A federal grand jury in Chicago indicted sports memorabilia executives Bill Mastro and Doug Allen on fraud charges, alleging that the pair — once the most influential figures in the multi-billion dollar collectibles industry — routinely defrauded customers, rigged auctions and inflated prices paid by unwitting bidders.
The indictment unsealed Wednesday also says that Mastro altered the world’s most expensive baseball trading card, the Honus Wagner T206 that has fetched millions in a series of high-profile sales since Mastro bought it for $25,000 in a Hicksville, L.I. memorabilia shop in 1985. Its owners have included NHL great Wayne Gretzky, who purchased the card in 1991 along with Los Angeles Kings owner Bruce McNall for $451,000.
“Defendant Mastro represented that Mastro Auctions had sold the most expensive baseball card in the world, a Honus Wagner T206 card,” the indictment says. “In making this representation, however, defendant Mastro knowingly omitted the material fact that defendant Mastro had altered the baseball card by cutting the sides of the card in a manner that, if disclosed, would have significantly reduced the value of the card.”
According to the indictment, Mastro Auctions also sold what it claimed was Elvis Presley’s hair years after Allen learned that DNA testing proved the locks did not come from the King of Rock. Additionally, the company sold a 1869 Cincinnati Red Stockings trophy baseball, even though Mastro knew there were questions about its authenticity.
Mastro, the founder of Mastro Auctions and the brother of Randy Mastro, Rudy Giuliani’s former deputy mayor and longtime aide, was charged with one count of wire and mail fraud. His attorney, Michael Monico, said he expects the case will be resolved without a trial, indicating that Mastro is cooperating with authorities.
Mastro dropped out of the hobby in 2009, after he shut down Mastro Auctions, which once generated as much as $50 million a year in sales. He sold his legendary memorabilia collection in 2010.
“Bill accepts responsibility for the actions that led to this case,” Monico said. “For many years, Bill has dedicated himself to religious and charitable works.”
MATTHEW ROBERTS
Doug Allen
Allen, the company’s president before it went out of business in 2009, faces 14 counts. Allen and former Mastro Auctions executive Mark Theotikos, who was charged with six counts of wire and mail fraud, formed Legendary Auctions after Mastro Auctions crashed. The maximum penalty for the fraud charge is 20 years in prison and a $250,000 fine, although federal guidelines make it unlikely that the defendants would face the maximum sentence.
Former Mastro employee William Boehm was also charged with one count of making false statements to agents ivestigating the case.
Christened the “Gretzky T206 Wagner” after the hockey great purchased it, the card was sold by Gretzky to Wal-Mart in 1995 for $500,000. It toured the country in a traveling memorabilia museum, has appeared at baseball’s All-Star game and has been the headliner at national card shows, including the National Sports Collectors Convention. It became the first million-dollar baseball card in history in 2000 when Chicago collector Mike Gidwitz sold it for $1.27 million to collector Brian Seigel.
The card is now owned by Arizona Diamondbacks owner Ken Kendrick, who paid $2.8 million for it in 2007 from Tom Candiotti, the former major league pitcher. It was on loan to the Baseball Hall of Fame in Cooperstown until March. Kendrick declined comment on the indictment.
Card collectors have long believed that the Gretzky T206 Wagner was cut from a sheet and trimmed, which is taboo in the hobby and would significantly reduce its value.
In their 2007 book “The Card,” Daily News reporters Michael O’Keeffe and Teri Thompson reported that the card had been cut from a printer’s sheet and was further trimmed by Mastro to make it appear as if it had come from a 1909 pack of cigarettes.
“The Card” quoted Bill Hughes, a member of the Professional Sports Authenticator team that graded the card, admitting he knew the card had been altered.
“The card is so outstanding, it would have been sacrilegious to call that card trimmed and completely devalue it,” Hughes explained.
The 1869 trophy ball named in the indictment was consigned to Mastro Auctions by dealer Peter Nash, according to a lawsuit filed last year in New Jersey federal court by collector Corey Shanus against auctioneer Rob Lifson and his company Robert Edward Auctions.
Nash, best known as “Prime Minister Pete Nice” of the 1980s hip-hop group 3rd Bass, has been embroiled for years in a series of legal and financial battles stemming from his memorabilia business, and sources have told the Daily News that the FBI has questioned them about the ex-rapper.
Chicago prosecutors declined to comment when asked if other indictments were expected.
The Chicago indictment is the result of an investigation into fraud in sports memorabilia that was initiated by the Chicago FBI and other federal agencies in 2007.
Three sports memorabilia dealers accused of selling bogus game-used jerseys to trading-card companies and other collectors pleaded guilty to mail fraud in Illinois federal court in November. Several other dealers were charged last year with selling counterfeit jerseys.
“Bidders must remain mindful of the maxim, ‘buyer beware,'” said Gary S. Shapiro, Acting U.S Attorney for the Northern District of Illinois. “Consumers have a right to be protected from deceptive and dishonest sales practices, and we will prosecute those who fraudulently rig auctions at the expense of bidders.”