminal complaint is a formal accusation of criminal conduct, not evidence.  A defendant is presumed innocent unless and until convicted.

The investigation is being conducted by special agents, forensic accountants, and intelligence analysts of the FBI’s Washington Field Office.  The prosecution is being handled by Deputy Chief William Stellmach and Trial Attorney Sandra L. Moser of the Criminal Division’s Fraud Section and Trial Attorneys Eric Schleef and Kristina Srica of the Antitrust Division.  Trial Attorneys Alexander Berlin and Thomas B.W. Hall, Law Clerk Andrew Tyler, and Paralegal Specialist Kevin Sitarski of the Criminal Division’s Fraud Section, along with Assistant Chief Elizabeth Prewitt and Trial Attorney Richard Powers of the Antitrust Division, and former Trial Attorney Luke Marsh have also provided valuable assistance.  The Criminal Division’s Office of International Affairs has provided assistance in this matter as well.

The broader investigation relating to LIBOR and other benchmark rates has required, and has greatly benefited from, a diligent and wide-ranging cooperative effort among various enforcement agencies both in the United States and abroad.  The Justice Department acknowledges and expresses its deep appreciation for this assistance.  In particular, the Commodity Futures Trading Commission’s Division of Enforcement referred this matter to the Department and, along with the U.K. Financial Conduct Authority, has played a major role in the investigation.  The Securities and Exchange Commission has also provided valuable assistance for which the Department is grateful.  The Department also expresses its appreciation to the United Kingdom’s Serious Fraud Office for its assistance and ongoing cooperation.  Various agencies and enforcement authorities from other nations are also participating in different aspects of the broader investigation, and the Department is grateful for their cooperation and assistance as well.

Finally, the Department acknowledges ICAP’s continuing cooperation in the Department’s ongoing investigation.

This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force.  President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.

DOJ REMARKS ON LAWSUIT CHALLENGING US AIRWAYS PROPOSED MERGER WITH AMERICAN AIRLINES

FROM:  U.S. DEPARTMENT OF JUSTICE 

REMARKS AS PREPARED FOR DELIVERY BY ASSISTANT ATTORNEY GENERAL BILL BAER AT THE CONFERENCE CALL REGARDING THE JUSTICE DEPARTMENT’S LAWSUIT CHALLENGING US AIRWAYS’ PROPOSED MERGER 
WITH AMERICAN AIRLINES WASHINGTON, D.C.

As you are aware, this morning, the Department of Justice, six state attorneys general plus the District of Columbia, filed a lawsuit in U.S. District Court in Washington, D.C., to block the proposed merger of American Airlines and US Airways.

Those attorneys general participating in the lawsuit are: Texas, from American’s home state; Arizona, from US Airways’ home state; Pennsylvania, home to one of US Airways’ largest hubs; Florida; Tennessee; and Virginia and Washington, D.C. – where both airlines operate. We filed the lawsuit today because we determined that the merger – which would create the world’s largest airline and leave just three legacy carriers remaining in the U.S. – would substantially lessen competition for commercial air travel throughout the United States. Importantly, neither airline needs this merger to succeed. We simply cannot approve a merger that would result in U.S. consumers paying higher fares, higher fees and receiving less service. Americans spent more than $70 billion flying around the country last year. Increases in the price of airline tickets, checked bags or flight change fees resulting from this merger would result in hundreds of millions of dollars of harm to American consumers.

If this merger were to go forward, consumers will lose the benefit of head-to-head
competition between US Airways and American on thousands of airline routes across the country – in cities big and small. They will pay more for less service because the remaining three legacy carriers – United, Delta and the new American – will have very little incentive to compete on price. Indeed, as our complaint shows, the management of US Airways, which will run the new airline, sees consolidation as a vehicle to reduce competition between the airlines and raise fees and fares. Here is one powerful example. Today, US Airways competes vigorously by offering discounts of up to 40 percent if a consumer takes its one stop instead of another airline’s nonstop route. This means that if you need to catch a flight at the last minute for any reason –

