Mastro/Legendary Article in Today's NY Daily News

[Rich Klein]

Without commenting further; it's a real doozy! And note the familiar people quoted in the article.

http://www.nydailynews.com/sports/baseball/yankees/2009/07/05/2009-07-05_mastro_fine_sports_auctions_disaster.html?page= 0

Regards
Rich

[Matt]

"But that is no longer Jim and Liz Murphy's concern. On the morning of June 8, Liz Murphy started repeatedly calling Allen's cell phone, Legendary's main office number and Allen's accountant. The goal was to tie up Legendary's phone lines until the final payment would be resolved. After two or three hours, Allen agreed to send a postdated check for the balance of the account.
.
.
.
Allen says he decided to write the check to the Murphys not because he was legally obligated to do so but because he wants to resolve his old firm's obligations as quickly as possible."

I don't know why everyone is making such a big deal about this - it seems pretty easy to get your consignment money.

incredible.

[RichardSimon]

One heck of an incredible story. Looks like O'Keeffe has added lots of fuel to the Mastro fire as these people continue to go down in flames. Anybody want to send a consignment to Legendary now???

[barrysloate]

Legendary Auctions will not survive this. No way.

[cyseymour]

You would have to be crazy to send a consignment to Legendary Auctions, at least as one of the "little guys". Perhaps the big guys will still be able to do so and Legendary will stay afloat. I don't see them recognizing great prices, however.

I find it strange that the President of a grading company would be actively purchasing massive amounts of collectibles that he couldn't afford. Was it an addiction? It doesn't make any rational sense.

I am sure they did engage in shill bidding, but it might be hard to prove. All in all, it is really sad that it is the "little guys" who did not get paid, as they need the money more than anyone else. Mastro/Legendary is toast. I'm not sure I'd even risk buying from them since they do not seem honest. Will stick to Mile High, SCP, Mem Lane, REA, Goodwin, etc.

[Matt]

Forman seems to get involved in some major hobby lawsuits. I hope he has a half way decent attorney.

[RichardSimon]

Forman seems to get involved in some major hobby lawsuits. I hope he has a half way decent attorney.


I think he does.

[jmk59]

I don't think this could possibly get more interesting.

And if, as Doug says, they did everything legally and the obligations of Mastro remain with Mastro, then why is he still involved in making arrangements and trying to pay off Mastro consignors and saying that Legendary wanted to get the Mastro business wrapped up as quickly as they could?

Which is it? If the debts are legally not Legendary's, as they claim, then why the ongoing involvement in those payments?

Go back to Adam's post above about personal liability. That's the only context in which this makes sense.

J

[oldjudge]

In my opinion this article points out that if Dave Foreman had paid even part of his debt many consignors could be taken care of. Makes me wonder if there is any facet of the hobby that is not tainted.

[19cbb]

...And note the familiar people quoted in the article.


Too many for my liking!

[oldjudge]

Can a lawyer answer this: If a judgement is made against Foreman, can cards being held by SGC for grading be attached by Mastro?

[Bicem]

If Dave is such an active seller in the hobby, um... what exactly prevents him from making sure that his cards are in the very highest SGC grade possible?

Conflict of interest?

[Peter_Spaeth]

No, for two reasons. One, SGC likely is not an "alter ego" of Dave and could not be held liable for his personal debts, and two, even if it could, SGC doesn't own the cards it holds for grading, they are not its assets.

[cyseymour]

I think that if Forman was buying cards raw, then that would certainly open it up for speculation. I know he sold some stuff at REA http://www.robertedwardauctions.com/auction/2009/280.html, though it explicitly stated that Forman had purchased it on the open market. He probably knows he can't buy raw cards.

That Forman ran up such a debt, failed to pay it when card prices crashed, and apparently had a close friendship with Bill Mastro, known for allegedly shill bidding and card trimming, is disturbing. It's really hard to know what to think. I'd like to think the best of everyone. Those of us who do are bound to be disappointed (but probably happier for it).

:Edited to note that Forman bought the T206 Bresnahan SGC 96 on 12/13/07 - that must have been the date that the trouble started with Forman buying too many cards. That was right before the recession hit.

[FrankWakefield]

Jay...

Seems to me that if I own a card, and I consign it to an auction house, I still own the card and the auction house has a consignment contract, an interest in the card. When the auction occurs I still own the card until my agent, the auction house, is satisfied with the winner's payment, at which time the winner owns the card and the auction house owes me money. The idea is that the auction house is an agent, they NEVER own the card.

If the auction house sends a card I consigned off for grading, I still own the card. So to answer your question, I think the owner of the card still has rightful title and ownership. The auction house, their creditors, the grader, all of those folks may claim some sort of lien on the card, but I don't see how title / ownership would pass without notifying the rightful owner and then proceeding on the lien. Mere possession of the card does not convey title to anyone.

When I send a card to an auction house, I'm not conveying title. I'm entering into an agreement that I will convey title if certain things happen... ie an auction, and payment. And I'm agreeing to convey ownership to the winning bidder, not the auction house nor anyone else.

All of that would be subject to Lord knows what that might have been put in micro type in some contract.

[batsballsbases]

I just sat down and read the article in the daily news. To me it still leaves more questions unanswered than answered. I think finally when the other "SHOE" drops that no matter how much damage control Doug does to try and save face it wont matter. One of the only good parts in keeping Legendary an auction house is the possibility that if Doug is serious about making everyone "Whole" the only way to have that happen is to be able to stay in business. If not then all the consignors will have a very long drawn out legal battle and probably walk away with nothing.So in the end it may be a love hate relationship with the Devil!

[Peter_Spaeth]

If Mastro did indeed "sell" assets to Legendary, as opposed to it being a paper transfer by Silk Road, then what consideration did Mastro receive from Legendary? If none, or if insufficient, fraudulent conveyance laws could come into play -- a transfer for less than fair value that leaves the transferor unable to pay its creditors in the ordinary course.

If the intent was to have Bill step out of the picture, then why not just rename the enterprise and say that Bill had left? The fact that it was not done this way, but was done through creation of a new entity that is now expressly disclaiming the liabilities of the old even though it acquired its assets, certainly raises questions.

[bijoem]

Its simple for me:
I would not consign a thing to Legendary.
I would not bid on a thing from Legendary.

Not until every Mastro consignor gets paid.
Closing one company and opening under a new name to avoid responsibilities is just deplorable.

[cyseymour]

Yes, but if Mastro was in considerable debt, then the business itself would have minimum value. Like cards, it is only worth what someone is willing to pay for it. With a large debt, one could see how it would go really cheaply.

I looked at Legendary's last auction, and they had a bunch of low-grade drums that went in the $2000-3000 range, which is pretty good. They also had a 52 Topps Wings set go for over two thousand bucks. I am guessing that eventually they will make enough money to pay off the consigners and recover. It could take years, though.

[bcornell]

I'm looking at this excerpt from the article:

Lichtman also says that Forman was the victim of shill bidding and other fraudulent activities under investigation by the FBI. "It is an open secret in the industry that Mastro Auctions engaged in massive shill bidding and other fraud against the public and we would want the balance to reflect that," Lichtman says. "We look forward to seeing the bidding records and seeing the truth about Mastro's fraud."

Is it actually known what the FBI is investigating? I thought that could only be inferred, since they haven't disclosed it. And can Mastro be made to reveal the bidding records for any or all of their auctions? I certainly want to know if I got ripped off by shill bidding at any point in the past 7 or so years, but isn't the burden of proof on the bidder?

On another note, this is a well written piece of journalism. It details the story, provides substantiated quotes from the people mentioned (minus Bill Mastro) and the writer doesn't provide his own conclusions, but lets the readers do that for themselves. There have been some shoot-the-messenger attacks on O'Keeffe here in the past, but it looks to me like he's doing his job.


Bill

[Leon]

I'm looking at this excerpt from the article:

Lichtman also says that Forman was the victim of shill bidding and other fraudulent activities under investigation by the FBI. "It is an open secret in the industry that Mastro Auctions engaged in massive shill bidding and other fraud against the public and we would want the balance to reflect that," Lichtman says. "We look forward to seeing the bidding records and seeing the truth about Mastro's fraud."

Is it actually known what the FBI is investigating? I thought that could only be inferred, since they haven't disclosed it. And can Mastro be made to reveal the bidding records for any or all of their auctions? I certainly want to know if I got ripped off by shill bidding at any point in the past 7 or so years, but isn't the burden of proof on the bidder?

On another note, this is a well written piece of journalism. It details the story, provides substantiated quotes from the people mentioned (minus Bill Mastro) and the writer doesn't provide his own conclusions, but lets the readers do that for themselves. There have been some shoot-the-messenger attacks on O'Keeffe here in the past, but it looks to me like he's doing his job.

Bill

Okeefe and I talk every now and then. I used to not really care for him but now I like him. Things change. He's just doing his job. I hope he goes to the National as I would love to meet him.

[T206Collector]

If Dave is such an active seller in the hobby, um... what exactly prevents him from making sure that his cards are in the very highest SGC grade possible?

Conflict of interest?

...And I am sure is watching this one closely. About now someone from SGC ought to explain what, if any, safeguards are in place to honestly review the cards of their President.

[HRBAKER]

...And I am sure is watching this one closely. About now someone from SGC ought to explain what, if any, safeguards are in place to honestly review the cards of their President.


Agreed, this isn't exactly third-party grading is it? This assumes "raw" cards are being graded for him which may not be the case. A fair query nonetheless.

[Peter_Spaeth]

If SGC does grade cards Dave owns, and Dave (directly or through others) is selling them, then there is at least a troubling appearance of a conflict of interest, even if SGC represents that it grades the cards as it would anyone else's.

We should not pre-judge the situation, but at the same time we should be vigilant to get the facts.

[oldjudge]

If the rumors I have heard are true, there is another bidder who owes Mastro Auctions about $400,000. If this amount and Dave's amount were paid I would guess that all the consignors could be paid and at least part of this ugly saga put to rest.
One thing I don't understand is that if Silk Road holds an ownership position in both Mastro Auctions and Legendary Auctions why, if the amounts still owed consignors are not too large, doesn't Silk Road advance Mastro the funds to pay off the consignors and lift the cloud off Legendary. Then at least their investment in Legendary might have a chance of paying off. Otherwise, I agree with the other posters who are not optimistic about Legendary's chances of survival.

[Bicem]

Agreed, this isn't exactly third-party grading is it? This assumes "raw" cards are being graded for him which may not be the case. A fair query nonetheless.

or graded cards that are then bumped up. The incentive ($$$) is there no matter if it's actually happening or not which is enough for me not to feel very good about it.

[Peter_Spaeth]

According to a court papers filed in the Northern District of Illinois, Bill Fisher owes Mastro a number in the low 6 figures, but has declared bankruptcy. I don't know if that is who Jay is referring to, or if there is yet another debtor in the picture.

[cyseymour]

If I can read into this correctly, is it possible that on 12/13/07, Dave Forman placed a number of max bids, and then after "winning" the cards, felt that he had been shilled, and refused to pay for them?

I think it's fair to question the ethics of card grading company staff, but in this instance I don't see how it applies, since Forman was the buyer of graded cards. I think Joe Orlando owns cards, too; it's hard to imagine that a President of a grading company wouldn't have a passion for cards and not want to collect them. That in itself is not a sin. There seems to be no evidence that Forman bought anything raw and had it graded; that would certainly be hazy, but it wouldn't lack integrity unless the grading that became unobjective. But to buy graded cards, I think is okay. These people have a right to collect.

I don't think this does anything to damage the integrity of SGC's grading. I just think it's a real embarrassment for its President, which might affect SGC's image. I feel bad for him.

Disclosure: I own no high value SGC cards.

[Peter_Spaeth]

I don't think we know for a fact that Dave bought only graded cards out of the Mastro auctions.

[T206Collector]

Look, the people at SGC are smart, business savvy individuals. They can't possibly be stupid enough to grade their own cards for resale or otherwise. I would just like a public disclaimer to that effect to avoid the appearance or potential for improper self-grading.

[bijoem]

If I can read into this correctly, is it possible that on 12/13/07, Dave Forman placed a number of max bids, and then after "winning" the cards, felt that he had been shilled, and refused to pay for them?

My take from the article is....

Dave owes them money, but they also owe Dave money and they are not mentioning money they owe Dave when discussing the overall figure.

Sort of like if hypothetically you owe me $100, and I owe you $90.... but all I talk about is the $100 you owe me (ignoring the $90 I owe you).

