The Antitrust Division of the Department of Justice announced it is rewarding a whistleblower $1 million for providing information that exposed a $16 million car auction fraud scheme.
In November 2020, EBlock, an online auction platform for used vehicles, acquired another online auction platform, referred to as Company A, for used vehicles but did not take immediate action after the acquisition to end the bid-rigging conspiracy and fraud at the company, the DOJ said.
From November 2020 to February 2022, individuals at Company A conspired with individuals at another company to suppress and eliminate competition for used vehicles sold on Company A's online auction platform in violation of the Sherman Antitrust Act, the DOJ said.
EBlock also did not take immediate action to end "shill bidding" on Company A's platform, resulting in the placement of fake bids intended to artificially increase the sales prices for used vehicles, the DOJ said.
As described in the court documents, legacy employees at Company A conspired with employees at Company B to share bidding information and agree on the maximum amount Company A or Company B would bid on certain vehicles, the DOJ said.
Company A employees provided special access and user permissions to Company B that enabled it to view confidential bidding information of other buyers and sellers on its auction site, the DOJ said.
The co-conspirators maintained a shared inventory of vehicles purchased pursuant to the bid-rigging scheme, and they coordinated to relist those vehicles and place shill bids with the intention of artificially increasing the prices paid by legitimate buyers, the DOJ said.
They also misrepresented the numbers and identities of these fake bidders during the online auctions by commissioning the development of software that would automatically place shill bids under the names of actual auto dealerships without those dealerships' consent, the DOJ said.
The co-conspirators pooled and split the profits from the scheme.
During the course of these actions, various documents in support of the scheme were sent via U.S. mail, the DOJ said.
EBlock has agreed to pay a $3.28 million fine and is also required to undertake remedial measures, including implementing an appropriate compliance program and cooperating with the DOJ's ongoing criminal investigation and any resulting prosecutions.
Whistleblowers who voluntarily report original information about antitrust and related offenses that result in criminal fines or other recoveries of at least $1 million may be eligible to receive a whistleblower reward.
Whistleblower awards can range from 15% to 30% of the money collected.
Sam Barron ✉
Sam Barron has almost two decades of experience covering a wide range of topics including politics, crime and business.
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