AUCTION rigging is a form of illegal collusion in which property speculators manipulate the bidding process to their advantage.
Taking place most often at public foreclosure real estate auctions, it is a practice that is all too frequent here.
In some countries, it can incur jail penalties up to 10 years and fines as high as €1 million. The US Department of Justice claims that over the past three fiscal years, it has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants, almost a third of them involving real estate.
Spain’s courts have also been known to deal sternly with the problem; we can recall one famous bid rigging case in Valencia where 42 individuals received lengthy sentences. On appeal 27 were later acquitted, but two of the fraudsters got 10 years each.
But the last high profile case took place as long ago as 1995. Since then, the government has done little to curb it.
You can witness the fraudsters in action by going to more or less any busy auction where a desired property is due to come under the hammer.
Let’s take Marbella for example. Here, a selected group of subasteros – a term that describes a combination of speculator, opportunist, fraudster and liar – operate with alarming impunity.
These guys are familiar faces who turn up day in day out to hijack the process. They chase away legitimate bidders – occasionally with threats – demand money from serious contenders in exchange for their non-participation, or alternatively offer them money to refrain from bidding themselves, or escalate the bids to force out a newcomer.
The erstwhile boss of this Mafia-style syndicate was a bold (not to mention bald), overweight individual whose name we shall withhold. He had experience, money and contacts in the courts, but he now appears to have taken a step back. Perhaps his prominence was beginning to mirror his physique; perhaps he started to feel, quite sensibly, that it was time to retire. But his cohorts remain, as so do hundreds of others operating throughout Spanish courts.
There is a simple and obvious solution: ‘first price’ auctions in which the potential buyers place their bids in sealed envelopes and simultaneously hand them to the auctioneer. Sadly, our lawmakers have so far failed to bring this in, or to tackle any of the flaws that are glaringly obvious in the current system.