[Peter_Spaeth]

The defendant’s involvement in shill bidding, his concealment of the shill
bidding, and selling altered memorabilia is a serious offense. The long-running and
systematic nature of the scheme undermines confidence in the auction house and
sports memorabilia industries, and calls into question the true value of merchandise.
As defendant correctly notes, the actual financial harm to any individual victim was
limited, they received the items they won, and at times, through the use of ceiling
bids, victims expressed a willingness to spend the additional money for an item they
wanted at auction. However, in this case, the intended loss was much greater. The
parties agree that through shill bidding the defendant’s intended loss was hundreds
of thousands of dollars and between $400,000 and $1,000,000. PSR ¶ 15; See
Government’s Version at 15-24. In other words, this is the amount that the
defendant intended to drive up the auction prices through shill bidding.

While defendant is correct that bidders were not cheated out of huge sums by
being duped by defendant and his co-defendants at auction to pay more for an item
than necessary and ultimately received the item they bid on at the auction – it was
still driven by fraud and cheated (or attempted to cheat) some bidders out of money.
And, regardless of the amount, using his position and power as CEO to steal money
from bidders and fraudulently drive up auction prices is still a serious offense.
Defendant notes that many of the victims of his scheme were sophisticated and
financially well off – however, that is with the benefit of hindsight. At the time he
cheated these victims - it is unlikely defendant knew their financial means.
Additionally, the offense is serious because it causes the true value of certain
auctioned merchandise to be called into questioned. The auctions were falsely
advertised as fair with items going to the highest bidder. And, when concluded –
auction results were shared and falsely showed that 99 percent of items were sold.
Certainly, these auction results, which were at times false, would be consulted as a
tool in the industry to determine prices for future transactions on the same or
related merchandise – much like a person using prior comparable home sales to
determine the value of a home. However, given defendant’s seven year scheme,
which often inflated the ultimate sale price of items or made it falsely appear that
items were sold for a certain value when in reality they just went back to the
consignor– these results, have to be called into question going forward by collectors
and investors. Moreover, the auction results prior to 2007 must be particularly
scrutinized because the exact scope of the shill bidding cannot be fully known – as
those records were destroyed.

As defendant points out, the motive for the offense cannot be chalked up to
simple greed because the immediate financial incentive of cheating a bidder was not
a windfall to defendant. However, through shill bidding defendant intended to drive
up prices hundreds of thousands of dollars – which is no small sum. See PSR ¶ 15.
Additionally, this offense seems to be largely driven by defendant’s desire to develop
Mastro Auctions into the biggest and the most successful auction house in the
industry. As a result, instead of letting the auction processes dictate the value of an
item, which might have been less than a consignor or defendant believed appropriate
– defendant used shill bidding to set the value he felt appropriate. This largely
meant using shill bids to falsely create bidder interest in an item, drive up the
ultimate winning bidder, or to protect a consignor from having an item go for too low
a price. In the end, defendant injected shill bidding to advance his own interest in
promoting the auction house as the premiere auction house that sold a high volume
of items at high values. In the end, defendant’s ultimate goal was to beat the
competition and garner more business for his auction house and in the end, more
money for him.

Defendant’s offense is also serious because he was the CEO of the auction
house for the entire scheme period. He had the authority and power to control how
the auction house operated. He opted to use this power to take a hands-on role to
promote shill bidding and to cover it up. For instance, around 2001, defendant
instructed co-defendant Bill Boehm, who was employed at the auction house as an
information technology employee, to get defendant an unused bidder account that he
could use to make shill bids. See Docket Entry Number 145 (Boehm Plea
Agreement) at 3. Boehm complied with defendant’s request and provided defendant
the account of Individual F.D. – an individual Boehm knew never used his account to
bid in auctions. Id. Defendant then used this account to make shill bids. Id. at 3-4.
In 2003, defendant wanted to conceal his shill bidding and instructed Boehm to
destroy under bidder records for Individual F.D. as well as historical under bidder
records. Id. at 4. Defendant further instructed Boehm to destroy under bidder
records in future auctions. Id. Defendant continued to shill bid in auctions - he just
wanted to make sure that the evidence was destroyed. PSR ¶¶8,9, 12, 15, 33.
Defendant’s efforts to get a lower-level employee involved in the shill bidding and
instructing that same employee to destroy the evidence – further add to the severity
of defendant’s offense.2