Legendary Auctions. Should I call the police on them about having possible stolen material

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Posted By: Aaron M.

Wow, Wes. Thanks for weighing in -- your experience pretty much sums up the worst of my fears.

I would seriously suggest you contact an attorney as it does not appear that Doug has any legal right to essentially hijack your consignments. I'm sorry you've got to go through this, but at least now we know Doug's position on the consignments.

May I ask a follow-up -- what was Doug's rationale for refusing to return your consignments?

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Posted By: Aaron M.

Sean, epic summary. Really underlines the absurdity of this situation.

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Posted By: Aaron M.

I think Sean's suggestion about the FBI is a good one. Perhaps you can contact the unit that is currently investigating Doug and they can either direct you to who can help or at minimum take your complaint to add to their case.

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Posted By: robert a

Wes,

That's interesting information for us to know.

Thanks for posting that and sorry to hear you weren't able to get your consignments back.

Rob

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Posted By: Wesley

Peter and Aaron,

Doug did offer an explanation, but I did not really understand it. Doug said that Mastro is still in business and is holding its auction in conjunction with Legendary Auctions. He said my consignor contract is still in place and since Mastro is honoring the contract, then I should as well.

I thought it was strange for Doug to say that Mastro Auctions is still in business. If Mastro is still in business and the current auction is actually a Mastro auction, held "in conjunction with Legendary Auction," then the lines between the two companies are really blurred.

At this point, I am not really interested in sending a complaint to the State Attorney General's office, to the police, or to the FBI. I need the money so I just want the items to be sold, and, hopefully, Legendary will pay me in a timely manner.

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Posted By: Peter_Spaeth

"The completion of all outstanding Mastro Auctions business will be seamlessly facilitated, processed and completed through Legendary Auctions."

Whatever that means.

EDIT TO ADD I agree with you Wes, whatever the legal niceties here it isn't worth it. I do think Legendary should have honored your request though, and perhaps not rushed to tee up an auction.

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Posted By: Sean C

From Wes's comment:

"Doug did offer an explanation, but I did not really understand it. Doug said that Mastro is still in business and is holding its auction in conjunction with Legendary Auctions. He said my consignor contract is still in place and since Mastro is honoring the contract, then I should as well. "

So they are using Mastro as a zombie company to try to explain the moving of the consignments, even though none of the marketing materials indicate that this is a "Mastro Auction"? What a load of crap.

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Posted By: boxingcardman

The whole point of an asset sale is to get the assets out of the mess of the old entity. If the head of the acquiring company is telling Wes and possibly other people that the acquiring company is the same as the old one and therefore the contract with the old one is still in effect, the new company is an alter ego of the old one. There is no way, under any scheme of law that I've ever heard of, that a company can claim not to be a continuation of the old enterprise for some purposes yet insist that it is for other purposes, like forcing those who contracted with the old enterprise honor their contracts as to the new enterprise because the two are one and the same. Legendary can't be the successor to Mastro only when it suits them. Second, there is a fraudulent transfer issue here. Mastro has left some consignors (and I'm going to bet some other creditors) high and dry, including the potential alleged victims of its alleged crimes. It would seem that the transfer to Legendary of its assets made Mastro insolvent, which is grounds for a Mastro creditor to go after the assets and try to get them back under the local version of the Uniform Fraudulent Transfers Act. Then there are other potential claims, like civil or criminal conspiracy to defraud, RICO, etc., all of which are very tempting to level against Legendary as part of any case against Mastro based on what its management has been doing and saying about its ties to Mastro. If the idea was a clean, fresh start, probably could have been executed a hell of a lot better than what's being reported.

Now I'm not advocating for or against any of these issues; I am just pointing out that Mastro/Legendary has entered a real morass and apparently has done so with the delicate touch of a sledgehammer.

Sic Gorgiamus Allos Subjectatos Nunc

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Posted By: Matt

Perhaps someone from Legendary will come on to clarify...

If they want a clean image, they're going to have to address this publicly I would think. I don't believe the relay of a 3rd party conversation is sufficient in light of the above.

My Trade/Sale Page

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Posted By: Peter_Spaeth

Oh what a tangled web we weave
When first we practice to deceive


EDIT TO ADD -- SIr Walter Scott

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Posted By: John Basilone

"I thought it was strange for Doug to say that Mastro Auctions is still in business. If Mastro is still in business and the current auction is actually a Mastro auction, held "in conjunction with Legendary Auction," then the lines between the two companies are really blurred. "

Mastro would still be on Silkroad Equity's books as a non-continuing operation. I'm guessing that there was an agreed upon "transition period" between Silkroad Equity & Doug Allen's group. I would hope that there is language in the sales agreement that Silkroad would be responsible for any future liabilities that could arise from items contracted prior to the divestiture of Mastro.

