Article about Collecting and Fraud in the Hobby

[Peter_Spaeth]

"No laws that prevent somebody from theoretically doctoring a card, getting it past the grading company, and having it go to auction."

Hard to read, who said that? It's not right if the third part above is included. We've been through this extensively. Mail and wire fraud apply to knowingly selling an altered card and not disclosing that it's altered, at least if most people would view the alteration as material (eg trimming). It isn't a defense that you fraudulently graded it. That's why we have, or had, an FBI investigation.

[whiteymet]

Originally Posted by Peter_Spaeth

"No laws that prevent somebody from theoretically doctoring a card, getting it past the grading company, and having it go to auction."

Hard to read, who said that? It's not right if the third part above is included. We've been through this extensively. Mail and wire fraud apply to knowingly selling an altered card and not disclosing. It isn't a defense that you fraudulently graded it. That's why we have, or had, an FBI investigation.

Peter:

in reading the article the wording you are questioning seem to be in quotes from Al Crisafulli

[Peter_Spaeth]

Originally Posted by whiteymet

Peter:

in reading the article the wording you are questioning seem to be in quotes from Al Crisafulli

Well I am not going to judge anyone on the basis of a quote in the press, as he may have been misquoted or taken out of context. But the statement as quoted is wrong, there clearly is an applicable legal framework as was discussed ad nauseum a couple of years ago and since, and the FBI would not have investigated if there wasn't. And PWCC would not have cooperated (for a long while anyhow), and his elite criminal lawyer would not have advised him to, if there wasn't. Maybe the reporter should have asked Special Agent Brusokas if he wanted to know about the law..

[MikeGarcia]

.
“I met a guy who wanted to do a trade with me,” said Chicagoan Sam Nubani, who said his collection is worth $10 million. “I thought I could trust him.

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“He said he would mail me my cards and I would mail him his at the same time. I go to FedEx to mail my box when I get notification he mailed his. Two days later, I get the box and it’s empty. I lost about 70 grand.”



... maybe it's just me , but for 70K I would gas-up the Park Avenue , shanghai a grand kid out of school for a day to help drive , and meet in the parking lot of Los Pollos Hermanos if need be, but we be doing that 70K in person , hombre.

..

[Peter_Spaeth]

I have a friend who bought a 52T Mantle from a guy through the mail or maybe it was Fed Ex and received a 57T. It was a long painful process but we got his money back.

[Johnny630]

Fraud and manipulation have always been a big part of this industry you just have to educate yourself and as always buyer beware, that’s it. It’s up to you to watch your own ass, no one else will.

[BobC]

Originally Posted by Peter_Spaeth

"No laws that prevent somebody from theoretically doctoring a card, getting it past the grading company, and having it go to auction."

Hard to read, who said that? It's not right if the third part above is included. We've been through this extensively. Mail and wire fraud apply to knowingly selling an altered card and not disclosing that it's altered, at least if most people would view the alteration as material (eg trimming). It isn't a defense that you fraudulently graded it. That's why we have, or had, an FBI investigation.

Don't disagree with you at all Peter, but what has come of that FBI investigation? I understand the Covid pandemic may have had an impact on its progress and continuation, but how many years is it now, with no further word, decision either one way or another, or even a hint of a possible resolution anytime soon? To my knowledge, any and all suspect parties seem to be carrying on with business as usual, and have really suffered no significantly discernible negative effects from being the potential targets of such an investigation.

And along those same lines, what has been going on with the BODA/Blowout guys blowing the whistle and outing all those resurfacing doctored cards that helped to start the investigation? I am not on Blowout, but seemed to almost regularly see postings and warnings on our forum of their ongoing discoveries of altered cards being put up for sale. Are they still doing that? I can't remember the last time I heard about their latest investigative findings/outings.

And as for the selling of altered cards and the potential fraud aspect of it, I wanted to make sure I fully understand your comment and point. Anyone can alter or doctor a card they own, that is no crime, period. And even if someone knowingly altered/doctored a card, their submission of it to any independent TPG for that TPG's opinion of said card is also in no way a criminal offense either, still correct, right? The trick and potential crime seems to start coming when the card is put up for sale/auction by an independent, third-party seller/AH the card doctor decides to sell the card through. If a card doctor goes to directly sell an item themself, say through Ebay, even if the card was mistakenly graded by a TPG I understand the card doctor as the actual, direct seller would still be considered responsible to inform potential buyers of the known alterations/restoration to the card, and can therefore potentially be subject to fraud implications and charges if they don't. But does that potential criminal liability for a card doctor dissipate, or possibly go away entirely, when instead of selling a card directly themself they opt to consign it to an independent third-party seller or AH?

