Mastro and Allen Indicted

[calvindog]

Carry on.

[Leon]

story

http://www.nydailynews.com/blogs/ite...-fraud-charges




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[sportscardpete]

Did i maybe misread it - is the maximum sentence printed? How long could he possibly go away to jail for?

[bijoem]

yuck.

[WhenItWasAHobby]

Quoting from the article:

"According to the indictment, in advertising portraying Mastro Auctions as the premier seller of valuable items, including the world’s most expensive baseball trading card, a Honus Wagner T-206 card, Mastro allegedly failed to disclose that he had altered the Wagner T-206 card by cutting the sides in a manner that, if disclosed, would have significantly reduced the value of the card".

HOLY "NEVER GET CHEATED" BATMAN! This could potentially be one colossal buy-buck by the company that graded that card.

[e107collector]

Oh boy. Doesn't sound good.

I think each count of fraud carries a maximum sentence of 20 years and a hefty fine. Don't quote me on the numbers, but they are serious charges.

Tony

[peterose4hof]

I wonder how it is that they determined Allen (14 counts) was much more culpable than Mastro (1 count).

[t206fix]

Phew! I am so glad that I didn't buy that t206 Wagner!

[e107collector]

The article states that Mastro didn't disclose that the T206 Wagner was altered by cutting it from the sheet, however, PSA graded the card as an 8.

I wonder if PSA will be investigated to see how that happened?

Tony

[slidekellyslide]

I wonder what this means for their current operations? Legendary is currently sitting on one of the best prewar collections of all time.

[Runscott]

Originally Posted by e107collector

The article states that Mastro didn't disclose that the T206 Wagner was altered by cutting it from the sheet, however, PSA graded the card as an 8.

I wonder if PSA will be investigated to see how that happened?

Tony

Interesting. Did Mastro claim that it was unaltered? Didn't the guy at PSA who graded it, state that in the condition he received it, it was deemed by him to deserve that grade? Since it was the first card PSA graded, perhaps they simply changed their grading standards immediately after that one was slabbed.

Also, everyone has known for a long time that the slabbed Wagner was trimmed - way back to Gretzky - and that has not "significantly reduced the value of the card." In fact, the trimming story and resulting book may actually have caused the value of the card to increase.

[g_vezina_c55]

the charge are for principally shill bidding if i understand good, and not for the psa 8 wagner....

i understand correctly?

[drc]

Guess they'll have to dissolve and start a third auction house next week. I predict it will be called Super Auctions.

[Anthony S.]

Originally Posted by drc

Guess they'll have to dissolve and start a third auction house next week. I predict it will be called Super Auctions.

I just checked, www.pleasedontindictusagainauctions.com is still available

[RUSH2112]

American justice is almost comical when seen from a distance.

MF Global's Jon Corzine can't account for $1.6 billion of investors money and still enjoying the good life and yet the Feds are going after some guy that misrepresented an old baseball card and supposedly did some shill bidding on items consigned to his auction house. There are hundreds of Wall street crooks that should be served with papers ahead of these guys.

He's already paid the price for his mistakes as far as I am concerned.

[Peter_Spaeth]

What price did he pay?

[Leon]

Originally Posted by RUSH2112

American justice is almost comical when seen from a distance.

MF Global's Jon Corzine can't account for $1.6 billion of investors money and still enjoying the good life and yet the Feds are going after some guy that misrepresented an old baseball card and supposedly did some shill bidding on items consigned to his auction house. There are hundreds of Wall street crooks that should be served with papers ahead of these guys.

He's already paid the price for his mistakes as far as I am concerned.

You can say almost anything you want but you are going to need to have your name in your posts...nothing personal it's just the rules. You can put a period between some letters to not show up in searches, if you want to...thanks for yours and everyone's understanding in this thread....

[calvindog]

Lol

[calvindog]

Originally Posted by RUSH2112

American justice is almost comical when seen from a distance.

MF Global's Jon Corzine can't account for $1.6 billion of investors money and still enjoying the good life and yet the Feds are going after some guy that misrepresented an old baseball card and supposedly did some shill bidding on items consigned to his auction house. There are hundreds of Wall street crooks that should be served with papers ahead of these guys.

He's already paid the price for his mistakes as far as I am concerned.

Yes, this makes a lot of sense. And I just lost 5 IQ points reading this post.

[calvindog]

Originally Posted by Peter_Spaeth

What price did he pay?

The guilt he felt about stealing all his friends' money?

