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Former Owner of Mastro Auctions Sentenced to 20 Months in Federal Prison in Shill-Bidding Scam
I read about this on Autograph Planet and thought I would post it here. I love it any time a scammer gets what is coming to them.
https://www.fbi.gov/chicago/press-releases/2015/former-owner-of-mas...
| U.S. Attorney’s Office August 20, 2015 |
CHICAGO—The former owner and CEO of a sports memorabilia auction house was sentenced Thursday to 20 months in federal prison for using phony bids to fraudulently inflate the price of his company’s listings at auction.
As the owner and chief executive officer of Mastro Auctions, WILLIAM MASTRO and several colleagues placed fake bids to drive up the prices of various listings, a process known as “shill bidding.” Mastro also sold phony and altered memorabilia, including a Honus Wagner baseball card whose sides Mastro had cut with a paper-slicing machine, and a purported 1869 Cincinnati Red Stockings trophy ball that Mastro knew contained paint manufactured after World War II.
Mastro, 62, of Palos Park, pleaded guilty in 2013 to one count of mail fraud. In addition to the 20-month prison term, U.S. District Judge Ronald A. Guzman noted that Mastro had already satisfied the court-imposed fine of $250,000. Judge Guzman ordered Mastro to begin serving his sentence no later than Nov. 30, 2015.
“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.”
Mastro is one of four former Mastro Auctions employees, including three executives, who have pleaded guilty in connection with the fraud scheme. Prior to closing in 2009 a.m.idst the federal investigation, Mastro Auctions had maintained offices at different times in Oak Brook, Willowbrook and Burr Ridge.
The T206-series Wagner card is considered one of the world’s most expensive trading cards. Mastro admitted in the plea agreement that he cut the card’s side borders, and then concealed this information when he sold the card in 1987. Mastro again failed to disclose his alteration even after participating in subsequent auctions of the card in 1991 and 2000. The sale in 2000 produced a purchase price of more than $1 million, according to the plea agreement. Mastro also failed to disclose that he cut the Wagner card again in 1992, even though he was aware that the card had been submitted to become the first baseball card assigned a grade based on the condition of the card.
Mastro sold the alleged 1869 Cincinnati Red Stockings trophy ball to a collector in 2006 for $62,000, even though Mastro was aware that the trophy ball had previously been returned to the auction house by a prior buyer who had conducted laboratory testing on it. The testing had shown that the trophy ball contained paint that was manufactured after World War II, casting doubt on the ball’s authenticity. Mastro did not inform the 2006 collector of the laboratory testing.
Mastro Auctions, which also operated under the names Mastro Fine Sports and Mastro Net, specialized in sports memorabilia but also featured coins, art, and Americana collectibles. Most items were consigned to Mastro Auctions by their owners, but the house also owned some of the items it sold. Mastro had sold the company in 2004 but stayed on as its chairman and chief executive officer until its closure.
Mastro admitted in a plea agreement that the shill-bidding scheme spanned from 2002 to 2009. The scam involved submitting phony bids to artificially drive up the price of online and live auctions. Mastro admitted that he or one of several colleagues would place the shill bids as needed to inflate the price and to protect the interests of consignors and sellers—at the expense of unwitting bidders. If the shill bids ever won the item being auctioned, Mastro or his colleagues would cancel the sale.
Three other former employees of Mastro Auctions have admitted their roles in the scheme. Doug Allen, 52, of Crete, served as president and chief operating officer from 2001 to 2009. He pleaded guilty to one count of wire fraud. Mark Theotikos, 54, of Addison, worked for Mastro Auctions from 1996 to 2009 as vice president of auction operations and acquisitions. He pleaded guilty to one count of mail fraud. Allen and Theotikos are scheduled to be sentenced by Judge Guzman on Oct. 14, 2015. William Boehm, 66, of Ballwin, Missouri, worked for Mastro Auctions in information technology. He pleaded guilty to one count of making false statements to agents of the Federal Bureau of Investigation who were probing the company’s practices. Boehm was given two years of probation.
The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; John A. Brown, Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and António Gomez, Inspector in Charge of the U.S. Postal Inspection Service in Chicago.
The government is being represented by Mr. Dollear and Assistant U.S. Attorney Derek R. Owens.
Replies to This Discussion
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Permalink Reply by Steve on
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I would not do business with anyone who chooses to use these unethical business practices. Crooks, plain and simple.
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Permalink Reply by LymanBostock Fan on
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Just want to say with 100% certainty, Randy and Steve are correct. Independently, I won an Iconic auction and and E-bay auction within a few days of each other. All items sent to me arrived the same day with the same return address:
15849 N. 77th Street, Suite 1
Scottsdale, AZ 85260
The only difference in the return address is the Iconic also had Jeff Woolf, Iconic Memorabilia, LLC, while the Press Pass one, had PPC on it.
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Permalink Reply by Robin Banks on
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Thats who exactly i was referring to. Its pretty obvious their operation is a sham and it didnt take long for some members to share the same experiences.
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Permalink Reply by terrier8HOF on
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Ebay pays no attention to shill bidding. it is rampant.
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Permalink Reply by Full Time Flipper on
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i had similar thing happen at Goldin auctions recently i was the high bidder all day they had a 15 minute rule so the auction ran on for 15 minutes after the last bid to stop sniping ,i got outbid and the auction closed immediately after i got outbid giving me no chance to bid again ,that was inhouse 100% i wrote to complain but got nothing its rife among the auction houses
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Permalink Reply by Ian Baldock on
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I avoid auctions unless I really desperately want something (which is rare). Its quite common for internet auctions to play these games.
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Permalink Reply by Xwiesy on
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Not entirely true. My friend's Mom had him bid on her item to save a mistake she made and she got busted.
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I'd like to know how Press Pass' stuff sells at an auction and yet is still available.
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Because it doesn't really sell. They give the appearance that items sell, but are looking for a certain amount to let it go. If you happen to give them what they want, then it is yours, otherwise it gets re-listed on both the auction site and their ebay account.
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I just don't see how you can win your own auction..thank you for the explanation.
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They are set up with fake bidders that are really themselves or associates. They win, keep the item because it doesn't meet what they are looking to get, then re-list it. They have the same exact item listed in several places (auction, ebay) hoping to get exposure of the item and anyone who is willing to pay their price.
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Permalink Reply by Ira Rosen on
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Two years ago I encountered a situation with a well-known auction house. I consigned an item with a reserve. A day before the auction was scheduled to end, the high bid was below my reserve. With a few hours left, a bid jumped over my reserve. I received an email almost immediately from the auction house asking if I would be interested in letting the item go for the previous, under-reserve bid. I wrote back asking why they wanted to know that, since the bidding had topped my reserve. They explained that the auction house placed the bid to top my reserve, and if no one topped their bid, I had the options of a) agreeing to accept the under-bid, or b) re-entering the item in their next auction. For the purposes of this discussion, that would be considered shill bidding, correct?
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