If any third-party seller/AH that ends up selling an altered/restored card without proper disclosure is truly independent of the card doctor who consigned it to them, and was never made aware of the alterations/restoration to that card they were selling, I would think that at least technically they are not criminally liable and potentially guilty of fraud. And since I've never consigned anything for sale to a third-party seller/AH I have to ask, do any such sellers/AHs ever directly and specifically ask consignors of cards to be sold if they have been altered/restored to that consignor's knowledge, despite what a TPG may have graded and encapsulated a card as? And are there any specific federal/state/local laws that may otherwise require those sellers/AHs to ask such specific questions of consignors. Absent positive responses to either of these questions, I can see how the FBI's investigation may have stalled if one of their goals was to somehow implicate and charge these sellers/AHs/TPGs with being a potential party to such fraud.

But unless the card doctors can somehow get out of potential criminal fraud liability by using unrelated and independent TPGs, sellers, and AHs to kind of buffer and insulate them from such criminal fraud charges, I'm a bit surprised that the FBI's investigation hasn't then just focused on going after the card doctors. If for nothing else than to bring charges against them, and then use that as leverage to sway the card doctors to turn against the TPGs, sellers, and AHs that may in fact have been working in cahoots with those same card doctors all along after all. But maybe it is still too early in the FBI's investigation, and we just haven't reached that point yet.

So Peter, if the FBI's investigation is unable to link the TPGs, independent sellers, and AHs as conspiring and working with card doctors to defraud the public, you're saying the card doctors can 100% still be held criminally liable for fraud themselves under the way they seem to be selling their altered/restored cards now, right? Or is it possible that without air-tight evidence of collusive activity among the suspected parties involved that even with the Blowout/BODA investigative work and findings, the FBI may not be able to get convictions against individual card doctors alone from such evidence.

Our hobby does not have a definitive, agreed upon, single set of standards and measures, appears to be based a lot on mere opinions of supposed "expert" third parties that can very easily be shown and proven to lack consistency and whose opinions are ripe with errors and mistakes. Also, not all people in the hobby necessarily look down or disapprove of restorations or improvements being made to items like cards. In fact, arguably the most famous/infamous, as well as arguably most valuable, card in the hobby is now definitively known to have not been properly issued as it should have been, and deserves no numerical grade whatsoever. This isn't even debatable given the supposed standards the opining TPGs and the hobby as a whole supposedly promote and follow. And yet, the card's grade has never been corrected, nor has the TPG involved corrected the listing of the improperly graded item in their own population records. Start putting that kind of information and evidence in front of a jury of non-card collecting nerds, like most on this forum, and who knows what kind of reasonable doubts that could raise in just one juror's mind.

[Peter_Spaeth]

I have no idea about the status of the FBI investigation. Certainly, we have seen these things take even longer, you may recall that the indictment only came down recently for the T206 forgeries that happened if memory serves five or so years ago. I also speculate, and it's pure speculation, that if it had ended with no action, certain people would have been proclaiming their innocence in public. But again, I have no idea.

One of the three BODA guys is still active. I suspect the others just got back to their lives, it was a huge commitment of time and effort, all unpaid.

In my judgment a card doctor could not insulate himself from mail/wire fraud by arranging for someone else to make the sale, any more than the fact that the card doctor defrauded a TPG would somehow be a defense. The card doctor/consignor is still directly responsible for the misrepresentation/omission assuming he doesn't disclose it to the seller. I haven't researched it but I have to believe the statute would reach that. The AH or other seller, on the other hand, if innocent, and that's debatable in many of these situations, would not have the necessary mens rea to be guilty of a crime.

[BobC]

Originally Posted by Peter_Spaeth

I have no idea about the status of the FBI investigation. Certainly, we have seen these things take even longer, you may recall that the indictment only came down recently for the T206 forgeries that happened if memory serves five or so years ago. I also speculate, and it's pure speculation, that if it had ended with no action, certain people would have been proclaiming their innocence in public. But again, I have no idea.

One of the three BODA guys is still active. I suspect the others just got back to their lives, it was a huge commitment of time and effort, all unpaid.

In my judgment a card doctor could not insulate himself from mail/wire fraud by arranging for someone else to make the sale, any more than the fact that the card doctor defrauded a TPG would somehow be a defense. The card doctor/consignor is still directly responsible for the misrepresentation/omission assuming he doesn't disclose it to the seller. I haven't researched it but I have to believe the statute would reach that. The AH or other seller, on the other hand, if innocent, and that's debatable in many of these situations, would not have the necessary mens rea to be guilty of a crime.