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Posted By: Jim VB

I'm sure this won't shock anyone, but Mastro is no longer listed on Silk Road's web site, as being part of their portfolio.


But guess who is listed...


http://www.silkroadequity.com/Equity/Portfolio.html

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Posted By: John Basilone

PORTFOLIO
SilkRoad Equitys investments are centered around growth -- growth through acquisition, internal growth and/or through our universe of resources. We are constantly scanning the market, searching for the right executives and promising business opportunities. Below is a summary of our family of businesses:

Legendary Auctions
http://www.legendaryauctions.com)
Chicago, IL
Legendary Auctions offer the most ideal forum in which to bring high quality individual items and significant collections to the marketplace. Legendary Auctions not only helps you realize the highest possible prices for your valuable material, they offer consignors peace of mind that their consignments will be treated with the utmost care and that every aspect of the auction process will be executed with the greatest attention to every detail.


WOW...the price of poker just went up.......

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Posted By: quan

wes good luck on the lots. doug probably knew it'd go for big money so he did you a favor.

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Posted By: Aaron M.

Jim -- damn!!!! Good work.

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Posted By: Peter_Spaeth

"Legendary Auctions, a newly formed Sports and Americana auction house has announced today it has taken possession of Mastro Auctions assets."

Perhaps we just assumed they meant they BOUGHT the assets?

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Posted By: PC

It is standard M&A practice in the context of an asset sale to transfer the assets, and not the liabilities, to the buyer. This is often the case when there are liabilities that a buyer would otherwise not want to deal with. The presence of such liabilities is a determining factor whether a deal is stuctured as an asset purchase or a stock purchase (although tax and other considerations also come into play).

Contracts entered into by the selling entity are assets that can be assigned to the buying entity, if the contract allows that to happen. That assignment may, or may not, require the consent of the other party to the contract. Some contracts are freely assignable by their terms, some have specific prohibitions on assignment, some have conditions to assignment (like consent of the non-assigning party), and (surprise) some contracts that have anti-assignment provisions are still assignable by law (for example, the UCC renders certain anti-assignment provisions unenforceable).

In this case, I would be surprised if the auction house's standard form of consignment agreement did not allow the auction house to assign the agreement without the consent of the consignor. After all, the auction house writes the agreement, and it is a safe assumption that it was drafted to give the auction house maximum protection and maximum flexibility. Most consignors (like most people) don't read the fine print, either becasue they don't care, don't see the likelihood of these situations coming into play, or don't have the leverage to object to such a provision (even if they did read it and cared).

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Posted By: Peter_Spaeth

But was there really an asset sale here?

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Posted By: Jim VB

"But was there really an asset sale here?"


I'll bet that technically and legally, there was. But I assume the negotiations go smoother and quicker when the the buyer and the seller are the same entity.

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Posted By: Jay

Looks like the "new" auction house is becoming legendary for all the wrong reasons. Somewhere in Watchung, NJ a man is laughing his ass off.

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Posted By: Jeremy Humber

Jay, wonder if the FBI guys are laughing their asses off with the restoration job Mastro did for you back in 2004.

http://www.network54.com/Forum/153652/message/1102513863/WHAT+IS+THE+KEELER+ROOKIE

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Posted By: Jay

Jerry--I have no clue who you are, but nice defense of Legendary. Just to be clear, I was not bashing Legendary, just making the point that you have only one chance to make a first impression and it appears to me that they are not doing a very good job of it. BTW, as noted in my December 8, 2004 post on that thread I never authorized, nor paid for, any restoration work on that piece. Not that there was anything wrong with the work, the work was fantastic. However, it should have been disclosed in the original lot description.

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Posted By: leon

Aaron- you said

"I become a bit incredulous when Leon seems to view Rob and REA disfavorably (at least with regard to business practices) yet backs Mastro/Legendary so resolutely."


NO where in this thread have I said I view Rob and/or REA disfavorably. Actually, it's quite the opposite. I have continued to be a fan of the REA auctions and bid in them heavily. There is no better bidding process in the hobby, imo.....and it's similar (not exactly) type s/w in my auction. I have a different view on a few descriptions than what REA does but those are somewhat relative anyway. I think REA does a very good job for consignors. I have even spoken with Rob several times in the last month and I count him as a hobby friend. I do put REA in the "good group" of auction houses..... I hope this clears up your misunderstanding, or my poor communication, of that situation.

As for Legendary Auctions. I know the 3 main folks fairly well and count them among hobby friends too. Mark even gave me a ride back from the Mastro Dinner a few years ago and I got to speak with Dr.Beckett for an hour in the car...which was cerainly my privilege....As for how they handle their current business practices, since I run an auction too, I won't comment there....

