Old News About Stamp Fraud

I see at least a name on that list who still in the business today, with forum members quoting him often as one of THE authority in the hobby.

<serious_question>

I am not defending this behavior, or suggesting that it is lawful, or ethical, or tasteful.

But how, exactly, mechanistically, does it rise to the level of criminality?

Where is it written that a seller at an auction has a right to the bids of others?

Bidders in government tenders sign a contract just to bid and, in that contract, collusion can be banned, and that ban enforced.

And the social good is clear. When the government is buying aircraft, for example - where there is a known & limited universe of sellers - one would not want the sellers to agree to take turns being the lowest bidder.

The transition from civil to criminal gets a little slippery for me, but I can live with it.

But, for some reason, I have a much harder time seeing this same rule at work in auction sales of private goods by private sellers to an open pool of private buyers.

I agree that it is collusion; I just do not see how that collusion rises to the level of a crime.

</serious_question>

<tangential_anecdote>

When my Uncle Donald was a lad, he & a friend would follow the chess competitions.

These were reported in the daily newspapers, and the boys had a long subway ride to school each morning.

There may be an element of exaggeration in his telling of the story but, as Uncle Donald told it, after some years of this, he & his friend noticed a pattern: the winner was always from the Soviet Union, the winner was always a Jew, and the winner was always a different Jew.

Curious, they began a detailed review of the elimination matches. They noticed that previous winners would slaughter all comers except one astonishingly lucky player, to whom they would all lose, one by one, until that year's up-and-comer had risen to the top, and was that year's champ.

Stalin would then make the new guy a Hero Of The Soviet Union, guaranteeing him an apartment, and a pension, and a stay-out-of-the-gulag-free card for life. Ah.

Now, Stalin was no dummy; there was no way that he could not catch on to the scheme. Uncle Donald figured that Stalin did catch on, but did not care. As long as the crew kept bringing home the championship, they were free to take turns saving each other.

Without taking a vow, I would like to say that, some day, post-Lotto, I'm gonna hire somebody to duplicate this research, prove that Uncle Donald wasn't telling a tall tale, and publish the results.

Collusion ain't always a bad thing.

</tangential_anecdote>

Cheers,

/s/ ikeyPikey

it is a violation of the Sherman Antitrust Act of 1890
"Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal."

area66 - most of the people in the bid ring are still active in the hobby, but I'm not sure who you are referring to as one of the authorities in the hobby. Are you confusing Anthony Feldman from the bid ring with David Feldman, the head of the prominent Swiss Auction House?

In my opinion, from what I've read, collusion was just the tip of the iceberg. It's what the states thought they could prove. I think that all the ugliness that can accompany collusion was there. Graft, bribery, blackmail, kickbacks, etc.

Collusion and price fixing in business is almost always illegal. Gas stations can't collude to fix prices on gasoline, for example. This law is designed to protect the consumer and I, for one, am glad this law is on the books.

SPQR:

Area66 is referring to John Apfelbaum.

sorry - I guess I missed the posts referring to him as an authority.

Point taken! There are plenty here on this forum who are not particularly enamored of that auction house.

Citing Federal Law is dramatic - and the transactions were, arguably, interstate - but the matter was pursued by states' Attorneys General, presumably under their respective state law - which they actually have statutory authority to enforce - and not the USDoJ.

Moreover, the individuals restrained themselves; they did not stop anyone else from coming along and out-bidding them at these public auctions with open & unrestricted pools of bidders.




But gas stations are sellers and, if you get enough of them together, they are a local monopoly.

These were bidders at public auctions with open & unrestricted pools of bidders, right?

Cheers,

/s/ ikeyPikey

The lawsuit was filed by the 3 states in Federal court, which has jurisdiction.

If it helps, the USA went after John Apfelbaum, also in Federal court.

http://www.justice.gov/atr/cases/f2...0/203220.htm

I believe DOJ went after all members of the ring
Here is the information filed against Davitt Felder http://www.justice.gov/atr/cases/f2...0/200385.htm
and the press release for Stephen Osborne http://www.justice.gov/atr/public/p...02/11218.pdf, the indictment against Anthony Feldman - http://www.justice.gov/atr/cases/f11500/11598.htm, you can look-up the others if it matters.
If I remember correctly, it was a joint state-federal investigation.

I quickly read the case file on Apfelbaum and it appears he pleaded guilty to criminal intent and was ultimately fined $150,000.

Did not read the rest. Sad really that they would do this.

Most bidders on the floor would not have the deep pockets of these dealers. Non-dealers would likely not be interested in the same lots so the dealers had a monopoly on the lots they were interested in.

Of course the sellers lost out as a result as well due to this behaviour.

GOB-SMACKED !@#$%!

Prosecuted (successfully) as a violation of the Sherman Anti-Trust Act.

No doubt about it.

But I am still having trouble wrapping my mind around this.

I still cannot see what is wrong with bid agreements amongst bidders if the auction is open & public, eg, they can be outbid.

<hypothetical>

Let's say that three stamp dealers - Moe, Larry, and Curly - form a corporation. Openly. Publicly. Legally.

The Board meets, and decides on the lots on which the corporation will bid.

Whether thru an agent - or by deputizing one of the boys - the corporation bids, wins, and pays.

Every so often, the lots that were won at auction are re-auctioned amongst Moe, Larry & Curly.

</hypothetical>

Q/ Would that be illegal, too?

Cheers,

/s/ ikeyPikey

Ikey,

The quoted paragraph below might be an over-simplification, but the main substance is logical and the law.

"American consumers have the right to expect the benefits of free and open competition — the best goods and services at the lowest prices. Public and private organizations often rely on a competitive bidding process to achieve that end. The competitive process only works, however, when competitors set prices honestly and independently. When competitors collude, prices are inflated (or deflated)**and the customer is cheated. Price fixing, bid rigging, and other forms of collusion are illegal and are subject to criminal prosecution by the Antitrust Division of the United States Department of Justice."

** (my note).

By colluding with each other to NOT bid on specific lots against each other the intended result and the realistic result was that many of those lots sold for substantially less than they would have if they competed fairly. The system was simple. Once it was decided that two or more of them were interested in a lot, each wrote his top bid on paper and a neutral(!) person looked at them and "awarded" the lot to the high bidder among them. Then, none of them would bid on that lot except the "winner" among them. Depending on the "savings" realized by the winner, he had to pay the other(s) a payoff fee. I have no idea how that worked or what that process was like in practice, but that's the basics of it.

What's important also to remember is that each of the people were substantial bidders in these auctions and by removing all of them but the "winner" from the normal bidding process, it tended to greatly reduce bidder pool and the realizations. Sure, you are right, the rest of the marketplace had the right to outbid them. But obviously they "won" enough material to make the scheme a sucess and they all made money - otherwise there would be no point to it, would there? In fact, it was obviously lucrative for all of them.