PWCC Statement on Recent Card Trimming Concerns

[steve B]

It's sad to see so many essentially sticking up for the trimmers. A couple articles

First, when it becomes acceptable to use a nonsense story about "I didn't know" and what happens after.
https://www.wweek.com/news/courts/20...-it-heres-how/


And the "is it really a crime" thing...…

https://www.autoblog.com/2019/02/07/...ed-each-night/

[vintagetoppsguy]

Originally Posted by steve B

It's sad to see so many essentially sticking up for the trimmers.

Sad to see comprehension of the English language is lost as well. Nobody stuck up for the trimmers.

[swarmee]

I'll take the bet that Brent is indicted by Jan 1, 2021 or that he turns state's evidence against BGS and/or PSA and one of their principals is indicted. $500

[vintagetoppsguy]

Originally Posted by swarmee

I'll take the bet that Brent is indicted by Jan 1, 2021 or that he turns state's evidence against BGS and/or PSA and one of their principals is indicted. $500

That wasn't the bet. I will you $500 that Brent is indicted by 1/1/21. Your $500, my $2000. That's the bet if you want it...and I'm actually extending the timeframe in your favor (I originally said within 1 year).

[CuriousGeorge]

Originally Posted by vintagetoppsguy

That wasn't the bet. I will you $500 that Brent is indicted by 1/1/21. Your $500, my $2000. That's the bet if you want it...and I'm actually extending the timeframe in your favor (I originally said within 1 year).

David, Brent has admitted that he is already dealing with law enforcement after about 2 weeks of this. You’re making like this is Monty Python and that’s just a flesh wound. Who knows what happens next? Does he roll on Moser? Anyone at PSA? If he does and they have issues and he just has to pay back a small fortune in restitution but doesn’t get indicted, does that make you a winner in the bet? I’m not sure you’re clearly seeing what’s going on here. 2 weeks in and already law enforcement involved. This time is different.

[swarmee]

You can take my bet or not. No harm. It didnt look like you thought PSA would get damaged in this.

[CuriousGeorge]

Originally Posted by swarmee

You can take my bet or not. No harm. It didnt look like you thought PSA would get damaged in this.

I think PSA is going to be very damaged from this. At some point the directors of their parent CLCT are presumably going to have to put out a statement to alert shareholders because the losses to them are potentially massive and they’re holding an 800K reserve.

[swarmee]

Forever. Self-insured. Current market value. 30 million cards graded, thousands more daily.

[Peter_Spaeth]

Originally Posted by swarmee

Forever. Self-insured. Current market value. 30 million cards graded, thousands more daily.

This clearly will be the pressure point for the public company IMO. Their financial statements have to be audited. And more generally, as alluded to, they have disclosure obligations under the securities laws.

[1952boyntoncollector]

Who actually has been harmed and what cards. Maybe if we had names and cards and saw a growing list of specific harm it would be more tangible.

Maybe im in the minority but everything to me is too vague as to the harm when there arent really any specific victims complaining and what amounts are being alleged...


general market value going down is too vague.

I know it will be hard to identify some true victims but if you cant identify any than it is what it is..

[36GoudeyMan]

There is NO doubt that PWCC is engaging in a criminal activity. I'm a lawyer with 40 years experience, including RICO cases. But so what? We shut down a dealer and someone else becomes the outlet for fraudulently altered cards. It becomes Whack-A-Mole.

The bigger issue is TPG authentication of clearly altered cards. The blessing/imprimatur of TPG authentication is a public statement that the card is, in fact (not opinion), unaltered (inasmuch as TPGs have categorization ability for altered cards). Is the TPG is unaware of the alteration, then its competence has to be questioned, and its exposure to "buy back"guarantees must be disclosed publicly, if it is a publicly-traded company. If it knows of the alterations and authenticates it anyway, it is engaged in fraud and a conspiracy to commit fraud by use of instrumentalities of interstate commerce.

