Suspect in Elaborate Northern California Auction Scam Pleads Guilty

A real estate investor accused of conducting a public foreclosure scam that misled homeowners, lenders and real estate investors pled guilty, according to the U.S. Department of Justice.

Court documents allege that, from April 2009 to March 2010, Danli Liu of Fremont worked in conjunction with investors to keep auction prices as low as possible by agreeing not to outbid each other. This lack of competitive bidding caused the foreclosed homes to sell at extremely low prices.

Investigators also claim that Liu fraudulently acquirement property titles via the mail so that she could send and receive payments.

This widespread scam has led to 25 plea agreements after the continuing investigation by the Department of Justice. In addition to Alameda, foreclosure scams are being investigated in the California counties of San Francisco, San Mateo and Contra Costa.

This isn’t even the most exotic scheme we’ve written about. What makes some real estate industry people think they can get away with this?