"The Feds Are Here To Stay"

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Posted By: john

Rob-anecdotal to you....not for me. It has been the rule, not the exception, to win lots for far below my left bids. I can't say that about everyone else. I recall in the late 90's leaving a dozen or so bids with a company, who's founder posts here, and winning them all for my max bid. That was the last time I did that. As Bush says, "Fool me once, shame on you, fool me twice, I won't be fooled again."

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Posted By: Peter_Spaeth

Agreed on both counts. One would EXPECT most items to sell at or close to ceiling bids, assuming they were within the limits of rationality. The case will be made, or not made, on the basis of any documentary evidence and, more importantly, what employees have to say.

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Posted By: Jeff Lichtman

John, you'd make a good character witness. Or juror.

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Posted By: Chris

I have to wonder if the biggest problem is with the authenticators rather than the people who auction stuff. For autographs you get these large lot COA's and I just don't know how well they look at all these items. I know in the last Mastro auction they had a lot of autographs that included a signed Johnny Bench photo, only problem was it was the same photo Bench sent out to everyone who requested his auto in the mail in the 80's and it has a preprinted signature. Yet the authenticators said it was a legitimate autograph. To Mastro's credit, they pulled the Bench that day when I contacted them about it. I just think these people authenticating items should know these things

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Posted By: john

Jeff-If the Feds pull all the bidding records, I probably would not be called as a witness. A good example is last night. I told Doug I would win the lot of wax packs, no matter the price. I nailed it for 13,500, below the low estimate

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Posted By: Peter_Spaeth

Jeff means you would be a character witness for the defense, I presume.

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Posted By: john

I read the articles regarding the supposed shill bidding with the con from Ohio. I can't imagine if that was going on, it would have happened to me also. With greed, more times than not, the situation gets painted with a broad bush stroke. Besides that one complaint, do any board members have any negative experiences regarding left bids with Mastro? I would think it would be prevelant if it was happening.

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Posted By: Jeff Lichtman

John, good job winning a lot below even the low estimate last night. Funny how some of the prices didn't seem quite as strong as they have in past Mastro auctions. Must be the economy holding those prices down. Or maybe the weather. Or maybe just too many people in attendance who were not buyers last night.

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Posted By: john

jeff-What did you think about the Wagner?

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Posted By: Jeff Lichtman

I think Wagners are on a different planet than all the other cards; not sure that the economy (or anything else) will ever affect The Holy Grail.

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Posted By: J Levine

No mention of Coach's Corner? I am shocked...figured that they might be one of the first to talk to the FEDs.

Joshua

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Posted By: john

Josh-CC auctions: Shill bidding is much easier to prove than fake autos. They look for easy to prove, open and shut cases. That's why the Feds have a 98% conviction rate.

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Posted By: Jeff Lichtman

John, you're correct. They go after cases they can win, the easier the better. As for their 98% conviction rate, not sure if that number is accurate but it includes guilty pleas. Trust me, they don't win 98% of their trials.

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Posted By: john

Jeff-Damn, I believed that agent. i shouldn't have pled guilty!

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Posted By: paulstratton

Sorry in advance...but I just can't let this go. The terror cells are originating in Waziristan and not in Afghanistan. The reasons(both politically and militarily) we can't bring the fight to them are too numerous to mention. It's an area of the world that is basically a modern day "badlands" and there are likely more than 1 million armed men running around unchecked(except by drones). Petraeus' strategy of "cut of a deal or you're next" just won't work there, though it is worth a try with the Pashtuns I guess. Afghanistan itself just might be the most unstable country in all of the world and if you had ever been there you'd realize why we can't go after "the real terrorists" as so many like to say.

I think the investigation of fraud in the industry is a good thing by the way.

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Posted By: john

Paul-Huh?

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Posted By: paulstratton

Huh what?

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Posted By: Rick McQuillan

Eric, you brought up a good point. There is a lot of cash changing hands today. How much of it will be reported? How much sales tax and income tax will be paid on this cash? It is only a matter of time until the IRS takes a closer look at this hobby. I was at a flea market in Wisconsin a few years ago when the the Department of Revenue had people checking the dealers to make sure that they had a Sellers License from the State of Wisconsin.

I'm not sure how the big dealers work things out when they purchase cards at a show. Do they issue a 1099's on large purchases?

