A big-time east coast sports collector decided to liquidate his collection. What he didn’t tell Robert Edward Auctions was that his stash had been obtained from the sale of stolen prescription drug samples.
There were hundreds of pieces of valuable sports memorabilia.
Vintage signed baseballs from Babe Ruth, Lou Gehrig, Ty Cobb, Honus Wagner and other Hall of Famers. Team-signed balls from the 1930s and 40s. Over 3600 autographs and other pieces of history tucked into every nook and cranny. The type of collection that would put you on the ‘A’ list of any auction house in the country.
Bill Stracher was a drug store owner in Paterson, New Jersey with a passion for baseball memorabilia and he wasn’t afraid of spending large amounts of cash to feed what seemed to be an insatiable desire for the stuff.
According to prosecutors, though, he was also making a killing in the drug store business by selling stolen prescription drug samples to unknowing customers.
Stracher, who actually lived near a Vermont ski resort but operated Sussman Drugs in Paterson, was charged in the fall of 2007 with the sale of millions of dollars in drug samples and laundering the proceeds by purchasing sports memorabilia with money orders. He’s currently awaiting sentencing.
Also arrested that fall was 52-year-old Luther Manning, a Wyeth Pharmaceuticals sales representative who was charged with stealing doctors’ samples and providing them at low cost to Stracher.
In the summer of that year, months before his scheme would unravel and anyone knew how his collection had grown so quickly, Stracher and his wife Toni had made a consignment deal with Jersey-based Robert Edward Auctions to liquidate 1678 items in the well-known collection. Many would later sell in REA’s 2008 spring catalog auction, but not before REA withstood an expensive legal fight with the state of New Jersey over which entity was entitled to dispose of the collection.
REA is now suing the Strachers for breach of contract, fraud and misrepresentation. The auction house is seeking compensatory damages, punitive damages and attorney’s fees, plus interest and costs of suit. The company also continues another court fight over earlier attempts by the Bergen County prosecutors office to acquire the collection and sell it through a local auctioneer who had little experience selling such items.
When Stracher was arrested after an investigation by state and federal authorities, law enforcement officers showed off a collection of sports memorabilia to reporters as evidence of his illegal activities. It turns out many of those items had already been dismissed by REA as likely counterfeit or of little value. The memorabilia REA and authenticator James Spence had deemed genuine and worthy of auction had already been picked up by REA and was stored in its underground vault.
REA president Rob Lifson learned of Stracher’s arrest through a story in Sports Collectors Daily on November 16, 2007. He contacted the prosecutor’s office, informing them that the authentic pieces were in his possession. Lifson says prosecutors at first agreed that REA should proceed with the sale of the Stracher collection, with the resulting proceeds and any unsold memorabilia to be turned over to the state. Lifson contends that his firm had already spent “tens of thousands of dollars” to process, identify, group, photograph, describe, grade, catalog, insure and organize the hundreds of valuable but disarrayed pieces that made up Stracher’s holdings.
REA made plans to include Stracher’s collection in the upcoming auction, but in mid-December, the state filed a motion to void the consignment agreement, saying it had title to the collection. The state’s plan was to have Caspert Asset Management, a local auction company, handle the sale. REA objected on legal grounds and a judge turned down the request, but in mid-February of 2008, the state made a second attempt to acquire the collection. A different judge again sided with the auction company saying that removing the items from REA’s auction would have “a dramatic, if not disastrous impact on REA’s business.”
The state’s attempt to take control of the collection came despite its acknowledgement that REA had saved it from potential embarrassment with its phone call in late 2007, instructing the state that the items it had seized were likely fakes.
Two months later, many of the 148 lots taken up by the Stracher collection were sold in the company’s annual catalog auction. By this time, Lifson claims the saga had diverted REA from “devoting its full time and resources to the remainder of the Spring 2008 auction, therefore reducing its overall profit”.
After the auction, REA sent the state a check for $315,590 representing items sold in the REA catalog and SC Gaynor, which had liquidated a smaller part of the collection, sent another for $3576.96. The unsold memorabilia was also shipped to the state, which had begun to seize the Strachers’ financial assets.
In March of this year, the Strachers signed a consent order with the state admitting the memorabilia had been acquired through illegal means. Lifson said he was never made aware of the consent order and that the Strachers admission constituted a breach of contract since the consignment agreement included Bill Stracher’s signature promising that he had legal ownership of the items. In fact, since the items had been purchased with laundered funds, Stracher was admitting he didn’t legally own them when he consigned them to REA.
Court papers obtained by Sports Collectors Daily state that “REA was forced to spend many hours of time and expense on litigating the issues created by the Defendants, thereby reducing REA’s profit on the sale of the Stracher Collection.”
While REA profited from the consignment fees associated with the sale of the large collection, Lifson claims he had spent much more than that amount in legal fees in an effort to prove the state was overstepping its bounds in attempting to take over the sale of the collection.
On April 21, REA attorney Barry Kozyra sent the Strachers’ attorney a letter offering to settle its claims for $80,000 to cover costs associated with defending its rights under the consignment agreement, but the offer was not accepted and last week, REA filed the civil lawsuit in Superior Court, Somerset County, New Jersey.