[WhenItWasAHobby]

For those of you not familiar with these individuals, here are two informative articles:

http://www.psacard.com/articles/arti...tml?artid=4511

http://www.psacard.com/articles/arti...tml?artid=4763

[oldjudge]

To the many lawyers on the board, what do you estimate the time horizon is for all this to come to trial? I have heard today that the Legendary Live Auction at the National is still on, as well as the August auction to follow shortly thereafter.

[RUSH2112]

Originally Posted by Leon

You can say almost anything you want but you are going to need to have your name in your posts...nothing personal it's just the rules. You can put a period between some letters to not show up in searches, if you want to...thanks for yours and everyone's understanding in this thread....

If my statements have harmed Jon Corizines reputation then please, by all means, remove my post. Should his lawyer call, feel free to give him or her my full name and phone number, which you already have in your database.

[Matt]

This quote is fascinating in light of the discussions with Heritage and Hunts and how they use a house account to bid and don't distinguish it from any other bid:

They further intended to deceive participants into believing that greater market demand existed for some items than actually was the case, the charges allege.

[WhenItWasAHobby]

CHICAGO—Online and live auctions of sports memorabilia and other collectibles conducted during the 2000s by the former Mastro Auctions, which was based in suburban Chicago, routinely defrauded customers, according to a federal indictment unsealed today. William Mastro, who owned the former business that once billed itself as the “world’s leading sports and Americana auction house,” together with Doug Allen and Mark Theotikos, both former executives of Mastro Auctions, were indicted on fraud charges for allegedly rigging auctions through a series of deceptive practices, including so-called “shill-bidding,” designed to inflate prices paid by bidders and to protect the interests of consignors and sellers at the expense of unwitting bidders.

According to the indictment, in advertising portraying Mastro Auctions as the premier seller of valuable items, including the world’s most expensive baseball trading card, a Honus Wagner T-206 card, Mastro allegedly failed to disclose that he had altered the Wagner T-206 card by cutting the sides in a manner that, if disclosed, would have significantly reduced the value of the card. The charges allege that Mastro and Allen caused the sale of certain items knowing that their authenticity and condition were misrepresented to customers, including purported hair of Elvis Presley and a purported 1869 Cincinnati Red Stockings trophy baseball.

“Consumers might be lured to the auction market for sports memorabilia and other collectibles by an emotional attachment to an item or purely as a calculated investment, but, as the allegations in this case demonstrate, bidders must remain mindful of the maxim ‘Buyer Beware,’” said Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois. “Consumers have a right to be protected from deceptive and dishonest sales practices, and we will prosecute those who fraudulently rig auctions at the expense of bidders as the indictment alleges in this case.”

Mr. Shapiro announced the charges with Robert D. Grant, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation, and Thomas P. Brady, Inspector in Charge of the U.S. Postal Inspection Service in Chicago.

Mastro, 59, of Palos Park, who owned Mastro Auctions until 2004 and was its chairman and chief executive officer from 1996 until February 2009, was charged with one count of mail fraud.

Allen, 49, of Crete, who was president and chief operating officer of Mastro Auctions between 2001 and February 2009, was charged with 14 counts of wire and mail fraud. Theotikos, 51, of Addison, who was employed by Mastro Auctions between 1996 and February 2009 as vice president of auction operations and, later, vice president of acquisitions, was charged with six counts of wire and mail fraud. Both Allen and Theotikos are currently executives of Legendary Auctions, based in south suburban Lansing.

Mastro, Allen, and Theotikos will be arraigned on dates to be determined in U.S. District Court in Chicago.

The 16-count indictment, which was returned by a federal grand jury yesterday, was unsealed today following the arrest of a fourth defendant, William Boehm, 63, of Ballwin, Missouri, who was Mastro Auction’s director of information technology. Boehm, who was charged with one count of making false statements to FBI agents investigating Mastro Auction’s practices, had an initial appearance today in Federal Court in St. Louis.

According to the indictment, Mastro Auctions, which also operated under the names Mastro Fine Sports and Mastro Net, specialized in sports memorabilia but also featured such items as coins, art, and Americana collectibles. Most items were consigned to Mastro Auctions for sale by their owners, but Mastro Auctions also sold items that it owned. Between 2001 and 2009, Mastro Auctions’ offices were located at different times in Oak Brook, Willowbrook, and Burr Ridge, Illinois.

In conducting online and live auctions, Mastro Auctions typically charged a “seller’s fee” or a “commission,” usually a percentage of the price that an item sold for on consignment, and required potential bidders to pay a one-time fee of $75 that enabled them to participate in auctions. Successful bidders were assessed a “buyer’s premium,” usually a fee of 15 to 22 percent on top of their winning bid, which was known as the “hammer price.” Bidders could place bids online through Mastro Auctions’ website or by directly communicating with a Mastro Auctions’ employee by telephone or fax machine. Bidders could place either “straight bids” that incrementally increased the value over the last bid or “ceiling bids” that raised bids by established increments until the maximum a bidder was willing to pay was reached.

