Bill Mastro, Doug Allen Indicted

[ironmanfan]

http://www.nydailynews.com/blogs/iteam/2012/07/sports-memorabilia-king-bill-mastro-indicted-on-fraud-charges?page=1

[joelsabi]

http://www.nydailynews.com/blogs/iteam/2012/07/sports-memorabilia-king-bill-mastro-indicted-on-fraud-charges?page=1

Between at least 2001 and February 2009, Mastro, Allen, Theotikos and others allegedly caused and made false representations and omissions in Mastro Auctions’ catalogs, advertising, promotions, and other media, and in the bids placed in certain auctions. Those three defendants allegedly intended to deceive bidders into believing that Mastro Auctions conducted auctions according to practices that ensured fair and competitive auctions for all participants. They further intended to deceive participants into believing that greater market demand existed for some items than actually was the case, the charges allege.


Was this trying to say that Mastro allegedly practiced shill bidding.

[camarokids]

What company or who will be next???

[Preston]

Another one bites the dust..............

Check one more off the list of who I won't see at the nationals!

[solarlottry]

The FBI has a special agent in charge of sports memorabilia related crimes. He is part of the "Art Crimes" division and he is a very knowledgable individual. He is also extremely easy to get in contact with if someone thinks that they have been a victim of fraud with regards to a sports memorabilia transaction.

How do I know this? I recently was involved in a transaction that I felt was suspicious in nature and after consulting with a number of fellow GUU board members, decided to give him a call.

We had an enlightening conversation and his scope of knowledge about the hobby, the products themselves (jerseys, balls, bats, autographs etc), the dealers and auction houses as well as the individual collector was impressive. He knew who I was (he called me "the 49er guy") without me providing any background except my name, which astounded me! He also knows who collects what as well as what is for sale via auction and in general. Most importantly he receives a detailed printout from the auction houses which he reviews for any signs of irregularity (shill bidding etc).

The fact that he knew who I was and had a detailed history of what I collected may sound ominous to some of us but he told me that the majority of the information he gathers comes from GUU and other publicly accessed places. Of course he has other considerable resources at his disposal but after speaking with him for over an hour, I got the sense that cleaning up the sports memorabilia industry was his first concern.

I will be speaking with him tomorrow to answer a few more questions. After that conversation and with clearance from him, I will fully explain the situation that prompted me to call him and what has transpired since.

It seems as if law enforcement and specifically the FBI is absolutely serious about cleaning up this hobby and going after the individuals that have contributed to its current state. The devotion of law enforcement resources towards persecuting auction houses, private businesses and individuals for sports memorabilia fraud was never a top priority but because of the work of a few dedicated agents, it is something that is quite real and carries a significant penalty!

If a fellow collector feels as if they have been the victim of fraud, then one the ways to help stop these kinds of crimes is to contact the FBI and let them know what has transpired. You may be pleasantly surprised by the response you receive!

Always buying 49er game worn and ANY 1994 49er gamers!
Paul
garciajones@yahoo.com

[karamaxjoe]

Normally this kind of news would be huge on a game used forum. Since this forum is on life support, the Mastro news barely registers with anyone.

I don't know how Legendary Auctions will survive when it's top guys are being indicted for shill bidding.

[sox83cubs84]

This story is even making mainstream news reports. The Roe and Roeper Show (2PM CST, WLS-AM 890) had an interview with Grant DePorter, the local restauranteur who bought the Bartman ball from Mastro in 2004. He felt that transaction was legit, although he was skeptical, at first, about Mastro's offer to bid on his behalf. Later, he found out that there was, indeed, an opposing bidder driving up the price: Todd MacFarlane, the owner of numerous milestone home run baseballs.

Dave Miedema

[yanks12025]

Yet coaches corner can carry on in selling fakes and taking people's money.

[mdube16]

Yet coaches corner can carry on in selling fakes and taking people's money.

Good point...wonder how this is possible?

[Eric]

Also from huffington post...

http://www.huffingtonpost.com/2012/07/26/mastro-auctions-fraud-chi_n_1705593.html

chicago tribune

http://articles.chicagotribune.com/2012-07-25/news/chi-rare-cards-elvis-hair-auctioneers-face-charges-20120725_1_mastro-auctions-sports-memorabilia-charges

more from the ny daily news
http://www.nydailynews.com/sports/i-team/famous-honus-wagner-card-increases-500-000-federal-indictment-alleges-card-trimmed-article-1.1122742

[Eric]

Here is the official FBI press release
http://www.fbi.gov/chicago/press-releases/2012/william-mastro-and-two-other-executives-of-former-mastro-auctions-indicted-for-allegedly-defrauding-bidders-in-online-and-live-auctions-of-sports-memorabilia-and-other-collectibles