celebration or emergency – you will find it is 40 percent cheaper to take US Airways’ connecting service than the non-stop fare offered by American, Delta and United. The big three airlines – American, Delta and United – don’t like this aggressive price cutting by US Airways. For example, for round-trip flights leaving on August 13 and returning on August 14 from Miami to Cincinnati, you can see the benefits of US Airways’ discount program. American is the only airline on this route to offer nonstop service, charging $740. Delta and United don’t have offer competition since they both charge more for their connecting service than American charges for nonstop service. In this instance, a consumer who bought a US Airways one-stop ticket would save $269 compared to American’s nonstop service. You can see the benefits of competition between US Airways and American on hundreds of other flights. For example, on round-trip flights leaving on August 13 and returning on August 14 from New York to Houston, US Airways’ one stop fare is about $870 cheaper than the other legacy carriers’ nonstop flights, and even beats JetBlue and AirTran by more than $300. Although Southwest doesn’t participate in the standard online travel sites, a cross-check against the Southwest website for the same dates demonstrates that US Airways also beats Southwest’s $887 nonstop fare by more than $300.  If this merger happens, US Airways’ aggressive discounting – called Advantage Fares –

will disappear. As a bigger airline with many more hubs, there will be no incentive for the merged company to offer any of the discounts I just described, resulting in higher prices, less choice and fewer services for the more than two million travelers who today benefit from the program. How do we know it? We know this from the internal analyses and the planning documents put together by American in considering the likely effects of this merger. The elimination of the Advantage Fares program is just one example. If the merger goes forward, consumers can also expect to pay higher fees for things like checked bags, flight changes, more legroom and frequent flyer benefits. Today, American does not charge if you redeem frequent flyer miles. US Airways charges an average of $40. If the merger is allowed, US Airways is planning to take this frequent flyer benefit away and make American’s frequent flyers pay redemption fees. By eliminating this competitive distinction between American and US Airways, the new airline generates an additional $120 million in revenue. But you pay the price. Consumers will also pay more on routes where US Airways and American today offer competing nonstop service. We know from prior mergers that elimination of head-to-head competition on nonstop routes results in substantial price increases for consumers.

Expect similar fare increases if this merger is allowed. For example, US Airways and American offer competing nonstop service between Charlotte, North Carolina and Dallas-Ft. Worth. Consumers will likely pay more than $3 million more per year for travel on that route alone.  You don’t need to go far from this very city to see another worrisome effect from the proposed merger. Across the Potomac River, the merged airline would dominate Washington Reagan National Airport, by controlling 69 percent of the take-off and landing slots at DCA. And, it would have a monopoly on 63 percent of the nonstop routes out of Reagan.

National. By allowing one airline to control that many slots, the merger will prevent other airlines, including low-fare carriers like JetBlue and Southwest from competing at Reagan National.  It would face little or NO competition.  Indeed, this would get worse. Recently JetBlue started service from Reagan National to Boston, competing with US Airways, and fares dropped by more than 30 percent saving consumers about $50 million a year. Similarly, consumers saved about $14 million in lower fares between Tampa and Reagan National after JetBlue started competing against US Airways. But – and this is important – half of JetBlue’s slots at Reagan National are leased from American. If this deal is allowed, new American can terminate that lease and JetBlue’s ability to compete will be severely diminished. Consumers will pay the price.

Blocking the merger will preserve current competition and service at Reagan National airport, including flights that US Airways currently offers to large and small communities around the country. The complaint also describes other ways in which consumers are at risk if we allow this deal to further reduce the number of competitors in this industry.

You do not need to take my word for this. High level executives at US Airways have talked about how consolidation allows for capacity reductions that “enable” fare increases. One US Airways executive recently stated that this merger is “the last major piece needed to fully rationalize the industry.” In the airline business the word “rationalize” is a code word for less competition, higher costs for consumers and fewer choices.

Both US Airways and American have publicly stated that they can do well without this merger. American has used the bankruptcy process to lower its costs and revitalize its fleet. It has repeatedly said that it can thrive as a standalone competitor. Just this January, American’s management presented plans that would increase the destinations and frequency of its flights in the U.S., allowing it to compete independently and vigorously with plans to grow.

And, executives of US Airways agree about American’s ability to make it on its own. They have noted that American will be stronger post-bankruptcy and that “[t]here is NO question” about American’s ability “to survive on a standalone basis.”

