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Swoboda4
07-05-2009, 10:07 AM
http://www.nydailynews.com/sports/baseball/yankees/2009/07/05/2009-07-05_mastro_fine_sports_auctions_disaster.html

Mastro Fine Sports Auctions' is at the center of a sports memorabilia scandal

BY MICHAEL O'KEEFFE
DAILY NEWS SPORTS WRITER

Sunday, July 5th 2009, 4:00 AM

It wasn't easy for Jim Murphy to sell his Babe Ruth memorabilia collection last year. The autographed photos, game-used bats and other pieces had been gifts from the Babe to Murphy's grandfather, Jimmy Donohue, the New Jersey restaurateur, and they'd been in the family for decades. But poor health and financial problems didn't give Murphy and his wife, Liz, much of a choice, so last fall they consigned the collection to Mastro Auctions, sports memorabilia's largest auction house for a decade.

The bulk of the collection, offered at Mastro sales in December and January, garnered almost $250,000. But when Mastro officials failed to send Murphy a check for the consignment, the Florida couple got increasingly worried. Mastro chief executive officer Bill Mastro and president Doug Allen eventually agreed to a payment plan with interest on Feb. 26. The first check arrived 10 days earlier than their March31 deadline, and the Murphys assumed everything would work out OK.

But the Murphys say they became more than a little distressed when they learned that Mastro Auctions, which is at the center of an FBI investigation into shill bidding, card doctoring and other allegations of fraud, had gone out of business in March and Allen had started a new firm, Legendary Auctions. Their anxiety skyrocketed when the second payment arrived two weeks late. When the third and final check didn't materialize by the May 31 deadline, the Murphys' frustration and anger was boiling over.

"Bill Mastro told us he would try to help us, but we wouldn't get paid because we were 'little people,'" says Murphy, who adds that Mastro seemed quite sympathetic to their plight but told him that Silk Road Equity, the North Carolina investment firm that owned Mastro Auctions, would take care of its banks and important memorabilia industry partners before it took care of the Florida couple.

When Allen and several colleagues announced over the winter that they had bought Mastro assets and would go into business as Legendary Auctions, they promised in a press release that all outstanding Mastro Auction business would be "seamlessly facilitated, processed and completed through Legendary Auctions." But the transition has been anything but seamless. Some Mastro consigners have complained that they haven't been paid for items that sold months ago.

Allen says the matter is out of his hands. The responsibility to pay consigners and other creditors belongs to Mastro Auctions, which was owned by Silk Road Equity. Silk Road has a small stake in the new auction business, Allen adds, but Legendary Auctions is a completely separate entity from Mastro Auctions.

"I will share their frustrations until everybody who did business with Mastro Auctions is made whole," Allen says. "I wish we could meet those old obligations and start with a clean slate. But legally, we have done everything appropriate."

Bill Mastro could not be reached for comment; Silk Road Equity officials did not return calls for comment.

Allen says one reason why Mastro consigners haven't been paid is because some of its bidders have not paid their bills. The company filed a lawsuit on June 25 in Illinois state court against Dave Forman, the president of SportsCard Guaranty, a New Jersey card-grading service. The suit alleges Forman owes Mastro more than $400,000, including interest, for items purchased in 2007 and 2008 auctions. "If Dave Forman paid Mastro Auctions, then we could take care of all those consigners and have money left over," Allen says.

Forman's attorney, Jeffrey Lichtman, says that his client doesn't deny that he has an outstanding balance. But that figure is less than the lawsuit contends because Mastro officials did not subtract the value of baseball cards sold by the auction house against Forman's wishes. Forman had given the cards to Mastro Auctions for a future sale, but when the economy turned sour - and with the FBI probe tarnishing the auction house's reputation - Forman decided to hold on to the cards. Instead, Lichtman says, they were sold at a Mastro Auction for much less than Forman might have gotten at a future date with a different auction house.

There are other disputes that are not included in the suit; Allen had offered to serve as the liaison for the sale of a rare comic book Forman was interested in buying; an agreement was reached but never consummated when the seller backed out because he said he couldn't find the comic, which is worth hundreds of thousands of dollars. The matter could have been resolved without a lawsuit, Lichtman says. "They made it the simplest of lawsuits because they don't want to address these issues," he says.

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."

Forman, according to Lichtman, will file a countersuit alleging he was damaged by the unconsummated comic book deal. He'll also claim Allen tried to blackmail him with a message left on his phone a few months ago. 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.

Allen acknowledges that he was a go-between in the thwarted comic sale, but he says that issue is irrelevant - Forman never paid for the book, so he hasn't lost a dime on it, and Mastro Auctions had no role in the unconsummated deal. Allen adds that he acted out of friendship, and not for a potential commission, in the comic sale. "I consider Dave a friend, but if he wants to blame somebody for the comic book, blame me, not Mastro Auctions," he says. "The company had nothing to do with it."