William Mastro and Two Other Executives of Former Mastro Auctions Indicted for Allegedly Defrauding Bidders in Online and Live Auctions of Sports Memorabilia and Other Collectibles
Fourth Former Mastro Auctions Employee Charged with Lying to FBI Agents
U.S. Attorney’s Office
July 25, 2012

Northern District of Illinois
(312) 353-5300
CHICAGO—Online and live auctions of sports memorabilia and other collectibles conducted during the 2000s by the former Mastro Auctions, which was based in suburban Chicago, routinely defrauded customers, according to a federal indictment unsealed today. William Mastro, who owned the former business that once billed itself as the “world’s leading sports and Americana auction house,” together with Doug Allen and Mark Theotikos, both former executives of Mastro Auctions, were indicted on fraud charges for allegedly rigging auctions through a series of deceptive practices, including so-called “shill-bidding,” designed to inflate prices paid by bidders and to protect the interests of consignors and sellers at the expense of unwitting bidders.

According to the indictment, in advertising portraying Mastro Auctions as the premier seller of valuable items, including the world’s most expensive baseball trading card, a Honus Wagner T-206 card, Mastro allegedly failed to disclose that he had altered the Wagner T-206 card by cutting the sides in a manner that, if disclosed, would have significantly reduced the value of the card. The charges allege that Mastro and Allen caused the sale of certain items knowing that their authenticity and condition were misrepresented to customers, including purported hair of Elvis Presley and a purported 1869 Cincinnati Red Stockings trophy baseball.

“Consumers might be lured to the auction market for sports memorabilia and other collectibles by an emotional attachment to an item or purely as a calculated investment, but, as the allegations in this case demonstrate, bidders must remain mindful of the maxim ‘Buyer Beware,’” said Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois. “Consumers have a right to be protected from deceptive and dishonest sales practices, and we will prosecute those who fraudulently rig auctions at the expense of bidders as the indictment alleges in this case.”

Mr. Shapiro announced the charges with Robert D. Grant, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation, and Thomas P. Brady, Inspector in Charge of the U.S. Postal Inspection Service in Chicago.

Mastro, 59, of Palos Park, who owned Mastro Auctions until 2004 and was its chairman and chief executive officer from 1996 until February 2009, was charged with one count of mail fraud.

Allen, 49, of Crete, who was president and chief operating officer of Mastro Auctions between 2001 and February 2009, was charged with 14 counts of wire and mail fraud. Theotikos, 51, of Addison, who was employed by Mastro Auctions between 1996 and February 2009 as vice president of auction operations and, later, vice president of acquisitions, was charged with six counts of wire and mail fraud. Both Allen and Theotikos are currently executives of Legendary Auctions, based in south suburban Lansing.

Mastro, Allen, and Theotikos will be arraigned on dates to be determined in U.S. District Court in Chicago.

The 16-count indictment, which was returned by a federal grand jury yesterday, was unsealed today following the arrest of a fourth defendant, William Boehm, 63, of Ballwin, Missouri, who was Mastro Auction’s director of information technology. Boehm, who was charged with one count of making false statements to FBI agents investigating Mastro Auction’s practices, had an initial appearance today in Federal Court in St. Louis.

According to the indictment, Mastro Auctions, which also operated under the names Mastro Fine Sports and Mastro Net, specialized in sports memorabilia but also featured such items as coins, art, and Americana collectibles. Most items were consigned to Mastro Auctions for sale by their owners, but Mastro Auctions also sold items that it owned. Between 2001 and 2009, Mastro Auctions’ offices were located at different times in Oak Brook, Willowbrook, and Burr Ridge, Illinois.

In conducting online and live auctions, Mastro Auctions typically charged a “seller’s fee” or a “commission,” usually a percentage of the price that an item sold for on consignment, and required potential bidders to pay a one-time fee of $75 that enabled them to participate in auctions. Successful bidders were assessed a “buyer’s premium,” usually a fee of 15 to 22 percent on top of their winning bid, which was known as the “hammer price.” Bidders could place bids online through Mastro Auctions’ website or by directly communicating with a Mastro Auctions’ employee by telephone or fax machine. Bidders could place either “straight bids” that incrementally increased the value over the last bid or “ceiling bids” that raised bids by established increments until the maximum a bidder was willing to pay was reached.

Between at least 2001 and February 2009, Mastro, Allen, Theotikos, and others allegedly caused and made false representations and omissions in Mastro Auctions’ catalogs, advertising, promotions, and other media and in the bids placed in certain auctions. Those three defendants allegedly intended to deceive bidders into believing that Mastro Auctions conducted auctions according to practices that ensured fair and competitive auctions for all participants. They further intended to deceive participants into believing that greater market demand existed for some items than actually was the case, the charges allege.