Between at least 2001 and February 2009, Mastro, Allen, Theotikos, and others allegedly caused and made false representations and omissions in Mastro Auctions’ catalogs, advertising, promotions, and other media and in the bids placed in certain auctions. Those three defendants allegedly intended to deceive bidders into believing that Mastro Auctions conducted auctions according to practices that ensured fair and competitive auctions for all participants. They further intended to deceive participants into believing that greater market demand existed for some items than actually was the case, the charges allege.

As part of the alleged fraud scheme, the indictment charges that Mastro, Allen, and Theotikos made false statements regarding the conduct of Mastro Auctions, including the following:

each Mastro Auctions catalog represented that “items are sold to the highest bidder.” In fact, Mastro, Allen, and Theotikos allegedly knew that certain items were not sold to the highest bidder because they canceled sales and engaged in and facilitated shill-bidding to fraudulently inflate prices to the detriment of bidders;
consignment agreements prohibited consignors or their agents from bidding on an item and, if the consignor violated this provision and had the highest bid on an item or lot, the consignor would be required to pay the commission and buyer’s premium. In fact, the three defendants knew they permitted certain consignors to bid on their own items, and, at times, those consignors did not pay commissions or premiums when they placed the highest bid; and
the three defendants represented at various times that Mastro Auctions did not implement undisclosed “reserves,” meaning prices, not disclosed to bidders, at which Mastro Auctions would not sell an item if the bidding failed to reach the “reserve” price. In fact, in certain auctions, they canceled sales instead of allowing the highest bidder to purchase an item, in order to prevent the sale of the item at a price lower than the consignor desired.

In October 2007, Allen allegedly created a “Code of Conduct” for Mastro Auctions. Despite the code’s assurances to the contrary, Mastro, Allen, and Theotikos knew that Mastro Auctions frequently did not disclose true ownership of items or that several employees with bidding privileges, including Mastro and Allen, had access to information about the ceiling bids, including the bid amounts. Further, contrary to the code’s assurances, employees, including Mastro, Allen, and Theotikos, bid on items consigned by related parties.

Among allegedly fraudulent auction practices, the indictment charges that the three defendants and others placed fictitious shill bids for the sole purpose of artificially inflating the price of items being auctioned. They allegedly placed shill bids at various times using a corporate bidding account, their own personal accounts, and accounts of employees and friends. The defendants then ensured that when a shill bid was the highest bid, the shill bidder would not be required to purchase the item; instead, they canceled the sale and offered the item to the next-highest bidder, the charges allege.

The Code of Conduct also provided certain assurances that Mastro Auctions would disclose information about auction items that were altered or restored. After the code was published, Mastro and Allen allegedly failed to disclose alterations and caused restoration work to be done on baseball trading cards, despite assurances that no such work would be performed.

Mastro and Allen also allegedly knew that they had misrepresented the authenticity of the purported hair of Elvis Presley. In April 2003, Mastro Auctions sold hair purportedly of Presley. The initial purchasers later returned the hair along with the results of DNA testing, which called its authenticity into question. In June 2004, Allen provided a refund to the purchasers. In December 2005, August 2006, April 2007, and August 2008, Allen again sold portions of the purported Presley hair to Mastro Auction bidders. In each instance, he allegedly made false representations in catalogs, such as asserting that the hair was “bona fide” or that it would be sold with “documents attesting to the veracity,” without disclosing the results of the DNA testing.

In August 2002, Mastro Auctions sold to Purchaser A what it claimed was an 1869 Cincinnati Red Stockings trophy baseball, which was described as an actual game ball played with by the first professional team, decorated following the game, and presented to the winning team. In October 2006, Purchaser A submitted the ball for laboratory testing, which indicated that the paint on the trophy ball contained a material not used in commercial paint until after World War II, thus clouding the authenticity of the ball. A month later, Allen provided a refund to Purchaser A and the ball was returned to Mastro Auctions, the indictment states. In December 2006, Mastro allegedly contacted Victim A about purchasing the trophy ball and failed to disclose information about the paint test results. On December 27, 2006, Victim A purchased the trophy ball from Mastro Auctions for approximately $62,000, according to the indictment.

The false statements count against Boehm alleges that he lied to FBI agents in July 2007 when he stated that he had disabled the Mastro Auctions bidding account of Individual D because Individual D was having financial difficulties, and he had created a bidding account in the name of “Craig Helling” to catch a Mastro Auctions employee suspected of stealing company information. In fact, Boehm allegedly knew that the accounts in the names of Individual D and Craig Helling were used to place fictitious bids.

