The insurance angle was thrown out without being stated to be true but a possibility, then the side that wants to justify the fake auction latched onto it. It is obviously not the case. No one can produce a single example of an insurance plan, policy, demand, decision or communique telling a claimant they must host a fake auction to assign value in all of human history for a reason - this is not how it works. This angle is pretty obviously false.
I would be a little surprised if their attorneys would have directly advised a course of action that seems to violate California consumer law, but it's possible. 'Maybe the police asked them to' is probably the best of these three possible justifications as none of us disgusting filthy poors who should not have any right to post an opinion have access to that investigation, so I don't know why they latched onto this clear falsehood so hard when there were better avenues to take.
Any auction house that embraces the principle of hosting fake fraudulent auctions to deceive bidders should lose bidders, but of course they won't. Stuff dictates ethics and the complete lack thereof. Even if that means covering up a theft of consigners property from consigners, and hosting a fraudulent auction lying to all of their bidders. If someone was handling my property, and it was stolen, don't we think I have a right to know that? Well, we would in any other case but not this one because we have priorities here $$$$$$$$$$$. Any of us bothered by this have probably already made the decision to not do business with Memory Lane considering Cohen's conviction for fraud and resulting prison term (
https://www.ftc.gov/news-events/news...ing-activities).