RICO Charges Aimed at Dallas Auction House and Execs, Says Mark Senter

[James_OldeTowne]

Lawsuit expanded as Montana businessman joins the complaint

 

DALLAS, Sept. 11 /PRNewswire/ -- A racketeering lawsuit aimed at Heritage Auctions and its top executives was expanded Wednesday, when a prominent Montana businessman joined the charges against what has been termed as a "massive auction scam." The suit charges the defendants used a secret, undisclosed shill, or fictitious bidder, at auctions, so winning bidders paid inflated prices.

 

Defendants in the suit are Gregory J. Rohan; Steve Ivy; James L. Halperin; Marc D. Emory; Paul R. Minshull; Dagmar Byers; and their company, Heritage Auctions, Inc.

 

Gary Hendershott, an expert in Civil War memorabilia, was joined in the suit by Chris Kortlander, a prominent Montana businessman. Kortlander alleges that he "consigned thousands of individual historical manuscripts and photographs to Heritage," but was deprived of profit because of Heritage's fraudulent and deceptive acts.

 

Dallas-based Heritage is a well-known auction house, reportedly the third largest behind Sotheby's and Christie's.

 

Mark Senter, attorney for the plaintiff, charged that "the Heritage defendants use N. P. Gresham, a fake bidder, to rip-off legitimate bidders."

 

These charges appear to be the latest in a long line of lawsuits filed across the U.S. charging the defendants with fraudulently manipulating auctions. In 1989 the FTC ordered Heritage to pay $1.2 million in restitution to victims of Heritage and Halperin who had paid inflated prices for coins. Forbes magazine reported that on another occasion, an arbitration panel ruled that Heritage must pay $23 million to another plaintiff.

 

"Texas law strictly and explicitly forbids shill, or fictitious, bidders at auctions, but James Halperin, Heritage's Chairman, admitted in sworn testimony at an injunctive hearing that N. P. Gresham does not exist. Yet Heritage later admitted that N.P. Gresham not only bids at auctions, but that no one outside of Heritage knows who Gresham is," said Senter.

 

According to the lawsuit, the defendants are in violation of RICO by "secretly bidding in the name of N. P. Gresham at auctions in surreptitious competition with other valid bidders."

 

Senter explained that using N. P. Gresham as a ghost bidder results in higher prices being paid at auctions by innocent, unknowing bidders. The practice overstates Heritage's ability to effectively get the best prices for items it auctions.

 

Depositions in the lawsuit are scheduled to begin in the near future.

 

SOURCE Mark Senter

 

Mark Senter, +1-214-365-4418, msenter@johnhcarney.com

[James_OldeTowne]

Here is an additional article for your perusal.

[MarkFeld]

It looks to me as if Heritage is, in essence, being sued for 1) entering reserve bids on its own items that it consigns and 2) bidding on items that are consigned by others. If so, I believe that both practices are permissible/legal and made note of in their terms of sale.

[James_OldeTowne]

I probably should have stated that, for the record, I am on Heritage's side, at least right now. In fact, I almost posted on the Dallas newspaper forum a post supporting their position, but decided not to in light of possible subsequent facts being revealed.

[MarkFeld]

I probably should have stated that, for the record, I am on Heritage's side, at least right now. In fact, I almost posted on the Dallas newspaper forum a post supporting their position, but decided not to in light of possible subsequent facts being revealed.

James, what's wrong with your commenting in that forum, based on the information ( I am purposely not using the word "facts") that has been presented, thus far?

[Mark T]

Let the legal feeding frenzy begin .

 

I have won many coins below my max bid. Lets think about this logically .

Does anyone think Heritage would be so careless to do something as blatant as this if it was not legal ? Teletrade auctions do not use a reserve and allow the consignors to bid on their own coins. If Heritage bids it up and is high bidder don’t they then own the coin ??

 

[Tradedollarnut]

The suit charges the defendants used a secret, undisclosed shill, or fictitious bidder, at auctions, so winning bidders paid inflated prices.

 

Defendants in the suit are Gregory J. Rohan; Steve Ivy; James L. Halperin; Marc D. Emory; Paul R. Minshull; Dagmar Byers; and their company, Heritage Auctions, Inc.

 

Gary Hendershott, an expert in Civil War memorabilia, was joined in the suit by Chris Kortlander, a prominent Montana businessman. Kortlander alleges that he "consigned thousands of individual historical manuscripts and photographs to Heritage," but was deprived of profit because of Heritage's fraudulent and deceptive acts.

 

Darnit, I was duped. All along I thought that bidder was Potte D Palm.

[James_OldeTowne]

I probably should have stated that, for the record, I am on Heritage's side, at least right now. In fact, I almost posted on the Dallas newspaper forum a post supporting their position, but decided not to in light of possible subsequent facts being revealed.

James, what's wrong with your commenting in that forum, based on the information ( I am purposely not using the word "facts") that has been presented, thus far?

I just don't think I can add anything useful. Several major dealers have already posted supportive commentary, and they've said everything I would want to, and more eloquently.

 

On the other hand, if Heritage solicited customers for supportive comments, I would do it then!

 

Let the legal feeding frenzy begin .

 

I have won many coins below my max bid. Lets think about this logically .

Does anyone think Heritage would be so careless to do something as blatant as this if it was not legal ? Teletrade auctions do not use a reserve and allow the consignors to bid on their own coins. If Heritage bids it up and is high bidder don’t they then own the coin ??

MarkT, I'm not sure what level of items you are bidding on, and can only state that I'm pretty well way on the low end . My gut tells me that the accusations revolve around high-end, expensive items. (My apologies if I am wrong and you are one of the high rollers!!)

[Mark T]

James the most I ever spent for one coin at Heritage was $ 3500 hammer.

I realized that this lawsuit would apply to those high end coins that I don’t purchase.

 

 

[kryptonitecomics]

I could see folks suing them for losing them money based on crappy pics but this.....I am shocked

 

 

 

lol

 

[WoodenJefferson]

The premise:

 

In theory, an auction house bidding in its own auctions could bid with the intent of driving up the price and then withdraw the bid if someone doesn't outbid them before the auction ends so it doesn't win.

 

This appears to be a loop hole:

 

The TDLR (Texas Department of Licensing and Regulation) regulates auctioneers, not auction houses. So while Heritage is required to hire licensed auctioneers to conduct its auctions, the company's practices as an auction house are not regulated. A statement from Tom Kelley, a spokesman for the Texas Attorney General's Office, says "nothing in the law addresses the licensing of auction houses."

 

Disgruntled employee:

 

(Claimant) claims his relationship with (Auction House) soured because he hadn't received any commission checks from the company for the millions in sales he generated from his referrals. "From things I saw going on there, I decided I better get out," he says.