As far as he shilling, I guess Dave is also questioning whether or not he was shilled on the amount owed to Mastro.

[daviddbreadman]

This guys flip flops more than Obama! (sorry for the political position there LOL) He puts out self promoting article in the PSA SMR stating how the new Legendary is tops with ethics and etc etc. Behind the scenes he's telling people "too bad you're out the money, you are too small for me to worry about (at $250,000 at that!! too small???). Then he gets roasted and panics and sends emails trying to do damage control and selectively paying people (I do hope that the individual did get his $5k recently).

There is no doubt the tomfoolery in essentially closing Mastro and reopening under Legendary was done for two reasons. Bill Mastro had to go, easy enough, but just to dump him and be left with Mastro without Bill Mastro is still a problem, so lets also get rid of the debts and create a new name, screw those we owe, the people we need for our business, so we can make more money for ourselves.

[botn]

Not sure when Jeff was hired but if it were even 10 minutes prior to Legendary filing the suit against Forman that would have been sufficient time for him to agree to a settlement on behalf of his client. The hobby is incredibly forgiving due to collectors' obsession but this is not going to be good for Dave or SGC.

Greg

[oldjudge]

Joe--If Dave won cards, then thought he had been shilled, and then decided not to pay for them why did he keep bidding in the first place? If the bidding was getting to an unrealistic level why didn't he question things then and just stop bidding? I guess that it is possible that these were left "up to" bids but, if Dave was suspicious of Mastro Auctions, why would he leave these?
Was Dave intending to pay these debts off through grading services? Did this strategy fall apart when Mastro Auctions went belly up forcing Dave to have to come up with the cash? These are questions I would like answers to. Also, I wonder if you can be completely objective in grading cards for someone that you owe a lot of money to?

[Sean_C]

Just me, but I'm hoping that none of the parties settle, as I'd love to see this one aired out in the public.

[rhettyeakley]

Wow, I gotta admit this is pretty disturbing to me in regard to Dave Forman and SGC.

I always thought that the heads of grading companies shouldn't be actively involved in buying/selling/etc. while they are at the helm of the grading company. While in college I minored in Archaeology/Anthropology and there isn't a respected Archaeologist in the country that also collects antiquities (if they want to be taken seriously by their collegues), it seems to me the same type of conflict of interest would exist here.

-Rhett

[sox1903wschamp]

or graded cards that are then bumped up. The incentive ($$$) is there no matter if it's actually happening or not which is enough for me not to feel very good about it.


This was one of the observations I also had from the article.

[oldjudge]

Peter--Another individual supposedly owes Mastro the roughly $400,000

[DJR]

,

[Basilone]

Was Dave intending to pay these debts off through grading services? Did this strategy fall apart when Mastro Auctions went belly up forcing Dave to have to come up with the cash? These are questions I would like answers to. Also, I wonder if you can be completely objective in grading cards for someone that you owe a lot of money to?

Excellent questions...

[RichardSimon]

Excellent questions...

There are so many excellent questions to ask Mssrs. Mastro and Allen that who would know where to begin? I think our Mr. Lichtman might :).

[sportscardtheory]

The glaring omission from this article and from everyone's replies, is the fact that the consignments were sent out before they were paid for. This entire situation is hinged on the fact that Mastro/Legendary sent out consignments without being paid first... otherwise, there is no story whatsoever. The items would be returned or re-auctioned. The fact that they sent out consignments without being paid makes it entirely their fault/problem. Another thing, if the guy from SGC bought items from them, never paid and resold the items he won, how could he not have the funds to pay for his winnings??? And if he didn't sell them, why has he not returned them? That is as shady as it gets and he (and anyone else that did this) should go to prison for theft for not returning the items he never paid for. I guess what I'm saying is, these people should go to jail. This shouldn't be a "you owe me money" situation. This is a "you stole my items" situation.

[Rob D.]

You might want to go back and search the archives regarding REA sending items to high bidders before payments were received. Pay particular attention to the adulation and fawning from Net54 board members over this business practice.

[RichardSimon]

The glaring omission from this article and from everyone's replies, is the fact that the consignments were sent out before they were paid for. This entire situation is hinged on the fact that Mastro/Legendary sent out consignments without being paid first... otherwise, there is no story whatsoever. The items would be returned or re-auctioned. The fact that they sent out consignments without being paid makes it entirely their fault/problem. Another thing, if the guy from SGC bought items from them, never paid and resold the items he won, how could he not have the funds to pay for his winnings??? And if he didn't sell them, why has he not returned them? That is as shady as it gets and he (and anyone else that did this) should go to prison for theft for not returning the items he never paid for. I guess what I'm saying is, these people should go to jail. This shouldn't be a "you owe me money" situation. This is a "you stole my items" situation.

I was going to bring that up in one of my posts, but was not certain that was the case, but apparently after rereading everything here, it certainly is.
What a way to run a business!! Here take this and pay me when you can, my consignor won't mind,,, I thought Wolffer's was the only one that did something like that to such a degree.

[ibuysportsephemera]

That is exactly what I was wondering. What would the big deal have been if the items were not paid for.....simply return the item to the person who consigned the item or re-auction. How crazy is it that the items were sent prior to payment being received...who does such a thing?

[Basilone]

.

[RichardSimon]

You might want to go back and search the archives regarding REA sending items to high bidders before payments were received. Pay particular attention to the adulation and fawning from Net54 board members over this business practice.


I have never bid or consigned with either of these auction houses, but I would believe, judging by all that I have read on this board, that REA had the money on hand to pay their consignors.

[sportscardtheory]

That is exactly what I was wondering. What would the big deal have been if the items were not paid for.....simply return the item to the person who consigned the item or re-auction. How crazy is it that the items were sent prior to payment being received...who does such a thing?

And why no legal action demanding the items back or immediate payment? Especially if the items were sold again after the fact. That is theft, and should be dealt with as such.

[oldjudge]

Personally, I think people are barking up the wrong tree here. The auction house, by sending out lots to winners before payment is received, is simply making a credit decision that they are willing to trust that bidder. If they are wrong they must suffer the consequences. Credit is extended in all businesses. When you charge something on a credit card the bank is allowing you to take delivery of goods before they are paid for. Our society is built on people getting items before they pay for them. Mastro obviously made some poor credit decisions. REA may send out some items early but, if they are better at assessing the creditworthiness of their customers, they may not be subjecting themselves to any appreciable risk while at the same time generating considerable good will.

[sportscardtheory]

Personally, I think people are barking up the wrong tree here. The auction house, by sending out lots to winners before payment is received, is simply making a credit decision that they are willing to trust that bidder. If they are wrong they must suffer the consequences. Credit is extended in all businesses. When you charge something on a credit card the bank is allowing you to take delivery of goods before they are paid for. Our society is built on people getting items before they pay for them. Mastro obviously made some poor credit decisions. REA may send out some items early but, if they are better at assessing the creditworthiness of their customers, they may not be subjecting themselves to any appreciable risk while at the same time generating considerable good will.

They are not the ones suffering the consequences.

If they are selling their own product, this would make sense. But this is consignment, the items are not theirs to take such outlandish risks. This has nothing to do with credit.

[oldjudge]

Of course it does. Once the auction house sends out the lot/lots they are implicitly taking on the responsibility to pay the consignor. If they do not they are legally liable. This is exactly a credit decision.

[Peter_Spaeth]

I agree with Jay. I am sure, at the time, Mastro had good reason to extend credit to Dave, for many possible reasons as to which I would be speculating. It is only in hindsight that, of course, it looks bad. Indeed, it may be unrealistic to run an auction house at that level without extending credit to certain bidders.

[sportscardtheory]

Of course it does. Once the auction house sends out the lot/lots they are implicitly taking on the responsibility to pay the consignor. If they do not they are legally liable. This is exactly a credit decision.

Okay, so if they don't pay, they should go to prison for theft. The consignee is the one that the theft is perpetrated upon. To simply have them go through the court system to get their money back is preposterous. If I go to a casino and they offer me credit, and decide I don't want to pay, I go to jail. They don't simply keep asking me for the money I owe them.

[sportscardtheory]

The moral of the story is, if you don't want to get screwed over by people who like to pass off blame (auction houses), don't use them. I know I never would.

[Exhibitman]

Personally, I think people are barking up the wrong tree here. The auction house, by sending out lots to winners before payment is received, is simply making a credit decision that they are willing to trust that bidder. If they are wrong they must suffer the consequences. Credit is extended in all businesses. When you charge something on a credit card the bank is allowing you to take delivery of goods before they are paid for. Our society is built on people getting items before they pay for them. Mastro obviously made some poor credit decisions. REA may send out some items early but, if they are better at assessing the creditworthiness of their customers, they may not be subjecting themselves to any appreciable risk while at the same time generating considerable good will.

An auctioneer can do what it wants with stuff it owns. It cannot do the same with stuff it does not own. Mastro did not own those lots; the consignors did. They furnished them to Mastro under certain contractual terms, none of which included the right to send the items to bidders without payment. One of the actual contract terms stated that unpaid items could be reclaimed 60 days after auction (go check your small print in your consignment contract). If Mastro agreed in its contract that the consignors of unpaid items could ask for their return, then Mastro undertook the duty to hold those items, not send them out in the hope of future payment.

What is being described here is looking more and more like a Ponzi scheme where current sellers' proceeds were used to pay earlier sellers and/or where current sellers' items were used to fund large customers' businesses as no-cash-down inventory.

[Exhibitman]

Is anyone else thinking that this is going to be a real interesting National dinner?

[sportscardtheory]

An auctioneer can do what it wants with stuff it owns. It cannot do the same with stuff it does not own. Mastro did not own those lots; the consignors did. They furnished them to Mastro under certain contractual terms, none of which included the right to send the items to bidders without payment. One of the actual contract terms stated that unpaid items could be reclaimed 60 days after auction (go check your small print in your consignment contract). If Mastro agreed in its contract that the consignors of unpaid items could ask for their return, then Mastro undertook the duty to hold those items, not send them out in the hope of future payment.

What is being described here is looking more and more like a Ponzi scheme where current sellers' proceeds were used to pay earlier sellers and/or where current sellers' items were used to fund large customers' businesses as no-cash-down inventory.

And how would anyone know if Mastro/Legendary isn't in on the whole thing? "Hey, buy this from us for $500,000, don't pay us. Then sell it somewhere else and we will split the money." Sound crazy? Sounds like easy money to me.

[byrone]

On SGC's website, their home page has a section for "Prices Realized", touting the high prices paid for SGC graded items. Seems harmless enough, unless a grading company employee or owner is a bidder/owner of said item.

[Leon]

Is anyone else thinking that this is going to be a real interesting National dinner?

The way it's going there will be like 10 people at it.....:eek:

[Rich Klein]

Then Leon can spring for Steaks for all of us :D

[spacktrack]

Hi Everyone,

Hopefully everyone had a nice, safe holiday weekend. I wanted to take the time to address some questions that have arisen on the board. It's unfortunate that Dave Forman and Mastro Auctions could not resolve their differences outside of court, but this personal matter between these two parties does not impact SGC's day to day operations or policies.

I want to stress the fact that SGC employees and/or owners are not able to submit cards for grading. All grading decisions and policies are under the sole discretion of the Director of Grading and his senior grading team. SGC has the industry's only "real" guaranty and stands behind every single card that we've graded.

Anyone having any further questions or concerns is welcome to contact me during normal business hours.

Thank you,

Brian Dwyer
SGC
1-800-742-9212 x114
bdwyer@sgccard.com

[bijoem]

Joe--If Dave won cards, then thought he had been shilled, and then decided not to pay for them why did he keep bidding in the first place? ...

I could be wrong but....
My take from the article is that Dave owes Mastro money.... but Mastro also owes Dave money. Yet... Mastro is asking for the entire money Dave owes them (ignoring the amount they owe to Dave).

Again - if you owed me $100, and I owed you $90.... would you send me the entire $100 and then 'hope' to receive the $90?

Where the shilling comes into play is....
At this point (now that this is a legal matter) why not question whether or not the money owed to Mastro is legitimate? If the items were shilled, should Dave pay the entire amount to Mastro? I think not.


And.... MOST IMPORTANTLY....
Mastro has an obligation to the consignors regardless of any money's owed to them by other people. I cannot operate a business and shaft my suppliers if I get shafted.

IMO -
Opening up "Legendary" and running away from Mastro - is just about as crappy as it gets.... and on top of that.... they must think everyone in the hobby are morons.