Rick

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Posted By: Tom Boblitt

finally got Robert Deneiro.........

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Posted By: Joseph

I've been out all day and haven't had a chance to read this whole thread, but after skimming through, it seems like some of the Mastro folks are headed to Gitmo. Wow! I'll go back and read now...

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Posted By: samuel

how prevalent are fake cards? can I get a better idea of this?

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Posted By: Bob

Samuel- I don't think it is the authenticity of cards here in question but rather whether a real card was altered and the other 99% of the items questioned are not cards but memorabilia, like signed balls and bats and whether uniforms are real, etc.
I personally don't collect any signed memorabilia unless I witness the signor actually signing it because of the fakes out there, even fakes which have been "authenticated" by supposedly knowledgable third party "experts."
There are fake cards floating around but 99.9% of those can be spotted by conscientious collectors who do their homework.

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Posted By: Jeff Lichtman

Feds swarm to question card sharks
BY MICHAEL O'KEEFFE
DAILY NEWS SPORTS WRITER

Saturday, August 2nd 2008, 10:15 PM

The same day Mastro Auctions sold a rare 1909 Honus Wagner card for $1.62 million at a sale held in conjunction with the National Sports Collectors Convention in Rosemont, Ill., federal agents investigating fraud in sports collectibles questioned employees of Professional Sports Authenticator, the hobby's top card grading service.

Also on Friday, investigators from the FBI and the United States Postal Service interviewed a former Mastro Auctions employee who is known to be a "card doctor," somebody who fixes dog-eared corners, removes stains, flattens out creases or takes other steps to improve the appearance of trading cards. Most collectors and dealers consider it unethical to alter cards.

"They spent a lot of time at the PSA booth," one sports memorabilia executive said.

Federal agents spent several hours Thursday, Friday and Saturday at the National, sports memorabilia's largest annual convention, issuing subpoenas to appear before a grand jury investigating fraud in the memorabilia business.

The agents' appearance at the show is part of an investigation into sports memorabilia fraud initiated last year by the Chicago division of the FBI, whose "Operation Foul Ball" smashed a multistate autograph forgery ring during the 1990s. The target of the investigation appears to be Illinois-based Mastro Auctions, sports memorabilia's largest auction house, although other businesses and individuals may also be involved.

The source said Bill Mastro, the company's chairman, looked cool and collected during the auction, held this year at the Chicago ESPNZone. "But (Mastro president Doug Allen) looked awful," the executive added. "I think all this is getting to him."

Allen and Mastro could not be reached for comment Saturday. Neither could Joe Orlando, president of PSA.

The fact that PSA officials and the former Mastro employee were interviewed by agents indicates that investigators are also interested in learning about "card doctoring."

Cards that have been trimmed, colored or repaired are tainted and worth considerably less than cards that have not been altered. The difference in the value of cards that have been altered and the same card that has not been doctored can be hundreds of thousands of dollars.

PSA was formed in 1991 to protect collectors from card doctors, counterfeiters and other cheats. But the company has been a lightning rod for controversy. Collectors and dealers say PSA inflates grades for cards submitted by big-volume customers such as Mastro Auctions.

The first card the company graded - another 1909 Wagner, at the time owned by NHL great Wayne Gretzky - had been cut from a sheet and later doctored, according to "The Card," a book by two Daily News reporters. The Wagner, which PSA graded an 8 (on a scale of 1-10) sold for a record $2.8 million last year, even though a former PSA authenticator has said the company knew the card had been doctored.

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Posted By: Fred C

Wow, our own Leon Luckey aka, Lucky Leon, aka, Wonka Victim, has been quoted by a New York newspaper!

Leon,

It will be interesting to see if there is an increased number of hits (on the b-board) since N54 was mentioned in the article. I think you need to jack up the banner ad prices

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Posted By: Joann

The later part of today's article (the one Jeff posted)refers to trimmed, colored or repaired - actions that pretty much everyone agrees are unethical alterations.

But the first part of the article talks about a card doctor and defines this as someone who "fixes dog-eared corners, removes stains, flattens out creases". Wow. These are not quite so universally considered alterations. Some people in the hobby defend these actions, along with soaking and erasing pencil marks, as benign and acceptable ways to spiff a card that fall short of unethical repairs. At minimum it is more debatable than trim/repair/recolor.

