Mastro/Legendary Article in Today's NY Daily News

[benjulmag]

My understanding is that Mastro Auctions intends and expects in the relatively near future to pay all consignors. Their delay in doing so was caused by a "Perfect Storm" of extraordinary occurrences: (i) recognized credit-worthy individuals not timely paying on their debts and (ii) withdrawal of a line of credit caused by economic circumstances unseen since the 1930's.

Their practice of selectively sending out lots prior to payment is hardly without precedent in this hobby. As has been noted, when one other noted auction house did it, they received tremendous applause and no dissent. The belief that Mastro's actions were unique in this hobby is the height of naivety. So Mastro caters to certain bidders. Mastro's rationale almost certainly is that it induces those bidders to bid more aggressively in their auctions, which benefits all consignors. I have yet to hear a complaint from a consignor who received substantially more for his consignment due to bids from an individual who knew he would be extended just the sort of credt that caused this whole situation.

Bottom line to me: Mastro's business practices are the rule, not the exception, not just in this hobby but in collectables in general. Yes, by the letter of the law perhaps they fall short. But then so do the substantial majority of others. Those out to crucify Mastro certainly have enough fodder to make it a grand feast. But they are smoking on something if they feel Mastro is the exception and not the rule.

[Jewish-collector]

This is going to be one hell of a Net54 dinner !!!

[oldjudge]

Well said Corey.

[JamesGallo]

Does anyone have any idea what Dave's role is on a daily basis at SGC?

I don't believe he is a grader...

I am not saying there isn't a potential conflict of interest but it is also possible that Dave wasn't buying cards but memorabilia or other things.

IMO Mastro is still the villian hear and I will save judgement on Forman until I know more of the facts.

Also if I bought 400K worth of stuff and shortly thereafter found out some shilling could have occured I would not pay for the stuff until the issues of shilling was taken care of.

What I don't understand is that if Dave owes them 400K for whatever and neither Mastro nor Dave have the stuff then where the heck is it???

James G

[jmk59]

Sometimes I swear I must be the biggest dumb-ass in the world. Or just incredibly naive. I know that credit is normal, and all that. But if Mastro was giving the big guns time to pay, wouldn't it just stand to reason that there is a "Gotcha covered" buried in there somewhere? That it was an extension of a business courtesy on their part to cover the money short term and not an offer at the risk of the consignor? Would you think anyone would even have to ask that? I know I wouldn't.

And am I also naive to think that, if these courtesies are going to be extended, Mastro (or anyone else handling so much of other people's cards or money) would take even the most basic precautions around the process? Like getting it in writing, at least. Or retaining some interest or ability to retrieve either the cards or the value if the payments fell through.

Here's what bugs me. First of all, I don't remember a time in this hobby in which there wasn't chronic speculation and grouching about favoritism to bigwigs while the individual small and medium or unconnected collectors sat on the sidelines playing by the rules. That's been out there on everything from auction house practices to grading preferences for the big submitters. Now the favoritism is crashing the news today, with the exact outcome that the little guy got nailed so the big shots could play mover and shaker.

At the center of it all is Mastro. I know there are people that didn't pay Mastro. But these people were not in a position to limit the fallout and shield the collectors and consignors that had owned the items. Mastro was the only entity that could have done that, and they didn't.

Personally, I couldn't pick either Dave Forman or Bill Fisher out of a crowd of two - don't know them at all. But I think it's unfortunate that their money issues are playing out in public, especially since I absolutely don't believe that the issue of consignor non-payment has the slightest thing to do with them. It's just more noise around the central issue of Mastro's behavior.

I understand that some of the bigger players in the hobby might want to look at what it means that Forman is still in cards while owning a grading company (although the recent REA auction had some pretty impressive disclosure) and wonder if there is an appearance of impropriety.

I'm more concerned with the actual improrpriety by Mastro that has already come out, already affected real people and collectors and is by far the biggest taint on the hobby in this whole mess.


J

[Peter_Spaeth]

I respectfully disagree with the above for the most part. Two or three people stiff Mastro for hundreds of thousands of dollars (allegedly of course), and Mastro is the evildoer? EDIT TO ADD I don't understand the comment that the issue of consignor non-payment has nothing to do with Fisher or Forman or Jay's third person. If Mastro is out $1 million or whatever and has no access to its credit line, then it is going to affect its ability to make payments. Could one fault Mastro, in hindsight, for extending credit? Perhaps, perhaps not -- there were likely very good reasons to do it. But to suggest the people reneging (allegedly) on their obligations are beside the point does not seem reasonable to me.

[jmk59]

Yes Peter, I really think they are. They were the ones that let it affect individual consignors and collectors. The non-payers didn't do that. They may not even have known that a default would do that. The consignors certainly didn't know it. Mastro was the only one that could control that outcome.

Somehow it is different with a consignment. It's not the same as Company X buying raw materials from Company Y with 30-day terms and then not being able to pay Y because the customers of X didn't come through.

With consignments, you are trusting someone with your individual specific property. You aren't selling them inventory on a commercial basis. The process and duty seems different.

This is why I think I may miss something in these kinds of situations. I do look at the consignors that got shafted as the innocent victims - individuals and collectors that trusted Mastro with selling cards for them. Maybe that's where I'm naive. If these consignors are all, themselves, turning these things over as part of an ongoing business, then maybe it is more like the commercial vendor selling inventory as a matter of course.

But it seems to me that just because the back half of the process - the relationship between the auctioneer and dealer/bidders - looks more like a normal commercial environment, the front half where the consignors are still looks sort of like innocent individuals.

J

[sreader3]

The bombshell here is not the well-known cloud over Mastro / Legendary auctions, but that Dave Forman was (is) involved in the hobby as a major buyer/seller. I can only imagine how this Board would react if Joe Orlando had been a major player in Mastro Auctions and bought (at least) $400K in cards! I, for one, would like to have SGC aver that it has never graded a card submitted by Mr. Forman (although I seriously doubt that such a declaration will be forthcoming).

I look forward to the future Daily News articles investigating the Mastro / Forman / SGC connection.

[bijoem]

Originally Posted by benjulmag

My understanding is that Mastro Auctions intends and expects in the relatively near future to pay all consignors.

That would be great, and I hope it is true.

[baseballart]

Originally Posted by benjulmag

...
Bottom line to me: Mastro's business practices are the rule, not the exception, not just in this hobby but in collectables in general. Yes, by the letter of the law perhaps they fall short. But then so do the substantial majority of others. Those out to crucify Mastro certainly have enough fodder to make it a grand feast. But they are smoking on something if they feel Mastro is the exception and not the rule.

Corey

I would expect any dealer who sends items without payment to be sufficiently capitalized to pay the consignor even if the winning bidder defaults; i.e. the auction house would have sufficient cash reserves without drawing on credit. I have no idea whether REA or others were so capitalized, but it is clear with hindsight that Mastro was not.

As such, I don't think you can generalize about such practices without this information.

Max