[oldjudge]

Adam--If the consignment agreement says that the consignor has the right to request the return of unpaid items after 60 days I still don't see where that prohibits Mastro Auctions from sending out the lots before payment is received. However, by doing this they are taking on the responsibility to pay for the item regardless of whether the buyer pays or not. By sending it out they are implicitly saying two things:

1-Consignor has been paid and we owe the consignor his money
2-We have entered into an interest free loan (or perhaps not) with the buyer to pay us the amount due

Therefore, if the consignor is not paid his or her claim is against Mastro, not the buyer. Mastro must file claim against the buyer.

Adam--Obviously, I am not a lawyer and I didn't even stay at a Holiday Inn last night, but where am I wrong?

[botn]

Dave is a very successful and seasoned dealer and hobby veteran. I think the shill bidding defense is weak unless of course the FBI investigation goes someplace. Right now it has not been proved they have shill bid.

As far as Mastro running a Ponzi scheme that is also a bit absurd. I don't think Mastro was engaged to do business simply to pay off past consignors. However they may have exercised poor judgment in extending credit to certain customers to the detriment of certain consignors. In both Bill Fisher's and Dave Forman's circumstances I suspect both showed the ability to make good on the credit which was extended to them. Not a unique situation where one day someone is a good customer and the next a bad creditor and as an auction house it can be tough to know when that is going to take place. I think Mastro got caught up in the feeding frenzy and was attempting to get the most they could for their items and the best way in which to do that is to extend credit.

I too would like to understand the arrangement Dave had with Mastro. Something very unsettling about this whole thing.

[slidekellyslide]

I thought I read on this board or maybe another years back when Forman took control of SGC that he was divesting his collection so as not to have any conflicts of interest as a collector/dealer and grading company owner. Am I wrong about that?

[Rob D.]

It goes without saying that if Mastro wasn't liquid enough to pay consignors before receiving payment from buyers, then it was incredibly stupid to deliver items before receiving payment.

But for people to post today how terrible such a practice is in theory when previously praise was heaped on REA for doing the exact same thing (that is, shipping before receiving payment), that's the very definition of Monday morning quarterbacking.

[Jim VB]

"...that's the very definition of Monday morning quarterbacking. "

Agreed. But that's what we do best, so we're sticking with our strengths!

[Exhibitman]

Adam--If the consignment agreement says that the consignor has the right to request the return of unpaid items after 60 days I still don't see where that prohibits Mastro Auctions from sending out the lots before payment is received. However, by doing this they are taking on the responsibility to pay for the item regardless of whether the buyer pays or not. By sending it out they are implicitly saying two things:

1-Consignor has been paid and we owe the consignor his money
2-We have entered into an interest free loan (or perhaps not) with the buyer to pay us the amount due

Therefore, if the consignor is not paid his or her claim is against Mastro, not the buyer. Mastro must file claim against the buyer.

Adam--Obviously, I am not a lawyer and I didn't even stay at a Holiday Inn last night, but where am I wrong?

If you grant a consignors the contract right to exercise an option to recall their items after 60 days, you are impliedly representing that (1) the items will still be there and (2) you won't do anthing to make the right unenforceable. Sending out an item w/o payment in that context removes the item from Mastro's possession and destroys that right, which is precisely what happened here. If Mastro knew that it routinely sent out items without receiving payment, then it knew that it did not comply with the terms of its contracts on a regular basis, yet it told none of its consignors and certainly never obtained their permission to repudiate portions of their contracts. Or, to put it another way, show me the part of the Mastro contract that says Mastro had the right to send out the items w/o payment and to pay the consignor "whenever." It doesn't say that because no one would be stupid enough to agree to it. Yet if that is what Mastro was doing, which appears to be the case, any consignor would have wanted to know. Or, to place it in a slightly different context, what happened is the equivalent of if you listed your house with a realtor and the escrow agent then gives the keys and title to a buyer without getting the money for the house. The fact that the escrow agent may be able to rustle up the cash from somewhere else to pay you off doesn't make it right.

As far as a Ponzi scheme goes, the essence of the colloquial term "Ponzi scheme" is taking funds earmarked for one purpose and using them to pay off earlier "investors." I am not saying Mastro was a pure Ponzi scheme; it did more than simply pay earlier investors with money from later investors. However, it appears to me that given the increasing scale of unpaid but shipped items as the deals worsened/soured in 2007-2008 Mastro increasingly relied on credit lines and/or consignors' money to paper over its unpaid consignments. The extent to which that happened could be untangled from its accounting records. What is apparent is that at the end the cash needed to pay the last group of consignors and their items both went missing. I know some of the consignors who are unpaid have been told, in effect, "tough ***t, no money and no item" and have to watch their items being resold on Ebay.

[oldjudge]

Rob--What Mastro did was working when they had credit lines they could draw on. I would guess that they went out of business when these lines dried up and Silk Road would not advance any more money to make good on these obligations. So, that would imply that this mess is a function of bad credit decisions and some exogenous factors.

[Exhibitman]

Rob--What Mastro did was working when they had credit lines they could draw on. I would guess that they went out of business when these lines dried up and Silk Road would not advance any more money to make good on these obligations. So, that would imply that this mess is a function of bad credit decisions and some exogenous factors.

The primary factor was endogenous, not exogenous: breaching their own consignment contracts by sending out unpaid items. BTW, had to look up "exogenous"; good one!

[sportscardtheory]

If you grant a consignors the contract right to exercise an option to recall their items after 60 days, you are impliedly representing that (1) the items will still be there and (2) you won't do anthing to make the right unenforceable. Sending out an item w/o payment in that context removes the item from Mastro's possession and destroys that right, which is precisely what happened here. If Mastro knew that it routinely sent out items without receiving payment, then it knew that it did not comply with the terms of its contracts on a regular basis, yet it told none of its consignors and certainly never obtained their permission to repudiate portions of their contracts. Or, to put it another way, show me the part of the Mastro contract that says Mastro had the right to send out the items w/o payment and to pay the consignor "whenever." It doesn't say that because no one would be stupid enough to agree to it. Yet if that is what Mastro was doing, which appears to be the case, any consignor would have wanted to know. Or, to place it in a slightly different context, what happened is the equivalent of if you listed your house with a realtor and the escrow agent then gives the keys and title to a buyer without getting the money for the house. The fact that the escrow agent may be able to rustle up the cash from somewhere else to pay you off doesn't make it right.

As far as a Ponzi scheme goes, the essence of the colloquial term "Ponzi scheme" is taking funds earmarked for one purpose and using them to pay off earlier "investors." I am not saying Mastro was a pure Ponzi scheme; it did more than simply pay earlier investors with money from later investors. However, it appears to me that given the increasing scale of unpaid but shipped items as the deals worsened/soured in 2007-2008 Mastro increasingly relied on credit lines and/or consignors' money to paper over its unpaid consignments. The extent to which that happened could be untangled from its accounting records. What is apparent is that at the end the cash needed to pay the last group of consignors and their items both went missing. I know some of the consignors who are unpaid have been told, in effect, "tough ***t, no money and no item" and have to watch their items being resold on Ebay.

Don't forget the fact that when things got hot, they simply closed down shop and started anew while saying "Sorry about your bad luck!" to those they owed money too. It WREAKS of Ponzi scheme. Maybe not in the true definition of the phrase, but it is something very close.

[Rob D.]

Rob--What Mastro did was working when they had credit lines they could draw on. I would guess that they went out of business when these lines dried up and Silk Road would not advance any more money to make good on these obligations. So, that would imply that this mess is a function of bad credit decisions and some exogenous factors.

By no means am I trying to say that Mastro was in the right when it shipped items before being paid. I'm not. All I'm saying is comments like the ones below, which demonize the very practice of shipping before receiving payment, are pretty comical when in fact another auction company is praised for having great customer service for doing the same thing.

"The glaring omission from this article and from everyone's replies, is the fact that the consignments were sent out before they were paid for."

"I was going to bring that up in one of my posts, but was not certain that was the case, but apparently after rereading everything here, it certainly is. What a way to run a business!!"

"How crazy is it that the items were sent prior to payment being received...who does such a thing?"

[sportscardtheory]

By no means am I trying to say that Mastro was in the right when it shipped items before being paid. I'm not. All I'm saying is comments like the ones below, which demonize the very practice of shipping before receiving payment, are pretty comical when in fact another auction company is praised for having great customer service for doing the same thing.

"The glaring omission from this article and from everyone's replies, is the fact that the consignments were sent out before they were paid for."

"I was going to bring that up in one of my posts, but was not certain that was the case, but apparently after rereading everything here, it certainly is. What a way to run a business!!"

"How crazy is it that the items were sent prior to payment being received...who does such a thing?"

Why are you lumping in my quote when I have never applauded the practice?

[oldjudge]

Adam, I still don't agree. Let me flesh an example:

Buyer A wins a lot in Mastro auctions
Mastro makes a loan to Buyer A for the amount due
Buyer A takes the loan money, agrees to the loan provisions, and hands the money back to Mastro (Mastro has thus received no net funds)
Mastro sends out the lot to Buyer A
Two things have happened; Mastro has been paid and Buyer A owes Mastro the loan amount
Because Mastro has been paid he owes the Consignor and since the lot has been paid for the Consignor has no right to recall it
The Consignor is now due only funds from Mastro and, if not paid, their only recourse is to sue Mastro

This is effectively what happens every time any lot is shipped before a check is received. In some cases there is an interest bearing loan due at some point in the future. In some cases it is a very short term zero interest loan.

[sportscardtheory]

Adam, I still don't agree. Let me flesh an example:

Buyer A wins a lot in Mastro auctions
Mastro makes a loan to Buyer A for the amount due
Buyer A takes the loan money, agrees to the loan provisions, and hands the money back to Mastro (Mastro has thus received no net funds)
Mastro sends out the lot to Buyer A
Two things have happened; Mastro has been paid and Buyer A owes Mastro the loan amount
Because Mastro has been paid he owes the Consignor and since the lot has been paid for the Consignor has no right to recall it
The Consignor is now due only funds from Mastro and, if not paid, their only recourse is to sue Mastro

This is effectively what happens every time any lot is shipped before a check is received. In some cases there is an interest bearing loan due at some point in the future. In some cases it is a very short term zero interest loan.

lol, which can all be avoided by holding the item until it is paid for. When all you have to do is close up shop and change your name to relinquish your debt to your consignees, it is now simply a fraud perpetrated upon unknowing victims. So, you are sticking up for a fraud.

[oldjudge]

Wrong again--I think that Legendary starting up before all Mastro consignors were paid is very wrong (and very stupid). What I am defending, subject to good credit analysis, is the practice of shipping lots before a check is received.

[sportscardtheory]

Wrong again--I think that Legendary starting up before all Mastro consignors were paid is very wrong (and very stupid). What I am defending, subject to good credit analysis, is the practice of shipping lots before a check is received.

It is quite evident you have never lost items of value to Mastro. I'm sure your tune would change if you lost your collection because the auction house shipped it all away without receiving payment and closed up shop telling you you are crap out of luck. Tell us you like the practice of shipping before payment then.

[oldjudge]

Plus, even if no lot was shipped before payment was received, this problem may not have been eliminated. Remember, major auction houses pay cash advances for new consignments (and pay salaries, returns to equity holders, rent, etc). The auction business is a dynamic process. Before, after and during auctions money is going out for these advances so that material comes available for the upcoming auctions. Once the credit lines dried up, even if every lot auctioned off up to that point was paid for, there may have not been sufficient funds to pay consignors. The credit lines were the safety net to overcome cash flow timing issues. Poor credit decisions only exacerbated the problem.

[oldjudge]

I would be angry and would contact my lawyer if the amount was significant. I fully understand how an aggreved consignor would feel. I doubt, however, that I would be against the practice (see prior post).

[sportscardtheory]

If I ran an auction house, it would be 10% or more up front and pay in full within 60 days or the item gets returned or re-auctioned at the discretion of the consignee. You don't get your item until it's paid in full and lose your down payment if after 60 days you haven't paid, no questions asked. See how simple that is? It's called running a legitimate business with your bread and butter in mind first and foremost. Your customers are the consignees, NOT the buyers/bidders.

[drc]

Until the buyer pays for it, the consignor is the owner of the lot. The auction house facilitates the sale, charging a fee for the service, but never owns the lot. Obviously, a contract will have agreed upon ground rules and time lines for sale and payments-- for examples, a consignor can't pull a lot in the middle of an auction, an unsold lot is to be promptly relisted, unpaid for lot goes to the underbidder or a bidder has to allow at least 30 days before receiving payment .