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Posted By: boxingcardman

The Mastro contracts I have on file do not contain any provision allowing the assignment of the contract. I reiterate, to decide whether the contracts were lawfully assigned you would need to analyze IL law.

As far as an asset sale, yes, the idea is to get the assets out from under the liabilities of the assignor, but that goal is compromised when the assignee states in various ways that it is continuing the business of the assignor, not merely buying its assets. If I was a Mastro creditor looking at this situation, I would certainly consider suing Mastro, Legendary and Silk Road under an conspiracy to defraud theory or as alter egos of one another.

Sic Gorgiamus Allos Subjectatos Nunc

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Posted By: Aaron M.

Leon, this was your comment that I responded to with regard to REA (from your April 16, 2:56 PM post):

"If any auction house is clean today I think it's Legendary."

The implication I took was that Legendary is cleaner than REA, and that REA may not be clean at all. I found both implications to be worthy of incredulity. If I misunderstood the intent of your comment, then I apologize.

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Posted By: leon

Yes, you did misunderstand. My response (that you just cited) had nothing at all to do with REA.

It does have to do with Legendary and I do think they will run a clean auction. As to the other things concerning the assets of Mastro and the consigned items, I won't comment because I run an auction house and each one has to do what they think is best for their business. Scott and I try to be the absolute most transparent and honest auction in the business. We hope that in the long run good business practices and honesty will be a winning formula. take care

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Posted By: Bob Casmer

I haven't read every single entry in this thread so if I missed something, forgive me. As a CPA for about 30 years, I've seen a lot of business sales and transactions. However, I'm not a lawyer so, this is only my opinion based on my years of business experience and thus, in true CYA fashion, I would advise anyone to check with an attorney before preceeding with any specific action in regards to my comments.

Most buyers only want to acquire assets in such a transaction, for several reasons. 1) They don't want the liabilities. 2) By buying the assets, they get to step-up the basis of what they are buying and hopefully depreciate the costs. If they buy the stock (or whatever the form of ownership interest there is) of the seller, they get a higher basis in the stock and the assets don't get any increase in value to depreciate. 3) If the buyer does buy the stock in a company, they take over all the responsibilities of the former owners. In other words, if the company gets audited by the IRS, it is now their problem, not the sellers. (This is why buyers often do very exhaustive Due Diligence before buying another company.) 4) Buying the assets also allows the buyer and seller to determine and allocate the purchase price amongst a companies various assets to take advantage of various tax aspects and attributes.

Based on what I've seen and heard about Mastro's problems, the FBI investigation, and so on, I'm not surprised a buyer wouldn't touch anything but Mastro's assets in a supposed sale/purchase deal.

Now, regarding the transfer of consignments from Mastro to Legendary, something doesn't add up. I saw a posting or two mentioning conversations with Doug about how Mastro still exists and the upcoming auction was in conjunction with Legendary and that the person(s) inquiring should still honor their contract as Mastro was honoring it. Another poster or two correctly brought up the point about how in the consignment contract each consigner had with Mastro, there is probably some fine print allowing for Mastro to assign their consignment contracts to someone else, WITHOUT the consigner's consent. This isn't any different than if you rented a space in a building and the building was sold to a new owner. The rental agreement doesn't terminate as there is generally an assignment clause allowing the owner to do this. All the rights and obligations of the original owner transfer to the new owner, just like they would if Mastro assigned the contracts to Legendary. However, that language generally has to be in the signed agreement for that to happen. Also, there is generally some kind of notice that needs to be given when this occurs. For those of you who have signed consignment contracts with Mastro, pull them out and read through them to find out exactly what your position and rights are.

Now, having said that, if the consignment contracts were legitimately assigned to Legendary, why would Doug tell people Mastro still existed, was running the upcoming auction in conjunction with Mastro, and that they should still honor their contracts? All he would have to say is that they were assigned and to read their contracts. The fact he wouldn't say that can only mean that 1) assignment rights were not necessarily granted without consigner permission and the contracts are not automatically assigned to Legendary, 2) they were granted but, he doesn't want to say that to consigners for some reason (maybe fearing they would think a fast one was being pulled on them or that they can rescind the consignment by notifying Legendary or Mastro) or, 3) he doesn't really know himself and said that to appease the concerned callers (which I would find very hard to believe). For those consigners out there, you might want to really go through your contract to see what it says. You may be surprised.

