Mastro Auctions, the largest sports memorabilia auction house, has closed amid an FBI fraud investigation. Three Mastro executives have purchased the company’s assets and will launch a new company called Legendary Auctions. Part of the investigation by law enforcement is focused on charges of “shill bidding”.
While this story does not involve the original prop collecting hobby, it is still of great interest in that it relates to a law enforcement investigation into fraud in the auction of entertainment memorabilia – in which authenticity is a vital component of that hobby – and some charges, such as shill bidding by an auction house, are just as significant a concern for participants of any type of memorabilia sold at auction.
The New York Daily News has provided ongoing coverage into the issues and accusations of fraud surrounding chairman Bill Mastro and his company.
The Daily News published a story in 2007 about the Chicago Division of the FBI opening their investigation into Mastro Auctions:
07/08/07: FBI probes hobby biz honchos
FBI probes hobby biz honchos
BY MICHAEL O’KEEFFE
DAILY NEWS SPORTS WRITERSunday, July 8th 2007, 4:00 AM
The Chicago division of the FBI, whose “Operation Foul Ball” smashed a multistate autograph forgery ring during the 1990s, has initiated an investigation into Mastro Auctions, sports memorabilia’s largest auction house.
At least two hobby executives have been questioned about Mastro Auction’s business practices in recent weeks by the FBI, the Daily News has learned. So has the president of Development Specialists Inc., the company hired by the state of Ohio to liquidate coins and collectibles purchased with state money by Tom Noe, the Republican Party official convicted last year of stealing from a $50 million workers compensation fund and sentenced to 18 years in prison.
“We have talked to the Chicago office of the FBI about their investigation and we are deferring some of our activities in deference to their investigation,” DSI president William Brandt said.
FBI spokesman Ross Rice said he could not confirm or deny an investigation into Mastro Auctions was underway. Mastro Auctions president Doug Allen said he was not aware of the FBI investigation.
“We have not been contacted by the FBI or by the police,” Allen said. “I have not heard anything about it.”
Indiana memorabilia dealer Bill Daniels, one of the hobby executives questioned by the FBI, said he provided information about “shill bidding,” when an auction house or a consignor enters fake bids on an item in order to drive up the price.
“I gave them the name of a consignor who bid on his own lots in Mastro Auctions,” said Daniels, who was interviewed by an agent about 10 days ago. “I think this is a big problem. It is not ethical for a consignor to bid on his own lots.”
Daniels sued Mastro Auctions last year over a collection of 2,000 autographed photos he purchased in a December 2004 Mastro sale. Daniels claims the lot includes numerous forged autographs, as well as damaged photos and smeared signatures. An Indiana judge reviewed evidence from both sides this spring and is expected to issue a ruling this month.
“One thing I discussed with the FBI is the fact that during discovery, Mastro could produce no records about the lot,” Daniels said. “They could not produce records about who the runnerup was or whether there were even any other bidders.”
The other executive, meanwhile, confirmed that he has been questioned by the FBI but declined comment for this story.
As The News reported last year, investigators who searched Noe’s Vintage Coins and Collectibles in Maumee, Ohio, in 2005 found a cache of collectibles – everything from Beanie Babies to 19th century political banners to autographed baseballs – worth an estimated $3.5 million. Authorities believe the GOP fund-raiser bought most of the collectibles with state money; a major source of the memorabilia was Mastro Auctions of Burr Ridge, Ill.
Brandt said Mastro Auctions has not cooperated with DSI officials as they attempt to recover and liquidate assets Noe bought with money from the Ohio Bureau of Workers Compensation fund. He said attorney Randy Mastro, a deputy mayor under Mayor Rudy Giuliani and the brother of Mastro Auctions founder Bill Mastro, has told him to “pound sand.”
“That’s not true,” Allen said. “I don’t believe what anybody from that company says. It’s comical. It’s all lies.”