If the late lots have not been paid for, they still belong to the consignor, even if they were shipped a year ago. I don't see why the consignor can't go to the non-payer's house and pick up his stiff. If the buyer never paid, the items certainly don't belong to him and some might label the items as stolen property.

Beyond the practical pitfalls of shipping early (the buyer might not pay), I don't believe the auction house has a right to ship before payment. Unless there is contact details allowing the practice, the lot isn't theirs to ship before payment. Once purchased (paid for) by the winner, then the lot should be promptly given to the new owner.

[Peter_Spaeth]

I am surprised that the principal focus of this thread has been a few (presumably) unpaid consignors instead of (1) serious accusations of shill bidding against Mastro by a lawyer and board member with unquestioned credibility, and (2) revelations that the principal of the #2 grading service (#1 by far on this board) continues to buy and sell hundreds of thousands of dollars of cards. To me anyhow that is the far more interesting story line.

[WarHoundR69]

CGC is SGC's sister company. I'm wondering if Dave Forman has his comics CGC graded and then resells them. That might fly a bit under the radar.

A point of interest to me since I also collect comics and have many CGC graded examples

[Wesley]

I am surprised that the principal focus of this thread has been a few (presumably) unpaid consignors instead of (1) serious accusations of shill bidding against Mastro by a lawyer and board member with unquestioned credibility, and (2) revelations that the principal of the #2 grading service (#1 by far on this board) continues to buy and sell hundreds of thousands of dollars of cards. To me anyhow that is the far more interesting story line.


I am surprised about that as well, Peter. It is a shame that Mastro has been unable to pay it's consignors, and they have justifiably been criticized about that for weeks. Also we have read about allegations of shill bidding for different auction houses for a long time.

For me the biggest news from reading the NY Daily News article and see that Mastro and Dave Forman is involved in litigation regarding hundreds of thousands of dollars for purchases made by Forman. I use SGC or grading and I rely on SGC for purchases and I am not exactly comfortable with hearing this news. Some are ok with it, but I don't like hearing that the president of SGC allegedly owes Mastro $400,000 for purchases, and that the president of SGC still consigns cards on such a large scale.

[MikeU]

CGC is SGC's sister company. I'm wondering if Dave Forman has his comics CGC graded and then resells them. That might fly a bit under the radar.

A point of interest to me since I also collect comics and have many CGC graded examples

They have not been a sister company for years now.

[Bicem]

agreed 100% Wes.

[slidekellyslide]

Nothing surprises me anymore...Dave Forman was at one time associated with Gary Moser (one of the REAL bad guys in this hobby).

[barrysloate]

I'm with everyone else. I consider Dave a friend but as soon as he purchased SGC he should have completely stopped his involvement in buying and selling baseball cards. The appearance of impropriety is enormous even if everything is done on the up and up. SGC has long been the darling of the Net54 board, but I think it has taken a huge hit today.

[oldjudge]

Barry--I agree. Didn't David Hall sell his collection to avoid just this type of situation?

[barrysloate]

Yes, David Hall did. However, there was still a cloud surrounding it since all his cards were PSA graded. Collectors wondered whether or not his got preferential treatment.

But to his credit at least he avoided the potential conflict of interest.

[Peter_Spaeth]

And Mr. Hall was purely a collector, not a card dealer, as I recall.

[barrysloate]

David Hall was a big coin dealer, and I know he was influential in coin grading; I don't recall his role in the baseball card hobby.

[slidekellyslide]

David Hall may be a collector, but he is also a coin dealer. IMO he has the same conflict of interest as Forman does with SGC.

http://www.davidhall.com/

[oldjudge]

I believe Hall had a high T206 collection that he sold to avoid a conflict of interest.

[slidekellyslide]

I believe Hall had a high T206 collection that he sold to avoid a conflict of interest.

David Hall owns PCGS...here he is on his website selling a PCGS encapsulated coin.

http://www.davidhall.com/coindetail.aspx?coid=25440

[botn]

I appreciate Brian Dwyer posting but none of us are privy to the checks and balances that are in place at SGC. I never thought that Dave made submissions to SGC directly. The real $400K question is how much of the inventory Dave was selling/consigning (or was being sold on his behalf) was SGC graded, if any.

Also I don't think Dave was ever associated with Gary Moser. That was Gerry Schwartz who at one time was "partners" with Dave Forman later to be "partners" with Gary Moser. But the point is well taken.

Greg

[benjulmag]

My understanding is that Mastro Auctions intends and expects in the relatively near future to pay all consignors. Their delay in doing so was caused by a "Perfect Storm" of extraordinary occurrences: (i) recognized credit-worthy individuals not timely paying on their debts and (ii) withdrawal of a line of credit caused by economic circumstances unseen since the 1930's.

Their practice of selectively sending out lots prior to payment is hardly without precedent in this hobby. As has been noted, when one other noted auction house did it, they received tremendous applause and no dissent. The belief that Mastro's actions were unique in this hobby is the height of naivety. So Mastro caters to certain bidders. Mastro's rationale almost certainly is that it induces those bidders to bid more aggressively in their auctions, which benefits all consignors. I have yet to hear a complaint from a consignor who received substantially more for his consignment due to bids from an individual who knew he would be extended just the sort of credt that caused this whole situation.

Bottom line to me: Mastro's business practices are the rule, not the exception, not just in this hobby but in collectables in general. Yes, by the letter of the law perhaps they fall short. But then so do the substantial majority of others. Those out to crucify Mastro certainly have enough fodder to make it a grand feast. But they are smoking on something if they feel Mastro is the exception and not the rule.

[Jewish-collector]

This is going to be one hell of a Net54 dinner !!!

http://vbbc.forumotion.com/users/17/23/61/smiles/136179.gif

http://vbbc.forumotion.com/users/17/23/61/smiles/136179.gif

http://vbbc.forumotion.com/users/17/23/61/smiles/136179.gif

[bijoem]

My understanding is that Mastro Auctions intends and expects in the relatively near future to pay all consignors.


That would be great, and I hope it is true.

[oldjudge]

Well said Corey.

[baseballart]

...
Bottom line to me: Mastro's business practices are the rule, not the exception, not just in this hobby but in collectables in general. Yes, by the letter of the law perhaps they fall short. But then so do the substantial majority of others. Those out to crucify Mastro certainly have enough fodder to make it a grand feast. But they are smoking on something if they feel Mastro is the exception and not the rule.

Corey

I would expect any dealer who sends items without payment to be sufficiently capitalized to pay the consignor even if the winning bidder defaults; i.e. the auction house would have sufficient cash reserves without drawing on credit. I have no idea whether REA or others were so capitalized, but it is clear with hindsight that Mastro was not.

As such, I don't think you can generalize about such practices without this information.

Max

[JamesGallo]

Does anyone have any idea what Dave's role is on a daily basis at SGC?

I don't believe he is a grader...

I am not saying there isn't a potential conflict of interest but it is also possible that Dave wasn't buying cards but memorabilia or other things.

IMO Mastro is still the villian hear and I will save judgement on Forman until I know more of the facts.

Also if I bought 400K worth of stuff and shortly thereafter found out some shilling could have occured I would not pay for the stuff until the issues of shilling was taken care of.

What I don't understand is that if Dave owes them 400K for whatever and neither Mastro nor Dave have the stuff then where the heck is it???

James G

[tbob]

Personally, I think people are barking up the wrong tree here. The auction house, by sending out lots to winners before payment is received, is simply making a credit decision that they are willing to trust that bidder. If they are wrong they must suffer the consequences. Credit is extended in all businesses. When you charge something on a credit card the bank is allowing you to take delivery of goods before they are paid for. Our society is built on people getting items before they pay for them. Mastro obviously made some poor credit decisions. REA may send out some items early but, if they are better at assessing the creditworthiness of their customers, they may not be subjecting themselves to any appreciable risk while at the same time generating considerable good will.

Couldn't have said it better. Agree 100%.

[rhettyeakley]

James, I could be wrong, and may have missed where it was specified (but I'm not going back and reading the whole thing again), but it seems as though Mastro sent the items to Dave and he is now not paying them for the items, because he may (or may not) have been shilled. If I am wrong I will stand corrected, but that is what seems to be being implied here. If that is the case I hope Dave has some good evidence of shill bidding or this could get really ugly.

Corey, I agree with your last statement, well put.

-Rhett

[jmk59]

Sometimes I swear I must be the biggest dumb-ass in the world. Or just incredibly naive. I know that credit is normal, and all that. But if Mastro was giving the big guns time to pay, wouldn't it just stand to reason that there is a "Gotcha covered" buried in there somewhere? That it was an extension of a business courtesy on their part to cover the money short term and not an offer at the risk of the consignor? Would you think anyone would even have to ask that? I know I wouldn't.

And am I also naive to think that, if these courtesies are going to be extended, Mastro (or anyone else handling so much of other people's cards or money) would take even the most basic precautions around the process? Like getting it in writing, at least. Or retaining some interest or ability to retrieve either the cards or the value if the payments fell through.

Here's what bugs me. First of all, I don't remember a time in this hobby in which there wasn't chronic speculation and grouching about favoritism to bigwigs while the individual small and medium or unconnected collectors sat on the sidelines playing by the rules. That's been out there on everything from auction house practices to grading preferences for the big submitters. Now the favoritism is crashing the news today, with the exact outcome that the little guy got nailed so the big shots could play mover and shaker.

At the center of it all is Mastro. I know there are people that didn't pay Mastro. But these people were not in a position to limit the fallout and shield the collectors and consignors that had owned the items. Mastro was the only entity that could have done that, and they didn't.

Personally, I couldn't pick either Dave Forman or Bill Fisher out of a crowd of two - don't know them at all. But I think it's unfortunate that their money issues are playing out in public, especially since I absolutely don't believe that the issue of consignor non-payment has the slightest thing to do with them. It's just more noise around the central issue of Mastro's behavior.

I understand that some of the bigger players in the hobby might want to look at what it means that Forman is still in cards while owning a grading company (although the recent REA auction had some pretty impressive disclosure) and wonder if there is an appearance of impropriety.

I'm more concerned with the actual improrpriety by Mastro that has already come out, already affected real people and collectors and is by far the biggest taint on the hobby in this whole mess.


J

[Peter_Spaeth]

I respectfully disagree with the above for the most part. Two or three people stiff Mastro for hundreds of thousands of dollars (allegedly of course), and Mastro is the evildoer? EDIT TO ADD I don't understand the comment that the issue of consignor non-payment has nothing to do with Fisher or Forman or Jay's third person. If Mastro is out $1 million or whatever and has no access to its credit line, then it is going to affect its ability to make payments. Could one fault Mastro, in hindsight, for extending credit? Perhaps, perhaps not -- there were likely very good reasons to do it. But to suggest the people reneging (allegedly) on their obligations are beside the point does not seem reasonable to me.

[tbob]

From the Daily News article: " In the message, Allen claimed that his former colleague Bill Mastro had gone "completely insane" with anger over Forman's debt and would damage Forman's reputation and report criminal activity allegedly committed by Forman to the same FBI agents who are investigating Mastro Auctions."


I can't wait to see what these allegations of alleged criminal activity by Forman are.

[jmk59]

Yes Peter, I really think they are. They were the ones that let it affect individual consignors and collectors. The non-payers didn't do that. They may not even have known that a default would do that. The consignors certainly didn't know it. Mastro was the only one that could control that outcome.

Somehow it is different with a consignment. It's not the same as Company X buying raw materials from Company Y with 30-day terms and then not being able to pay Y because the customers of X didn't come through.

With consignments, you are trusting someone with your individual specific property. You aren't selling them inventory on a commercial basis. The process and duty seems different.

This is why I think I may miss something in these kinds of situations. I do look at the consignors that got shafted as the innocent victims - individuals and collectors that trusted Mastro with selling cards for them. Maybe that's where I'm naive. If these consignors are all, themselves, turning these things over as part of an ongoing business, then maybe it is more like the commercial vendor selling inventory as a matter of course.

But it seems to me that just because the back half of the process - the relationship between the auctioneer and dealer/bidders - looks more like a normal commercial environment, the front half where the consignors are still looks sort of like innocent individuals.

J

[Peter_Spaeth]

As Jay and or Corey already pointed out, the willingness to extend credit probably resulted historically in making huge sums FOR consignors, as otherwise numerous bids would not have been placed. In hindsight it is easy to point the finger, but one has to assess the wisdom and propriety of a practice contemporaneously.

Now if as has been alleged there was shill bidding, that is a horse of another color.