Assistant U.S. Attorneys Nancy DePodesta and Steven Grimes represent the government.

Each count of mail and wire fraud against Mastro, Allen, and Theotikos carries a maximum penalty of 20 years in prison and a $250,000 fine and restitution is mandatory. The court may also impose a fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater. The false statements count against Boehm carries a maximum penalty of five years in prison and a $250,000 fine. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.


http://www.fbi.gov/chicago/press-rel...r-collectibles

[SetBuilder]

Can a lawyer with access to PACER please post the criminal complaint in .PDF? I would like to read the allegations in detail.

[WhenItWasAHobby]

It's not on PACER as of 30 seconds ago.

[wonkaticket]

Jeff, you drive a PACER hook Manny up.

[kcohen]

Does this mean that Mr. Allen will not be a featured speaker at this year's Net54 dinner?

[autograf]

Ugly....could change the landscape of who's auction what down the road. Lots of details in that press release. Wonder what basis they have for alledging that Mastro trimmed the Wagner? Not that I doubt anything was fishy with the Wagner, just seems like mostly heresay unless there's some smoking gun testimony to that effect.....

[autograf]

It's not on Pacer but can be found on AMC Gremlin.....okay....that was gratuitous, I know....

[glchen]

I wonder if this indictment is a coincidence with National so close at hand. It seems like every year the Feds try to do something around this time.

[peterose4hof]

Originally Posted by glchen

I wonder if this indictment is a coincidence with National so close at hand. It seems like every year the Feds try to do something around this time.

Very good point!

[Leon]

Originally Posted by kcohen

Does this mean that Mr. Allen will not be a featured speaker at this year's Net54 dinner?

I assume he will be attending his own live auction that night.

[Runscott]

Originally Posted by calvindog

Yes, this makes a lot of sense. And I just lost 5 IQ points reading this post.

We can't consider your measly 5 IQ points, until after we've dealt with the guys like me who lost 10-20.

[Brian Van Horn]

Now, for the obvious question:

Will this lead to an additional investigation of Legendary Auctions?

[travrosty]

no one said 'boom goes the dynamite' yet, so i just thought i would just get that out of the way.

[travrosty]

I think the phrase about the Wagner being trimmed and Mastro allegedly knowing this would only be part of the investigation and indictment release if the Feds have a plan to prove it was trimmed, otherwise why mention it? If they can prove it was trimmed, I think psa is in a conundrum. Would they then have to admit it is an "Authentic" or would they still stand by an 8? Would the Wagner get subpoenaed? That would be something.

[Bicem]

Originally Posted by Brian Van Horn

Now, for the obvious question:

Will this lead to an additional investigation of Legendary Auctions?

whoa, come on now, completely different company.

[calvindog]

But since Doug Allen was involved, fraud was still afoot.

[ElCabron]

This is devastating to me. My world has just been turned upside down. Along with Dave Kohler and Jerry Sandusky, there is no one I trust more than Doug Allen.

Can we assume additional indictments for shill bidding will follow shortly?

-Ryan

[peterose4hof]

Originally Posted by NoizeBringer

Can we assume additional indictments for shill bidding will follow shortly?

-Ryan

"Shortly" I don't think so. These cases take years and years to build.

I would say yes, eventually.

[ElCabron]

It's been several years for those cases, too. I don't want to be greedy, but another round would be nice.

-Ryan

[Fripples]

Will we soon be able to bid on his ridiculously ancient computer that he has sitting on his desk? I'm assuming he'll need some money once he gets out of the chokey. *cough*

PS - Ray Charles saw this coming.

[travrosty]

Will the 2006 PSA world series of authentication title be in jeopardy now if charges are proved?

[Brian Van Horn]

For some (not saying me), the following clip may sum it up:

http://www.youtube.com/watch?v=SjbPi00k_ME

[Jlighter]

Originally Posted by RUSH2112

American justice is almost comical when seen from a distance.

MF Global's Jon Corzine can't account for $1.6 billion of investors money and still enjoying the good life and yet the Feds are going after some guy that misrepresented an old baseball card and supposedly did some shill bidding on items consigned to his auction house. There are hundreds of Wall street crooks that should be served with papers ahead of these guys.

He's already paid the price for his mistakes as far as I am concerned.

Last I checked it is not against the law to lose peope's money in a legal manner. Again that was last I checked.

Jake Lighter

[ruth-gehrig]

Looking forward to seeing what comes of it.

[rainier2004]

I think a name is missing in this thread.......

[bijoem]

Originally Posted by Bicem

whoa, come on now, completely different company.

hahaha. lol.