The Daily News published a follow-up report a year later:
08/02/08: Feds swarm to question card sharks
Feds swarm to question card sharks
BY MICHAEL O’KEEFFE
DAILY NEWS SPORTS WRITERSaturday, 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.
More from the Daily News, a few months later:
09/08/08: Feds’ memorabilia case heating up
Feds’ memorabilia case heating up
BY MICHAEL O’KEEFFE
DAILY NEWS SPORTS WRITERMonday, September 8th 2008, 9:20 PM
Several sports memorabilia officials have testified in recent weeks before a grand jury in Chicago that is investigating Mastro Auctions and fraud in the collectibles business.
Additional hobby insiders are also scheduled to testify before the grand jury, sources said, while others have been asked to provide records and other documents.
“There has been a parade of people going to the grand jury,” said a source close to the case. “The feds are closing in.”
The grand jury deliberations are part of an investigation into memorabilia fraud initiated last year by the Chicago division of the FBI, whose “Operation Foul Ball” smashed a multistate autograph forgery ring in the 1990s.
Although the target of the investigation is Illinois-based Mastro Auctions, sports memorabilia’s largest auction house, other businesses and individuals may be involved.
Some of the hobby insiders who received subpoenas to appear before the grand jury are former Mastro Auctions employees. “The FBI told me I am not a target, but they want to talk to me,” said one former Mastro worker.
Mastro Auctions president Doug Allen did not return a call for comment.
As the Daily News first reported, investigators from the FBI and the United Postal Service crashed the National Sports Collectors Convention in Rosemont, Ill., in August, delivering subpoenas to industry executives and questioning memorabilia companies’ employees.
The investigation of Mastro Auctions has focused on shill bidding, card doctoring and other allegations of fraud.
The Daily News have followed-up with three more reports in the past two months:
02/08/09: At Mastro Auctions, check is in the mail
At Mastro Auctions, check is in the mail
BY Michael O’Keeffe
DAILY NEWS SPORTS WRITERSunday, February 8th 2009, 2:31 AM
Is Mastro Auctions, already the target of an FBI investigation, suffering from financial problems?
Sports memorabilia’s largest auction house recently asked consignors not to cash the checks the company issued them for items sold at Mastro’s December catalogue sale.
In an e-mail to the Daily News, Mastro Auctions president Doug Allen blamed the problem on “a banking issue.” The checks, he said, were drawn from the wrong account.
“As a result we had to contact a handful of consignors. In all those cases we have personally made calls, provided replacement checks and wires when requested,” Allen added.
A lawyer contacted by an angry consignor, however, said company founder Bill Mastro told him the company had a cash-flow problem. Mastro sold the auction house in 2004 to SilkRoad Equity, a private investment firm.
“Mastro said the new owners have been reluctant to expand or renew their bank credit line,” said the lawyer, who spoke on the condition of anonymity.
The lawyer said Mastro told the consignor the company had to call back $600,000 but assured him that replacement checks would go out immediately.
The Daily News reported in September that sports memorabilia officials have testified before a grand jury in Chicago that is investigating Mastro Auctions and fraud in the collectibles business.
The grand jury deliberations are part of an investigation into memorabilia fraud initiated last year by the Chicago division of the FBI, whose “Operation Foul Ball” smashed a multistate autograph forgery ring in the 1990s.
Although the target of the investigation is Illinois-based Mastro Auctions, sports memorabilia’s largest auction house, other businesses and individuals may be involved.
The investigation of Mastro Auctions has focused on shill bidding, card doctoring and other allegations of fraud.
03/04/09: Mastro Auctions in freefall
March 4, 2009
Mastro Auctions in freefallMastro Auctions, the country’s largest sports memorabilia auction house, continues to have problems. As the Daily News has reported recently, Mastro is the target of a federal investigation into shill bidding and fraud, and it has also had problems paying consigners.