As part of the alleged fraud scheme, the indictment charges that Mastro, Allen, and Theotikos made false statements regarding the conduct of Mastro Auctions, including the following:

each Mastro Auctions catalog represented that “items are sold to the highest bidder.” In fact, Mastro, Allen, and Theotikos allegedly knew that certain items were not sold to the highest bidder because they canceled sales and engaged in and facilitated shill-bidding to fraudulently inflate prices to the detriment of bidders;
consignment agreements prohibited consignors or their agents from bidding on an item and, if the consignor violated this provision and had the highest bid on an item or lot, the consignor would be required to pay the commission and buyer’s premium. In fact, the three defendants knew they permitted certain consignors to bid on their own items, and, at times, those consignors did not pay commissions or premiums when they placed the highest bid; and
the three defendants represented at various times that Mastro Auctions did not implement undisclosed “reserves,” meaning prices, not disclosed to bidders, at which Mastro Auctions would not sell an item if the bidding failed to reach the “reserve” price. In fact, in certain auctions, they canceled sales instead of allowing the highest bidder to purchase an item, in order to prevent the sale of the item at a price lower than the consignor desired.
In October 2007, Allen allegedly created a “Code of Conduct” for Mastro Auctions. Despite the code’s assurances to the contrary, Mastro, Allen, and Theotikos knew that Mastro Auctions frequently did not disclose true ownership of items or that several employees with bidding privileges, including Mastro and Allen, had access to information about the ceiling bids, including the bid amounts. Further, contrary to the code’s assurances, employees, including Mastro, Allen, and Theotikos, bid on items consigned by related parties.

Among allegedly fraudulent auction practices, the indictment charges that the three defendants and others placed fictitious shill bids for the sole purpose of artificially inflating the price of items being auctioned. They allegedly placed shill bids at various times using a corporate bidding account, their own personal accounts, and accounts of employees and friends. The defendants then ensured that when a shill bid was the highest bid, the shill bidder would not be required to purchase the item; instead, they canceled the sale and offered the item to the next-highest bidder, the charges allege.

The Code of Conduct also provided certain assurances that Mastro Auctions would disclose information about auction items that were altered or restored. After the code was published, Mastro and Allen allegedly failed to disclose alterations and caused restoration work to be done on baseball trading cards, despite assurances that no such work would be performed.

Mastro and Allen also allegedly knew that they had misrepresented the authenticity of the purported hair of Elvis Presley. In April 2003, Mastro Auctions sold hair purportedly of Presley. The initial purchasers later returned the hair along with the results of DNA testing, which called its authenticity into question. In June 2004, Allen provided a refund to the purchasers. In December 2005, August 2006, April 2007, and August 2008, Allen again sold portions of the purported Presley hair to Mastro Auction bidders. In each instance, he allegedly made false representations in catalogs, such as asserting that the hair was “bona fide” or that it would be sold with “documents attesting to the veracity,” without disclosing the results of the DNA testing.

In August 2002, Mastro Auctions sold to Purchaser A what it claimed was an 1869 Cincinnati Red Stockings trophy baseball, which was described as an actual game ball played with by the first professional team, decorated following the game, and presented to the winning team. In October 2006, Purchaser A submitted the ball for laboratory testing, which indicated that the paint on the trophy ball contained a material not used in commercial paint until after World War II, thus clouding the authenticity of the ball. A month later, Allen provided a refund to Purchaser A and the ball was returned to Mastro Auctions, the indictment states. In December 2006, Mastro allegedly contacted Victim A about purchasing the trophy ball and failed to disclose information about the paint test results. On December 27, 2006, Victim A purchased the trophy ball from Mastro Auctions for approximately $62,000, according to the indictment.

The false statements count against Boehm alleges that he lied to FBI agents in July 2007 when he stated that he had disabled the Mastro Auctions bidding account of Individual D because Individual D was having financial difficulties, and he had created a bidding account in the name of “Craig Helling” to catch a Mastro Auctions employee suspected of stealing company information. In fact, Boehm allegedly knew that the accounts in the names of Individual D and Craig Helling were used to place fictitious bids.

Assistant U.S. Attorneys Nancy DePodesta and Steven Grimes represent the government.

Each count of mail and wire fraud against Mastro, Allen, and Theotikos carries a maximum penalty of 20 years in prison and a $250,000 fine and restitution is mandatory. The court may also impose a fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater. The false statements count against Boehm carries a maximum penalty of five years in prison and a $250,000 fine. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

[Eric]

Card collector Keith Olbermann on Mastro and the Wagner

http://keitholbermann.mlblogs.com/tag/mastro-auctions/

[Eric]

Here is the actual indictment

http://www.justice.gov/usao/iln/pr/chicago/2012/pr0725_01a.pdf

[gnishiyama]

http://haulsofshame.com/blog/?p=13261#more-13261

This is interesting. Not at all a card guy but it seems like it was the worst
kept secret in the hobby but now that it's hit mainstream media I can't
imagine the card not losing some value.

