Mastro/Legendary Article in Today's NY Daily News

[slidekellyslide]

I thought I read on this board or maybe another years back when Forman took control of SGC that he was divesting his collection so as not to have any conflicts of interest as a collector/dealer and grading company owner. Am I wrong about that?

[Rob D.]

It goes without saying that if Mastro wasn't liquid enough to pay consignors before receiving payment from buyers, then it was incredibly stupid to deliver items before receiving payment.

But for people to post today how terrible such a practice is in theory when previously praise was heaped on REA for doing the exact same thing (that is, shipping before receiving payment), that's the very definition of Monday morning quarterbacking.

[Jim VB]

"...that's the very definition of Monday morning quarterbacking. "

Agreed. But that's what we do best, so we're sticking with our strengths!

[oldjudge]

Rob--What Mastro did was working when they had credit lines they could draw on. I would guess that they went out of business when these lines dried up and Silk Road would not advance any more money to make good on these obligations. So, that would imply that this mess is a function of bad credit decisions and some exogenous factors.

[Exhibitman]

Originally Posted by oldjudge

Rob--What Mastro did was working when they had credit lines they could draw on. I would guess that they went out of business when these lines dried up and Silk Road would not advance any more money to make good on these obligations. So, that would imply that this mess is a function of bad credit decisions and some exogenous factors.

The primary factor was endogenous, not exogenous: breaching their own consignment contracts by sending out unpaid items. BTW, had to look up "exogenous"; good one!

[Rob D.]

Originally Posted by oldjudge

Rob--What Mastro did was working when they had credit lines they could draw on. I would guess that they went out of business when these lines dried up and Silk Road would not advance any more money to make good on these obligations. So, that would imply that this mess is a function of bad credit decisions and some exogenous factors.

By no means am I trying to say that Mastro was in the right when it shipped items before being paid. I'm not. All I'm saying is comments like the ones below, which demonize the very practice of shipping before receiving payment, are pretty comical when in fact another auction company is praised for having great customer service for doing the same thing.

"The glaring omission from this article and from everyone's replies, is the fact that the consignments were sent out before they were paid for."

"I was going to bring that up in one of my posts, but was not certain that was the case, but apparently after rereading everything here, it certainly is. What a way to run a business!!"

"How crazy is it that the items were sent prior to payment being received...who does such a thing?"

[sportscardtheory]

Originally Posted by Rob D.

By no means am I trying to say that Mastro was in the right when it shipped items before being paid. I'm not. All I'm saying is comments like the ones below, which demonize the very practice of shipping before receiving payment, are pretty comical when in fact another auction company is praised for having great customer service for doing the same thing.

"The glaring omission from this article and from everyone's replies, is the fact that the consignments were sent out before they were paid for."

"I was going to bring that up in one of my posts, but was not certain that was the case, but apparently after rereading everything here, it certainly is. What a way to run a business!!"

"How crazy is it that the items were sent prior to payment being received...who does such a thing?"

Why are you lumping in my quote when I have never applauded the practice?

[oldjudge]

Adam, I still don't agree. Let me flesh an example:

Buyer A wins a lot in Mastro auctions
Mastro makes a loan to Buyer A for the amount due
Buyer A takes the loan money, agrees to the loan provisions, and hands the money back to Mastro (Mastro has thus received no net funds)
Mastro sends out the lot to Buyer A
Two things have happened; Mastro has been paid and Buyer A owes Mastro the loan amount
Because Mastro has been paid he owes the Consignor and since the lot has been paid for the Consignor has no right to recall it
The Consignor is now due only funds from Mastro and, if not paid, their only recourse is to sue Mastro

This is effectively what happens every time any lot is shipped before a check is received. In some cases there is an interest bearing loan due at some point in the future. In some cases it is a very short term zero interest loan.

[sportscardtheory]

Originally Posted by oldjudge

Adam, I still don't agree. Let me flesh an example:

Buyer A wins a lot in Mastro auctions
Mastro makes a loan to Buyer A for the amount due
Buyer A takes the loan money, agrees to the loan provisions, and hands the money back to Mastro (Mastro has thus received no net funds)
Mastro sends out the lot to Buyer A
Two things have happened; Mastro has been paid and Buyer A owes Mastro the loan amount
Because Mastro has been paid he owes the Consignor and since the lot has been paid for the Consignor has no right to recall it
The Consignor is now due only funds from Mastro and, if not paid, their only recourse is to sue Mastro

This is effectively what happens every time any lot is shipped before a check is received. In some cases there is an interest bearing loan due at some point in the future. In some cases it is a very short term zero interest loan.

lol, which can all be avoided by holding the item until it is paid for. When all you have to do is close up shop and change your name to relinquish your debt to your consignees, it is now simply a fraud perpetrated upon unknowing victims. So, you are sticking up for a fraud.

[oldjudge]

Wrong again--I think that Legendary starting up before all Mastro consignors were paid is very wrong (and very stupid). What I am defending, subject to good credit analysis, is the practice of shipping lots before a check is received.