The first thing I thought when I read that was to wonder if Doug would regret coming on this board and admitting that Mastro used to do those kinds of things. Wow. Because clearly Mastro did not think they were doing anything wrong at the time, and now it might be some kind of crime?

Will the feds somehow determine what is an illegal, fraudulent alteration to a card when the hobby itself has been unable to agree on where the line should be drawn? And if anyone gets in legal trouble for pressing down corners or removing stains, it will be hard for me to see how that would be fair.

Think that's what's going on? Or is that just O'Keeffe's spin on the scope of the questions?

J

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Posted By: Jeff Lichtman

Joann, two thoughts: a) I think Mastro's problems are not centered around 'fixing dog-eared corners;' and b) my guess is that Doug Allen regrets a whole bunch of things he's done about now.

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Posted By: barrysloate

I'm not sure anyone considers ironing out creases an acceptable practice.

My interest in this would be to investigate the graders. If they are giving inflated grades to their best customers I hope they get shut down.

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Posted By: Anonymous

When was fixing corners ever considered acceptable?

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Posted By: Mike

I hope the Feds were referred to both Coach's Corner ,Chris Morales and STAT to see how they conduct business.

I also overheard at a National a few years ago a major auction house say the following to one of his workers when the employee showed him a damaged card , as he examined it he said " no trouble we can fix the corner and get those creases out of it !"

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Posted By: Mike

In regards to graders, they state they don't know whose cards they are grading ? You don't think if a big-shot walked in with a Wagner, etc they wouldn't know whose card it is. How can they be slabbed ( Dmitri Young Collection, Lionel Carter collection etc if no one knows the supplier of the cards.

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Posted By: Jeff Lichtman

Mike, the bigger question is this: when the FBI was at the PSA booth yesterday, did anyone see a hair on Joe Orlando's head out of place?

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Posted By: Joann

I agree Jeff. I'm sure Doug is a bit nervous. I feel kind of bad about that. I don't know him from Adam, but I suspect he's a good guy that pushed the limits a bit.

I interpreted the 'fixing corners' as the laying down corners practice that has been the subject of debate here several times, with many board members saying they don't see anything wrong with laying down a corner that is stuck up a little bit. If what that means is a corner rebuild or something like that, then obviously it is considered unethical.

As to removing creases, that had some debate here with most people saying it shouldn't happen and it seemed like that one was the one that got Mastro to rethink what it was doing - not because they considered it wrong but because they saw that the hobby and customer base disapproved of the practice. That's just my recollection of the course of events, threads and posts, but it could be wrong. Hell, I can hardly remember what I had for breakfast!

I just thought it was notable that the first list of 'card doctor' practices read very closely to the list of things that were discussed here at length, particularly as related to Mastro, came down on the side of a majority here disapproving (but far from unanimously), and Mastro changed policy.

J

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Posted By: Chris

How does O'Keefe know that the former Mastro employee was a card doctor? And how do we know the conversations with PSA were even related to card doctoring? Were they questioning actual graders (who would be knowledgeable of such things) or were they just questioning reps?

They may have just been asking PSA about the submission process (how submitters's identities are concealed and that sort of thing). If the FBI were interested in doctored cards that end up in holders, I would expect them to question all the grading companies. You would also think that they would be shutting down the Gem Elite/Pro's of the world pretty soon if that were their interest, as it would be very easy to prove with those companies.

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Posted By: Jeff Lichtman

Chris, you're probably right. The FBI agents and postal inspectors were probably jus asking about the post-50s special that PSA was advertising. I've heard that the FBI agent in charge of the investigation found a huge box of 70s Topps cards in his grandfather's attic and was hoping to get a good deal on slabbing.

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Posted By: davidcycleback

If you disclose what you did to a card or work or art, you have no legal issue. If you don't disclose alterations you performed, and the alteration and non-disclosure was done to raise value, you could get into legal trouble. It's perfectly legal to cut off the edges, bleach and rebuild the corners of all your baseball cards and Monet paintings. But you are required to disclose what you did to the cards and paintings when you sell.

