Bankruptcy

It's not quite that easy, floortrader. Only the DA can bring criminal charges, and in most jurisdictions prosecutors would have far more serious crimes to worry about unless the loss was six figures or more. Proof of criminal intent to defraud is notoriously difficult as "smoking gun" evidence almost never exists. Moreover, the elements of proof are different in criminal and civil cases, so there is no reason that a civil bankruptcy cannot proceed even with criminal charges pending.

A civil complaint isn't an option either. The filing of a federal bankruptcy case, under any chapter of the Bankruptcy Code, triggers an injunction against the continuance of any action by any creditor against the debtor or the debtor's property. 11 U.S.C. 362. This is the "automatic stay" rule--any other action is automatically stayed. Yes, you could file the action, but it would not advance until the bankruptcy case closed, and at that point there's unlikely to be any funds to satisfy a judgment.

The takeaway for someone contemplating consigning material is to make sure you've documented your material as well as you can practically can (which will vary based on the nature and value of the material), and to get a written consignment agreement that specifically references your material.

I'd guess that the bigger houses do this religiously, anyway, but some of the smaller houses probably cut corners on this point. I know at least one is fine with oral consignment arrangements.

There will still be some risk, but at least you will have taken some sensible steps to manage the risk. If you didn't want to take any risks, you wouldn't get out of bed in the morning.

Well, I don't know. Not getting out of bed in the morning sounds rather risky to me. Might end up bankrupt if you did that every day.