March 4, 2015
It’s not a baseball memorabilia dispute but every baseball collector will be familiar with the names of the characters getting dragged into the RR Auction class action lawsuit. The litigation, initiated by collector Michael Johnson, has been brewing for over three years in Santa Barbara Superior Court and the lawsuit is on track to receive California class certification in the next few weeks. Take a look at your PSA/DNA LOA’s and you’ll see the facsimile signatures of the so-called experts who have been dodging subpoenas in the case for months now including PSA PresidentJoe Orlando; Pawn Stars regular Steve Grad, and John Reznikoff. Even the former kingpin of the memorabilia and auction industry, Bill Mastro, is on the list to be deposed as he awaits sentencing after pleading guilty to mail fraud last year in a Chicago Federal Court.
Orlando and Grad are still currently evading service of subpoenas while the deposition of PSA authenticator Bob Eaton has been up on a video link at the RR Auction lawsuit website since January. Grad’s video-taped deposition is highly anticipated in the hobby considering he fabricated his professional bio and was exposed lying under oath about his education in another litigation. The deposition of Eaton, who is also the owner of RR Auctions and claims to do $25 million annually in revenue, is a must-see for anyone who buys, sells or collects autographs. One collector who watched the video told us, “It’s hard to believe that a PSA/DNA LOA with his name on it could be worth the paper it’s written on after watching that video.”
Eaton’s name and facsimile signature were recently reported as having been removed from PSA/DNA LOA’s and sources have confirmed that recently issued PSA certifications make no mention of Eaton. In his deposition Eaton said he was no longer affiliated with PSA and that his company no longer offers a “lifetime guarantee” or even letters of authenticity on items they sell. Eaton couldn’t recall who prints his monthly auction catalogs and also couldn’t remember filing lawsuits within the hobby and against former employees.
Eaton also said he had no knowledge of his “entertainment expert” Roger Epperson authenticating or consigningMichael Jackson forgeries to his auction house despite evidence suggesting that he did. Eaton’s consignment director, Elizabeth Otto, however, admitted under oath that Epperson and PSA experts Grad, Reznikoff and Eaton consign their own authenticated materials to the New Hampshire auction house. Otto also stated that the autograph submission protocol at RR and PSA/DNA is “anonymous” and that experts do not know the identity of consignors, but sources indicate that internal RR documents contradict Otto’s testimony.
Otto also said that Bob Eaton was not on the “PSA payroll” or compensated by PSA for having his name and signature appear on PSA LOAs but she could not directly answer why Eaton would work for PSA without compensation. In her deposition Otto also claimed that William Boehm, another associate of Bill Mastro whoplead guilty and is also awaiting sentencing in the Mastro case, had acted as the webmaster and outside IT consultant for the auction website. RR’s Vice President Bobby Livingston went a step further in his deposition and said that Boehm was a freelancer who worked for RR and “oversees the function of the auction software.” Boehm was working for RR after he was indicted for lying to FBI agents about destroying auction bidding records and company computers for Bill Mastro.
As one collector told us after watching all of the RR video testimony, “This class action lawsuit really shows the behind the scenes collusion between the auction houses and the third-party authenticators.” Another veteran collector said, “This very well could be the beginning of the end for PSA/DNA.” But if that’s the case, what is the RR Auction class action really all about and how is PSA/DNA involved in the litigation? And why are the lawyers who represent PSA and its parent company, the publicly held corporation Collectors Universe (CLCT), also representing Bob Eaton and RR Auctions?
The original underlying claims made in the lawsuit relate to collector Michael Johnson’s RR auction purchases of over $100,000 of autographed Rock n’ Roll memorabilia including album covers, guitars and drum heads allegedly signed by the likes of Vanilla Fudge, Pink Floyd, The Eagles, Paul McCartney, Cream, Eric Clapton, theMoody Blues and the Rolling Stones. According to the complaint and the lawsuit website, Johnson had all of the material sent to PSA/DNA for letters of authenticity to be issued, but all of the items were deemed non-genuine by PSA and expert Steve Grad. After he was notified that the items he won from RR were failed, Johnson complained to Eaton and RR vice president Bobby Livingston and subsequent email exchanges between Livingston and his boss show that Eaton called Johnson a “nut case.” The exchanges also reveal that RR had discussions with PSA which resulted in another email exchange which referred to Johnson’s items and stated: “PSA-Now They Are Real.”