[cyseymour]

Joann,

I hear where you are coming from, but remember - if you take something and don't pay for it, that's stealing. It's illegal. Mastro may have enabled it, but the people who did it, still did it. It was Forman who took items without paying, and has caused great grief and stress to the people who need the money the most - the "small time" collectors. It is stealing. You can say what you want about the possibility of shill bidding, but if Forman never paid and took the cards anyway, then it's irrelevant.

Anyone who sides with Forman on this matter, I think, I wouldn't have a lot of interest in buying cards from them on the B/S/T board - cause who really knows if I'd get my side of the deal?

Jamie

[jmk59]

But Peter, I don't think I'm pointing the finger after the fact because it looks clearer that way. I'm more genuinely dumbfounded that someone would do this with someone else's property, especially on such a large scale.

It's not like people gave them money to invest. Or entered the transaction from a commercial standpoint with all of the normal commercial risks. These were individuals that sent specific pieces of property to Mastro simply to sell, keep a cut and pass on the proceeds.

Again, this is where I'm not sure if I am naive or not. I have never consigned to an auction house, but if I did I would not have the foggiest notion that I am undertaking commercial risks normally associated with business. It would be my actual physical and identifiable card that I'm sending. What could go wrong? If anything happens, I just get my card back, right?

That's what I'd think, anyways. Probably the reason that I am sympathetic to the consignors is because it could so so so easily be me, and no doubt I would absolutely NEVER have seen it coming - would never even have considered the possibility of someone selling my cards and keeping the money as I made the decision to consign.

J

[sreader3]

The bombshell here is not the well-known cloud over Mastro / Legendary auctions, but that Dave Forman was (is) involved in the hobby as a major buyer/seller. I can only imagine how this Board would react if Joe Orlando had been a major player in Mastro Auctions and bought (at least) $400K in cards! I, for one, would like to have SGC aver that it has never graded a card submitted by Mr. Forman (although I seriously doubt that such a declaration will be forthcoming).

I look forward to the future Daily News articles investigating the Mastro / Forman / SGC connection.

[uniship]

You need not worry, it's not you. You just happen to be a logical thinker here analyzing an insane situation.

Rest assured that there are many many others like you who are utterly shocked and basically horrified at this information.

[slidekellyslide]

"Forman's attorney, Jeffrey Lichtman, says that his client doesn't deny that he has an outstanding balance. But that figure is less than the lawsuit contends because Mastro officials did not subtract the value of baseball cards sold by the auction house against Forman's wishes. Forman had given the cards to Mastro Auctions for a future sale, but when the economy turned sour - and with the FBI probe tarnishing the auction house's reputation - Forman decided to hold on to the cards. Instead, Lichtman says, they were sold at a Mastro Auction for much less than Forman might have gotten at a future date with a different auction house."


-------------------------------------------------------------

I'm sorry, but Forman's defense sounds ridiculous to me....The shilling allegations against Mastro have been going on for years and I don't think for one minute that Forman didn't know about them...I also think it's ridiculous to hold Mastro responsible for an outside sale that didn't go through because the seller lost the comic book...no money changed hands! And why would Mastro return cards to Forman if he owed them $400,000?? What did Forman do with the items he won from Mastro?? And how does Forman/Lichtman know that he could have gotten more for the cards at a later date with a different auction house?? Especially considering the economy.

[Peter_Spaeth]

And JoAnn if they told you they could realize 10-20-30 percent more for your item by extending credit to bidders who were substantial persons in the hobby with perfect payment records, and that of course they would pay you out of their general funds or go to their credit lines if necessary in the remote event there was an issue, what then?

[uniship]

they didnt tell her that

[jmk59]

Peter, in that scenario I would have the option to weigh the risks and decide. I might very well decide to do it. Or not. But no one was given the option or even told.

It's just a bad deal all the way around.

J

(And it's possible that I would have said no anyways, or at least asked a LOT of questions about whether this was normal practice, where would I be in line, what happened if someone didn't pay, had it ever happened before? I may have asked all of those questions and been a general pain in the rear b/c I'm sometimes sort of like that when I don't really understand something very well.)

[Exhibitman]

It had no credit to extend. The "credit" was other peoples' possesions that were entrusted to Mastro, that Mastro did not own, and that Mastro did not have the owners' permission to "lend" to the bidders.

I reviewed a Mastro consignment of mine to see whether it said anything about making loans with my stuff. Not surprisingly, there isn't a word in there to that effect, but it does say this:

"If any Buyer does not pay us for any Memorabilia within sixty (60) days after the end of an Auction, you have the option to withdraw the Memorabilia and have us return it to you, at your expense, or you may leave the Memorabilia with us for placement in another Auction."

So, not only did Mastro NOT inform consignors that it had the right to send their stuff out without payment, they promised consignors that if the item was unpaid for 60 days, it could be reclaimed. You cannot possibly tell me that what Mastro promised to its consignors is consistent with Mastro "extending credit" by "loaning" the consigned items to bidders. By definition, if the item's owner had the right to take it back from Mastro after 60 days, the item never, ever should have been sent out by Mastro to a bidder without payment first being received by Mastro. I do not think I would have any problem in court proving that this condition in the contract constitutes a promise by Mastro that it will hold onto the items until they were paid for by the winning bidders, and that continuing to make this promise despite what is now apparent was a long history of repeated violation of this promise is evidence of a management policy of actively defrauding consignors. The fact that they weren't caught until now is not an indicator of the soundness of the practice; by that logic Bernie Madoff did nothing wrong except to the last people who didn't get their principal back.

As far as SGC goes, that is another case. Right now it is supposition and innuendo--we don't know what really happened, yet. What we do know, right now, is that Lege-stro screwed some of its consignors. It is a much "bigger" story to me at this point because it is proven. Some of our members have had the pleasure of watching their cards sold on Ebay with no money to show for it from Lege-stro.

[rhettyeakley]

I in no way am defending what Mastro/Legendary has done in the past. They seem to have shot themselves in the foot several times, and are guilty of at least being terrible businessmen. That being said, I guess I'm not all that surprsed that Mastro/Legendary is in the middle of this thing. They certainly seem to deserve most of what is being heaped on them at this point.

However, when reading this story for the first time earlier today what WAS surprising to me was he Dave Forman/SGC thing. I literally thought to myself after reading it "Holy crap, this is NOT going to go well for Forman". The Mastro stuff isn't as surprising to me because none of what was in there was "new", most of it had been at least alluded to over the past several months. The SGC/Forman thing is "new" and it is rightfully being scritinized based on the information that we have. I must admit though it doesn't pass the smell test.

I am far from a PSA apologist but if this was Joe Orlando/PSA the pitchforks would already be out. It does seems like a bit of a double standard from many here.

[dennis]

"I am far from a PSA apologist but if this was Joe Orlando/PSA the pitchforks would already be out. It does seems like a bit of a double standard from many here."[/QUOTE]
who will start the thread i will not send in cards to sgc?:)

[sox1903wschamp]

However, when reading this story for the first time earlier today what WAS surprising to me was he Dave Forman/SGC thing. I literally thought to myself after reading it "Holy crap, this is NOT going to go well for Forman". The Mastro stuff isn't as surprising to me because none of what was in there was "new", most of it had been at least alluded to over the past several months. The SGC/Forman thing is "new" and it is rightfully being scritinized based on the information that we have. I must admit though it doesn't pass the smell test.

I am far from a PSA apologist but if this was Joe Orlando/PSA the pitchforks would already be out. It does seems like a bit of a double standard from many here.

This was the first thing that hit me about Dave Forman and I think I also exclaimed "holy crap" or something close to that. I do not know Dave but I sure know his company. Not ready to boycott them but I would like to see many more facts on this case.

[JamesGallo]

So no one has addressed what impact Dave has on day to day activity. I don't think Joe Orlando is sitting grading cards or unpacking orders, I don't think Dave is either.

I am not saying he is without guilt, but to fry him without pretty much any facts would be getting very much ahead or ourselves.

I think each person will have to make a decision on if they really believe that the graders do not know who the cards belong to. If that is the case then it really doesn't matter who submitted the cards and therefore I think some of the conflict of interest is removed, not all but sum.

Like I said without knowing any facts or what Dave's daily duties are I certainly can't make a decision to fry him or not.

Sometimes owners of companies can make bad decisions that doesn't mean the company as a whole is a pile of crap. I am not happy about this news, but I don't think it is as damaging as not opening on Mondays :-)

In a way I hope this goes to court, but there are always 3 sides to a story and I am not sure we will ever really know what the truth is regardless of the outcome of the case. It is very possible that the person who is right could very well get screwed.

James G

James G

[rhettyeakley]

James, we are pretty much in agreement. I have no intention to "fry" him. It just looks really bad, and his explanation in the story (if accurate) is kinda disturbing. In the end it will all play out and those that have done wrong will bear the consequences of their actions/decisions so I agree 100% with you that no pitchforks are neded.
-Rhett

[tbob]

The way things are going this might be a perfect storm for Mike Baker to regain a foothold for his new GAI company in the grading business. I'll guess we'll just have to see how this plays out.
Even though I have regularly used SGC for my card grading, I have to agree with the posters who state that if this story involved Orlando and PSA (instead of Forman and SGC) there would be a storm of outrage. :rolleyes:

[JamesGallo]

James, we are pretty much in agreement. I have no intention to "fry" him. It just looks really bad, and his explanation in the story (if accurate) is kinda disturbing. In the end it will all play out and those that have done wrong will bear the consequences of their actions/decisions so I agree 100% with you that no pitchforks are neded.
-Rhett

Rhett,

But in the story all your hearing is what the writer wrote and that generally in my mind isn't the whole story. Heck it might not even be the whole quote :-)

James G

[mightyq]

also dont forget that dave formans brother ..steve is a dealer....he is around philly buying all the time. does he submit cards to sgc? does he sell cards for dave? i could go on, way way to many questions here. he may be not guilty, (dave) but way to many questions where there shouldnt be!

[WarHoundR69]

I might be the only one here, but I'm most intrigued by the comic book debacle. How do you "LOSE" a collectible worth a couple hundred grand?

Doesn't pass the smell test.

Plus was it a raw Action Comics No. 1 or a CGC9.6 Marvel Key such as Amazing Fantasy No. 15, FF No. 1 or Spiderman No. 1?

In others words a raw Golden Age Key or a very High Grade (Graded) Silver Age Key?

I would just like to know what the comic book was - not too many are worth several hundred grand.

For that matter it could even be a graded Golden Age Key - a few of those in high enough grade would fetch those bucks.

[BCD]

David Hall may be a collector, but he is also a coin dealer. IMO he has the same conflict of interest as Forman does with SGC.

http://www.davidhall.com/

No! David Hall does not walk the floor of shows selling coins he just pressed into a holder!

[mcap100176]

After reading the article and comments, here's what I learned and thought:

1. Use REA if your items are good enough

2. If buying expensive items, buy them yourself and not have a friend help you

3. If not using REA, use Ebay with PayPal. Why? You always get paid and have an avenue to recoup lossess without resorting to a Pomeranian Serenade. Few horror stories aside, considering the massive quantity of sold items on Ebay and low percentage of frauds, it is still (appears to be) the best place to do business.

4. Only ship items after payment is received AND clears.

5. Don't bid if you can't pay

6. "The company filed a lawsuit on June 25 in Illinois state court against Dave Forman, the president of SportsCard Guaranty, a New Jersey card-grading service. The suit alleges Forman owes Mastro more than $400,000, including interest, for items purchased in 2007 and 2008 auctions.

Take out 11 of the 45 words and half of the comments in this topic go away.

"The company filed a lawsuit on June 25 in Illinois state court against Dave Forman. The suit alleges Forman owes Mastro more than $400,000, including interest, for items purchased in 2007 and 2008 auctions.

7. "When Allen and several colleagues announced over the winter that they had bought Mastro assets and would go into business as Legendary Auctions, they promised in a press release that all outstanding Mastro Auction business would be "seamlessly facilitated, processed and completed through Legendary Auctions."

Press releases aren't legally binding. Does 'assets' include the outstanding debt? In this case unpaid consignors. Why buy the debt? Wouldn't it be a smarter business decision to have to make the consignor seek restitution/payment from a bankrupt company?

8. If you are owed money, repeatedly call the company in an attempt to clog the phone lines.

9. If I am Silk Road Equity and I saw one of my investments using my name in the public in a negative sense, I drop them like a lead balloon.

[Sean_C]

I seriously doubt that will ever happen. Baker won't give up the dream though, even if the company is toast.

