Mastro/Legendary Article in Today's NY Daily News

[baseballart]

Originally Posted by benjulmag

...
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]

Originally Posted by 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.

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]

Originally Posted by rhettyeakley

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.

[JamesGallo]

Originally Posted by 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

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]

Originally Posted by 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/

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.

Originally Posted by 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.

[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]

Originally Posted by 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.

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]

Originally Posted by 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.

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]

Originally Posted by slidekellyslide

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]

Originally Posted by 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

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.