I am not generally considered an hysteric. Most of you have no clue who I am, or care, and that's fine. However, this is a really, really huge issue, and implicates the SEC and FTC in their regulatory powers over TPGs. I say this with all due caution: this scandal can destroy this hobby. Everyone who has any affection for this universe of collectibles needs to start demanding public accountability. File complaints with the SEC (CLCT, etc.), and the FTC, before this becomes so pervasive and rampant (or has it already) that there is no dependable collectability of these treasures any longer.

[Peter_Spaeth]

Relatedly I have thought and mentioned that if analysts became interested, due to the loss reserve implications or otherwise, PSA would have a harder time ignoring them than it historically has had ignoring collectors (see WIWAG scandal).

[darkhorse9]

I think one issue here (legally) is that there is no legal definition of a baseball card grade. It's an opinion.

If I trim a card and say it's now mint, then it's mint. No law has been broken by being a real crappy person and doing that. Now if the buyer asks if it's been trimmed I have to disclose that.

A TPG exists only on reputation. They can't be legally held liable for their grading standards or procedures.

[CuriousGeorge]

CLCT stock down over 5% today. Short it while you can!

[vintagetoppsguy]

Originally Posted by darkhorse9

I think one issue here (legally) is that there is no legal definition of a baseball card grade. It's an opinion.

If I trim a card and say it's now mint, then it's mint. No law has been broken by being a real crappy person and doing that. Now if the buyer asks if it's been trimmed I have to disclose that.

A TPG exists only on reputation. They can't be legally held liable for their grading standards or procedures.

Grading is a 2 step process - authentication then grading. Grading is subjective. Authentication is not. It's either altered or it isn't. There is no gray area there. And if a TPG assigns a numeric grade to a card (instead of an AUTHENTIC), they're basically stating that the card has not been altered.

[judsonhamlin]

Selling "adulterated" or "mislabeled" commodities is a criminal offense under MPC section 224.7, with those terms defined by established commercial usage. While the penalties may not be significant (in NJS 2C:21-7, a DP offense), it would expose those sellers to further criminal liability as to the corporate officials (in NJ, NJS 2C:21-9c) and Commercial Breach of Duty (MPC 224.8) criminalizing their accepting a benefit for themselves if they are in the business of making a disinterested selection/appraisal/criticism of a commodity.

[topcat61]

Originally Posted by darkhorse9

I think one issue here (legally) is that there is no legal definition of a baseball card grade. It's an opinion.

If I trim a card and say it's now mint, then it's mint. No law has been broken by being a real crappy person and doing that. Now if the buyer asks if it's been trimmed I have to disclose that.

A TPG exists only on reputation. They can't be legally held liable for their grading standards or procedures.

It was only a few years ago that Doug Allen and Bill Mastro went to prison for doing "allegedly" what collectors and dealers here are saying PWCC is doing. Short term memories being what they are I suppose, here's what Ryan Cracknell reported in Beckett Magazine -

"So what does a history of fraud in high-profile sports memorabilia auctions get you? For Bill Mastro, it’s 20 months in federal prison.

That was the sentence handed down by U.S. District Judge Ronald Guzman on Thursday. It could have been as much as five years but Guzman and prosecutors agreed on the lighter sentence based on Mastro helping authorities following his 2012 indictment.

In a plea agreement, Mastro admitted to driving up prices through shill bidding between 2002 and 2009. He and his associates would bid up auctions to drive prices higher.

“The long-running and systematic nature of the scheme undermines confidence in the auction house and sports-memorabilia industries, and calls into question the true value of merchandise,” said Assistant U.S. Attorney Steven J. Dollear. “The defendant’s ultimate goal was to beat the competition and garner more business for his auction house, and, in the end, more money for himself.”

After decades of whispers and suspicions, Mastro finally admitted to trimming the famed T206 Honus Wagner that would go on to be graded PSA 8 and sold to Wayne Gretzky and Bruce McNall. When Mastro sold the card in 1987, he didn’t disclose the fact that it had been altered. He was also involved in subsequent sales of the card in 1991 (to Gretzky and McNall) and 2000. Again, he didn’t given any hint about what he’d done to the card".