People like to philosophize about the relative harm and ethics of spooning and wrinkle pressing and the like, but fraud really is a financial law and possibly fraudulent situations are substantially judged by the financial impact. Say blatant alteration and lack of disclosure was done to falsely raise the sell value by $10,000. What may most matter to a prosecutor and judge is the $10,000, not the kind of alteration performed. If wrinkle pressing to super high PSA grade and autograph forgery on a baseball result in the same $10,000 loss to a citizen, don't be surprised if a judge considers them equivalent crimes. The financial impact of the alteration and non disclosure may be far more important to the judge than the kind, style or technique of alteration used to reach the financial impact.

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Posted By: Frank Wakefield

A significant aspect of this is the timing.

The FBI and USPS officers could have made their inquiries anytime. It seems likely they chose to do it during the National. There are many reasons why they might have done that.

So it isn't just what they did, but when they did it. And WHY they did it when they did.

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Posted By: Chris

I doubt the FBI would have much interest in submitting cards, but they could have a lot of interest in whether PSA's graders know whose cards they're evaluating if they've heard allegations of favoritism for Mastro or large submitters.

I thought I spelled that out enough the first time.

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Posted By: Anonymous

Maybe the agents were inquiring whether they could get a greater discount on a collector's club membership.

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Posted By: JimCrandell

Wow.

On vaca and just gave it a quick read but this is great news. Any high level investigation of fraud can only be good.

Do not agree that the hobby is about the people you meet--to me its all about the cards and anything that can stop the bad guys from altering the cards is a great thing.

Jim

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Posted By: B.C.Daniels

should be the qualifier on the labels of your cards Jim!
The "people".....matter!

BcD

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Posted By: Jeff Lichtman

Jim, do you really get no satisfaction out of meeting and conversing with people who share this very esoteric interest/obsession of ours? I mean, yeah, the cards are great, but some people I've met just from this board I consider close friends. Doesn't that have any value to you?

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Posted By: barrysloate

Hey Jim, you met me...wasn't that a life altering event?

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Posted By: boxingcardman

Willie Sutton allegedly (it is actually a misquote) as to why he robbed banks "because that's where the money is." They went to the National because it gave the US Marshall a chance to serve all the subpoenas in one place; that's where the targets were located.

As far as testimony goes, I don't think they'll get much beyond invocation of the 5th Amendment privilege...but Brother Lichtman is the expert in this area of the law so whatever he says about this issue is fine by me.

BTW, I heard that a dealer actually did get arrested and taken off the floor by the Feds, but it was unrelated to the FBI's investigation. Anyone know what that was about?

Seems our next poll will be "which hobby luminary will be someone's prison wife this time next year?"

Sic Gorgiamus Allos Subjectatos Nunc

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Posted By: Anonymous

There are other ways to make a case other than the admissions of the principals.

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Posted By: Jeff Prizner

"Do not agree that the hobby is about the people you meet--to me its all about the cards and anything that can stop the bad guys from altering the cards is a great thing."

I'd feel that way too if I were you Jim.

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Posted By: Jeff Lichtman

Adam, no targets could have received subpoenas for their testimony -- because then they could simply assert the 5th, get immunity, and have their sins washed away. My guess is that any target that received a subpoena was for documents only. Anyone who received a subpoena for their testimony is probably just a witness for the Grand Jury.

And, of course, you're right: the reason why the subpoenas were served at the National is because the FBI/Postal Inspector was basically shooting fish in a barrel by having everyone under one roof.

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Posted By: Fred C

This should be an interesting exercise for the feds.

Lets list the HOF of possible impropriety:

CARDS - The T206 "Gretzky" PSA8 Wagner

GAME USED - The bat "possibly" (use the term loosely) used in Joe D's 56 game hit streak

Can anyone add more?

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Posted By: Anonymous

The Harris Collection (possibly maybe).

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Posted By: JimCrandell

Jeff, Barry

You guys are good guys but if I did not collect or sold my collection its not that I would be involvedv in net 54 or see you guys.

to me--its the cards that matter--but if others feel differently and collect for the friendships that is fine too.

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Posted By: Rich Klein

What I heard was that the person who was taken out in cuffs, went into a back room, stole a bunch of merchandise and THEN tried to sell the stolen stuff on the show floor in plain sight of the people who knew what had been taken. As a local radio personality here in Dallas does on his morning program, they walk amongst us.

Regards
Rich