Mastro/Legendary Article in Today's NY Daily News

[cyseymour]

I think that if Forman was buying cards raw, then that would certainly open it up for speculation. I know he sold some stuff at REA http://www.robertedwardauctions.com/.../2009/280.html, though it explicitly stated that Forman had purchased it on the open market. He probably knows he can't buy raw cards.

That Forman ran up such a debt, failed to pay it when card prices crashed, and apparently had a close friendship with Bill Mastro, known for allegedly shill bidding and card trimming, is disturbing. It's really hard to know what to think. I'd like to think the best of everyone. Those of us who do are bound to be disappointed (but probably happier for it).

:Edited to note that Forman bought the T206 Bresnahan SGC 96 on 12/13/07 - that must have been the date that the trouble started with Forman buying too many cards. That was right before the recession hit.

[FrankWakefield]

Jay...

Seems to me that if I own a card, and I consign it to an auction house, I still own the card and the auction house has a consignment contract, an interest in the card. When the auction occurs I still own the card until my agent, the auction house, is satisfied with the winner's payment, at which time the winner owns the card and the auction house owes me money. The idea is that the auction house is an agent, they NEVER own the card.

If the auction house sends a card I consigned off for grading, I still own the card. So to answer your question, I think the owner of the card still has rightful title and ownership. The auction house, their creditors, the grader, all of those folks may claim some sort of lien on the card, but I don't see how title / ownership would pass without notifying the rightful owner and then proceeding on the lien. Mere possession of the card does not convey title to anyone.

When I send a card to an auction house, I'm not conveying title. I'm entering into an agreement that I will convey title if certain things happen... ie an auction, and payment. And I'm agreeing to convey ownership to the winning bidder, not the auction house nor anyone else.

All of that would be subject to Lord knows what that might have been put in micro type in some contract.

[batsballsbases]

I just sat down and read the article in the daily news. To me it still leaves more questions unanswered than answered. I think finally when the other "SHOE" drops that no matter how much damage control Doug does to try and save face it wont matter. One of the only good parts in keeping Legendary an auction house is the possibility that if Doug is serious about making everyone "Whole" the only way to have that happen is to be able to stay in business. If not then all the consignors will have a very long drawn out legal battle and probably walk away with nothing.So in the end it may be a love hate relationship with the Devil!

[Peter_Spaeth]

If Mastro did indeed "sell" assets to Legendary, as opposed to it being a paper transfer by Silk Road, then what consideration did Mastro receive from Legendary? If none, or if insufficient, fraudulent conveyance laws could come into play -- a transfer for less than fair value that leaves the transferor unable to pay its creditors in the ordinary course.

If the intent was to have Bill step out of the picture, then why not just rename the enterprise and say that Bill had left? The fact that it was not done this way, but was done through creation of a new entity that is now expressly disclaiming the liabilities of the old even though it acquired its assets, certainly raises questions.

[bijoem]

Its simple for me:
I would not consign a thing to Legendary.
I would not bid on a thing from Legendary.

Not until every Mastro consignor gets paid.
Closing one company and opening under a new name to avoid responsibilities is just deplorable.

[cyseymour]

Yes, but if Mastro was in considerable debt, then the business itself would have minimum value. Like cards, it is only worth what someone is willing to pay for it. With a large debt, one could see how it would go really cheaply.

I looked at Legendary's last auction, and they had a bunch of low-grade drums that went in the $2000-3000 range, which is pretty good. They also had a 52 Topps Wings set go for over two thousand bucks. I am guessing that eventually they will make enough money to pay off the consigners and recover. It could take years, though.

[bcornell]

I'm looking at this excerpt from the article:

Lichtman also says that Forman was the victim of shill bidding and other fraudulent activities under investigation by the FBI. "It is an open secret in the industry that Mastro Auctions engaged in massive shill bidding and other fraud against the public and we would want the balance to reflect that," Lichtman says. "We look forward to seeing the bidding records and seeing the truth about Mastro's fraud."

Is it actually known what the FBI is investigating? I thought that could only be inferred, since they haven't disclosed it. And can Mastro be made to reveal the bidding records for any or all of their auctions? I certainly want to know if I got ripped off by shill bidding at any point in the past 7 or so years, but isn't the burden of proof on the bidder?

On another note, this is a well written piece of journalism. It details the story, provides substantiated quotes from the people mentioned (minus Bill Mastro) and the writer doesn't provide his own conclusions, but lets the readers do that for themselves. There have been some shoot-the-messenger attacks on O'Keeffe here in the past, but it looks to me like he's doing his job.


Bill

[Leon]

Originally Posted by bcornell

I'm looking at this excerpt from the article:

Lichtman also says that Forman was the victim of shill bidding and other fraudulent activities under investigation by the FBI. "It is an open secret in the industry that Mastro Auctions engaged in massive shill bidding and other fraud against the public and we would want the balance to reflect that," Lichtman says. "We look forward to seeing the bidding records and seeing the truth about Mastro's fraud."

Is it actually known what the FBI is investigating? I thought that could only be inferred, since they haven't disclosed it. And can Mastro be made to reveal the bidding records for any or all of their auctions? I certainly want to know if I got ripped off by shill bidding at any point in the past 7 or so years, but isn't the burden of proof on the bidder?

On another note, this is a well written piece of journalism. It details the story, provides substantiated quotes from the people mentioned (minus Bill Mastro) and the writer doesn't provide his own conclusions, but lets the readers do that for themselves. There have been some shoot-the-messenger attacks on O'Keeffe here in the past, but it looks to me like he's doing his job.

Bill

Okeefe and I talk every now and then. I used to not really care for him but now I like him. Things change. He's just doing his job. I hope he goes to the National as I would love to meet him.

[oldjudge]

If the rumors I have heard are true, there is another bidder who owes Mastro Auctions about $400,000. If this amount and Dave's amount were paid I would guess that all the consignors could be paid and at least part of this ugly saga put to rest.
One thing I don't understand is that if Silk Road holds an ownership position in both Mastro Auctions and Legendary Auctions why, if the amounts still owed consignors are not too large, doesn't Silk Road advance Mastro the funds to pay off the consignors and lift the cloud off Legendary. Then at least their investment in Legendary might have a chance of paying off. Otherwise, I agree with the other posters who are not optimistic about Legendary's chances of survival.

[Peter_Spaeth]

According to a court papers filed in the Northern District of Illinois, Bill Fisher owes Mastro a number in the low 6 figures, but has declared bankruptcy. I don't know if that is who Jay is referring to, or if there is yet another debtor in the picture.

[daviddbreadman]

This guys flip flops more than Obama! (sorry for the political position there LOL) He puts out self promoting article in the PSA SMR stating how the new Legendary is tops with ethics and etc etc. Behind the scenes he's telling people "too bad you're out the money, you are too small for me to worry about (at $250,000 at that!! too small???). Then he gets roasted and panics and sends emails trying to do damage control and selectively paying people (I do hope that the individual did get his $5k recently).

There is no doubt the tomfoolery in essentially closing Mastro and reopening under Legendary was done for two reasons. Bill Mastro had to go, easy enough, but just to dump him and be left with Mastro without Bill Mastro is still a problem, so lets also get rid of the debts and create a new name, screw those we owe, the people we need for our business, so we can make more money for ourselves.