The way things are going this might be a perfect storm for Mike Baker to regain a foothold for his new GAI company in the grading business. I'll guess we'll just have to see how this plays out.
Even though I have regularly used SGC for my card grading, I have to agree with the posters who state that if this story involved Orlando and PSA (instead of Forman and SGC) there would be a storm of outrage. :rolleyes:

[2dueces]

Seeing all that is going on, is this the hobby we all expected it to be? Is this how we thought collecting cardboard would turn out? A childhood passion tainted with everything that goes on. Really is a shame that a few ruin a great passion for everyone else.

[oldjudge]

Adam--Mastro Auctions didn't lend lots, they loaned money. I think you would lose that case in court.

So far, when discussing Mastro Auctions and Foreman, in my mind at least, there is only one who is clearly wrong--Foreman. Mastro may have done some horrible things, but nothing has been proven. I have more problems with what Legendary has done, based on what has been proven so far, than anything that Mastro Auctions has done.

[Peter_Spaeth]

This is why one must avoid not only conflicts but appearances of conflict.

Naturally, SGC says Dave cannot submit. Some will accept that reassurance, others will be skeptical and demand proof that won't be forthcoming because it is virtually impossible to prove a negative -- at least without access to records of all cards Dave purchased and all that he sold/consigned.

Dave may well have never submitted a card to SGC, directly, through his brother, or anyone else. But since he is the principal of the company, if he were inclined to do so, one imagines he could.

In my opinion, he should have avoided even the appearance of a conflict.

And I concur with those who say if these revelations had been made about Joe Orlando, the outrage on this board would be tenfold.

[Mrc32]

Seeing all that is going on, is this the hobby we all expected it to be? Is this how we thought collecting cardboard would turn out? A childhood passion tainted with everything that goes on. Really is a shame that a few ruin a great passion for everyone else.

Go watch Field of Dreams tonight while searching the ebay listings. Everything will be alright.

[HRBAKER]

"And I concur with those who say if these revelations had been made about Joe Orlando, the outrage on this board would be tenfold."

The righteous indignation would be suffocating!

[slidekellyslide]

This is why one must avoid not only conflicts but appearances of conflict.

Naturally, SGC says Dave cannot submit. Some will accept that reassurance, others will be skeptical and demand proof that won't be forthcoming because it is virtually impossible to prove a negative -- at least without access to records of all cards Dave purchased and all that he sold/consigned.

Dave may well have never submitted a card to SGC, directly, through his brother, or anyone else. But since he is the principal of the company, if he were inclined to do so, one imagines he could.

In my opinion, he should have avoided even the appearance of a conflict.

And I concur with those who say if these revelations had been made about Joe Orlando, the outrage on this board would be tenfold.

Someone who used to work at SGC just posted on another thread in this forum that the graders were extra hard on Dave's submissions.

Dan

[canjond]

Someone who used to work at SGC just posted on another thread in this forum that the graders were extra hard on Dave's submissions.

Dan

I thought SGC already responded to this thread and stated:

"I want to stress the fact that SGC employees and/or owners are not able to submit cards for grading."

So does that mean they can submit cards for grading?

[oldjudge]

"Oh what a tangled web we weave, When first we practice to deceive".----Sir Walter Scott

[Peter_Spaeth]

Hey that's my favorite quote which I have posted many times lol.

How about this one, from Joe South.

Oh the games people play now
Every night and every day now
Never meaning what they say now
Never saying what they mean.

[Peter_Spaeth]

This is what Glyn posted, which does, at first blush, appear to be different from what Brian posted.

"For the record I think they treated Dave's material with more scrutiny then any other submitters, and he never got the benefit if they were between grades he got the lower, and if there were any questions the card was rejected. I have nothing but praise for the individuals at SGC, they are a fine company and even finer people."

[tothrk]

One individual states the graders knew they were Dave's cards but were extra careful with them. Another states that employees/owners can't even submit cards. I would assume both of these people can't be correct.

[danmckee]

Doesn't one of the SGC employees usually post here when there are issues? That gent has been very good at clearing up stuff for us, maybe we can get him to come on this thread.

I like SGC the best.

Dan

[canjond]

Doesn't one of the SGC employees usually post here when there are issues? That gent has been very good at clearing up stuff for us, maybe we can get him to come on this thread.

I like SGC the best.

Dan

Dan, I think you are referring to Brian, who is the person who posted that SGC employees and/or owners are not able to submit cards for grading.

[danmckee]

oh ok, well that probably ain't looking too favorable. Though Dave is way up the ladder and maybe Brian wasn't aware of it? Am I digging here? Dan.

[oldjudge]

Dan--They have like six employees in an office the size of a bodega in the Bronx. You'de think they would all know what is going on.

[canjond]

I personally have no idea and have always found Brian to be great. I just happened to notice the inconsistency in statements between the two. :)

[danmckee]

Yes that is a tough one to explain away there.

[oldjudge]

Ricky Ricardo: Lucy, you got some 'splainin' to do!

[philliesphan]

the policies of today are very different from when Glyn was a grader there. How long ago was that, Glyn?

[tothrk]

Sounds like some of their policies suck.

[glynparson]

This could very easily be the case, as Brian and I only worked together for a few short weeks. It has been about a year since i worked at SGC and it is very possible the policies have changed. Again they are all first rate individuals at SGC and they grade the card for the card not who owns it or wants to buy it.
Please remember I was very critical of Dave when he first purchased SGC. With the direction SGC went in after he took over he proved me wrong. I then went to work there and can tell you nothing changed my opinion, that this is the best most accurate grading company out there. I have no problem calling it like I see it and I can tell you they are as honest as a company can possibly be. It was not my intention to cause SGC any harm but I was letting Rich know he had the wrong guy.

[Peter_Spaeth]

So how many cards, one wonders, are out there in the marketplace that SGC graders graded for their boss, knowing they were his cards? This situation certainly should have been avoided.

[mightyq]

what glyn p said....."For the record I think they treated Dave's material with more scrutiny then any other submitters, and he never got the benefit if they were between grades he got the lower, and if there were any questions the card was rejected. I have nothing but praise for the individuals at SGC, they are a fine company and even finer people."


glyn has said all the right things for sgc. and most are probably true.
but that statement sounds like to me that dave has his cards graded and the graders "know" they are his!! this is alarming !!

why is dave forman still dealing cards??!!! and using his own grading co. to do so. dont know what many of you think, but i own a good amount of sgc myself, no matter what way you want to disect this and rally around sgc...."this is not good". how long has this been going on??? dave grading and selling in auctions:confused:

i may be wrong but what glyn said is an admission of what sgc has been doing, of course it was un-knowingly done by glyn and now it just has led to more questions.

[Wesley]

I agree Marty. When I read the NY Daily Times article yesterday, I thought it was odd that Dave Forman was buying hundreds of thousands of dollars worth of cards, and consigning cards on such a large scale with Mastro. I was wondering whether any of the consigned cards were graded by SGC.

Glyn confirmed my worst fears about SGC: Not only does the principal in one of the major grading companies have cards graded by his own company, but there is also no anonymity in the grading room as far as who is submitting the cards. These revelations are disturbing to me on so many different levels.

[JamesGallo]

I agree Marty. When I read the NY Daily Times article yesterday, I thought it was odd that Dave Forman was buying hundreds of thousands of dollars worth of cards, and consigning cards on such a large scale with Mastro. I was wondering whether any of the consigned cards were graded by SGC.

Glyn confirmed my worst fears about SGC: Not only does the principal in one of the major grading companies have cards graded by his own company, but there is also no anonymity in the grading room as far as who is submitting the cards. These revelations are disturbing to me on so many different levels.

Man you guys can really go off with assumptions all over the place.

WE HAVE NO IDEA IF DAVE EVEN BOUGHT CARDS!!!!!!

People are just assuming Dave bought cards but we don't KNOW that as a fact.

I think forming opinions without hardly any facts is foolish at best.

I think there are several issues here

1) Do the graders know who owns the cards before they grade them.

I doubt this.

2) Did Dave or someone close to him submit raw cards for grading.

I don't know the answer to this yet, perhaps the cards he sold were all graded before he became involved with SGC. Again WE DON'T KNOW.

3) Did Dave sell SGC graded cards, raw cards or what.

Again we have no idea what he sold.

4) Did Dave buy cards at all.

Again we don't know what the heck he bought, people are assuming he bought cards and in the few times I have met him and been to the SGC offices I know that his interests go beyond sports cards. I would have no problem with Dave buying a Ruth bat or other such item.

I don't know Glyn, but I would like to know who knew what. He was a grader so is he saying Dave just walked in and asked the graders to grade a pile of cards for him. I find this hard to believe.

Again I am not saying Dave is innocent of screwing up but to make assumptions about what he did or did not do and what he sold is stupid at this point.

At this point with this going to court I am not sure what else will come out but it may be some time before many of the above questions get answered.

Out of all the grading services I have used, PSA, BGS, SGC for cards, CGC for comics and AFA for toys, SGC has always had the best customer service and has been very consistent with the grades I have received.

I have no reason to doubt the service they provide and the integrity of the company as a whole.

James G

[Peter_Spaeth]

Glyn worked for SGC. It seems highly unlikely he is wrong about what he said.

[Leon]

Glyn (hi Glyn) can obviously answer this, and I am not sure if it matters with what is being asked, but I always thought Glyn was in customer service and not the grading dept.

[Wesley]

James, Glyn worked for SGC, and he answered your first two questions in a post above. He said the SGC graders were actually harder on Dave's cards, not easier. How did the graders more heavily scrutinize Dave's cards, if they did not know they belonged to Dave?

[Rob D.]

There's an episode of <em>The Twilight Zone</em> ("The Monsters are due on Maple Street") in which aliens periodically turn the power on and off for only a few of the residents of a typical American neighborhood. The people, who have little information about what's going on and immediately have no explanation for what's happening, turn into a panicked mob as the accusations fly.

This board, sometimes, is that neighborhood.

http://www.youtube.com/watch?v=NwoytBw5iIw

[JamesGallo]

James, Glyn worked for SGC, and he answered your first two questions in a post above. He said the SGC graders were actually harder on Dave's cards, not easier. How did the graders more heavily scrutinize Dave's cards, if they did not know they belonged to Dave?

Wesley,

This is exactly my point, and is Glyn did work in customer service as Leon suggested then I am not sure how much involvement he would have.

Your assuming that person A brought cards into the grades and said oh these are Dave Formans cards so be harsh on them. I just don't buy it as I feel the graders stick to their guns and don't want to know who the cards belong to.

As I have said I have no facts, all you are going on is what Glyn said in a short statement and you have not asked how did Gyln know the graders knew they were Daves cards.

I don't think graders care whose cards are whose and they shouldn't grade the card for the card and not the owenr. I think they do that and that is enough for me until there are some FACTS that prove otherwise.

I am not closed minded but I am not jumping to a conclusion without any facts and I many are.

James G

[tbob]

Those with long memories remember back on the Full Count Board (predecessor of Net 54) and in the early days when posters who inferred that collectors who were "good old boys" or "large quantity submitters" would get preferential treatment, would get lambasted. I remember one time posting that I believed that grading companies, despite their written policies, DID know who was submitting certain cards and although some agreed with me, many were outraged at the thought that the grading companies were ever anything other than 100% impartial. Flash forward 6 years and how many of you dissenters still think the grading companies are Ivory Snow businesses? Just wondering...;)

[tbob]

To me this is the bottom line:

Either SGC KNEW the cards submitted were Forman's (and depending on who you believe they were either tougher on his cards or he got a "good old boy" upgrade) or they did NOT know. That's the bottom line. Sure the Prez of SGC should have avoided even the appearance of impropriety but the bottom line is did the graders know they were his cards or not. Glyn who used to work there indicates they DID (although they graded his cards tougher), others say they had no idea whose cards were whose.
That's the bottom line.

Me, I am still trying to figure out which comic book would have sold for hundreds of thousands of dollars, especially in the stagnant comic book market these days. :confused:

[Peter_Spaeth]

This is hysterical, someone says they have no facts when we have a statement from an employee of SGC with no bias as he says only favorable things. Amazing. Tell us James, what is YOUR basis for saying Glyn doesn't know what he is talking about?

[oldjudge]

Bob-My guess is that when the average guy mails in a submission to SGC the graders probably don't know whose it is. When someone brings a few high grade cards in for immediate turnaround my guess is that they sometimes do know whose cards they are.
Is there preferential treatment--who knows. Certainly not for me or you.

