Mastro sentencing update

[Peter_Spaeth]

The government filed its response today. Here is the introduction.

In this submission, the government asks the Court to sentence defendant
WILLIAM MASTRO to a term of 20 months’ imprisonment because it is the
appropriate sentence in light of the sentencing factors set forth in 18 U.S.C.
§3553(a). In his private life, defendant demonstrated, through his charitable work,
that he is a person that knew right from wrong. Yet for seven years (from about
2002 to 2009) of his professional life - he opted to advance his own interests through
a series of lies and using his power as CEO of the auction house to serve himself
and defraud others.

While defendant was CEO of Mastro Auctions, shill bidding was pervasive
and the exact extent of the shill bidding will never be fully known – because, in
2003, when defendant became concerned that his shill bidding would be discovered,
he instructed an employee – and now co-defendant – to destroy the under bidder
records (which records are the primary evidence of the shill bidding) and kept right
on shill bidding for years.

However, in his sentencing memorandum, defendant offers a statistical
analysis in an effort to quantify the volume of shill bidding at Mastro Auctions
during the seven years of the scheme – which he calculates, as quite small.
Defendant’s statistical analysis is flawed and of limited value, however, because
defendant caused the under bidder records to be destroyed for auctions prior to 2007
(this includes records dating back to the 1990s when the auction house started
operating). Presentence Investigation Report ¶ 12, 15. So, under bidder records (or
records documenting the bids placed before the ultimate winning bid), which are the
key records law enforcement used to identify and investigate shill bidding at Mastro
Auctions are not available to law enforcement for approximately five of the seven
year scheme (and for any year prior to 2007). Notably, in calculating the guidelines
in his case, given the absence of records, the government has not held defendant
accountable as part of its loss calculations for shill bidding in auctions prior to 2007
(even though defendant admitted in his plea that it occurred between 2002 and
2007). Id. ¶ 15.

Thus, in calculating its loss and investigating the shill bidding – the
government has been handicapped by being limited to records from auctions dating
from April 2007 to February 2009 - which amounts to approximately 12 of 36
auctions conducted during the scheme period. But, even in that limited time frame,
there was shill bidding on over 1300 lots. And, as explained below, this shill
bidding took place largely after defendant learned in 2007 of an the FBI
investigation– which would suggest that the volume of shill bidding was greater
prior to 2007. While each shill bid did not result in an immediate significant
financial benefit to defendant - at its core, it was done to advance defendant’s own
business interests at the expense of others. Whether he was cheating a bidder out
of a certain sum or keeping a consigner happy with a protective bid – it was done to
advance his own interest and as a fraudulent tool to grow Mastro Auctions into the
largest auction house.

Defendant’s undisputed Guidelines range is 57 to 60 months’ imprisonment.
See PSR ¶¶26-46, 113. The government seeks a below guidelines sentence here
because: (1) the defendant continues to provide substantial assistance with the
government’s investigation and prosecution of the charged co-defendants in this
case and for that reason, pursuant to Section §5K1.1(a), the government moves the
Court to depart from the Guidelines and impose a sentence of 20 months’
imprisonment; (2) mitigating information regarding defendant’s history and
characteristics, including his charitable activities and his family history; (3) the
deterrent value in the memorabilia auction industry of having defendant—a longtime
leader in the industry—take criminal responsibility for his role in shill bidding
and the sale of certain altered sports memorabilia; and (4) given uncertainties in
reaching the appropriate loss calculation under the guidelines in this particular
case.

Accordingly, in light of the offense conduct and the § 3553 sentencing factors,
including defendant’s cooperation with law enforcement and the mitigation of
defendant’s family history and charitable works – a below guideline sentence of 20
months is warranted. Conversely, a sentence of probation, as requested by
defendant, is not appropriate and will serve to send the wrong message that
defendant’s crime is not a serious one and that he was able to avoid taking full
responsibility for his years of lies through unrelated good works.