Mastro/Legendary Article in Today's NY Daily News

[RichardSimon]

Originally Posted by Basilone

Excellent questions...

There are so many excellent questions to ask Mssrs. Mastro and Allen that who would know where to begin? I think our Mr. Lichtman might .

[sportscardtheory]

The glaring omission from this article and from everyone's replies, is the fact that the consignments were sent out before they were paid for. This entire situation is hinged on the fact that Mastro/Legendary sent out consignments without being paid first... otherwise, there is no story whatsoever. The items would be returned or re-auctioned. The fact that they sent out consignments without being paid makes it entirely their fault/problem. Another thing, if the guy from SGC bought items from them, never paid and resold the items he won, how could he not have the funds to pay for his winnings??? And if he didn't sell them, why has he not returned them? That is as shady as it gets and he (and anyone else that did this) should go to prison for theft for not returning the items he never paid for. I guess what I'm saying is, these people should go to jail. This shouldn't be a "you owe me money" situation. This is a "you stole my items" situation.

[Rob D.]

You might want to go back and search the archives regarding REA sending items to high bidders before payments were received. Pay particular attention to the adulation and fawning from Net54 board members over this business practice.

[RichardSimon]

Originally Posted by Rob D.

You might want to go back and search the archives regarding REA sending items to high bidders before payments were received. Pay particular attention to the adulation and fawning from Net54 board members over this business practice.

I have never bid or consigned with either of these auction houses, but I would believe, judging by all that I have read on this board, that REA had the money on hand to pay their consignors.

[RichardSimon]

Originally Posted by sportscardtheory

The glaring omission from this article and from everyone's replies, is the fact that the consignments were sent out before they were paid for. This entire situation is hinged on the fact that Mastro/Legendary sent out consignments without being paid first... otherwise, there is no story whatsoever. The items would be returned or re-auctioned. The fact that they sent out consignments without being paid makes it entirely their fault/problem. Another thing, if the guy from SGC bought items from them, never paid and resold the items he won, how could he not have the funds to pay for his winnings??? And if he didn't sell them, why has he not returned them? That is as shady as it gets and he (and anyone else that did this) should go to prison for theft for not returning the items he never paid for. I guess what I'm saying is, these people should go to jail. This shouldn't be a "you owe me money" situation. This is a "you stole my items" situation.

I was going to bring that up in one of my posts, but was not certain that was the case, but apparently after rereading everything here, it certainly is.
What a way to run a business!! Here take this and pay me when you can, my consignor won't mind,,, I thought Wolffer's was the only one that did something like that to such a degree.

[oldjudge]

Personally, I think people are barking up the wrong tree here. The auction house, by sending out lots to winners before payment is received, is simply making a credit decision that they are willing to trust that bidder. If they are wrong they must suffer the consequences. Credit is extended in all businesses. When you charge something on a credit card the bank is allowing you to take delivery of goods before they are paid for. Our society is built on people getting items before they pay for them. Mastro obviously made some poor credit decisions. REA may send out some items early but, if they are better at assessing the creditworthiness of their customers, they may not be subjecting themselves to any appreciable risk while at the same time generating considerable good will.

[sportscardtheory]

Originally Posted by oldjudge

Personally, I think people are barking up the wrong tree here. The auction house, by sending out lots to winners before payment is received, is simply making a credit decision that they are willing to trust that bidder. If they are wrong they must suffer the consequences. Credit is extended in all businesses. When you charge something on a credit card the bank is allowing you to take delivery of goods before they are paid for. Our society is built on people getting items before they pay for them. Mastro obviously made some poor credit decisions. REA may send out some items early but, if they are better at assessing the creditworthiness of their customers, they may not be subjecting themselves to any appreciable risk while at the same time generating considerable good will.

They are not the ones suffering the consequences.

If they are selling their own product, this would make sense. But this is consignment, the items are not theirs to take such outlandish risks. This has nothing to do with credit.

[oldjudge]

Of course it does. Once the auction house sends out the lot/lots they are implicitly taking on the responsibility to pay the consignor. If they do not they are legally liable. This is exactly a credit decision.

[Peter_Spaeth]

I agree with Jay. I am sure, at the time, Mastro had good reason to extend credit to Dave, for many possible reasons as to which I would be speculating. It is only in hindsight that, of course, it looks bad. Indeed, it may be unrealistic to run an auction house at that level without extending credit to certain bidders.

[sportscardtheory]

Originally Posted by oldjudge

Of course it does. Once the auction house sends out the lot/lots they are implicitly taking on the responsibility to pay the consignor. If they do not they are legally liable. This is exactly a credit decision.

Okay, so if they don't pay, they should go to prison for theft. The consignee is the one that the theft is perpetrated upon. To simply have them go through the court system to get their money back is preposterous. If I go to a casino and they offer me credit, and decide I don't want to pay, I go to jail. They don't simply keep asking me for the money I owe them.