[tothrk]

To me this is the bottom line:

Either SGC KNEW the cards submitted were Forman's (and depending on who you believe they were either tougher on his cards or he got a "good old boy" upgrade) or they did NOT know. That's the bottom line. Sure the Prez of SGC should have avoided even the appearance of impropriety but the bottom line is did the graders know they were his cards or not. Glyn who used to work there indicates they DID (although they graded his cards tougher), others say they had no idea whose cards were whose.
That's the bottom line.

Me, I am still trying to figure out which comic book would have sold for hundreds of thousands of dollars, especially in the stagnant comic book market these days. :confused:

Glyn outright told us they KNEW they were grading Dave's cards. Of course he is going to say they were tougher on them. Something is not right. Maybe he was just getting cards graded and that's it. In any event, I personally feel some submissions are not anonymous. Finally, I have plenty of comic books I will sell you for hundreds of thousands of dollars.

[Leon]

Glyn outright told us they KNEW they were grading Dave's cards. Of course he is going to say they were tougher on them. Something is not right. Maybe he was just getting cards graded and that's it. In any event, I personally feel some submissions are not anonymous. Finally, I have plenty of comic books I will sell you for hundreds of thousands of dollars.

Do you have a #27 Detective Comics (1st appearance of Batman) in high grade? If so I might have a buyer for you :)

[spacktrack]

Please see the below statement from Sean Skeffington, VP of Operations for SGC.

--------------------------------------------------------------------------

Everyone,

We’ve been following the comments and questions on this issue closely, and while we cannot continue to address every question in this forum, we feel compelled to clarify a few issues.

Please understand that due to the nature of the dispute between Dave Forman and Mastro Auctions, we are not at liberty to make statements regarding the issue. What is important for us to communicate is that the dispute does not involve SGC as a company, and thus we cannot make any sort of statement, other than to express our hope that the two parties are able to resolve their differences.

However, in the course of the many online discussions, some questions about perceived inconsistencies in SGC’s company policies have come to light, and in the interest of transparency and trust, we feel compelled to comment.

First, in our continuing efforts to refine and improve our internal operations, SGC established a policy prohibiting any employee from submitting cards for grading. That policy was established in the second half of 2008. Prior to that, while there was no official company policy on the matter, it was a non-issue, since the number of cards submitted by employees was minimal. We established the policy on our own, to help eliminate the potential for impropriety.

Secondly, we feel it is important to note that as the owner of SGC, Dave Forman is not involved in the day-to-day operation of the company, and has never dictated grading policy or graded any cards submitted to SGC.

Lastly, as a grading company well-known for honoring its guarantee, we want to remind everyone that SGC continues to stand behind each and every card in an SGC holder. If, at any time, you feel that one of your cards is not accurately graded for whatever reason, we will be happy to review it for you at no charge, and as you all know, we have bought back misgraded cards in the past.

We feel that it is important to note that for the last 11 years, SGC has worked very hard to earn your trust and establish itself as the most knowledgeable, skilled grading company in the hobby. We are truly appreciative of the trust you have shown us, and we continue to work hard to earn that trust, every single day. While we understand many of the concerns that have been expressed here, we also ask you to remember that SGC still boasts the same commitment to accuracy, consistency, knowledge and customer service that you have all come to expect from us.

We appreciate your patience with our response. We also appreciate your understanding that due to the nature of this situation, we are not at liberty to discuss specifics regarding the dispute between Dave Forman and Mastro. If there are any additional questions that we can answer to help restore your confidence, please do not hesitate to call our offices.

Sincerely,

Sean Skeffington
VP of Operations

[canjond]

Bob-My guess is that when the average guy mails in a submission to SGC the graders probably don't know whose it is. When someone brings a few high grade cards in for immediate turnaround my guess is that they sometimes do know whose cards they are.
Is there preferential treatment--who knows. Certainly not for me or you.

Jay's probably correct IMO. For example, when the infamous N167 was purchased on eBay and subsequently graded by SGC, I'm sure they knew who had purchased the card. An N167 Ewing doesn't come in every day. I'm not implying that SGC gave any preferential treatment, just that I agree with Jay that in some instances, the owner of a card is probably known.

[tothrk]

Do you have a #27 Detective Comics (1st appearance of Batman) in high grade? If so I might have a buyer for you :)

No, sorry. My comics are of the worthless variety, but I'm more than willing to sell them for hundreds of thousands of dollars:)

[Leon]

Jay's probably correct IMO. For example, when the infamous N167 was purchased on eBay and subsequently graded by SGC, I'm sure they knew who had purchased the card. An N167 Ewing doesn't come in every day. I'm not implying that SGC gave any preferential treatment, just that I agree with Jay that in some instances, the owner of a card is probably known.


I have to guess that SGC does know who some of the submitters of cards are, especially very rare ones, how could they possibly not? I can safely say that I don't know ANYONE, including myself, that has EVER gotten any preferential treatment with respect to a grade. SGC still has the best graders in the business, imo, and they will still get my business....not because they are a banner advertiser, but because they are the most consistent and best in the business. No doubt there have been questions raised that deserve some answers but the grading dept is as good as it gets...along with their ops dept. :)


I should add that I think my friends at Beckett do an outstanding job also......I have my fingers crossed on a JSA item they have of mine right now.....

[mcap100176]

What if a grader for any company wanted their cards graded, then they can't submit to their own company?

What would the fallout be if Foreman bought some raw cards and sent them to PSA?

I fully understand and respect the appearance of possible favoritism or impropriety but I have to assume that the graders are collectors also.

I don't have a problem with any grading company grades employee cards.....as long as the cards are graded the same as everything else submitted...not graded harder or with a closer inspection, not easier....just the same as everyone else.

Out of all of this, the most annoying item was someone's cards were graded at a different standard.

Place in the label that it was "So And So's Card from their personal collection" to be completely open if that card ever hit the open market.

[Matt]

Please see the below statement from Sean Skeffington, VP of Operations for SGC.

--------------------------------------------------------------------------

Everyone,

We’ve been following the comments and questions on this issue closely, and while we cannot continue to address every question in this forum, we feel compelled to clarify a few issues.

Please understand that due to the nature of the dispute between Dave Forman and Mastro Auctions, we are not at liberty to make statements regarding the issue. What is important for us to communicate is that the dispute does not involve SGC as a company, and thus we cannot make any sort of statement, other than to express our hope that the two parties are able to resolve their differences.

However, in the course of the many online discussions, some questions about perceived inconsistencies in SGC’s company policies have come to light, and in the interest of transparency and trust, we feel compelled to comment.

First, in our continuing efforts to refine and improve our internal operations, SGC established a policy prohibiting any employee from submitting cards for grading. That policy was established in the second half of 2008. Prior to that, while there was no official company policy on the matter, it was a non-issue, since the number of cards submitted by employees was minimal. We established the policy on our own, to help eliminate the potential for impropriety.

Secondly, we feel it is important to note that as the owner of SGC, Dave Forman is not involved in the day-to-day operation of the company, and has never dictated grading policy or graded any cards submitted to SGC.

Lastly, as a grading company well-known for honoring its guarantee, we want to remind everyone that SGC continues to stand behind each and every card in an SGC holder. If, at any time, you feel that one of your cards is not accurately graded for whatever reason, we will be happy to review it for you at no charge, and as you all know, we have bought back misgraded cards in the past.

We feel that it is important to note that for the last 11 years, SGC has worked very hard to earn your trust and establish itself as the most knowledgeable, skilled grading company in the hobby. We are truly appreciative of the trust you have shown us, and we continue to work hard to earn that trust, every single day. While we understand many of the concerns that have been expressed here, we also ask you to remember that SGC still boasts the same commitment to accuracy, consistency, knowledge and customer service that you have all come to expect from us.

We appreciate your patience with our response. We also appreciate your understanding that due to the nature of this situation, we are not at liberty to discuss specifics regarding the dispute between Dave Forman and Mastro. If there are any additional questions that we can answer to help restore your confidence, please do not hesitate to call our offices.

Sincerely,

Sean Skeffington
VP of Operations

Thank you for clarifying.

[Peter_Spaeth]

As long as I am playing the ass**le cynic in Jeff's absence (:))
1. If there was no issue then why change the policy?
2. Does the policy apply to family members?
3. I also note that Sean does not dispute anything Glyn said.

[Wesley]

Thanks Sean and Brian for the clarification. I am not cynical like the East Coast guys, but here are other questions that can be raised:

1. How many cards did SGC grade on behalf of David Forman from the time he took over the company until one year ago?

2. Is there any way to identify cards graded on behalf of SGC owners or SGC personnel?

3. Did the graders know that they were scrutinizing cards that belonged to their coworkers in the next cubical?

4. Did SGC owners and SGC personnel have to fill out submittal forms and place cards in CardSaver I's?

[tbob]

and (to add to Wesley's list):

5) Were cards owned by Forman's brother (who is reported here to be a seller of cards) graded by SGC?
6) Did the graders know that these were his brother's cards before grading (a follow-up on Glyn's comment)?

As to the issue of the actual graders at SGC, I have (like others) disagreed on occasional grades received in the past but have always found the guys who grade to be top-notch and very cordial when I have met them at the National.

[wondo]

I gotta believe that when I walk up to the SGC booth at a show, fill out an invoice and give them my cards that the grader may/can see me - especially when a grader comes out and asks a question.

Anonymity is not the issue, favoritism is. One might argue that anonymity guarantees non-bias treatment, but I say that professionalism is more likely to lead to equitable grading. It comes down to trust; everything else is like living is Neverland (apologies for the MJ reference). I trust the three big grading companies.

[botn]

Not sure I have any more of an issue with Dave having cards graded by his own company, SGC, than his having cards graded with PSA. My trouble is that Dave should not be dealing cards any longer. If he did submit cards to SGC I would like to believe they were graded in accordance with SGC's polices. My fear is that he was supposed to have divested his collection or at the very least stopped selling cards so it begs the question as to how far he went. Yet this clearly is not the case and not what the public was lead to believe. It is Dave's company. As I asked yesterday, what are the checks and balances that are in place? What prevents Dave from grading his own stuff?


Greg

[calvindog]

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[botn]

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[botn]

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[JamesGallo]

Please see the below statement from Sean Skeffington, VP of Operations for SGC.

Secondly, we feel it is important to note that as the owner of SGC, Dave Forman is not involved in the day-to-day operation of the company, and has never dictated grading policy or graded any cards submitted to SGC.

Sean Skeffington
VP of Operations

This is what I have been trying to get out through out this thread and perhaps it was lost in the length of Sean's comments.

Dave does not impact any grading, he does not grade, therefore if you trust the graders then it is a non issue.

Peter, I am not saying I know any facts that is the problem, just because Glyn made one comment about the issue does not mean that all the facts have been presented. I assume we won't hear anything further from Glyn so as to avoid him opening up any other pandora boxes. I don't believe Glyn was doning anything else but commenting on his view of things and certainly was not trying to do harm although some may have turned it into that.

I agree there are a lot of other questions but since we don't even have the most basic facts
1) what did Dave have graded
2) did he sell cards he had graded
3) what he bought
4) what he sold

I don't see how anyone can come to the mind set that Dave and SGC did wrong.

As I said I will stand by SGC because even if a grader did happen to know a card was Dave's I don't think they would have acted any different and that is what I expect, want and pay for.

James G

[Peter_Spaeth]

Depending on the level of detail in the Complaint, we MAY know soon at least what lots Dave purchased that he didn't pay for. I doubt we will ever know what he sold, or what he had graded, or the true extent of what he bought.

To me, creating the appearance of impropriety, even if there wasn't any actual impropriety, is sin enough, particularly in this business. I am sure others will share that view and others like yourself will not, which is fine.

[calvindog]

I've waited a day and a half to make any comment on this thread as it would most likely be perceived to be self-serving; that being said, there are a few points I'd like to make:

First, I've been representing Dave on this issue with Mastro/Legendary since March of 2009; my thoughts about Bill Mastro and Doug Allen have been pretty much consistent for at least 3 years now and are probably in line with about 90% of the people in the hobby. Of course, as Dave's lawyer I'm biased towards his position; but my point is that since becoming his attorney my position on Mastro and Doug have not changed one iota. I wish other posters' biases and motives could be as transparent. Unfortunately, the news about the lawsuit has provided the opportunity for many to take shots at Dave due to personal problems they may have with him having nothing to do with SGC or, in other instances, to support Mastro/Doug despite being either financially involved with them or otherwise a part of some of their mess over the years.

