A Cornell alumnus has been indicted by the U.S. Department of Justice for allegedly rigging online property foreclosure auctions.
The U.S. DOJ indicted real estate investor Stuart Hankin ’07 for restraining fair competition through bid rigging in Florida’s online property foreclosure auctions, according to a press release on Friday.
The indictment, filed in Southern Florida’s U.S. District Court, alleged that Hankin colluded with two other investors between January 2012 and June 2015 to win foreclosed properties at suppressed prices. The details of the supposed collusion remain unclear.
Hankin, who graduated from Cornell with a degree in operations research and information engineering, told The Sun “I can say that I am innocent and am going to fight,” but did not elaborate on the case itself due to his lawyer’s advice.
On his client’s behalf, Hankin’s attorney David Oscar Markus of Markus/Moss, PLLC wrote “Stu is innocent,” explaining that because the auctions were online, his client could not have rigged the market.
“[Hankin] bought properties through an online auction like eBay in which anyone in the country could bid,” he said. “No one controlled the market, nor could they. These properties were sold at fair prices.”
However, the indictment claims that among the three investors, there was a “continuing agreement, understanding and concert of action.” The indictment accuses the defendants of conspiring in meetings, telephone conversations, emails and text messages.
Hankin founded Prodigy Capital Inc. in Palm Beach Gardens in 2010 with accused co-conspirator Christopher Graeve. Hankin and Graeve engineered a real estate investment fund “specializing in the fix-and-flip model,” according to the firm’s marketing material. The third accused investor, Avi Stern, was associated with Florida’s Best Realty Services in Boca Raton, but no longer works there.
“I am proud of the company that I helped to build, which has done good and ethical work,” Hankin told The Sun.
However, Friday’s indictment questions Prodigy Capital promise of “a rapid turnover rate with an exceptional return on investment, exceeding industry performance standards,” according to the company’s website.
Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division wrote in the DOJ release that the division will prosecute “regardless of whether their conduct is carried out in person, or in texts, online chats or through other electronic means.”
Delrahim also promised in the DOJ release that he will prosecute all those responsible.
Markus, who has prevailed in at least three similar DOJ cases in his district, said that “despite the inflammatory language in the prosecution’s press release … this case has been brought to bolster the Antitrust Division’s statistics.”
“It is not about justice,” Markus said.
The accusations hold Hankin in violation of the Sherman Antitrust Act — the 1890 legislation barring trusts and preserving commercial competition — because he agreed to lower bid rates with his competitors in order to allocate properties among group members.