Shanus-REA suit

[Kenny Cole]

Wow, you actually get to have oral argument in state court appeals? I think the last time I did that was about 20 years ago. I go argue writs (in front of a referee) out at the state Supreme Court fairly frequently, but they practically never hear oral argument in actual appeals. My partners and I get to go visit with the esteemed jurists in the 10th Circuit occasionally (not by choice), but that never happens in state court. I remain conflicted about whether or not that's a good thing.

[egbeachley]

It seems to me about 1/3 to 1/2 of the auction houses have had "problems". Way, way higher than the other professions.

[WhenItWasAHobby]

Originally Posted by egbeachley

It seems to me about 1/3 to 1/2 of the auction houses have had "problems". Way, way higher than the other professions.

What I'd like to see is how many of these auction house honchos would be willing to take polygraph tests to assure the collecting community that they've never engaged in shill bidding, card doctoring (actively themselves or knowingly through a third party), allowing items of questionable authenticity to be embellish as the "real deal", consigning their own items without disclosure, and the list goes on.

As I recall, recently one auction house boss was already given that challenge on this board to deny just one of those issues on a polygraph and best my knowledge never accepted that offer to "clear the air".

[pwilk17]

Originally Posted by WhenItWasAHobby

What I'd like to see is how many of these auction house honchos would be willing to take polygraph tests to assure the collecting community that they've never engaged in shill bidding, card doctoring (actively themselves or knowingly through a third party), allowing items of questionable authenticity to be embellish as the "real deal", consigning their own items without disclosure, and the list goes on.

As I recall, recently one auction house boss was already given that challenge on this board to deny just one of those issues on a polygraph and best my knowledge never accepted that offer to "clear the air".

I would also like to see the owners and managers of third party authentication companies take these polygraph tests as well. It would be nice to find out who the true good guys are.

[calvindog]

I'd also like to see certain posters on this board take IQ tests.

[19cbb]

Forget the Cowbell... What this lawsuit needs is more Halper!

[Peter_Spaeth]

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After 7 years, this case recently went to trial, and the jury reached a verdict several days ago. I was able to download in PDF form the verdict sheet and the jury communication regarding punitive damages from PACER, but you would need a PACER ID to see them. If I can figure out a way to post the PDFs in full, I will.

In the meantime, this is what happened, based on my review of the publicly-accessible record which of course is all I know.

While there were several counts in Mr. Shanus' Amended Complaint, the only one that went to trial was Count II, which charged Mr. Lifson and REA (Robert Edward Auctions, LLC, which subsequently changed its name to R.L. Americana, LLC) with fraud, and specifically, with "engag[ing] in a systematic scheme of misrepresenting and reporting sales with the intent of artificially inflating the auction prices of items being offered for sale." The Amended Complaint alleges as examples of such items the "Origins of Baseball Letter" and the "Fashion Course Trophy Ball," and alleges that the purchase prices of these items in REA's auction were "false and fraudulent." Those two items, and no others, are mentioned in the verdict sheet.

The jury answered a series of questions tracking the elements of fraud, separately against each defendant. It answered all questions in the affirmative.

The jury awarded no damages against the REA entity, and $55,100 against Mr. Lifson. The jury also awarded punitive damages against Mr. Lifson of $52,900.

A couple of notes:

1. This has nothing to do with Bryan Dwyer.

2. This is a civil case and there may, of course, be post-trial motions and/or an appeal.

3. I don't know the evidentiary basis for the jury's findings. Beyond the pleading stage, most of the significant filings and even the court's summary judgment opinion were not publicly-accessible through PACER, which was frustrating to me as I tried to follow the case over the years. And the transcripts of the trial, though referenced in the PACER docket, are not publicly-accessible at this time.
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[steve B]

I would have to believe that there are few auction houses where shilling hasn't happened, and those few would be new ones. But there are probably only a few that have done the shilling themselves. In theory I could consign anywhere, and have a friend bid on my items. Pretty hard to prove, and harder to stop.

I also have to believe that every auction that's been around long enough has handled an item or two that is either fake, altered, or stolen. Stolen stuff because the item isn't widely known as stolen. Altered stuff - Maybe the alteration was done well enough to pass inspection at one time, but newer technology has made it possible to detect the alteration. And some fake stuff can be well done enough to get past many experts. Nobody can catch 100% of the questionable items unless they have access to a lot of lab gear and time. And even then some stuff would slip through.

The need for third party graders to not buy or sell cards is a tough one. Yes, it's a conflict. But I wouldn't expect someone with no knowledge or interest in cards to be able to authenticate them. Stamps are authenticated by experts in a particular issue. All of them collect, and buying and selling are a part of that.

Steve Birmingham

[calvindog]

Originally Posted by steve B

I would have to believe that there are few auction houses where shilling hasn't happened, and those few would be new ones. But there are probably only a few that have done the shilling themselves. In theory I could consign anywhere, and have a friend bid on my items. Pretty hard to prove, and harder to stop.

I also have to believe that every auction that's been around long enough has handled an item or two that is either fake, altered, or stolen. Stolen stuff because the item isn't widely known as stolen. Altered stuff - Maybe the alteration was done well enough to pass inspection at one time, but newer technology has made it possible to detect the alteration. And some fake stuff can be well done enough to get past many experts. Nobody can catch 100% of the questionable items unless they have access to a lot of lab gear and time. And even then some stuff would slip through.

The need for third party graders to not buy or sell cards is a tough one. Yes, it's a conflict. But I wouldn't expect someone with no knowledge or interest in cards to be able to authenticate them. Stamps are authenticated by experts in a particular issue. All of them collect, and buying and selling are a part of that.

Steve Birmingham

I agree completely. We'll never see an auction system that is free of shill bidding; however, at the very least we should expect auction houses not to engage in fraud themselves.

[ls7plus]

Agree completely with Jeff on that one. It's just so annoying to be so very conveniently cha-chinged right up to but not past your maximum bid near the end of the auction by some of these auction houses. I can think of at least two instances where that's happened to me right off the top of my head. I would think the auction house would have to have been involved in those cases, at least to the extent of tipping off the consignor concerning the maximum bid. Maybe the only thing you can do with auction houses known to have pulled this is to set the maximum bid a few rungs lower than you ordinarily might-- better suggestions?

Good move, by the way, Bill. Oh and by the way, Jeff? My wife tested out at an IQ of 163, and she still doesn't like baseball cards!

Best regards, everyone.

Larry

[the 'stache]

I just read this entire thing, start to finish. All I can say is, I'm so glad I didn't go into law. Studying legal history in college is one thing. I thoroughly enjoyed the hundreds of hours I spent researching precedent cases in Lexisnexis and Westlaw. And every single element of mock trial fascinated me. But the actual practice of law in the real world is so very different than the young idealist in me could have ever anticipated. Jeff, Larry et all, I don't know where you guys find the patience your chosen profession requires. Chapeau.

To briefly touch on the point that was discussed earlier, comparing the amount of corruption prevalent in our hobby to that within the legal and financial realms-there's really no comparison to be made, at all. There are going to be those who engage in nefarious activity in any large group of people. It's unavoidable. Money attracts the unscrupulous. But speaking as one who worked in the investments industry, and is familiar with the oversight and safeguards in place, the kind of underhanded behavior that runs rampant in our hobby could never exist there. Not on that scale.