[Exhibitman]

Originally Posted by oldjudge

Personally, I think people are barking up the wrong tree here. The auction house, by sending out lots to winners before payment is received, is simply making a credit decision that they are willing to trust that bidder. If they are wrong they must suffer the consequences. Credit is extended in all businesses. When you charge something on a credit card the bank is allowing you to take delivery of goods before they are paid for. Our society is built on people getting items before they pay for them. Mastro obviously made some poor credit decisions. REA may send out some items early but, if they are better at assessing the creditworthiness of their customers, they may not be subjecting themselves to any appreciable risk while at the same time generating considerable good will.

An auctioneer can do what it wants with stuff it owns. It cannot do the same with stuff it does not own. Mastro did not own those lots; the consignors did. They furnished them to Mastro under certain contractual terms, none of which included the right to send the items to bidders without payment. One of the actual contract terms stated that unpaid items could be reclaimed 60 days after auction (go check your small print in your consignment contract). If Mastro agreed in its contract that the consignors of unpaid items could ask for their return, then Mastro undertook the duty to hold those items, not send them out in the hope of future payment.

What is being described here is looking more and more like a Ponzi scheme where current sellers' proceeds were used to pay earlier sellers and/or where current sellers' items were used to fund large customers' businesses as no-cash-down inventory.

[Exhibitman]

Is anyone else thinking that this is going to be a real interesting National dinner?

[Leon]

Originally Posted by Exhibitman

Is anyone else thinking that this is going to be a real interesting National dinner?

The way it's going there will be like 10 people at it.....

[sportscardtheory]

Originally Posted by Exhibitman

An auctioneer can do what it wants with stuff it owns. It cannot do the same with stuff it does not own. Mastro did not own those lots; the consignors did. They furnished them to Mastro under certain contractual terms, none of which included the right to send the items to bidders without payment. One of the actual contract terms stated that unpaid items could be reclaimed 60 days after auction (go check your small print in your consignment contract). If Mastro agreed in its contract that the consignors of unpaid items could ask for their return, then Mastro undertook the duty to hold those items, not send them out in the hope of future payment.

What is being described here is looking more and more like a Ponzi scheme where current sellers' proceeds were used to pay earlier sellers and/or where current sellers' items were used to fund large customers' businesses as no-cash-down inventory.

And how would anyone know if Mastro/Legendary isn't in on the whole thing? "Hey, buy this from us for $500,000, don't pay us. Then sell it somewhere else and we will split the money." Sound crazy? Sounds like easy money to me.

[byrone]

On SGC's website, their home page has a section for "Prices Realized", touting the high prices paid for SGC graded items. Seems harmless enough, unless a grading company employee or owner is a bidder/owner of said item.

[tbob]

Originally Posted by oldjudge

Personally, I think people are barking up the wrong tree here. The auction house, by sending out lots to winners before payment is received, is simply making a credit decision that they are willing to trust that bidder. If they are wrong they must suffer the consequences. Credit is extended in all businesses. When you charge something on a credit card the bank is allowing you to take delivery of goods before they are paid for. Our society is built on people getting items before they pay for them. Mastro obviously made some poor credit decisions. REA may send out some items early but, if they are better at assessing the creditworthiness of their customers, they may not be subjecting themselves to any appreciable risk while at the same time generating considerable good will.

Couldn't have said it better. Agree 100%.

[rhettyeakley]

James, I could be wrong, and may have missed where it was specified (but I'm not going back and reading the whole thing again), but it seems as though Mastro sent the items to Dave and he is now not paying them for the items, because he may (or may not) have been shilled. If I am wrong I will stand corrected, but that is what seems to be being implied here. If that is the case I hope Dave has some good evidence of shill bidding or this could get really ugly.

Corey, I agree with your last statement, well put.

-Rhett

[tbob]

From the Daily News article: " In the message, Allen claimed that his former colleague Bill Mastro had gone "completely insane" with anger over Forman's debt and would damage Forman's reputation and report criminal activity allegedly committed by Forman to the same FBI agents who are investigating Mastro Auctions."


I can't wait to see what these allegations of alleged criminal activity by Forman are.

[ibuysportsephemera]

That is exactly what I was wondering. What would the big deal have been if the items were not paid for.....simply return the item to the person who consigned the item or re-auction. How crazy is it that the items were sent prior to payment being received...who does such a thing?

[sportscardtheory]

Originally Posted by ibuysportsephemera

That is exactly what I was wondering. What would the big deal have been if the items were not paid for.....simply return the item to the person who consigned the item or re-auction. How crazy is it that the items were sent prior to payment being received...who does such a thing?

And why no legal action demanding the items back or immediate payment? Especially if the items were sold again after the fact. That is theft, and should be dealt with as such.

[Basilone]

.