## Facts

- Federal prosecutors charged Joseph Giraudo and Kevin Cullinane with participating in a long-running conspiracy to rig bids at public foreclosure auctions in San Mateo County, California.
- Regular auction participants allegedly agreed that certain members would refrain from bidding at the public auction so a designated member could acquire properties at artificially low prices.
- After the public auction, members conducted private follow-on transactions among themselves to allocate properties and share profits.
- The government estimated the scheme generated more than $36 million in profits.
- Giraudo and Cullinane pleaded guilty to violating § 1 of the Sherman Act (15 U.S.C. § 1).
- At sentencing, the parties disputed the proper calculation of offense levels under the U.S. Sentencing Guidelines, including U.S.S.G. § 2R1.1 and Chapter Three role adjustments.

## Issues

1. Whether the defendants’ conduct qualified as a “non-competitive bidding agreement” warranting the §2R1.1(b)(1) bid-rigging enhancement.
2. How to calculate “volume of commerce” under §2R1.1(b)(2), and whether the magnitude of commerce affected supported a +4 increase.
3. Whether aggravating-role adjustments under §3B1.1 applied to Giraudo (leader/organizer) and Cullinane (manager/supervisor).
4. Whether, after acceptance-of-responsibility reductions, the total offense levels should align with the government’s proposed levels rather than the substantially lower levels urged by defendants.

## Decision

- The court rejected the defendants’ request to omit the principal enhancements and accepted the government’s core Guidelines approach.
- The court applied the §2R1.1(b)(1) enhancement, treating the scheme as bid rigging.
- The court applied a §2R1.1(b)(2) volume-of-commerce increase based on the substantial commerce affected.
- The court applied aggravating-role adjustments under §3B1.1, finding Giraudo was a leader/organizer and Cullinane a manager/supervisor.
- The court also applied a reduction for acceptance of responsibility under §3E1.1 based on the guilty pleas.
- The resulting total offense levels were consistent with offense levels in the high teens (approximately 18 for Giraudo and 17 for Cullinane).

## Legal Principles

- U.S.S.G. §2R1.1 applies to Sherman Act conspiracies involving bid rigging, price fixing, or market allocation among competitors.
- A coordinated agreement to suppress bidding at public auctions constitutes a “non-competitive bidding agreement” for purposes of §2R1.1(b)(1).
- “Volume of commerce” under §2R1.1(b)(2) is driven by the scale of commerce affected by the antitrust violation; large affected commerce supports higher increases.
- Aggravating-role enhancements under §3B1.1 apply where a defendant organizes/leads extensive criminal activity or manages/supervises participants or operations.
- A defendant who pleads guilty and clearly accepts responsibility may receive a reduction under §3E1.1 even when major offense-level increases apply.

## Conclusion

The court treated the foreclosure-auction conspiracy as bid rigging under §2R1.1, applied a substantial volume-of-commerce increase and aggravating-role adjustments, and then credited acceptance of responsibility, yielding total offense levels in the high teens for both defendants.


United States v. Giraudo, No. 3:14-cr-00376-CRB, 2018 WL 2197703 (N.D. Cal. May 14, 2018)