A Southern California-based business entrusted with submitting cards for grading on behalf of customers has filed for bankruptcy.
In its Chapter 7 filing this week, Marx Cards, owned by Michael Minjares, listed assets of $89,981 and liabilities of over $1.36 million.
The list of creditors includes hundreds of people across the country who submitted cards to Marx for grading with PSA and are still waiting to get them back. Hundreds of thousands of dollars in loans were also listed in the filing.
Marx, which had been approved by PSA as a group submission outlet, indicated it had taken in over $954,000 in 2020, had $4.4 million in revenue during 2021 but because of its debts, ran out of money in August.
Group submissions allow multiple collectors to submit cards through a third party intermediary who handles the process of organizing paperwork, delivering the cards to grading companies and shipping them back to customers, typically at a cost savings. Some also offer screening services and other benefits.
In its Statement of Financial Affairs through its attorney, Marx indicated it was “essentially an Instagram contact business” in which users contacted Marx through that platform to submit cards on their behalf. As a group submitter, Marx would take a small profit in exchange for its services, promising faster turnaround times and lower costs. However, the company says the suspension of PSA’s lower cost services last year resulted in a disruption of its revenue. After ramping up its business in 2020 including the opening of a storefront, Marx says it “was in so much debt that all revenues were being absorbed by the daily and weekly payments to merchant banks which made loans to the business.”
When some of the orders Marx had submitted to PSA were completed and money was due, Minares stated his company stated it didn’t have the funds available to pay. One shop owner in Ohio who had submitted cards through Marx on behalf of customers, has stated he flew to Southern California and paid for them himself so he could return the cards to those customers, even though he’d already paid Marx for the same work.
In the bankruptcy documents, Marx blamed PSA’s 2021 shutdown of most service levels on much of its troubles, but also cited another business’ failure to pay some $60,000 it was owed and two bookkeepers it hired. In its filing, Marx indicated the bookkeeper paid herself about $50,000 more than the $48,000 per year salary she was supposed to receive. Both of the company’s bookkeepers left their jobs in November of last year. It also says a customer failed to pay a $60,000 debt to the company related to card grading.
PSA has pledged to complete the process of grading the thousands of cards collectors had sent to Marx at no cost, but indicated the situation was complex because of the volume of cards that had been submitted through Marx. PSA still has to match some of the thousands of cards still in its authentication and grading process belong to the Marx customers who submitted them.
“It’s going to take some time to sort it all out,” admitted PSA President Kevin Lenane on Wednesday. He indicated PSA would be making changes to its group submission requirements, including the collection of a 50% upfront deposit instead of charging customers for the full amount when their cards have completed the grading process.
Related Stories:
Notes: Mahomes+Burrow=$1.1 Million; PSA Backlog; Hoops Premium Sets; Dominguez Buyer; More
Notes: PSA Rolls Out Allocated Economy Subs; PWCC Goes Weekly; Marco Rol Passes; NY Show, More
PSA Graded More Cards in September Than Any Month in Company’s History
PSA Grading Tally: Over 2 Million Trading Cards Since June
Notes: Topps Deal Update; Big Herbert Card Sold; PSA’s NSCC Numbers; Jersey Auctions; More
PSA Again Expands Space to Increase Capacity
PSA Hires Long-Time Collector for New Customer Experience Role
Notes: Namath Rookie Jersey, Pujols Memorabilia Auctions; PSA Backlog Update, Show Pix