The email exchanges were turned over to Johnson’s attorneys in discovery and they reveal the inner workings of the auction house’s authentication process and the incestuous relationship between RR and PSA/DNA, the company that auction house owner Bob Eaton has served as an expert for and is listed on hundreds of thousands of letters of authenticity. RR didn’t immediately refund Johnson’s money and in doing so, RR and Eaton opened up the door for the filing of the class action lawsuit amid claims that many other California residents who bid on items in RR’s auction sales were also the victims of fraud and deception that stemmed from the authentication processes utilized and manipulated by RR and PSA/DNA. A closer examination of the email threads turned over by RR also reveals that the documents received in discovery may have been doctored or fraudulently altered to delete information which included direct email exchanges between RR and PSA/DNA including its President Joe Orlando and senior authenticator Steve Grad. Adding to the controversy and conflicts of interest is the fact that RR and PSA/DNA are represented by the same attorneys, Keith Attlesey and Suzanne Storm of the California lawfirm Attlesey & Storm.
While Eaton still appears as an expert on Jimmy Spence’s website for the authentication company JSA, his name and signature appear to have been removed from the PSA/DNA LOAs after he was noticed for his deposition back in October. The last LOA we could find with his facsimile signature was issued in November of 2014. Eaton’s name had appeared on PSA/DNA LOA’s under the Collectors Universe umbrella for over a decade since he joined PSA in late 2003. Prior to 2004, the PSA/DNA letters only included the names and signatures of Jimmy Spence and Steve Grad but by 2005 Spence had left PSA and the new LOA’s issued by the company included the names of Grad, Reznikoff, Zach Rullo, Roger Epperson and Eaton as the members of the “PSA Authentication Team.”
It is interesting to note that Eaton and the PSA team authenticated scores of Babe Ruth forgeries that were sold by Mastro Auctions and MastroNet during that same time period and it is no surprise that Bill Mastro, the godfather of the third-party authentication system, is listed on the class action website for an upcoming deposition. It was Mastro who was instrumental in installing Jimmy Spence and ex-Mastro employee Steve Grad as the lead authenticators for PSA/DNA and it was Mastro and his MastroNet partner Rob Lifson who devised language and regulations in the MastroNet catalogs between 2000 and 2003 which insulated the auction house from liability for selling forgeries and successfully set up a system to market and distribute forgeries throughout the hobby with little recourse for collectors.
There has been little in-depth reporting about the Johnson case and the “hobby press” hasn’t really acknowledged the legal wranglings. Most of the chatter about the case has surfaced on autograph forums and long-time PSA supporter, Steve Cyrkin, made the most notable public comments about the case recently before he was added to the class action website’s list of individuals scheduled to be deposed. Cyrkin addressed the lawsuit and said:
“If you’re perplexed why this lawsuit was filed, since R&R offered to refund Johnson’s money and all grading and shipping fees, this may make it easier to understand: There’s a California law covering signed sports memorabilia, Calif. Civil Code 1739.7, that specifies 10-times losses plus legal fees and costs for selling fake signed memorabilia. I hear it has been successfully used in cases involving non-sports signed memorabilia as well. I think that Johnson is trying to use this law to try shakedown R&R. R&R offered Johnson his money back and more according to the deposition testimony, so I can’t imagine any judge or jury awarding a civil penalty. I think that at best all Johnson will get is what’s specified under R&R’s terms and conditions in force when he bought the items.”
