Heard a VERY disturbing rumor - Denver

[Linda Weygant]

I was talking with my friend/mentor earlier this week and we were discussing gaps in my knowledge and what might interest me to learn.  I said that tax lien, foreclosure and other types of auctions seem interesting and are a topic I'd like to try to figure out.

He said that in Denver, there is a group of investors (about 20 or 30 of them, he thinks) that have pretty much locked any new-comers completely out of that niche.

When auction lists come out, they go through it and they decide which of them will get what.  They then have an agreement that they will not bid against each other.  If there is a dispute, money will change hands such that Bob pays John $1000 not to bid on a property.  

At auction, if somebody outside their circle tries to bid on a property, the rest of them will all jump in and bid the property up until the outsider quits.  Then, they use contract clauses or simply their buddy network within the auction system to get out of the now over-priced property.

He says he witnessed this himself and was shut out of all auctions over a period of about two years by people he came to recognize on the auction circuit.  When he made inquiries into this within his own network, this is what he was told.

As far as I can tell, there's nothing illegal actually happening here, so there's nothing actionable.  But can anybody either confirm or refute this rumor?