Allen says the allegation of blackmail is laughable. He says his phone call to his friend Forman was an attempt to explain that Bill Mastro had become so frustrated by Forman's debt that he was considering exposing Forman as an industry official who doesn't pay his bills. "That had nothing to do with Mastro Auctions," Allen says. "That was me, calling as a friend, trying to get him to do the right thing."

To Lichtman, the lawsuit is an attempt to shift the blame for Mastro's simmering problems with consigners. It is certainly no easy fix for those who feel they've been stiffed by the company - even if Mastro Auctions prevails in the lawsuit, it could take years for the issue to be settled and for Mastro to receive a judgment.

But that is no longer Jim and Liz Murphy's concern. On the morning of June 8, Liz Murphy started repeatedly calling Allen's cell phone, Legendary's main office number and Allen's accountant. The goal was to tie up Legendary's phone lines until the final payment would be resolved. After two or three hours, Allen agreed to send a postdated check for the balance of the account. Jim Murphy said he deposited the check last week and considers the matter over.

"I've apologized to the Murphys for the distress we've caused them," Allen says.

Allen says he decided to write the check to the Murphys not because he was legally obligated to do so but because he wants to resolve his old firm's obligations as quickly as possible. He says he's trying to resolve issues with other consigners, too.

But Murphy thinks there was another reason: "I was ready to give them the Pomeranian serenade," Murphy said in a telephone interview over the din of yapping dogs. "But Doug gave in before it got to that point."

mr.miracle
07-05-2009, 10:49 AM
What happened to Bill Mastro and what is he doing now?

joelsabi
07-05-2009, 11:08 AM
Is it time already to campaign for a Hobby Association so that our hobby can be monitored.

Lokee
07-05-2009, 11:40 AM
f-ing criminals. I hope the FBI comes down hard on these people.

suicide_squeeze
07-05-2009, 11:47 AM
Is it time already to campaign for a Hobby Association so that our hobby can be monitored.

Joel,

I would agree with you, but we don't need another "organization" that will no doubt eventually head south with their ethics and dealings too.

We have the Association.

It's us.....all of us ladies and gentlemen HERE. If there's going to be any association developed, it should start with some of the most trusted and respected members HERE.

Another bureaucratic organization would no doubt eventually see the dollars involved, the popularity, and because of the involvement of humans beings, coupled with the secrecy of opperations behind closed doors, it would get mucked up and cause more difficulty for us collectors.

I like the current situation: The FBI is heavily up the asses of the bad folks in the biz. Let's continue doing our thing thing, exposing the wrong-doings right HERE, publicly, and that should keep the bad souls from being successful, at the same time doing what we can to protect our fellow collecting community.

Regards,

Steve

Mr.3000
07-05-2009, 11:49 AM
Joel,

I would agree with you, but we don't need another "organization" that will no doubt eventually head south with their ethics and dealings too.

We have the Association.

It's us.....all of us ladies and gentlemen HERE. If there's going to be any association developed, it should start with some of the most trusted and respected members HERE.

Another bureaucratic organization would no doubt eventually see the dollars involved, the popularity, and because of the involvement of humans beings, coupled with the secrecy of opperations behind closed doors, it would get mucked up and cause more difficulty for us collectors.

I like the current situation: The FBI is heavily up the asses of the bad folks in the biz. Let's continue doing our thing thing, exposing the wrong-doings right HERE, publicly, and that should keep the bad souls from being successful, at the same time doing what we can to protect our fellow collecting community.

Regards,

Steve

Well said!

sammy
07-05-2009, 03:18 PM
I love this strategy.

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But that is no longer Jim and Liz Murphy (http://www.nydailynews.com/topics/Liz+Murphy)'s concern. On the morning of June 8, Liz Murphy started repeatedly calling Allen's cell phone, Legendary's main office number and Allen's accountant. The goal was to tie up Legendary's phone lines until the final payment would be resolved. After two or three hours, Allen agreed to send a postdated check for the balance of the account. Jim Murphy said he deposited the check last week and considers the matter over.

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Allen says. "I wish we could meet those old obligations and start with a clean slate. But legally, we have done everything appropriate."

Doug, just substitute the word "morally" in place of legally to get yourself on the right path.

sox83cubs84
07-06-2009, 08:48 PM
Is it time already to campaign for a Hobby Association so that our hobby can be monitored.

The idea of a national hobby association is not new. As far back as the 1980s, the notion was put forth periodically at the National Convention, either by major dealers or National promoters. None took off because of lack of interest. Until enough people of influence in this hobby/industry start looking at the big picture instead of their own little world and get tired of the Feds policing our hobby because too many of the particpants can't be bothered, it'll remain just that...an idea. I'd welcome such an association, but too many of the hobby's power players (mostly major card dealers and major show promoters) don't seem to care.:mad:

Dave M.
Chicago area