Six Washington area real estate firms, including the presidents of three, were indicted yesterday on charges of conspiring to raise commission rates they charge for selling residential property in Montgomery County.
The federal indictment and a companion civil suit, which names the companies only, accuse the firms of entering into an agreement beginning about September, 1974, to raise the commissions they charged sellers of residential real estate in the county to 7 per cent of the sale price. The current commission rate charged in the Washington area generally is 6 per cent.
If convicted, the companies could be fined up to $1 million; the individuals could be fined up to $100, 000 and sentenced to up to three years in prison.
The indictment, filed in U.S. District Court in Baltimore, name as defendants:
Bogley, Inc., and its president, Robert W. Lebling.
Colquitt-Carruthers, Inc. and its president, John T. Carruthers, Jr.
Jack Foley Realty, Inc., and its president, John P. Foley, Jr.
Robert L. Gruen, Inc.
Schick & Pepe Realty Inc.
Shannon & Luchs Co.
Among them, the six companies handled more than $350 million in res idential property sales in Montgomery County between January 1974, and Ocbert 1975, according to court papers.
Although the Justice Department has brought a number of civil antitrust suits against area real estate brokers over the last eight years it had never before obtained a criminal indictment.
A spokesman for Colquitt-Carruthers said yesterday the company and its president deny any wrongdoing and intends to vigorously contest the charges. Spokesmen for all the other defendants either had no comment or were unavailable.
Real estate brokerage firms like the six named in the indictment are paid a commission or fee by sellers of property in return for finding buyers and negotiating and arranging the terms of the sales. When the property is sold, the seller gets the price of the house paid by the buyer, less the commission or fee.
The indictment and suit asset that the six companies conspired, along with "various corporations and individuals," to raise commission rates to 7 per cent on residential real estate in Montgomery County in violation of antitrust laws.
The other "corporations and individuals" are called coconspirators by the indictment and suit but were neither indicted nor identified.
The Justice Department charges that the effects of the alleged conspiracy have been to raise and maintain commission rates at artificially high levels, restrain price competition among brokers, and deprive sellers of houses of the benefits of free and open competition in the sale of real estate services.
The civil suit asks that the firms be enjointed from continuing the alleged commission fixing scheme and from engaging in any practice having a similar purpose or effect. It also asks that they be enjoined from discussing their proposed or actual commission rate policies with any competitors, except when necessary to carry out specific transactions.