If there is no assignment right granted in the contracts, the consigners may have every right to request their property back. Even if Doug's contention is that Mastro still exists and the auction is being run in conjunction with Legendary, I'm guessing the contracts call for Mastro handling and publicizing the auction. It probably doesn't mention Legendary Auctions anywhere in the consignement contract so, my question would be, "Why then doesn't all the advertising and publicity for the upcoming auction mention Mastro anywhere?" If Legendary is publicizing it and hasn't truly been assigned the contracts, Mastro could be in technical breach of their contract by not following through with their handling/control of the auction. I was at the Strongsville, OH/Fusco show over this past weekend and Legendary Auctions was there, basically just showing off some of the items in their upcoming auction. Nowhere did it say or mention it was in conjunction with/affiliated with/or had anything to do with Mastro. I didn't think to jot down what items were in the display cases but, I wouldn't be surprised if one or more were originally conisgned to Mastro, not Legendary.

Finally, for those who are concerned about not receiveing monies or property back from Mastro, I still believe it only takes three creditors to file to have someone put into involuntary bankruptcy. Assuming Mastro is a corporation, you could actually check through the Secretary of State's office in the state they were originally incorporated (Illinois?) to see if they've filed for a formal disolution of the company. If they haven't, then Mastro would indeed still exist. Once a compnay is put into bankruptcy, the court takes over control of all assets and generally appoints a receiver to watch over asstes in favor of the creditors. It can even go back and require payments and disbursement of company assets prior to the time of the bankruptcy filing (up to 90 days I believe) to be returned by the recipients. Again, I'm not a lawyer but, I believe that a deal with Legendary could even be in jeopardy if it was found that the creditors/consigners were someghow being cheated by an improper transfer. My guess is that Mastro and Legendary people have had their legal representatives involved in this whole affair from day one. They would likely have advised them to keep people in the dark for as long as possible and to get through this first auction with as little friction and bad publicity as possible. The more time that goes by, the less likelihood that someone can disrupt what they want to accomplish.

This isn't anything new. I had some involvement with a contractor years ago that was going under and sent out all kinds of letters and reassurances to customers and vendors about people being around to answer their questions and concerns in the coming weeks as they were winding up their operations. They mailed the letters and such out on a Friday afternoon as they walked out the doors....and never came back. Whenever they could, they stalled people as long as possible from pursuing any legal remedies, with the thought that as more time went by, more rights for those being damaged by this company's actions would lapse. Anyway, just my 2 cents worth for anyone interested.

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Posted By: PeterSpaeth

If Silk Road owned Mastro, and now owns Legendary, where was the "sale"?

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Posted By: Aaron M.

OK, Leon, also when I wrote the following in reference to REA:

"Leon, your endorsement and middle-man servicing aside, I would think that there is at least one cleaner auction house out there -- one that has never allowed it's employees to shill lots, has promoted "honest auto-bid" from day one, was the only major auction house to agree to stringent (but long overdue) authentication disclosure requirements, and is not the target of a federal criminal investigation and hasn't had to change its operating name in fly by night manner.

Sadly, if more auctioneers had followed this distinguished gentleman's lead, these messes could have easily been avoided."

You responded with:

"Aaron April 19 2009, 10:59 PM

You are truly ignorant is all I can say...."

I took that to mean that you had information that I did not that would impugn Rob Lifson's integrity and business practices. (I also got the same impression from the e-mail you sent me.)

When I asked you to enlighten me on this information, you responded with:

"It's not my job to enlighten you. Ignorance is bliss.....have a good day."

Which I again took to mean that you had damaging information on Rob and his auction house.

I don't think I was the only poster to interpret your posts in that way as two subsequent posters offered:

"Aaron, Rob Lifson is not a saint either.

"The most powerful members of our community have a shattering secret..."

Not sure if any of those members is willing to bring the skeletons out of the closet."

and:

"Aaron,

As others have pointed out, how certain people are now are not how they have always been. This goes for dealers, grading co people etc. This may keep a lot of the truth under wraps."

I responded to both posts that I was open-minded on the issue and would listen to any information one was willing to share that could be negative with respect to Rob and his integrity.

No-one did (although my invitation is still out there).

Was that my misunderstanding as well?

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Posted By: PeterSpaeth

Silence is only probative in circumstances where it is reasonable to expect someone to speak. Issuing an open invitation to attack someone on a public forum would not seem to be one of those circumstances. This has nothing at all to do with Rob, just the methodology here.

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Posted By: James Feagin

It seems that perhaps Legendary needed to keep these Mastro items in order to have a competitive auction?

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Posted By: JimCrandell

Aaron,

I would not repeat rumors on a public board.

I also would not tell you by e-mail either since I don't know who you are.

Nothing personal--you have helped make this post one of best ever on Net 54. This is the stuff I like most about the board--serious stuff about the hobby.

Jim