Once one of the hobby’s most powerful players, Bill Mastro will soon be an inmate.
The former owner and CEO of Chicago-based Mastro Auctions was sentenced Thursday in U.S. District Court to 20 months in prison. The sentence matched the recommendation of government attorneys prosecuting the case.
Mastro, 62, has already paid a $250,000 fine after pleading guilty to fraud, including artificially raising prices on bidders in his auctions through systematic shill bidding in which company employees placed bids to drive up prices, ultimately forcing customers to pay more. The scheme, prosecutors said, took place from 2002-2009 and involved other Mastro employees’ participation. If the shill bids ever won the item being auctioned, Mastro or his colleagues would cancel the sale.
As per the orders of Judge Ronald Guzman, Mastro will not be subject to supervision following his release from the Bureau of Prisons.
Mastro also admitted he sold phony and altered memorabilia, including a T206 Honus Wagner baseball card whose sides he had cut with a paper-slicing machine, and a purported 1869 Cincinnati Red Stockings trophy ball that Mastro knew contained paint manufactured after World War II. For years, Mastro publicly stated that he had done nothing to the Wagner card, despite suspicions within the hobby.
Judge Guzman ordered Mastro to begin serving his sentence no later than Nov. 30, 2015.
“The long-running and systematic nature of the scheme undermines confidence in the auction house and sports-memorabilia industries, and calls into question the true value of merchandise,” said Assistant U.S. Attorney Steven J. Dollear. “The defendant’s ultimate goal was to beat the competition and garner more business for his auction house, and, in the end, more money for himself.”
After a lengthy investigation, a federal grand jury indicted Mastro on fraud charges in July of 2012. Plea agreements reached in 2013 were ultimately rejected and the investigation continued.
In a response to a sentencing memorandum by Mastro’s attorneys that asked the judge to keep Mastro out of jail, assistant Dollear suggested last week that a 20-month prison sentence was appropriate. The hope was that it would serve as a deterrent to others in the sports memorabilia business and force Mastro to pay a stronger price for the severity of his actions.
Owens and Dollear say FBI investigators found shill bidding on over 1,300 lots Mastro offered for sale from April 2007 through February 2009, after Mastro learned of the FBI investigation and had ordered earlier bidding records destroyed. Prosecutors believe that discovery “would suggest that the volume of shill bidding was greater prior to 2007.”
Mastro has been cooperating in related FBI investigations into his company and the sports memorabilia industry and doing so likely played a major role in lessening the time he will spend in federal prison. Through his attorneys’ pre-sentencing memorandum, he pledged never to return to the sports memorabilia industry.
Mastro admitted in the plea agreement that he cut the Wagner card’s side borders, and then concealed that information when he sold the card in 1987. Mastro again failed to disclose his alteration even after participating in subsequent auctions of the card in 1991 and 2000. The sale in 2000 produced a purchase price of more than $1 million. Mastro also failed to disclose that he cut the Wagner card again in 1992, even though he was aware that the card had been submitted to become the first baseball card assigned a grade based on the condition of the card. The PSA 8 Wagner last sold for $2.8 million, prior to Mastro’s indictment.
Mastro sold the alleged 1869 Cincinnati Red Stockings trophy ball to a collector in 2006 for $62,000, even though he was aware that it had previously been returned to the auction house by a prior buyer who had conducted laboratory testing on it. The testing had shown that the trophy ball contained paint that was manufactured after World War II, casting doubt on the ball’s authenticity. Mastro did not inform the 2006 collector of the laboratory testing.
Mastro Auctions, which also operated under the names Mastro Fine Sports and Mastro Net,specialized in sports memorabilia but also featured coins, art, and Americana collectibles. Most items were consigned to Mastro by their owners, but the house also owned some of the items it sold. Mastro had sold the company in 2004 but stayed on as its chairman and chief executive officer until its closure in 2009 amidst the federal investigatioin.
Mastro is one of four former Mastro Auctions employees, including three executives, who have pleaded guilty in connection with the fraud scheme. Former company president Doug Allen and fellow executive Mark Theotikos are scheduled to be sentenced in October.
Allen, 52, served as president and chief operating officer from 2001 to 2009, then headed Legendary Auctions. He pleaded guilty to one count of wire fraud. Theotikos, 54, worked for Mastro Auctions from 1996 to 2009 as vice president of auction operations and acquisitions. He pleaded guilty to one count of mail fraud. Bill Boehm, 66, of Ballwin, Missouri, worked for Mastro Auctions in information technology. He pleaded guilty to one count of making false statements to agents of the Federal Bureau of Investigation who were probing the company’s practices. Boehm was given two years of probation in June.
Where Mastro spends his sentence will be determined when he enters the Federal Bureau of Prisons system, likely within 30 days.