I agree with your thinking, but was wondering from the legal side if you thought/knew there was possibly some specific ambiguity(ies) in the law that could potentially keep prosecutors from reaching that "beyond a reasonable doubt" level in juror's minds. Given all the inconsistencies and such as are in this hobby, a non-collector in looking at a lot of what we've come to accept as normal would likely laugh and roll their eyes at us collecting nerds.

And you're probably right about the FBI still being in the midst of investigating. No one has been, or looks to currently be, in danger of any physical harm or violence, so timing isn't as critical for the FBI to stop someone in this case. And the potential theft/loss some people may have initially incurred, when buying these altered cards from the card doctors selling them, could have been (and very likely was) quickly turned around and negated if and when these initial victims later turned around and then unknowingly resold these altered/doctored cards to other unsuspecting victims. In many cases for possibly even bigger profits and amounts than the card doctors got away with to start, given the huge jump in card prices in recent years.

And that leads to another question concerning such fraud. I know in the case of a card's theft, if after the theft the card changes hands a few times involving unsuspecting and innocent buyers, that card, if later discovered by authorities to have been taken in a theft, can forcibly be taken from the then current owner, and rightfully returned to the original theft victim. What would happen in a fraud case to the then current unsuspecting and innocent owner of a valuable card if it suddenly was discovered and came out during a trial of the person that originally doctored/altered the card that their card they now owned had been altered, and was now worth thousands of dollars less than they paid for it? And to further complicate things, the altered card you now own had changed hands several times after the initial sale by the card doctor, right after he first altered the card and then got it erroneously graded by some TPG. There's no theft victim for the card to be returned to, so without question you own the card. But now that its alterations are outed and you know it, you can't sell it to anyone else without fully disclosing those alterations (unless you now want to potentially be liable for fraud also). So say you do sell it, after properly disclosing the alterations, and lose your ass on it. What actual legal recourse(s) do you have, if any? Can you go back against the also innocent person/dealer you bought it from, or do you go back against the original card doctor? And what about the TPG that improperly graded it, can you just go back at them assuming they don't voluntarily make you whole for their original mistake, even though you never dealt with them personally in regard to getting the card graded? Or is this TPG issue further complicated by having to now go back and read, decipher, and interpret the various agreements and contracts that were signed and entered into at the time the card in question was graded, even though you were never involved nor signed or agreed to anything with the particular TPG that graded your card? Or are you just SOL, get hit with the loss, and can only end up checking with whatever insurance coverages you might have to see if by some miracle one of them will agree to cover and pay you at least something for your loss?

And I'm asking this as a very serious question, as given the presumed decades over which card doctors are believed to have been operating, and the unfathomable number of altered cards thought to be out in the hobby market/community today, the chances for any of us with even just a somewhat modest collection of graded cards to unknowingly have an altered card or two in our personal collections is a lot stronger than I know I'd ever care for it to be. I'm guessing the possibility of ever catching and really outing a truly significant percentage of these altered cards in the hobby is virtually nil. Despite the best efforts of the BODA/Blowout guys, they're probably lucky if they've even scratched the surface on what altered stuff is out there. But having said all that, who knows if the FBI investigation does not one day pan out, and they nail one of these card doctors, who then in cooperation with the feds to hopefully lessen their punishment and sentence turns over records and documentation of literally thousands of cards they've altered over the years, along with which TPG slabs (and cert #s) they got those cards into. So, in case something like that ever came to be, I know I'd like to be aware of my potential recourse options if I suddenly found cards I owned on such an outed list.

Any good thoughts, comments or legal advice in regard to the above?

[Peter_Spaeth]

Well, your first remedy might be to ask PSA to review it under their marketplace guarantee. Good luck with that. See Leaf Jackie Robinson.

There's probably a misrepresentation/mistake theory in most or all states under which you could seek rescission against your immediate seller, even if they're innocent, although there may be limitations issues depending on how long ago your purchased. But if the seller isn't willing to accept the return, are you really going to litigate it with all that entails?

[BobC]

Originally Posted by Peter_Spaeth

Well, your first remedy might be to ask PSA to review it under their marketplace guarantee. Good luck with that. See Leaf Jackie Robinson.

There's probably a misrepresentation/mistake theory in most or all states under which you could seek rescission against your immediate seller, even if they're innocent, although there may be limitations issues depending on how long ago your purchased. But if the seller isn't willing to accept the return, are you really going to litigate it with all that entails?

And exactly why I was asking. LOL

I've also heard in some instances where TPGs that supposedly have guarantees in place just almost automatically tell the affected party(ies) to go back to the seller as well. So much for guarantees right.

