Google subsidiary accused of illegal practice

First reported in the by Richard Morgan, Google subsidiary, is accused of artificially inflating the price of one of its online offerings through the use of a so-called shill bidder.

The suit, which is headed to trial next year, is making news just as the sector is poised to explode. Google invested $50 million in in march to mark the arrival of online property auctions and with a promise to "level the playing field for smaller investors."'s aim of upending the real estate business isn't winning it any friends. Property agents have complained for years about the company's little-understood practice of bidding on behalf of a seller - without revealing the identity of the bidder - to motivate buyers to meet the minimum price needed for a sale to go through. doesn't consider this a shill bid, butGoogle-subsidiary-accused-of-illegal-action

it's such a hot button issue in California, that the state recently passed a law requiring property auctioneers to disclose bids they make on a seller's behalf starting  July 1, 2015.

In the case at hand, Village at Redlands Group(VRG) alleges, either used a shill or turned a bidder into one while auctioning off cottages in Redlands, about 65 miles east of LA, for $7.375 million. The suit, filed in California state court, contends VRG initial bid of $5.35 million should have been enough to secure the property. But the VRG suit charges that was in cahoots with the property's loan holder, former owner and real estate agent, "to unfairly inflate the price that would be paid by a qualified bidder."

RES, the loan holder, began foreclosure proceedings on Mountain View, the property's owner at the time in January 2011. After becoming the cottages post-foreclosure owner, RES directed Rialto Capital, a real estate agent, to list the property with, according to the suit.

VRG qualified as a bidder for the property in April 2012 after it submitted an initial deposit of $25,000 and proof of $6.67 million in readily available funds. The auction itself took place over the next few days, with a starting bid of $2.85 million and a reserve of $6.9 million. Only after winning the auction, according to the suit, did VRG learn it's opposing bidder was none other than Mountain View - the same entity that only a year earlier lost the property to foreclosure.

VRG alleges, Mountain View lacked the funds to qualify as a bidder and quotes an email its executive director sent to real estate agent Rialto Capital, midway through the auction.

" stated that we will not be able to bid if we cannot show the $6.9 [million] as liquid [cash] in an account now. Can we make this work, knowing we will fund in 30 days?"

The real estate agent responded to the query from Mountain View by e-mailing "Pls make sure these guys can bid." called the suit "wholly without merit" and in its motion for summary judgement dismissed it as "a legal shakedown."

A part or whole of this article was initially published by on December 25, 2014, by Richard Morgan. Citywide Housing Services is not affiliated, owned or influenced in the re-publishing of this article by View original article here,


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