Heritage Auction

[glchen]

I don't think Heritage has addressed the question on whether an employee at Heritage guaranteed authentication on a ball on ebay.

Second, the house bids are really shady. I bid frequently at Heritage, and I never knew about this. To me, this is still shill bidding. They should change this to a reserve price if they wanted to be in the clear.

Heritage used to be in the top tier of auction houses in my opinion, especially because of their volume and their great website, which is probably the best of all auction houses. They've dropped to the 2nd or 3rd tier now.

[oriolesbb6]

I would also like the issue addressed on the note or lack there of? Secondly, how many emails are appropriate when a customer has questions or concerns? Lastly, agreed-reserve the items-in house bidding represents a touchy subject-if you are pushing an item up to a certain amount then isn't that intentionally running up an item-whether at the beginning or end of an auction.........

[HRBAKER]

Factoring out whether the whole concept is good or bad, acceptable or unacceptable, etc.; does the explanation intuitively follow to a bidder from reading the rule in the auction catalog? Also as stated it doesn't seem to me to limit the house to the strictures stated above.

[Leon]

Folks in this thread will not be able to remain private. Just a heads up....

[sports-rings]

I have to word this response very carefully. I too have lost a lot of respect for Heritage during the last couple of years.

I was concerned about one of their consigments in an auction this year and I mentioned to them I wanted to discuss this item on this board. I was told that if I did this, I was opening myself up to a lawsuit for liable. I won't go into the details of this situation but I was warned not to discuss this matter. So I never posted my concerns on this board.

Furthermore, a couple of years ago, I tried to purchase an item from the family of an old-time ball player. I thought we had a done deal but the family decided to sell the item to Heritage. It wound up in their catalog without any disclosure that it was owned by them.

[barrysloate]

Jonathan- if Heritage bids so low that they virtually never win anything, why conduct this practice at all? On the positive side you win virtually nothing and accomplish little; on the negative side you create a great deal of suspicion and a boatload of bad will, since nearly 100% of your customers would likely hate this practice.

I believe you when you say it is done a week before the auction closes, and I understand the distinction you make between placing early bids and shilling. But how could Heritage risk the reputation it has built over decades, with the only thing to show for it is a few stray lots that slip between the cracks?

Sounds like the risk far outweighs the reward.

[Matt]

Also, I'm not sure I follow the distinction he makes - the difference between this and shilling is that these bids come in before competitive bidding starts and shill bidding takes place after? Before/After the start of "competitive bidding is an imaginary line.

[HRBAKER]

Is the conventional wisdom and the borne out experience of auctioneers regardless of field that starting an item with an opening bid of the lowest acceptable amount for a lot as oppposed to a low opener with a hidden reserve stifling to participation and routinely results in lower amounts realized for lots?

That would be interesting to know if it was possible to draw a hard conclusion. I am assuming it would have something to do with the psychology of the bidding/have to win process.

Sorry for the wordy question.

[perezfan]

Originally Posted by barrysloate

Jonathan- if Heritage bids so low that they virtually never win anything, why conduct this practice at all? On the positive side you win virtually nothing and accomplish little; on the negative side you create a great deal of suspicion and a boatload of bad will, since nearly 100% of your customers would likely hate this practice.

I believe you when you say it is done a week before the auction closes, and I understand the distinction you make between placing early bids and shilling. But how could Heritage risk the reputation it has built over decades, with the only thing to show for it is a few stray lots that slip between the cracks?

Sounds like the risk far outweighs the reward.

This question from Barry was well articulated, and really cuts to the heart of the matter.

I will be eager to hear the response from Heritage, as it really seems "the juice ain't worth the squeeze"

[RichardSimon]

The thing I find probably most annoying in this whole mess is that Heritage will not stand behind their employee, Mr Gutierrez. What is the point of having executive employees rendering opinions on authenticity if the auctioneer won't stand by that opinion.
I guess they really have no intent to stand behind their employees. How can you have faith in an auction house that operates in this manner?
---

[sago]

There is always the chance for impropriety if employees can bid, consign, etc. for the auction house where they work.

If it's that important or necessary for employees to consign an item, or for Heritage to both buy and broker the sale of items, then have a separate section in your catalog for those lots. Since it's such a simple concept that most people already understand, I'm sure the employee and Heritage lots would do just as well.

From HA.com
21. The Auctioneer, its affiliates, or their employees consign items to be sold in the Auction, and may bid on those lots or any other lots. Auctioneer or affiliates expressly reserve the right to modify any such bids at any time prior to the hammer based upon data made known to the Auctioneer or
its affiliates. The Auctioneer may extend advances, guarantees, or loans to certain consignors.

22. The Auctioneer has the right to sell certain unsold items after the close of the Auction. Such lots shall be considered sold during the Auction and all these Terms and Conditions shall apply to such sales including but not limited to the Buyer’s Premium, return rights, and disclaimers.

My question on HA 21: Heritage employees and the house itself are allowed to bid on the same lots they consign. Perhaps a clarification such as "up to and including the pre-determined reserve amount" would help eliminate some shill bidding questions, and possibilities.

My question on HA 22. "Such lots shall be considered sold during the Auction": Is this the Heritage equivalent of a lot being "passed"? If so, is the final price indicated in the HA archives as sold, thereby skewing the sales results for the item?

I'm not sure if these questions will get answered, but here they are.

David Davis

[gordonanalytic]

I think that it would be best to avoid Heritage altogether. The arrogance of the employees is shocking. There are too many other decent auction houses, and we should give the alternatives our business. The fact that one of their legends in the business, Mike Gutierrez had his "opinion" on a Mickey Mantle signature contradicted by PSA, the people he used to work for, should be embarrasing to the company. If he can't get that right then why deal with them. Where is the accountability?