Second, the lawsuit was filed on June 25. Today is July 6 and I have yet to hear from Mastro's attorneys about the suit despite having been in touch with them since March. Dave has also not been served with a copy of the lawsuit. I learned about the lawsuit from Mike O'Keeffe who provided me with a copy of it -- it was clearly given to him by an interested party (can you guess who?). Needless to say, it is more than troubling to learn about a lawsuit from a reporter (as well as from a number of apparently hand-picked hobbyists who also alerted me) instead of from attorneys. Make from that what you will but I will say that this is a curious way to try to settle a dispute - assuming that settling the dispute was the desired goal with the lawsuit. And remember: we didn't bring a lawsuit against Mastro; we're defending it. Unless we did everything that Mastro wanted, we had no choice in the matter here; they sued Dave without warning, not the other way around.

Next, I'm not going to litigate the legal issues on this board despite the great desire here for such a show. There's no point in it. And while there are a number of “judges” here who have already pronounced their verdicts based solely on a newspaper article written by a guy who before yesterday hated cards more than he hates bin Laden, you'll excuse me if I don't feel the strong desire to make my arguments to them. Needless to say, the article hardly provides all the information required to come to any fair conclusion. And again, there are unrevealed biases here and opinions should be taken with a grain of salt -- many (but not all) of the people bashing Dave and SGC here have made clear to me their dislike for him well before any of the legal issues arose.

Finally, anyone who has any intimate dealings with SGC knows that Dave has been nowhere near the grading room for months and months and months and is not a daily presence in the running of the company. I'm not going to get into a defense of the company, however, because I'm Dave's lawyer and I otherwise don't know how the operation works there. All I can say is take a look at SGC's track record, their customer service, their product since Dave took over. You might even want to compare it to the track record for integrity that existed/exists at Mastro/Legendary. Regardless, if you have any questions, call the guys at SGC. I've submitted cards to both SGC and PSA so what do I know but I think SGC's product has been generally favored on this board and those reasons still exist regardless of Dave's problems with Mastro and Doug.

As for perceived conflicts of interest, there are real and perceived conflicts of interest all over this hobby. With SGC cards, however, the proof is in the pudding. If cards are overgraded, doesn't SGC have a track record of buying them back? (Although I don't know many people that complain of having overgraded SGC cards) The argument that suddenly even the appearance of impropriety is awful, if extended logically, would knock out every auction house and grading company in existence. In the end, you have to trust the grading of your cards...and as I've said before, call SGC up if you have any questions, they do answer their phones -- even without dogs barking in the background.

[Peter_Spaeth]

Jeff I appreciate your remarks and perspective, but with all due respect I disagree with you on appearance of conflict. For one thing overgrading is not the only potential problem with slabbing cards, and even then, it is subjective. But leaving that aside, assuming Dave does buy and sell cards, which you haven't denied I don't think, I for one don't want a grading service run by a card dealer whose grading service is grading his cards. It just raises too many questions, where basically we have to take his word (or those of his employees) that it is all on the up and up. And it may well be, but it is unnecessary.

And your statement that there are other conflicts, while perhaps true, does not excuse this one. Joe Orlando is not, to my knowlege or anyone else's, buying and selling cards.

[Rich Klein]

While I know you have many fascinating things to say about this case; as a lawyer who is aware of facts that we are not; I think you have the right to stay out of this thread :)

And I was out at dinner with wife and her friends last nite -- Had to go; she was very antsy after being home bound since Tuesday when her knee got scoped. Which is why I missed your show last nite. Why does ABC need that Imus guy anyway for. ;)

All I ask; is when it is legally prudent for you to do so; to post the suit (and counter-suit if there is one) with a link. :p

Regards
Rich

[danmckee]

WOW! again, this is some crazy info. You are defending Dave, that is great. But did he win lots he hasn't paid for or not? That is the main question here I think. Why else could Mastro Inc sue him? dan.

[three25hits]

Anyone can sue anyone at anytime.

And Mastro still isn't paying consignors... but they are certainly pointing the finger at others for all sorts of things.

[Peter_Spaeth]

Dave is still selling and buying cards on ebay, it appears.

http://feedback.ebay.com/ws/eBayISAPI.dll?ViewFeedback2&userid=dfco&ftab=AllFeedback

[oldjudge]

Interesting that his grading company of choice is PSA. Who grades those Frasier DVDs?

[Mrc32]

Dave is still selling and buying cards on ebay, it appears.

http://feedback.ebay.com/ws/eBayISAPI.dll?ViewFeedback2&userid=dfco&ftab=AllFeedback

Is he upgrading those PSA graded cards by walking down the hall?

Ugh :(

[Jewish-collector]

Maybe Jeff can speak & take questions at the Net54 National dinner. :D:D:D

[Matt]

Maybe Jeff can speak & take questions at the Net54 National dinner. :D:D:D

I was hoping Doug would.

[Leon]

Anyone can sue anyone at anytime.

And Mastro still isn't paying consignors... but they are certainly pointing the finger at others for all sorts of things.

Since you made this statement can you please list the names here of the folks you are referring to? As far as I am aware every person that contacted me has been contacted and has had arrangements made to be paid or has been paid. I am sure there might be more out there but since you are the one posting then I would like to know. This will help them get paid quicker (which I totally agree that they should have already been paid). Thanks much

[JamesGallo]

Dave is still selling and buying cards on ebay, it appears.

http://feedback.ebay.com/ws/eBayISAPI.dll?ViewFeedback2&userid=dfco&ftab=AllFeedback

Yes but everything he seems to have sold has been in a PSA holder.

It certainly is silly to have his name clearly on that id and to be buying cards with it certainly isn't the best looking thing but that doesn't mean he has done anything wrong per sa.


James G

[Wite3]

Got my usual , "please consign with us email today" from Legendary...aside from the really poor taste in my mouth about their trustworthiness, the email had two different spelling errors...maybe they should use some of their stolen money and pay for a spell check program.

Joshua

[Bosox Blair]

Is he upgrading those PSA graded cards by walking down the hall?

Ugh :(

I think the transactions pretty clearly show he is not. He is repeatedly selling PSA-graded cards in PSA holders (ie. NOT using his "influence" to get those cards slabbed with higher SGC grades).

I don't have nearly enough facts to want to get into this debate, but if this Ebay feedback does anything for me, it encourages me.

Cheers,
Blair

[botn]

The complaint filed by Mastro states that Forman amassed a staggering $805K in debt between 2006 and Aug 2008. Since Aug 2008 (the Dec 08 auction) Forman's net consignment proceeds were just over $569K according to the complaint. It does not give a complete list of the items making up the $805K in purchases nor does it identify all of the items Forman sold in auction totaling just over $569K but it does list the following 4 items:

T210 Jackson PSA Authentic (Lot 589 in the Dec 08 Auction)

T205 Cobb SGC 84 (Lot 718 in the Dec 08 Auction)

M110 Complete Set SGC graded (Lot 329 in the Dec 08 Auction)

49B Robinson SGC 98 (Lot 226 in the Dec 08 Auction)

The complaint also states that Forman had an unpaid $200K debt with Mastro Auctions in Aug 2007 at which time an agreement was made to extend him additional credit at 10% interest.

Don't know about you but if someone is unable to satisfy a debt for 200K what makes you think it is a great idea to extend the credit like to over $800K? The 10% interest was enough of an incentive? I don't buy that. There is more to this story then we are getting.

Greg

[Sean_C]

Is the complaint viewable online?

The complaint filed by Mastro states that Forman amassed a staggering $805K in debt between 2006 and Aug 2008. Since Aug 2008 (the Dec 08 auction) Forman's net consignment proceeds were just over $569K according to the complaint. It does not give a complete list of the items making up the $805K in purchases nor does it identify all of the items Forman sold in auction totaling just over $569K but it does list the following 4 items:

T210 Jackson PSA Authentic (Lot 589 in the Dec 08 Auction)

T205 Cobb SGC 84 (Lot 718 in the Dec 08 Auction)

M110 Complete Set SGC graded (Lot 329 in the Dec 08 Auction)

49B Robinson SGC 98 (Lot 226 in the Dec 08 Auction)

The complaint also states that Forman had an unpaid $200K debt with Mastro Auctions in Aug 2007 at which time an agreement was made to extend him additional credit at 10% interest.

Don't know about you but if someone is unable to satisfy a debt for 200K what makes you think it is a great idea to extend the credit like to over $800K? The 10% interest was enough of an incentive? I don't buy that. There is more to this story then we are getting.

Greg

[WarHoundR69]

Just wanted to mention that the "Fraudlent" dealings go back even further.

Sometime in 2007, Mark Finn, a prominent & highly respected Non-Sport collector bought a lot from Mastro that included original artwork from the 1941 R158 Gum Inc. Uncle Sam Home Defense Set. When Mark received the lot, the most desirable high number artwork was missing.

A complaint was filed by Mark, he was banned by Mastro. The missing original artwork showed up in a subsequent Mastro auction. Mark filed a complaint with the FBI.

Check out the Nonsport Forum for the complete thread.

Who knows how many little guys were ripped off in this fashion over the years?

As a disclaimer, Mark Finn is a friend of mine - We have bought from, Sold to & Traded many cards, from each other over the years.

When will someone like Mark be made whole by Mastro or Legendary?

[danmckee]

I too will proudly vouch that Mark is a stand up guy. Dan Mckee

[WarHoundR69]

Leon - I emailed Mark Finn about your offer to help.

He should be emailing you with all the particulars.

Anyone out there with a similar Mastro auction problem?

[Peter_Spaeth]

If, as appears to be the case, a large portion of Mastro's claim is interest, in theory that should make the dispute easier to settle. And (easy for me to say, of course), it probably SHOULD settle. That said, settlement dynamics are not always perfectly rational, at least early in a case.

[calvindog]

Leon - I emailed Mark Finn about your offer to help.

He should be emailing you with all the particulars.

Anyone out there with a similar Mastro auction problem?

Does Leon have Doug's phone in his pocket? Why can Mike O'Keeffe get in touch with Doug but not Mastro/Legendary customers?

[clamendo]

The solution is simple. People who own, run, or work for grading companies should stick to grading - not price guides (PSA -SMR), or prices realized (on the SGC home page). Becasue as soon as they stress the monetary aspects - they should not be allowed participate in bidding on any graded cards. They are indirectly generating "buzz" and it is self serving and a conflict of interest. Let the people who advertise in their magazines do that.

Here is the definition of a shill from Wikipedia.

A shill is an associate of a person selling goods or services or a political group, who pretends no association to the seller/group and assumes the air of an enthusiastic customer. The intention of the shill is, using crowd psychology, to encourage others unaware of the set-up to purchase said goods or services or support the political group's ideological claims. Shills are often employed by confidence artists. The term plant is also used. Shill bidding, found on many auction sites such as eBay, is punishable by law[1] and may result in fines and or prosecution.

Shilling is illegal in many circumstances and in many jurisdictions because of the frequently fraudulent and damaging character of their actions. However, if a shill does not place uninformed parties at a risk of loss, but merely generates "buzz", the shill's actions may be legal. For example, a person planted in an audience to laugh and applaud when desired (see claque), or to participate in on-stage activities as a "random member of the audience", is a type of legal shill.

[Bicem]

It does not give a complete list of the items making up the $805K in purchases nor does it identify all of the items Forman sold in auction totaling just over $569K but it does list the following 4 items:

T210 Jackson PSA Authentic (Lot 589 in the Dec 08 Auction)

T205 Cobb SGC 84 (Lot 718 in the Dec 08 Auction)

M110 Complete Set SGC graded (Lot 329 in the Dec 08 Auction)

49B Robinson SGC 98 (Lot 226 in the Dec 08 Auction)



he bought or sold these items?

[Wesley]

I have not seen the complaint, but it looks like Dave Forman consigned those cards for Mastro to sell on his behalf.

[botn]

Those are 4 consignments that Mastro sold on behalf of Forman.

[Mr. Mitt]

Just conjecture, since I have absolutely no facts to back this up, but what about the possibility of Forman shilling for Mastro? It’s not inconceivable that they were working together with an agreement that Forman would re-consign whatever he, unfortunately in their eyes, won while bidding up lots. This could have been ongoing and lead to the massive “paper” debt in his name. Now that the Feds are involved and the books had to be opened, the excuse of a deadbeat bidder needed to be fabricated in order to disguise the shill scam. Any thoughts?

[Peter_Spaeth]

Nice Jackie!! Too bad the graders were harsher on Dave than the rest of us or it might have received a 100. :)

[Peter_Spaeth]

I think not Mr. Mitt. This has every appearance of a genuine dispute, to my eye.