And trying to go back against a seller that was also just an innocent buyer at one point themselves, and prevailing, now turns that seller into a victim as well. So what recourse does that new victim possibly have then, but to try going against the person/dealer they bought it from as well. And potentially on and on back till it may actually get to the card doctor that originally altered and sold it, or the trail of prior sellers goes dark if it was one time say bought at a show years ago and the last victim has no record/receipt of who they bought it from. And with the possibility some of these altered cards have been out there for decades now, who knows how many innocent prior owners may be involved in one single card. What a potential cluster-you-know-what!

This seems to turn the potential outcome for victims in instances like this into nothing more than being players in a game of "Hot Potato". You just hope and pray you're not holding and owning a card when it gets outed and it is made public that it was altered. And the idea that TPGs may not be held accountable in such situations is appalling, and just another sign and reason why their control and sway over the hobby should be removed, and they should be subject to independent, outside review, and all TPGs forced to go by and adhere to one formally standardized and universally recognized set of consistent and unchanging standards. And no more contingent grading fees based on a cards value should ever be allowed either. That is totally wrong and clearly indicates a potential bias and conflict of interest for the TPG. And what about all the threads we have here on the forum asking about how the same card graded by TPG-A, will it be worth and sell for more (or less) if graded by TPG-B instead? That is like asking if say Amazon or Tesla's stock would suddenly trade for more, or less, if they decided to switch from one big auditing firm, like KPMG, to another big firm, like Ernst & Young. In the case of the stock prices, the correct answer is that it doesn't matter which accounting firm audits and opines on Amazon or Tesla's financials, they do their work following and adhering to the exact same rules and standards as all the other auditing firms out there. And the same should be the case for TPGs. It shouldn't be the TPG company that audits and opines on the condition of a card somehow impacting that card's perceived price/value, independent of the card's actual condition and grade. And it shouldn't matter which TPG grades a card as they should all come up with the same grade when looking at the exact same card..........period!

[Peter_Spaeth]

When the scandal first broke, Steve Sloan, PSA President, issued a statement telling people who thought they had altered cards to go back to their sellers. Of course the other problem with the guarantee is that it's like the Outer Limits -- we control the horizontal, we control the vertical. If they say your card is good, even if it isn't, you're out of luck.

[raulus]

Originally Posted by BobC

And exactly why I was asking. LOL

That is like asking if say Amazon or Tesla's stock would suddenly trade for more, or less, if they decided to switch from one big auditing firm, like KPMG, to another big firm, like Ernst & Young. In the case of the stock prices, the correct answer is that it doesn't matter which accounting firm audits and opines on Amazon or Tesla's financials, they do their work following and adhering to the exact same rules and standards as all the other auditing firms out there. And the same should be the case for TPGs. It shouldn't be the TPG company that audits and opines on the condition of a card somehow impacting that card's perceived price/value, independent of the card's actual condition and grade.

BobC - not to get too deep into the weeds with your accounting firm analogy, but I'm not sure it's all that applicable here.

When an accounting firm issues an audit opinion, it's basically pass/fail. While regulators over the years have been trying to get accounting firms to be more nuanced, there's never been a real movement beyond the current pass/fail regime. Certainly if accounting firms were issuing opinions graded from 1-10, with half grades and qualifiers and sub-grades, then more people would spend a lot more time reading auditors' reports!

On the other hand, with the TPGs, if they were just opining on pass/fail, then their job would be pretty simple. But having to take all of the various factors for any given card, weight them, and then boil them down into a single number is a heck of a lot more exciting than just pass/fail.

I think when you add on issues around service, volume, perceived acceptance in the marketplace, encapsulation techniques, and other features, there are just too many opportunities for differentiation that I don't expect that the TPGs in our world will ever get to a spot where they're aligned in all respects.

And if you want to get deep enough into the weeds here, most of the major accounting firms have a list of scandals that goes pretty deep. Even if you just look at their PCAOB examination findings, they all seem to be doing an imperfect job of actually following those immutable professional standards. So hoping that the TPGs will be more like accounting firms may not be moving in the right direction.

Which isn't to say that TPGs (and auditors for that matter) couldn't do a lot better!

But to expect that the market will view TPG grading opinions no differently than auditors' reports is probably not a realistic expectation given the differences between the services offered and opportunities for innovation among the TPG services offered.