Cyrkin even published the California statute he was referring to which states:
“(g) Any consumer injured by the failure of a dealer to provide a certificate of authenticity containing the information required by this section, or by a dealer’s furnishing of a certificate of authenticity that is false, shall be entitled to recover, in addition to actual damages, a civil penalty in an amount equal to 10 times actual damages, plus court costs, reasonable attorney’s fees, interest, and expert witness fees, if applicable, incurred by the consumer in the action. The court, in its discretion, may award additional damages based on the egregiousness of the dealer’s conduct. The remedy specified in this section is in addition to, and not in lieu of, any other remedy that may be provided by law.”
Cyrkin made his public statements just before he lost three motions in California Superior Court as a defendant in a defamation suit filed against him by autograph dealer Todd Mueller of Colorado Springs, Colorado. Mueller’s suit alleges malicious defamation and business interference and sources familiar with that litigation allege that documents obtained in discovery by Mueller’s attorneys (the same firm representing Johnson) evidence collusion between PSA/DNA and auction houses and also suggest that Cyrkin, Orlando, Grad, Epperson, Reznikoff andJimmy Spence of JSA worked in concert to destroy Mueller’s reputation and his business to further their position as a monopoly in the authentication industry.
Cyrkin, who is a co-founder of PSA and currently employed by the company in its coin division declined comment about his public statements regarding Johnson’s alleged “shakedown” of RR Auctions. Cyrkin is the moderator of the website Autograph Magazine Live and is known throughout the hobby as a notorious seller of forged itemsthrough his now defunct company Starbrite Autographs. Cyrkin has also claimed in court papers to have several mental disorders and he also has as a history of legal troubles including a $500,000 judgment entered against him by the Provident Life and Accident Insurance Co. for committing insurance fraud. Johnson and his attorney,Dugan Kelly, declined to comment or respond to Cyrkin’s allegations of a “shakedown” but did say there could be additional filings in the class action suit against RR later this week.
Hauls of Shame interviewed several parties familiar with the details of the RR class action and the Mueller litigation who disagree with Cyrkin’s commentary and, based upon those interviews, we’ve determined that there are multiple issues that could interest the FBI in relation to the RR Auctions and PSA/DNA:
1. Allegations of collusion between RR Auctions and PSA/DNA.
2. RR’s alleged sale of bogus autographs accompanied by RR and/or PSA/DNA LOA’s.
3. Allegations that RR Auctions’ office manager Karen “Kay” Burris may have been a murder victim contrary to reports that she committed suicide just weeks after RR filed police reports and a lawsuit against her alleging the embezzlement of $111,000. Sources say that Burris had first-hand knowledge of fraud and shill-bidding at RR and that Eaton and RR Auctions settled out of court with Burris’ family after her death.
4. Allegations of collusion and racketeering between PSA/DNA employees and major auction houses.
5. Questions about the professional qualifications of PSA/DNA authenticators and how its “so-called experts” could render opinions on the 400,000+ autographed items per year. In its 2014 Annual Report Collectors Universestates that PSA/DNA employs “6 autograph experts with an average of 25 years of experience in the autograph memorabilia market, as well as outside consultants that (they) use on a contract basis.”
Hauls of Shame has confirmed that at least two FBI agents have expressed interest in reviewing the RR class action lawsuit depositions as well as the upcoming depositions of PSA/DNA employees. Bob Eaton was asked in his deposition if he was currently being investigated by the FBI and he responded that he was unaware of any such investigation. A Federal agent has also made it known to several hobbyists that the New York office of the FBI would like to hear from any collectors who feel they have been victimized by any third-party authentication company and said they can report their experiences by calling 718-286-7100. We requested interviews with Joe Orlando and Bob Eaton but neither executive responded to comment on the on-going litigation.
As far as the civil litigation is concerned, one major dealer with over thirty years in the autograph industry is skeptical that the RR class action could ever impact PSA/DNA or Collectors Universe in a significant way. He told us, “I do not see depositions or a court case on the horizon, the parties (at PSA) that have refused service will continue to do so until they throw so much money at this that they will make it go away. Too much at stake to forfeit a monopoly, unfortunately that is the reality.”