The business of how the South Fork’s real estate heavy hitters share information, and how the region’s multiple listing services work, has come under the scrutiny of the U.S. Department of Justice.
Earlier this month, interrogatory calls were made by Justice Department officials to several East End real estate-related businesses, though few were willing this week to go on the record and share details of the discussions. But a few insiders have pointed to George Simpson, owner of Suffolk Research Service of Hampton Bays, as providing the impetus for the probe.
In March 2009, Mr. Simpson and his wife, Jean, filed a lawsuit against 25 real estate companies and principals operating on the East End, and against Nick Khuri, the managing partner of OREX, the company that owns RealNet and Hamptons Real Estate Online. The lawsuit charged that OREX is an illegal and cost-prohibitive multiple listing service that induces anti-competitive practices, collusion, price-fixing and restraint of trade.
The Simpsons, whose business researches and sells real estate transaction data, withdrew the suit in August 2009 without explanation.
On Wednesday morning, John Nickles, a Southold-based broker and chairman of the multiple listing service for the Hamptons and North Fork Realtors Association (HANFRA), reported that he had been contacted by Justice Department officials on May 5. He said that he had a 30-minute “pleasant conversation” with Ann Marie Blalock from the anti-trust division, an attorney, another Justice Department lawyer, an economist and a paralegal. According to Mr. Nickles, the questions were generally about real estate practices on the South Fork and whether or not those practices involved “restraint of trade.”
A spokesperson from the Department of Justice declined to comment on the probe on Wednesday morning, stating that a press release would be issued if charges were filed during the course of an investigation. Most of the East End’s major real estate players—including the Corcoran Group, Prudential Douglas Elliman, Sotheby’s, Brown Harris Stevens, and Town and Country Real Estate, as well as the company that owns and operates RealNet Solutions and Hamptons Real Estate Online—were named as defendants in the Simpsons’ lawsuit, which claimed that they engaged in anti-trust practices. Most responded with motions to dismiss the case and argued that Mr. and Ms. Simpson’s claims were false.
Dawn Watson on May 19, 2010