Here’s a recent post from the Vintage Baseball Card Forum:
“Has anyone heard from Mastro Auctions, since their last auction concluded? I haven’t received an invoice (electronic or otherwise) and tried to call them, to verify my winnings. I left a voice-mail, asking someone to call me back about the lot I won (or at least think that I won). No return call. …
“After about 12 more attempts (in which the receptionist never picked up the phone) the recording says to leave a message. But there is never a beep (to indicate the start of recording). This would suggest that their voice-mail is full, and is perhaps unattended.
“This company used to pride itself on stellar customer service. Has anyone else been successful in contacting them since their auction’s close? Does anyone know what might be going on with Mastro, and if they’re still around?”
Here’s moderator Dan Bretta’s reply: “Perhaps it’s time to send lawyers, guns and money?”
By Michael O’Keeffe on March 4, 2009 5:53 PM
03/12/09: Bill Mastro folds sports memorabilia’s largest auction house amid FBI probe
Bill Mastro folds sports memorabilia’s largest auction house amid FBI probe
BY Michael O’Keeffe
DAILY NEWS SPORTS WRITERThursday, March 12th 2009, 10:15 AM
Mastro auctions chairman Bill Mastro boasted in a Jan. 21 article in the Chicago Daily Herald that his auction house would not be damaged by the recession because it caters to high-end clients.
“When we do our big auctions we’re typically dealing with well-heeled guys, and this is what gives them pleasure,” Mastro said. “If anything, I think guys are getting more choosy and discriminating about what they buy and how they buy it. But at the end of the day a Mercedes is a Mercedes, and if you want and have the means, you’ll pay for it.”
Less than two months later, Mastro Auctions is apparently out of business.
Sports memorabilia’s largest auction house is at the center of an FBI investigation into shill bidding, card doctoring and other allegations of fraud that have damaged the company’s Mercedes image. While Bill Mastro said in the January interview that the company would continue to generate $50 million in annual sales, industry sources say it had crippling credit-line and cash-flow problems. Consignors have complained that they were not paid for items sold at Mastro’s December auction.
Three Mastro executives, including president Doug Allen, have purchased Mastro Auction’s assets and will launch a new company called Legendary Auctions. The new business has taken possession of computer software and client lists, sources told the Daily News. Allen did not return phone calls for comment, but in a press release, the new company said all outstanding Mastro Auctions business will be “seamlessly facilitated, processed and completed through Legendary Auctions.” Industry sources told the Daily News they expect Mastro’s consignors will all eventually be paid.
Allen had told potential investors that he is not a target of the FBI probe, according to sources, but the new company appears to be taking steps to avoid shill-bidding allegations and other problems that damaged Mastro’s credibility with collectors.
“The principals employed by Legendary Auctions will put their own collecting interests aside and concentrate solely on providing opportunities for our customers,” Allen said in the press release. “There will be no mixing of business and pleasure at Legendary Auctions in terms of our own collecting pursuits. This will really be all about our customers.”
The Daily News reported last year that sports-memorabilia officials have testified before a grand jury in Chicago that is investigating Mastro Auctions and fraud in the collectibles business.
The grand jury deliberations are part of an investigation into memorabilia fraud initiated last year by the Chicago division of the FBI, whose “Operation Foul Ball” smashed a multistate autograph forgery ring in the 1990s. Other sports-memorabilia businesses and individuals may also be under investigation.
Bill Mastro will not be associated with Legendary Auctions. “Circumstances make it clear to me that the business needs to move in a different direction at this time, and Legendary Auctions is a positive step that allows everyone to be taken care of, especially our customers who have been so loyal,” Mastro said in the press release. “I am looking forward to taking some time off for now, and wish Legendary Auctions only the best as they move forward.”
Though there are reports of Mastro Auctions shutting down the business, at the time of this article, the website is still active:
The newly announced Legendary Auctions has secured the domain name and put up an “Under Construction” page:
The immediately preceding article also relates to auction houses and bidding practices (see Latest Version of New York State Assembly Bill A01730: Seeks Prohibition of Auction House “Sham” Bids Without Disclosure).
Jason De Bord
Jason DeBord, Original Prop Blog