Kevin Keating responds to shill bidding allegations

[Spahn21]

Hi Al,

Thanks for sharing your concerns with me. Pardon my delay but I had to eat dinner with my family, put my children to bed, make a few phone calls, and do a few other things so I am only getting to your question now as I wanted to wait until I could give it the attention it deserves.

Yes, I did hire an attorney: William Coffield (of Berliner, Corcoran & Rowe, LLP Washington, DC, ). My attorney spoke directly with the FBI and multiple times with the U.S. Attorney's Office. My lawyer has advised me that I do not need a written statement because the U.S. Attorney's Office in charge of the case approved my statement last week. And I’m confident they would corroborate my statement again if you wish to contact them.

This entire episode began for me on Sunday, January 31. I had just returned from a family vacation and put our children to bed. It was about 10:30 at night when I was clearing through emails that had piled up while gone and came upon the one I have copied (verbatim) below from a friend who is also the owner of an auction company and here is what he wrote, in its entirety (save for his name at the end):

Hey Kevin,

Hope all is well with you. Information came out in Doug Allen's sentencing regarding shill bidding. Your name is on a spreadsheet that is circulating on the internet. It makes no sense that you would do something like this, you were probably just bidding. I wanted (you-sic) to be aware of this so you can correct it.

Needless to say, as someone who has NEVER shill bid in any auction, I was more than stunned at the information before me which I was doing my best to process. I spoke with my attorney the first thing the next morning and we immediately began fact-finding to determine what the list was, what purpose it served, and most importantly (to me, anyway): how was it that my name had been added as a “shill bidder”???

My lawyer started making phone calls while I researched the 38 lots. Fortunately, the Legendary website remains operational and I was able to find every lot in question in their on-line archives. While I did not remember seeing everything before (this was 7-8 years ago), I did recall some.

But what was apparent to me was that these were all lots I would have bid on if given a chance.

After that I went to the spreadsheet on Exhibit E and, using a “Control F” search, I consolidated all the entries of my name so that I could evaluate that data more easily.

With all the information on a single page, a few things jumped out at me and raised some additional questions:

1) At first, I did not know who “Historical Collectibles” were. But once I learned that it was a M-L “Shell company”, I realized that everything attributed to me was, in fact, owned by M-L or someone I knew to be a M-L employee, (with one possible exception—Lot 949 in the December 2008 auction);

2) How could I—or anyone—be accused of shill bidding on seven lots I had won—especially when all seven were owned by someone else?

3) How could anyone—in this case, me—be accused of shill bidding on two lots they did not own and for which the loss amount attributed to the shill bidding is ZERO? (see lots 107 & 426 from the August 2008 auction). What's the point on shill bidding something for no monetary gain???

4) The total “loss amount” assessed to the 38 lots comes to $20, 437, an average of $537.81/lot (and twelve of the lots were assigned a loss value of $100 or less each). But I had bid on hundreds of M-L lots during that same, two-year period, so why were these 38 lots selected for inclusion and the hundreds of others were not?

And besides knowing that I had never shill bid, I also knew that in all the discussions I have had with the FBI about the M-L and other investigations, I have never been questioned in any way to suggest that I was ever suspected of complicity in any unethical or criminal behavior. And I have never been asked to provide grand jury testimony, either.

Considering all this and the questions which I had derived from my spreadsheet analysis, I concluded that the only explanation for my inclusion on the list was that M-L had used my account somehow without my knowledge to execute some of its shilling activity--and that use was attributed to me when this list was prepared.

But that presumption was incorrect, and in one of my lawyer’s conversations with the government we were informed that the reason for my inclusion was simply that M-L had violated its own self-imposed code of conduct (COC) under paragraph 2, which prohibits authenticators and others who worked for the auction house from bidding on lots owned by M-L employees. As a stated policy, M-L was therefore obligated to prevent me from bidding on items they or their employees owned. And of course, because no one but M-L had access to information that would identify lot ownership, only M-L could enforce that policy—and, at least in my case, they chose not to do so and let me bid both unwittingly and in good faith on those lots.

Thus, for the purposes of assessing damages, which was the intent I am told, of Exhibit E, the effect of both a shill bid and a prohibited bid (as is the case of my bids) is the same to the lot winner because both bids will theoretically result in a higher end price for the winning bidder. And this list was prepared to look at the monetary damage assessment, a.k.a., "loss amounts." And, in my case, when compiling the list my name was co-mingled with others since no distinction was made between bids that were executed in good faith like mine (but were prohibited by M-L rules) and those that were actual shill bids.

These are the facts. I realize that they may not be enough to satisfy everyone but my goal is not to please everyone or to make everyone like me--I think I gave up on that goal back in kindergarten! My goal is simply to present the facts--convoluted as they are--in a coherent, logical way so that they may be readily understood. If I can achieve that, I am confident that fair-minded people will conclude that I did nothing wrong.

Again, thanks Al for asking your question—Kevin K.