Mastro sentencing update

[jboosted92]

i got Diverse...

I have my own chocolate factory and cacao farm in the Dominican Republic.... ( in the Baseball Capitol of the world i might add)

Pretty sweet!

[steve B]

Originally Posted by jboosted92

i got Diverse...

I have my own chocolate factory and cacao farm in the Dominican Republic.... ( in the Baseball Capitol of the world i might add)

Pretty sweet!

Please tell us you've got a chocolate lake with a tube that could suck up a chubby visitor - Please.......Maybe that you've hired singing little people too

Steve B

[CW]

[steve B]

Ok, that made my day.

Steve B

Originally Posted by CW

[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.

[Peter_Spaeth]

The defendant’s involvement in shill bidding, his concealment of the shill
bidding, and selling altered memorabilia is a serious offense. The long-running and
systematic nature of the scheme undermines confidence in the auction house and
sports memorabilia industries, and calls into question the true value of merchandise.
As defendant correctly notes, the actual financial harm to any individual victim was
limited, they received the items they won, and at times, through the use of ceiling
bids, victims expressed a willingness to spend the additional money for an item they
wanted at auction. However, in this case, the intended loss was much greater. The
parties agree that through shill bidding the defendant’s intended loss was hundreds
of thousands of dollars and between $400,000 and $1,000,000. PSR ¶ 15; See
Government’s Version at 15-24. In other words, this is the amount that the
defendant intended to drive up the auction prices through shill bidding.

While defendant is correct that bidders were not cheated out of huge sums by
being duped by defendant and his co-defendants at auction to pay more for an item
than necessary and ultimately received the item they bid on at the auction – it was
still driven by fraud and cheated (or attempted to cheat) some bidders out of money.
And, regardless of the amount, using his position and power as CEO to steal money
from bidders and fraudulently drive up auction prices is still a serious offense.
Defendant notes that many of the victims of his scheme were sophisticated and
financially well off – however, that is with the benefit of hindsight. At the time he
cheated these victims - it is unlikely defendant knew their financial means.
Additionally, the offense is serious because it causes the true value of certain
auctioned merchandise to be called into questioned. The auctions were falsely
advertised as fair with items going to the highest bidder. And, when concluded –
auction results were shared and falsely showed that 99 percent of items were sold.
Certainly, these auction results, which were at times false, would be consulted as a
tool in the industry to determine prices for future transactions on the same or
related merchandise – much like a person using prior comparable home sales to
determine the value of a home. However, given defendant’s seven year scheme,
which often inflated the ultimate sale price of items or made it falsely appear that
items were sold for a certain value when in reality they just went back to the
consignor– these results, have to be called into question going forward by collectors
and investors. Moreover, the auction results prior to 2007 must be particularly
scrutinized because the exact scope of the shill bidding cannot be fully known – as
those records were destroyed.

As defendant points out, the motive for the offense cannot be chalked up to
simple greed because the immediate financial incentive of cheating a bidder was not
a windfall to defendant. However, through shill bidding defendant intended to drive
up prices hundreds of thousands of dollars – which is no small sum. See PSR ¶ 15.
Additionally, this offense seems to be largely driven by defendant’s desire to develop
Mastro Auctions into the biggest and the most successful auction house in the
industry. As a result, instead of letting the auction processes dictate the value of an
item, which might have been less than a consignor or defendant believed appropriate
– defendant used shill bidding to set the value he felt appropriate. This largely
meant using shill bids to falsely create bidder interest in an item, drive up the
ultimate winning bidder, or to protect a consignor from having an item go for too low
a price. In the end, defendant injected shill bidding to advance his own interest in
promoting the auction house as the premiere auction house that sold a high volume
of items at high values. In the end, defendant’s ultimate goal was to beat the
competition and garner more business for his auction house and in the end, more
money for him.

Defendant’s offense is also serious because he was the CEO of the auction
house for the entire scheme period. He had the authority and power to control how
the auction house operated. He opted to use this power to take a hands-on role to
promote shill bidding and to cover it up. For instance, around 2001, defendant
instructed co-defendant Bill Boehm, who was employed at the auction house as an
information technology employee, to get defendant an unused bidder account that he
could use to make shill bids. See Docket Entry Number 145 (Boehm Plea
Agreement) at 3. Boehm complied with defendant’s request and provided defendant
the account of Individual F.D. – an individual Boehm knew never used his account to
bid in auctions. Id. Defendant then used this account to make shill bids. Id. at 3-4.
In 2003, defendant wanted to conceal his shill bidding and instructed Boehm to
destroy under bidder records for Individual F.D. as well as historical under bidder
records. Id. at 4. Defendant further instructed Boehm to destroy under bidder
records in future auctions. Id. Defendant continued to shill bid in auctions - he just
wanted to make sure that the evidence was destroyed. PSR ¶¶8,9, 12, 15, 33.
Defendant’s efforts to get a lower-level employee involved in the shill bidding and
instructing that same employee to destroy the evidence – further add to the severity
of defendant’s offense.2