FBI looking into a number of industry auction houses

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Publish date:
Aug 2, 2010

(This story originally appeared in the NY Daily News)

BY Michael O'Keeffe
DAILY NEWS STAFF WRITER

Dave Grob has been sounding the alarm for years: The future of sports memorabilia is at stake if the scandal-stained industry doesn't clean up its act. Legislators will impose onerous regulations on dealers and auction houses, Grob warned years ago. Memorabilia executives will go to jail. Collectors, tired of spending money on forged autographs, doctored trading cards and counterfeit jerseys, will take their money and their passion elsewhere.

Grob, the policy director at Memorabilia Evaluation and Research Services, a prominent authentication firm, urged hobby leaders to form a self-policing trade association. Industry leaders told him it was a great idea, he says, but nobody did anything about it. When MEARS developed policies in 2007 that it hoped would eliminate the blatant conflicts of interest and lack of transparency that dog sports memorabilia, only one company - Robert Edward Auctions - signed on.

Grob says he fears his dire predictions are about to come true, now that the third major federal investigation into sports memorabilia in 15 years appears to be winding down.

"I can't imagine the government spent all this time and energy into this investigation if they think there is nothing there," Grob says. "This will not be good for the industry."

Grob and more than a dozen other sports memorabilia dealers, authenticators and collectors interviewed by the Daily News say they expect federal agents will be at the National Sports Collectors Convention when it kicks off in Baltimore on Wednesday. Most also believe the Chicago grand jury investigating the hobby will soon hand down indictments outlining criminal charges against hobby executives. The dealers and collectors say they don't know what the charges will be, but they expect several prominent hobby executives will be indicted, and that the industry's already muddy reputation will be tarnished even further.

The target of the investigation appears to be Mastro Auctions, which was once sports memorabilia's largest auction house but folded in 2009.

The FBI's previous memorabilia investigations, Operation Foul Ball and Operation Bullpen, targeted forgers who flooded the memorabilia market with millions of dollars worth of bogus athlete and celebrity autographs.

But this investigation appears to be far more extensive. Dealers and collectors say agents are focusing on shill bidding, counterfeit memorabilia and card doctoring. Mastro Auctions founder Bill Mastro did not return calls; company president Doug Allen, who now runs Legendary Auctions, declined comment through a spokeswoman.

The government has also inquired about the hobby's "Holy Grail," the T206 Honus Wagner card once owned by NHL star Wayne Gretzky. The card, previously owned by Bill Mastro, is widely believed to have been cut from a sheet decades after it left the printing press and trimmed after that, a cardinal sin in the card hobby. The card is now owned by Arizona Diamondbacks managing general partner E.G. "Ken" Kendrick, who bought it for $2.8 million in a private sale in 2007.

Executives at other companies could also be dragged into the investigation - and that could have a devastating impact on the hobby, collectors and dealers say.

"Everybody knows Mastro Auctions is a target, but they've already gone out of business," says one dealer. "But if somebody from a card-grading service or an authentication service is charged with fraud, that could impact thousands of collectors and raise questions about millions of dollars worth of memorabilia and cards."

Denver collector Marshall Fogel, a longtime friend of Bill Mastro, has invited prominent collectors and dealers to a meeting at the National, apparently to discuss the investigation. A message posted on Net54Baseball.com, a collectors' Internet forum, said the purpose of the meeting is to examine "the national consequences that are about to occur causing damage to the reputation and the past financial successes of our industry."

Agents from the FBI and United States Postal Service crashed the past two conventions to interview dealers and authenticators and deliver subpoenas requiring executives to produce records or appear before the grand jury, and the list of executives contacted by the agents represented the biggest names ins sports memorabilia, including Grey Flannel, Heritage Auctions, B&E Collectibles, Historic Auctions, Hunt Auctions, SportsCard Guaranty, Lelands, Professional Sports Authenticators and Legendary Auctions.

Grob says collectors who once accepted the forged autographs and counterfeit jerseys as the price of doing business have grown disillusioned.

"People who bought this stuff are well-heeled and smart," he says. "They are not willing to put up with this any more."

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