PS.... A cyber-attack? A bit of hyperbole. Some of my more creative employees in IT came up with interesting ideas to share with the folks at Heritage.

120 emails. Sounds like excellent communication. How many were for consignments?

[Jim VB]

Originally Posted by gordonanalytic

I think that it would be best to avoid Heritage altogether. The arrogance of the employees is shocking. There are too many other decent auction houses, and we should give the alternatives our business. The fact that one of their legends in the business, Mike Gutierrez had his "opinion" on a Mickey Mantle signature contradicted by PSA, the people he used to work for, should be embarrasing to the company. If he can't get that right then why deal with them. Where is the accountability?

PS.... A cyber-attack? A bit of hyperbole. Some of my more creative employees in IT came up with interesting ideas to share with the folks at Heritage.

120 emails. Sounds like excellent communication. How many were for consignments?

Gordon,

There's 2 distinct issues here. First is whether a retail enterprise has the right to terminate business dealings with a customer that they haved deemed to be overly troublesome, by their definition. Clearly, they do. They are not obligated to do business with you if they so choose. Many retail stores do the same thing. More and more, retailers are keeping track of customer profiles (e.g. - frequent buying and then returning items.) Some customers will find themselves banned, even from stores like Target or Best Buy.

The second issue is whether or not the bidding practices of Heritage are legal and/or a smart business practice. They are legal. Period. The jury is still out for the smart business practice part, at least for me.

[RichardSimon]

If they won't stand behind the opinion of Mike Gutierrez, regarded by some as a major authority on autographs, then what kind of company are they.
There are some people in the autograph hobby who regard Mike Gutierrez' opinion on autographs as the gold standard. Apparently his own employer does not deem that worthy of their support.
In the interest of full disclosure the consignor has contacted me, asking about other signatures and then telling me about this matter.
---

[gordonanalytic]

DALLAS, Sept. 11 /PRNewswire/ -- A racketeering lawsuit aimed at Heritage
Auctions and its top executives was expanded Wednesday, when a prominent
Montana businessman joined the charges against what has been termed as a
"massive auction scam." The suit charges the defendants used a secret,
undisclosed shill, or fictitious bidder, at auctions, so winning bidders paid
inflated prices.

Defendants in the suit are Gregory J. Rohan; Steve Ivy; James L. Halperin;
Marc D. Emory; Paul R. Minshull; Dagmar Byers; and their company, Heritage
Auctions, Inc.

Gary Hendershott, an expert in Civil War memorabilia, was joined in the suit
by Chris Kortlander, a prominent Montana businessman. Kortlander alleges that
he "consigned thousands of individual historical manuscripts and photographs
to Heritage," but was deprived of profit because of Heritage's fraudulent and
deceptive acts.

Mark Senter, attorney for the plaintiff, charged that "the Heritage defendants
use N. P. Gresham, a fake bidder, to rip-off legitimate bidders."

These charges appear to be the latest in a long line of lawsuits filed across
the U.S. charging the defendants with fraudulently manipulating auctions. In
1989 the FTC ordered Heritage to pay $1.2 million in restitution to victims of
Heritage and Halperin who had paid inflated prices for coins. Forbes magazine
reported that on another occasion, an arbitration panel ruled that Heritage
must pay $23 million to another plaintiff.

"Texas law strictly and explicitly forbids shill, or fictitious, bidders at
auctions, but James Halperin, Heritage's Chairman, admitted in sworn testimony at an injunctive hearing that N. P. Gresham does not exist. Yet Heritage later admitted that N.P. Gresham not only bids at auctions, but that no one outside of Heritage knows who Gresham is," said Senter.

According to the lawsuit, the defendants are in violation of RICO by "secretly
bidding in the name of N. P. Gresham at auctions in surreptitious competition
with other valid bidders."

Senter explained that using N. P. Gresham as a ghost bidder results in higher
prices being paid at auctions by innocent, unknowing bidders. The practice
overstates Heritage's ability to effectively get the best prices for items it
auctions.

Depositions in the lawsuit are scheduled to begin in the near future.

[thekingofclout]

True or False. Guilty or Innocent. Damage control on a board of 2200 members should be the least of their concerns...

[baseballart]

Jimmy

A google search shows the lawsuit was started in May 2009 and amended in September 2009.

Here's a link to an article with heritage's response

http://acn.liveauctioneers.com/index...ltants-lawsuit

Max

[glchen]

gordonanalytic:

I know you're understandably upset about this situation and about how you've felt you've been treated by Heritage. However, at this rate, you're probably going to be banned from the board, and deservedly so. You are only further supporting the opinions on why Heritage banned you. Take it was a lesson learned, and the next time you purchase a expensive auto, make sure that there is an LOA from JSA or PSA/DNA.

About the latest Heritage posts, to be frank, I still dislike house bidding. Jonathan mentions that even if they win the item, they have to pay the 19.5% BP. However, who gets that BP? Heritage, of course. Therefore, with house bidding, Heritage is at an advantage even if they win the item. And that "7 day rule" as far as I know, is not written into the Heritage terms and conditions. If it were, I would feel better, because then I would know not to start bidding until 6 days before the auction and just take the current bid as the reserve. I still think that major auction houses should follow REA's standard of excellence, where there is not even the slightest hint of impropriety.

[calvindog]

Jonathan, far be it from me to offer such a humble guy like you some advice, but perhaps Wikipedia is not the best source to be citing when noting litigation results. Second, as per your Wikipedia entry, I noticed that the lawsuit filed by the guy from Montana was simply removed to arbitration. I'm guessing this was done due to the contract he signed with Heritage which held that any disputes would go to arbitration and not a court. I've checked Wikipedia and I'm unable to find out what happened with that litigation; perhaps you can shed some light on this.