Looks like the winner here is Mr. Brian Seigel (don't know who he is)
and SCP Auctions. (Who I just won a few items in their last
auction WAY below my ceiling bid so hats off to them!)

Congratulations!


Associated Press

MISSION VIEJO, Calif. -- A rare Honus Wagner baseball card has been sold for a record $2.8 million, just over six months after it was bought for a then-record $2.35 million.
Referred to as the "Mona Lisa" of baseball cards, the almost mint-condition collectible -- released in 1909 by the American Tobacco Company -- was sold by Brian Seigel of Las Vegas to an unidentified Southern California collector in February. SCP Auctions was a minority owner, but David Kohler, the company's president and CEO, said that's no longer the case.



http://sports.espn.go.com/mlb/news/story?id=3007893

[gorilla777]

There should be some interesting conversations going around the booths at The National. It livened things up with the show of force taking down Jensen at the Vintage Authentics booth last year....wonder if there is more to come?

[trsent]

Yet coaches corner can carry on in selling fakes and taking people's money.

Yup - Some big auctions houses are being investigated, but Coach's Corner has been questioned for many, many years now and nothing ever seems to be done about it - Great point!

[sox83cubs84]

I just received an email from Legendary Auctions promoting their holding of the National Convention auction next weekend. It may just be me, but I question the National's PR acumen in having a just-indicted business running their signature auction.

Dave Miedema

[Eric]

JULY 31, 2012
After indictment on fraud charges, sports memorabilia king Bill Mastro pleads not guilty
BY MICHAEL O'KEEFFE

Bill Mastro, the one-time king of sports memorabilia who was indicted by grand jury on a count of fraud last week, entered a plea of not guilty in Chicago federal court on Tuesday. Mark Theotikos, the former Mastro Auctions executive who faces six counts of fraud, has also entered a plea of not guilty.

Doug Allen, Mastro Auction’s longtime president who along with Theotikos went on to found Legendary Auctions, entered a plea of not guilty last week.

Mastro’s attorney, Michael Monico, said last week that he expects the case will be resolved without a trial, suggesting that his client is cooperating with the feds and will change his plea at some point in the future.

Mastro dropped out of the hobby in 2009, after he shut down Mastro Auctions, which once generated as much as $50 million a year in sales. He sold his legendary memorabilia collection in 2010.

Allen, a source tells us, is in Baltimore for the National Sports Collectors Convention, which begins on Wednesday and runs through the weekend. Allen, we hear, isn’t hiding. He’s greeting friends and associates at the hobby’s annual bash, and telling anyone who will listen that he will vigorously fight the charges. That’s consistent with what his lawyer, Michael Petro, already told the Daily News. The Chicago Sun-Times quoted Petro as saying Bill was “the Mastromind” of the company.

The indictment says Mastro altered the world's most expensive baseball trading card, the Honus Wagner T206 that has fetched millions in a series of high-profile sales since Mastro bought it for $25,000 in a Hicksville, L.I. memorabilia shop in 1985. Its owners have included NHL great Wayne Gretzky, who purchased the card in 1991 along with Los Angeles Kings owner Bruce McNall for $451,000.

"Defendant Mastro represented that Mastro Auctions had sold the most expensive baseball card in the world, a Honus Wagner T206 card," the indictment says. "In making this representation, however, defendant Mastro knowingly omitted the material fact that defendant Mastro had altered the baseball card by cutting the sides of the card in a manner that, if disclosed, would have significantly reduced the value of the card."

The T206 Wagner is the subject of the book I wrote with Teri Thompson, “The Card.” Here’s what one of the wise guys on Net 54, the vintage card forum, said about the book: “Get your hands on a copy of ‘The Card.’ It will give you enlightenment to the background in this case. I just got it from a friend and after reading it, it changed how I look at this hobby.”

Thanks for the endorsement!

According to the indictment, Mastro Auctions also sold what it claimed was Elvis Presley's hair years after Allen learned that DNA testing proved the locks did not come from the King of Rock. Additionally, the company sold a 1869 Cincinnati Red Stockings trophy baseball, even though Mastro knew there were questions about its authenticity.

Another Net 54 posted an item about what promises to be the must-have collectible at this year’s show: “Just a rumor, but I've heard that they are putting the finishing touches on mug shot promo cards for distribution at the National. The cards will feature a "Criminal Code of Conduct" on the verso of the booking photo.”

Now that’s a Holy Grail!

I’ve been invited to speak on Friday at the NSSC dinner organized by Net 54 moderator Leon Luckey. Thanks to the Justice Department, there won’t be a shortage of topics to discuss.

http://www.nydailynews.com/blogs/iteam/2012/07/after-indictment-on-fraud-charges-sports-memorabilia-king-bill-mastro-pleads-not-guilt