[Yoda]

Originally Posted by BobC

Don't disagree with you at all Peter, but what has come of that FBI investigation? I understand the Covid pandemic may have had an impact on its progress and continuation, but how many years is it now, with no further word, decision either one way or another, or even a hint of a possible resolution anytime soon? To my knowledge, any and all suspect parties seem to be carrying on with business as usual, and have really suffered no significantly discernible negative effects from being the potential targets of such an investigation.

And along those same lines, what has been going on with the BODA/Blowout guys blowing the whistle and outing all those resurfacing doctored cards that helped to start the investigation? I am not on Blowout, but seemed to almost regularly see postings and warnings on our forum of their ongoing discoveries of altered cards being put up for sale. Are they still doing that? I can't remember the last time I heard about their latest investigative findings/outings.

And as for the selling of altered cards and the potential fraud aspect of it, I wanted to make sure I fully understand your comment and point. Anyone can alter or doctor a card they own, that is no crime, period. And even if someone knowingly altered/doctored a card, their submission of it to any independent TPG for that TPG's opinion of said card is also in no way a criminal offense either, still correct, right? The trick and potential crime seems to start coming when the card is put up for sale/auction by an independent, third-party seller/AH the card doctor decides to sell the card through. If a card doctor goes to directly sell an item themself, say through Ebay, even if the card was mistakenly graded by a TPG I understand the card doctor as the actual, direct seller would still be considered responsible to inform potential buyers of the known alterations/restoration to the card, and can therefore potentially be subject to fraud implications and charges if they don't. But does that potential criminal liability for a card doctor dissipate, or possibly go away entirely, when instead of selling a card directly themself they opt to consign it to an independent third-party seller or AH?

If any third-party seller/AH that ends up selling an altered/restored card without proper disclosure is truly independent of the card doctor who consigned it to them, and was never made aware of the alterations/restoration to that card they were selling, I would think that at least technically they are not criminally liable and potentially guilty of fraud. And since I've never consigned anything for sale to a third-party seller/AH I have to ask, do any such sellers/AHs ever directly and specifically ask consignors of cards to be sold if they have been altered/restored to that consignor's knowledge, despite what a TPG may have graded and encapsulated a card as? And are there any specific federal/state/local laws that may otherwise require those sellers/AHs to ask such specific questions of consignors. Absent positive responses to either of these questions, I can see how the FBI's investigation may have stalled if one of their goals was to somehow implicate and charge these sellers/AHs/TPGs with being a potential party to such fraud.

But unless the card doctors can somehow get out of potential criminal fraud liability by using unrelated and independent TPGs, sellers, and AHs to kind of buffer and insulate them from such criminal fraud charges, I'm a bit surprised that the FBI's investigation hasn't then just focused on going after the card doctors. If for nothing else than to bring charges against them, and then use that as leverage to sway the card doctors to turn against the TPGs, sellers, and AHs that may in fact have been working in cahoots with those same card doctors all along after all. But maybe it is still too early in the FBI's investigation, and we just haven't reached that point yet.

So Peter, if the FBI's investigation is unable to link the TPGs, independent sellers, and AHs as conspiring and working with card doctors to defraud the public, you're saying the card doctors can 100% still be held criminally liable for fraud themselves under the way they seem to be selling their altered/restored cards now, right? Or is it possible that without air-tight evidence of collusive activity among the suspected parties involved that even with the Blowout/BODA investigative work and findings, the FBI may not be able to get convictions against individual card doctors alone from such evidence.

Our hobby does not have a definitive, agreed upon, single set of standards and measures, appears to be based a lot on mere opinions of supposed "expert" third parties that can very easily be shown and proven to lack consistency and whose opinions are ripe with errors and mistakes. Also, not all people in the hobby necessarily look down or disapprove of restorations or improvements being made to items like cards. In fact, arguably the most famous/infamous, as well as arguably most valuable, card in the hobby is now definitively known to have not been properly issued as it should have been, and deserves no numerical grade whatsoever. This isn't even debatable given the supposed standards the opining TPGs and the hobby as a whole supposedly promote and follow. And yet, the card's grade has never been corrected, nor has the TPG involved corrected the listing of the improperly graded item in their own population records. Start putting that kind of information and evidence in front of a jury of non-card collecting nerds, like most on this forum, and who knows what kind of reasonable doubts that could raise in just one juror's mind.

bob, I suspect that the FBI has their hands full at the moment with the events unfolding at Mar a Lago and that lower priority cases are on hold.

[BobC]

Originally Posted by Yoda

bob, I suspect that the FBI has their hands full at the moment with the events unfolding at Mar a Lago and that lower priority cases are on hold.

LOL

Great point, but that is a much more recent incident. Still, I hope the FBI prevails in both cases to getting the correct answers and just outcomes.