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FBI Investigation Looms Over the 2011 National Convention

Posted 6/17/2011 22:03 | Filed under Third Party Authentication | Comments (0)
A month and a half from today, sports memorabilia collectors and dealers from all over the country will convene at the 2011 National Sports Collectors Convention in Rosemont, just outside Chicago. The location may be appropriate, because the Chicago office of the FBI has been investigating the sports memorabilia business for the last four years and may be ready to announce its findings any month now. FBI agents have questioned numerous individuals at the last few National Conventions and it would surprise no one if they showed up in Rosemont as well.

The FBI's investigation began with 2007 allegations that Mastro Auctions (based in suburban Chicago) was involved in shill bidding, card doctoring and other fraudulent activity. Mastro Auctions, which was the industry's largest auction house, shut down in 2009 as its reputation went down the toilet. The FBI investigation has been thoroughly reported by Michael O'Keeffe at the New York Daily News.

If the investigation results in indictments, which seems likely, the sports memorabilia business will suffer a major black eye. But how big? It seems unlikely the FBI would spend four years looking into the actions of just one auction house. In fact, a, August 2008 article by O'Keefe regarding Mastro Auctions notes that "federal agents investigating fraud in sports collectibles questioned employees of Professional Sports Authenticator, the hobby’s top card grading service" and regarding the famous T-206 Honus Wagner card graded 8 by PSA sold for a record $2.8 million in 2007, "a former PSA authenticator has said the company knew the card had been doctored."

It has been frequently alleged within the hobby that PSA has given preferential grades to its best customers, such as Mastro Auctions, and by the same token, PSA/DNA is much less likely to decline to authenticate autographs submitted by its best customers. To see just how tight PSA was with Mastro Auctions, note that four years after the fact, on PSA's website there is STILL an article boasting about Mastro's big sales in 2007.

I don't have any first hand knowledge of what will come of the FBI investigation, but I do know this. It's been more than a decade since the last big FBI bust, Operation Bullpen. This business unfortunately has more fraud going on right now than back then, thanks to the internet and a general feeling by fraudsters that the FBI doesn't care about this business in a post 9/11 world. Just look at all the obviously bogus autographs that is flooded with, for instance. Regarding third party autograph authentication companies such as GAI, JSA and PSA/DNA, it's long been my suspicion that individuals within those companies have knowingly cooperated with forgers.

I believe the length of this investigation means that the more the FBI has dug, the more fraud they've found. A major FBI bust in this business will temporarily hurt sales of all dealers selling sports memorabilia, including me. However, I will be the first to tell you that I can't wait for it to happen. I hope all the scumbag competitors I've run across on and elsewhere on the internet get busted. Then they can practice forging signatures from behind bars.
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