 US Airways also has said that US Airways itself does not need the merger – that it can thrive as a standalone firm.

The lawsuit we filed today to block this deal gives consumers the best possible chance for continued competition in an important industry that they have come to rely upon.
I want to thank the litigation team from the division’s Transportation, Energy and
Agriculture Section, led by Chief Bill Stallings and Assistant Chief Kathy O’Neill, as well as the Economic Analysis Group led by Bob Majure and Oliver Richard for their hard work on this.  And, I want to thank the attorneys general who have joined this lawsuit and are working with us to protect the consumers of their respective states.
And with that, I’m happy to take any questions you have.

BARRY DILLER TO PAY $480,000 CIVIL PENALTY FOR VIOLATING ANTITRUST PREMERGER NOTIFICATION REQUIREMENTS

FROM: U.S. DEPARTMENT OF JUSTICE

Violations Occurred When Diller Acquired Voting Securities of The Coca Cola Company

WASHINGTON — Corporate investor Barry Diller will pay a $480,000 civil penalty to settle charges that he violated premerger reporting and waiting requirements when he acquired voting securities of The Coca Cola Company, the Department of Justice announced today.


The Justice Department’s Antitrust Division, at the request of the Federal Trade Commission (FTC), filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., against Diller for violating the notification requirements of the Hart-Scott-Rodino (HSR) Act of 1976. At the same time, the department filed a proposed settlement that, if approved by the court, will settle the charges.

The HSR Act of 1976, an amendment to the Clayton Act, imposes notification and waiting period requirements on individuals and companies over a certain size before they consummate acquisitions resulting in holding stock or assets above a certain value, which at the time of Diller’s violations ranged from $63.4 million to $68.2 million and is currently $70.9 million.

Federal courts can assess civil penalties for premerger notification violations under the HSR Act in lawsuits brought by the Department of Justice. For a party in violation of the HSR Act the maximum civil penalty is $16,000 a day.

INVESTOR PLEADS GUITLY FOR ROLE IN RIGGING BIDS AT MUNICIPAL TAX LIEN AUCTIONS

FROM: U.S. DEPARTMENT OF JUSTICE
NEW JERSEY INVESTOR PLEADS GUILTY FOR ROLE IN BID-RIGGING
SCHEME AT MUNICIPAL TAX LIEN AUCTIONS

Investigation Has Yielded 12 Guilty Pleas


WASHINGTON — A financial investor who purchased municipal tax liens pleaded guilty today for his role in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities in New Jersey, the Department of Justice announced.

A felony charge was filed today in U.S. District Court for the District of New Jersey in Newark, against Norman T. Remick, of Barnegat, N.J. According to the charge, from in or about the beginning of 2007 until approximately February 2009, Remick participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders which liens each would bid on. The department said that Remick proceeded to submit bids in accordance with the agreements and purchased tax liens at collusive and non-competitive interest rates.

"The conspirators illegally met and engaged in anticompetitive discussions to allocate bids amongst themselves at tax lien auctions in New Jersey, depriving distressed homeowners of competitive interest rates at a time when they most needed them," said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division's criminal enforcement program. "Prosecuting these types of bid-rigging schemes remains a top priority for the division."

The department said that the primary purpose of the conspiracy was to suppress and restrain competition in order to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent property owners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.

According to the court documents, Remick was involved in a conspiracy with others not to bid against one another at municipal tax lien auctions in New Jersey. Since the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens that earned a higher interest rate. Property owners were, therefore, made to pay higher interest on their tax debts than they would have paid had their liens been purchased through open and honest competition, the department said.

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than the $1 million statutory maximum.

Today's plea is the 12th guilty plea resulting from an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions. Eight individuals – Isadore H. May, Richard J. Pisciotta Jr., William A. Collins, Robert W. Stein, David M. Farber, Robert E. Rothman, Stephen E. Hruby and David Butler – and three companies – DSBD LLC, Crusader Servicing Corp. and Mercer S.M.E. Inc. – have previously pleaded guilty as part of this investigation.

Today's charge was brought in connection with the President's Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys' offices and state and local partners, it's the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants.