Article about Collecting and Fraud in the Hobby

[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.

[BobC]

Originally Posted by 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.

Exactly, I remember that. So what good is the guaranty then if they don't plan to honor it?

What gives the supposed extra value to a graded card is that a knowledgeable, independent, and unbiased expert is supposed to have examined it and given their opinion as to its authenticity and condition, based on a recognized set of uniform and consistently applied standards. And even if a TPG is only giving an opinion, if they are unable or unwilling to stand behind that opinion, then that opinion really isn't worth shit. The TPGs fully realizes that people are making financial decisions based on their opinions, and sometimes some very expensive ones. How they can escape liability by hiding behind it only being an opinion they are giving is exactly why the TPGs should ALL be required to follow a similar set of uniform grading standards determined and handed down by some hobby group or authority, not determined separately by each TPG as to what they think/want the grading standards to be, and then changing them to suit their own whims and wishes.

The point where the hobby has gotten to today has made it virtually impossible to ever expect the TPGs to give up their position and control over the hobby, either voluntarily or by force, without there being either some absolutely horrific incident/scandal that totally destroys a vast majority of the people/collectors/sellers in the hobby's current faith and trust in TPGs, or the government decides they need to step in and wrest such control from the TPGs, for whatever reason. I'm not holding my breath though.

[Republicaninmass]

I sold an unsigned raw card to Roger Till last week. These people are still rampant in the hobby

[BillyCoxDodgers3B]

Originally Posted by Republicaninmass

I sold an unsigned raw card to Roger Till last week. These people are still rampant in the hobby

Funny, someone else I know did so last week as well.

Let me guess, the player has been dead a very long time.

I'm sure you've saved screen grabs of all pertinent sales info along with high-res scans of both sides of that card. Hoping it pops up "signed" soon enough and you can show your proof to the powers that be on whichever site it's encountered.

[steve B]

Originally Posted by 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.

If I recall correctly, PSA also reviewed some modern serial numbered cards where there were clear before and after pics showing trimming and simply reslabbed them with a new number.

Which comes back directly to the question of who is an expert, and who decides.
I think I'm pretty good, but wouldn't call myself an expert in many situations. I doubt saying "I've studied papers and printing for decades in multiple fields where it matters financially" would qualify me.
(My recent excursion into paper varieties of the various stamps issued by the allies occupying Germany..... sooo humbling! even with excellent catalog descriptions)

I have little doubt that the FBI has people who study those things in detail and who absolutely would qualify as experts.

PSA? nope. Maybe a few, but they basically abandon grading cards that aren't easy.

[Snowman]

I don't understand the argument that selling a doctored card can be considered mail fraud if the underlying act of doctoring a card is not itself a crime.

People collect sneakers. Some pay big bucks for them too. You can clean up an old pair of Jordans and surely get more money for them than you could if you sold them grungy. Surely, there are sneaker "purists" who would prefer their sneakers to have never been "tampered" with, but that doesn't mean they get to set the rules for everyone on what is and isn't allowed. It's not a crime to clean and sell sneakers. It's not a crime to clean and sell comics. Surely, it's not a crime to clean and sell baseball cards regardless of how much profit someone makes in the process.

I've said this multiple times before, but I maintain that someone could openly admit to altering cards in front of a jury (even without having representation) and they would never be convicted of a crime under any and every circumstance imaginable.

The arguments for criminalizing this sort of behavior just comes across to me as wishful thinking on the part of those who would like to impose their views on others.

[Peter_Spaeth]

Originally Posted by Snowman

I don't understand the argument that selling a doctored card can be considered mail fraud if the underlying act of doctoring a card is not itself a crime.

People collect sneakers. Some pay big bucks for them too. You can clean up an old pair of Jordans and surely get more money for them than you could if you sold them grungy. Surely, there are sneaker "purists" who would prefer their sneakers to have never been "tampered" with, but that doesn't mean they get to set the rules for everyone on what is and isn't allowed. It's not a crime to clean and sell sneakers. It's not a crime to clean and sell comics. Surely, it's not a crime to clean and sell baseball cards regardless of how much profit someone makes in the process.

I've said this multiple times before, but I maintain that someone could openly admit to altering cards in front of a jury (even without having representation) and they would never be convicted of a crime under any and every circumstance imaginable.

The arguments for criminalizing this sort of behavior just comes across to me as wishful thinking on the part of those who would like to impose their views on others.

Assuming you are talking broadly about altering cards and not just cleaning which some don't view as alteration at all, are you suggesting I don't know this area of the law and you do? Are you suggesting Brent's elite criminal defense lawyer who along with me explained this at length in the day and later advised Brent to cooperate doesn't know the law but you do? Are you suggesting SA Brusokas has spent years investigating activity that was perfectly legal? Come on Travis, stop it.

As to your question, which is fair and you should have stopped there, you need to understand the nature of mail and wire fraud. just altering the card hasn't yet defrauded anyone through the wires or mail. It only becomes a crime when those elements are met, in other words when there's been a scheme carried out through the wires or mail by means of a material misrepresentation or non-disclosure. In other words, it's not the sale per se of the altered card that's the problem, it's the non -disclosure of the fact that it's altered. If I trim a card, get it past the graders, and sell it with full disclosure, there's no fraud. So your logic -- if it isn't illegal to alter it, it can't be illegal to sell it -- misunderstands the nature of mail and wire fraud. Oh, and in your free time read the Mastro indictment and the part about the Wagner. The part that allegedly was mail fraud was not the trimming but the concealment.

Now if your REAL point is not that it couldn't be a crime, but that it isn't something that SHOULD be prosecuted, that would be a different point and discussion.

[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.

[Johnny630]

Originally Posted by raulus

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.

Well said! We are paying for an Opinion that’s it. To me nobody is perfect and nothing is going to catch All alterations. I like the way things are now with PSA and SGC :-)

[BobC]

Originally Posted by raulus

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.

Hey Nicolo,

You are going a bit deeper than I intended. LOL

The point I'm trying to present is that at the end of the day, all the accounting firms and TPGs really do is give their opinions. And both are supposed to be (or in the case of TPGs, they should be) independent, knowledgeable, and giving their opinions based on a recognized and uniform set of rules and measurement standards, consistently applied. And if that is the case and actually true, why do the exact same cards, in the exact same grades, typically sell for more if graded by one TPG over another? You mentioned additional services and opportunities for innovations among TPGs as a basis for possibly explaining why one TPG's cards may sell for more than another's. Okay, what additional services and what innovations? I understand only one TPG has a working Registry, at least for now. Is that the additional services you're referring to? Because if so, is that Registry still the huge factor it once was in driving prices? If anything, I feel there may still be some carryover influence from the earlier days of the Registry where collectors would vie against one another to get that TPG's highest graded example of that card, but how many people, and what portion of the hobby, are still so actively involved in those Registry fights, especially when it comes to pre-war or vintage cards? For example, that SGC '52 Topps Mantle is now the most valuable card sold to date, and that doesn't impact anyone's registry standing. Further, I've often felt that in those cases of Registry fights, the dealers and sellers then actively push the "All boats rise with the tide." mantra to then justify pushing higher prices to customers of all the similar, but lesser condition cards they had and were selling. And a lot of that I always felt went back to the old Beckett price guides, or the SCD catalogs, which would base card prices off of a NM (or possibly EX-NM) figure, and values for other grades would then be a set percentage of those NM or EX-NM prices. And collectors got brainwashed and bought into that thinking. And because of those Registry people early on always pushing up prices for one particular TPG's cards over those of all the other TPG's, many in the hobby were sufficiently brainwashed into thinking that for some reason that one TPG's cards of equal grade and condition were somehow always intrinsically more valuable than any other TPG's similar cards. Just like Goudey Ruth cards were shown in the old Beckett's as his rookie card, and contributed to what I still feel is the extremely overpriced nature of those readily available and not rare at all cards today.

The truth is, one TPG's cards are intrinsically NOT more valuable, unless it is two Registry people suddenly vying for the same card. But of all the Ebay card sales, other online card sales, card sales at shows, and AH auctions going on out in the marketplace today, what percentage of those transactions today are truly driven by Registry considerations? And I'm talking about mostly pre-war and vintage, not the newer, modern stuff where many are possibly still actively trying to get atop those Registry lists that haven't been established and filled for years already.

That is why, and how, I possibly see the Registry as affecting and influencing prices of TPG graded cards. And for a vast portion of the hobby that don't give a rat's ass about a Registry or their set's Registry ranking, that isn't a service, it's a marketing technique I view as an overall bane to the hobby, and how certain players in this industry have been able to make a lot more money than they otherwise would have by pushing and continuing that thinking still to today. But my point is that if the TPGs really did what they were supposed to, opine and grade cards uniformly and consistently, then it wouldn't/shouldn't really matter which TPG graded it, the same card should sell for approximately the same price regardless of which TPG encapsulated it. Just like it doesn't matter which accounting firm opines on a company's financial statements and financial condition, as it has no bearing on stocks price in the marketplace, nor should it. As our beloved cards seem to be becoming more and more like investments every day, the parties that opine on them as to what gives them value, the TPGs that grade them, should aspire to be even more independent and consistent and non-biased in what they do. And a Registry really should not be influencing overall market prices like it may have in the past, and carried over to today. That fault lies with the collecting community, and more so with Registry geeks and followers who worship at it's feet.

And what innovations are you talking about? I don't know anyone that will pay more for a card in one TPG's holder over another, just for some perceived technological innovation that is yet to come from the one TPG.

And as for financial audits being a simple pass/fail test, they are a lot more than that. In college I learned the crux was in the finding of "competent sufficient evidential matter". And as for simply pass/fail, did you not ever work on an audit where you had to give a client "proposed audit adjustments" or basically edit or even re-write/add footnotes for them? Or what about walking into a company that has never been audited before, and having to be the one in charge of figuring out what look for, ask about, find evidence to test, and on and on. Not having someone else's prior year workpapers and checklists to literally just follow and copy off of certainly is a bit more involved than just running some pass/fail tests. LOL

And yes, I'm well aware of there being many accounting scandals and firms with issues over the years. But that is the point, they are known, and the accounting firms in many cases, if not most all, were held accountable and ended up paying for their issues and scandals, sometimes dearly. Author Anderson met their demise with Enron. I have a friend who was a national tax partner with Laventhol & Horwath, who didn't like the direction and way they were going and left them because of that about three years before they imploded. Unfortunately, he found out the hard way why being in a general partnership can be bad. What big, heavily publicized cases have any of the TPGs actually lost in court, or otherwise suffered/paid dearly for? Again, all why I feel TPGs giving opinions on a card's condition should be held to standards, rules, and oversight, and be much more accountable for their actions, similar to public accounting firms giving opinions on a company's financial statements and condition. It isn't a perfect match, but close enough for me. Will we ever see my wishes coming true though, honestly, probably not.