Seven months after being sued for money they say he owed them, SGC president Dave Forman has submitted a counterclaim against Mastro Auctions.
The court papers filed January 27 accuse the parent company of the now defunct auction house of several transgressions including shill bidding, a practice that artificially raises bids to generate a higher profit.
The counterclaim obtained by Sports Collectors Daily also states that a grand jury was convened in Chicago last month to see evidence and hear testimony on issues centered around an FBI investigation of unethical practices within the sports collecting hobby.
Forman, the owner of one of the hobby’s largest card grading and authentication services, also claims the auction company knowingly sold him a T200 Fatima Premium Cleveland Americans card that had been altered.
Mastro Auctions, which shut down last year, filed suit against Forman in the same Illinois state court last June, seeking $400,000 it says he owes. In 2007 and 2008, Mastro claims Forman purchased cards but didn’t pay for them. Forman claims Ketap (the name of the corporation that once did business as Mastro Auctions) has not produced receipts in support of those allegations and disputes that figure.
Forman claims the amount he owes Mastro was in error because his account with the auction house was never credited with proceeds from the sale of several lots he had consigned, including a 1934-36 Diamond Stars complete set, a 1933 Goudey Babe Ruth graded PSA 7, a T206 Buck Herzog graded SGC 88 and four rare comic books.
The suit indicates the grading and authentication service owner and the auction house had a long-standing relationship that involved Forman buying and selling cards. Ketap claimed in its suit that “dozens” of rare collectible items and memorabilia were bought and sold by Forman.
Under claims of violations involving the Illinois Consumer Fraud Act, Forman now says Mastro made unauthorized bids to raise prices during its auctions using Forman’s account as well as those of other, unnamed individuals.
“Ketap and its officers knowingly conducted rampant fraud through a process known as shill bidding,” the claim states.
Forman claims that in a 2006 auction “a Ketap employee shill bid on a Ted Williams baseball card when, upon information and belief, he neither had the money or interest in owning it.”
Another of Forman’s shill bidding allegations states that in May of 2006, company officials artificially raised the bidding for an L-1 Leather Ty Cobb. “The item was then selling for $17,000,” the court papers state. “During that converstion, Mastro learned that the collector would pay a maximum bid of $41,000 for that item. Minutes later, a bid of $41,000 was placed on that item which would have triggered the collector’s maximum bid. Upon information and belief the $41,000 bid was the result of shill bidding effectuated by Mastro and Ketap.”
Forman also claims Mastro Auctions allowed various consignors to look at the ceiling bid information during its auction in the fall of 2007 and alleges that while Mastro promoted a “no reserve” auction, selected consignors were allowed to have reserves on their items.
Mastro Auctions was in the process of ending its run as one of the hobby’s top auction houses when Forman also claims it sold a Jackie Robinson rookie card graded 98 by his company, and a 1911 T205 Ty Cobb card graded 84, without his permission. Forman claims the items sold for significantly less than the $125,000 minimum he would have accepted.
The counterclaim and third-party complaint filed by Forman and his attorneys, seeks punitive damages and attorney’s fees.