Government prosecutors are asking a judge to put the former president of Mastro Auctions in prison for 20 months.
In a response to a sentencing memorandum by Bill Mastro’s attorneys filed last week, assistant U.S. attorneys Derek Owens and Steven Dollear say the sentence would serve as a deterrent to others in the sports memorabilia business.
Mastro has pleaded guilty to fraud charges, including shill bidding, while his company’s large catalog auctions over a seven-year period.
Mastro attorney Michael Monico cited Mastro’s remorse, his lack of prior criminal activity and letters of support of family and friends in his missive to Judge Ronald Guzman in asking for probation and community service time when a decision is handed down next Thursday in a Chicago courtroom.
However, prosecutors told the judge that while Mastro demonstrated knowing right from wrong, he spent seven years of his business life trying to “advance his own interests through a series of lies and using his power as CEO of the auction house to serve himself and defraud others.”
Dollear and Owens say FBI investigators found shill bidding on over 1,300 lots the company offered for sale from April 2007 through February 2009, after Mastro learned of the FBI investigation and had ordered earlier bidding records destroyed. That fact, prosecutors say, “would suggest that the volume of shill bidding was greater prior to 2007.”
The two prosecutors also cited a secretly recorded conversation in 2008 between Mastro and a confidential witness in which Mastro admitted what he’d denied for years, that he had trimmed the T206 Honus Wagner card from a larger piece before submitting it for grading. In the conversation, Mastro also stated vintage sports cards were being altered without disclosure at an “unbelievable” pace, many cut from sheets and many sold via his company.
Mastro could have faced more than five years in prison in addition to the $250,000 fine he’s already paid, but the Chicago area resident has been cooperating with investigators and prosecutors who ultimately charged three other employees for their part in the scheme. Former Mastro IT director Bill Boehm was sentenced to a fine and probation earlier this summer while former company president Doug Allen and fellow executive Mark Theotikos await their fate.
Prosecutors told the judge Mastro used fraud to grow his company into the hobby’s largest auction house and advance his own interest “whether he was cheating a bidder out of a certain sum or keeping a consignor happy with a protective bid.”
Mastro Auctions was undeniably successful. The government lawyers say Mastro was making approximately $41,000 a month as early as 1996. In 2004, he sold his stake in the company, receiving $3.5 million. He remained as CEO after the sale and prosecutors say he made approximately $500,000 a year between 2003 and 2009 and lives in a $600,000, six-bedroom home in the suburbs.
“Even though defendant has been unemployed since 2009 – he remains a wealthy man,” Dollear and Owens wrote Guzman. “His estimated net worth is approximately $1.3 million. And, this amount does not include approximately $2.5 million in trust accounts set up by defendant for the benefit of his family. Thus, defendant did not need the money he obtained from driving up bidders at auction– but instead appears to have been driven by a perverse desire to be the best and beat out the competition at any cost.”
Imploring the judge to deliver a sentence that would keep Mastro in prison for more than a year and a half, the attorneys said “to impose a lesser sentence, such as probation, would suggest that defendant’s decision to commit himself to charitable ventures – rather than ending the fraud – was somehow a valid one. When in reality good works for certain people does not excuse defrauding others.”
The lengthy investigation has been a cloud hanging over the sports memorabilia industry and there’s little doubt both agents involved in the ongoing probe and attorneys working on the government’s behalf are hoping Guzman sees Mastro’s misdeeds as an offense serious enough to warrant more than a slap on the wrist and sizeable fine.
“Ultimately, the deterrence message that needs to be conveyed is that regardless of industry or position, those that cheat others and use inside information to their own advantage will be met with significant consequences,” Dollear and Owens wrote. “This deterrent message would be lost if the CEO of a company that oversaw a seven-year scheme and destroyed records related to the scheme was sentenced to probation.
“For others in the auction industry with authority similar to defendant, a 20 month sentence will make clear that if law enforcement puts in the time and effort necessary to prove up shill bidding – the court will meet the conduct with a significant consequence.”