[vintagetoppsguy]

Originally Posted by 36GoudeyMan

There is NO doubt that PWCC is engaging in a criminal activity. I'm a lawyer with 40 years experience, including RICO cases. But so what? We shut down a dealer and someone else becomes the outlet for fraudulently altered cards. It becomes Whack-A-Mole.

The bigger issue is TPG authentication of clearly altered cards. The blessing/imprimatur of TPG authentication is a public statement that the card is, in fact (not opinion), unaltered (inasmuch as TPGs have categorization ability for altered cards). Is the TPG is unaware of the alteration, then its competence has to be questioned, and its exposure to "buy back"guarantees must be disclosed publicly, if it is a publicly-traded company. If it knows of the alterations and authenticates it anyway, it is engaged in fraud and a conspiracy to commit fraud by use of instrumentalities of interstate commerce.
I am not generally considered an hysteric. Most of you have no clue who I am, or care, and that's fine. However, this is a really, really huge issue, and implicates the SEC and FTC in their regulatory powers over TPGs. I say this with all due caution: this scandal can destroy this hobby. Everyone who has any affection for this universe of collectibles needs to start demanding public accountability. File complaints with the SEC (CLCT, etc.), and the FTC, before this becomes so pervasive and rampant (or has it already) that there is no dependable collectability of these treasures any longer.

Thank you!

Brent/Moser going to jail or not does not stop the problem. As long as TPGs continue to assign numeric grades to altered cards, this will continue. Like I said a few posts above, people need to hold PSA accountable, even if it does have an impact on the value of their collection.

What happens to the Moser cards, and other altered cards, once they are uncovered and returned to PWCC (or PSA or whoever) for refund? Will they be destroyed? I mean its just an altered card, they're not forgeries or anything, and in some cases might be rare and still hold significant value, even as an altered card

[jason.1969]

For all the talk of legal vs illegal, the main takeaway for me from all of this is that I can't and won't trust anything in Brent's auctions ever again.

Jason Schwartz
Chicago, IL

[joshuanip]

Originally Posted by Gobucsmagic74

What happens to the Moser cards, and other altered cards, once they are uncovered and returned to PWCC (or PSA or whoever) for refund? Will they be destroyed? I mean its just an altered card, they're not forgeries or anything, and in some cases might be rare and still hold significant value, even as an altered card

A bit altruistic, but I would hope it’s donated to a museum. Still eye candy at the end of the day. They could at least take a tax cut on the donation of their cost.

[Promethius88]

Originally Posted by Gobucsmagic74

What happens to the Moser cards, and other altered cards, once they are uncovered and returned to PWCC (or PSA or whoever) for refund? Will they be destroyed? I mean its just an altered card, they're not forgeries or anything, and in some cases might be rare and still hold significant value, even as an altered card

Maybe they should all be put in pedigree holders. "Moser/PWCC Scandal-2019". Actually might fetch a premium in years to come, lol. Just look at the PSA 8 Wagner and it's history. Just the story behind it is more than likely to attract more potential bidders and higher bids the next time it is up for sale.

[vintagetoppsguy]

Originally Posted by Gobucsmagic74

What happens to the Moser cards, and other altered cards, once they are uncovered and returned to PWCC (or PSA or whoever) for refund? Will they be destroyed? I mean its just an altered card, they're not forgeries or anything, and in some cases might be rare and still hold significant value, even as an altered card

Good question. What if PSA makes good on these and labels them Authentic Altered? Does that really suffice? What's to keep someone from cracking it out and resubmitting it again hoping for a numerical grade? For those that believe PSA had no involvement, if it slipped by and they graded it once, what's to keep it from slipping by and getting graded again? That's of course if you really believe PSA is an innocent pawn in all this. I think they're part of the scam.

[jason.1969]

Originally Posted by Gobucsmagic74

What happens to the Moser cards, and other altered cards, once they are uncovered and returned to PWCC (or PSA or whoever) for refund? Will they be destroyed? I mean its just an altered card, they're not forgeries or anything, and in some cases might be rare and still hold significant value, even as an altered card

We will see them at auction again and again, just with new holders.

