Six Washington area real estate firms will go on trial Monday in federal court in Baltimore on charges of conspiring to raise commission rates on Montgomery County properties. Presidents of three of the companies were also indicted in the Justice Department's first criminal case against the real estate industry.
The defendants are accused of entering into an agreement, in violation of antitrust laws, to raise residential sale commissions from 6 to 7 per cent. The meeting allegedly took place Sept. 5, 1974, at the Congressional Country Club in upper Bethesda. Should they be convicted, the companies could be fined up to $100,000 and sentenced to up to three years in prison.
The Justice Department charges that the effects of the alleged consiracy have been to raise and maintain commission rates at artificially high levels, restrain price competion among brokers and deprive sellers of houses of the benefits of free and open competition in the sale of real estate services.
Those indicted are:
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.
Named as unindicted coconspirators were William M. Ellis, vice president of Shannon & Luchs; Robert L. Gruen, president of Robert L. Gruen, Inc.; and Allyn J. Rickman, vice president of Schick & Pepe. These men, who also allegedly attended the meeting, are expected to be called as witnesses by the prosecution.
The judge presiding over the jury trial will be C. Stanley Blair, who presided over the recent SIGMA case in which five cut-rate gasoline firms and their trade association were convicted of conspiring to fix prices.
This realty trial, expected to last three to six weeks, will be watched closely by the defendants in a similar criminal case the Justice Department has brought against a group of Syracuse, N.Y., realtors.
Acting under the "parens patriae" law, the state will act as "parent" in trying to recover for its residents nearly $700,000 in real estate commissions paid by Montgomery County home sellers. The amount represents the difference between 6 and 7 per cent commission.
The state will also ask treble damages of about $2 million. The amount is calculated on a percentage of the companies' gross between September 1974, when the "parens patriae" law went into effect, and April, 1977, when the suit was initiated.