[Fuddjcal]

Originally Posted by 36GoudeyMan

There is NO doubt that PWCC is engaging in a criminal activity. I'm a lawyer with 40 years experience, including RICO cases. But so what? We shut down a dealer and someone else becomes the outlet for fraudulently altered cards. It becomes Whack-A-Mole.

The bigger issue is TPG authentication of clearly altered cards. The blessing/imprimatur of TPG authentication is a public statement that the card is, in fact (not opinion), unaltered (inasmuch as TPGs have categorization ability for altered cards). Is the TPG is unaware of the alteration, then its competence has to be questioned, and its exposure to "buy back"guarantees must be disclosed publicly, if it is a publicly-traded company. If it knows of the alterations and authenticates it anyway, it is engaged in fraud and a conspiracy to commit fraud by use of instrumentalities of interstate commerce.

I am not generally considered an hysteric. Most of you have no clue who I am, or care, and that's fine. However, this is a really, really huge issue, and implicates the SEC and FTC in their regulatory powers over TPGs. I say this with all due caution: this scandal can destroy this hobby. Everyone who has any affection for this universe of collectibles needs to start demanding public accountability. File complaints with the SEC (CLCT, etc.), and the FTC, before this becomes so pervasive and rampant (or has it already) that there is no dependable collectability of these treasures any longer.

once again, I agree. I was contemplating making a complaint against collectors universe with the SEC but wasn't sure that was the proper agency? Thanks for making this point loud and clear.

[griffon512]

Originally Posted by Fuddjcal

once again, I agree. I was contemplating making a complaint against collectors universe with the SEC but wasn't sure that was the proper agency? Thanks for making this point loud and clear.

The SEC and FTC are extremely unlikely to do anything with a complaint or disclosure filed by any member of this board. I say that to save peoples' time if they want to go that route. It is best spent elsewhere...

Collectors Universe (CLCT) is most likely to be sensitive to how this impacts their stock price and financial health. They are not a well capitalized company and they may have inadequate reserves given the magnitude of the problem. Their stock price will likely be driven by the selling or buying of several large institutional shareholders. Here's a partial list: https://finance.yahoo.com/quote/CLCT/holders?p=CLCT. Note that Renassaince and Dimensional are quant/indexing focused, not fundamentally focused, so one is better off trying to contact the money managers/research analysts at the other funds. If one is unable to make direct contact with these people, contacting investor relations at CLCT is an alternative -- though less impactful -- starting point. Investor relations is in contact with senior management, and will likely inform them if a groundswell of people are making inquiries.

CLCT is most likely to start making the changes people desire if they are getting pressure or inquiries from their large institutional shareholders or senior management recognizes the potential enormity of forced buybacks of altered cards versus their reserves/cash levels. Beyond the $800,000 in reserves they have ~$16 million in cash (around $13.5 million net of debt). They generate a healthy amount of cash (~$12 million over the last 9 months), but a chunk of that goes to paying dividends, the absence of which would hurt the stock price. They also have exposure to the Chinese market in coin grading. One can see several potential problems, so they are certainly not immune to a grassroots effort among hobbyists.

[steve B]

Originally Posted by vintagetoppsguy

Sad to see comprehension of the English language is lost as well. Nobody stuck up for the trimmers.

Questioning if fraud is really a crime is just what I said.

As I understand it, altering something, getting an "expert" to say it's not altered, then selling it as unaltered is fraud.

Whether it will be prosecuted is debatable, lots of worse crimes go unpunished because the cases are too hard to get a conviction on (see the Portland car theft article.)

Or to use your house analogy, and I'd hope the actual lawyers will correct me if I'm wrong..
If you have a house, and rewire it to remove aluminum wiring, yes, that's an improvement. And I don't think you'd have to disclose it. I would also think that if it was done recently by a licensed electrician working with an approved permit, you would want to disclose that.
Of course, if there was a permit or even without one, but the work was done by your acquaintance who says he knows how to wire, but he didn't really replace all the wiring, but just enough to get it past the building inspector who is known to be overworked and as a result doesn't look all that hard... Not disclosing is a problem isn't it?
Maybe not, as long as nothing happens. But if there's a fire and some one gets hurt.... https://www.nytimes.com/1990/08/11/n...ire-death.html