Is eBay stamp racket the Net's stickiest scam?

Mike Brunker Projects Team editor • Profile • E-mail

It may be the stickiest scam on the Internet — a nine-year saga of deceit that has seen thousands of altered postage stamps sold to unwitting collectors on eBay and other Internet auction sites. More striking than its longevity, though, is that the mastermind has never been charged with a crime, even though his identity apparently is known to eBay security, law enforcement officials and some of the nation’s leading stamp experts.

The man believed to be behind the scheme is a longtime stamp dealer living in upstate New York. He has been investigated by law enforcement, suspended by eBay and exposed in Internet forums devoted to stamp collecting. Yet the massive operation continues to churn out philatelic fakes, burning collectors and, some say, undermining the very foundations of the hobby.

A retired FBI agent who worked numerous stamp fraud cases during his years with the bureau describes it as the “the most prolific and most notorious” scam ever perpetrated in eBay’s problematic stamp-collecting category. (MSNBC.com is not identifying the suspect because he has not been charged with a crime.)

The scheme was exposed on MSNBC.com in 2002, in a two-part series looking at whether eBay adheres to its stated anti-fraud policy. Months later, eBay suspended accounts identified in the article, but a small group of collectors that uncovered the scam says the forger merely moved the operation to another Internet auction site for a few months before returning to eBay, setting up new accounts and picking up where he left off.

The scheme’s most recent incarnation ground to a halt Jan. 29, when eBay security suspended two accounts after the collectors produced conclusive evidence that forged stamps were being sold. But the frustrated philatelists say there is little doubt that the crook will soon be back in business on eBay — the leading Internet auction site, with tens of thousands of stamps listed for sale at any one time — cloaked in new online identities.

The rip-offs have been occurring intermittently on eBay and other auction sites since at least 1998, generating millions of dollars in illicit profits for the mastermind, according to the collectors, who have united under the rubric Stamp Collectors Against Dodgy Sellers, or SCADS.

Case has unique features
The stamp scam is in some ways a typical case of Internet auction fraud — the no. 1 source of consumer complaints to the federal Internet Crime Complaint Center, accounting for 62.7 percent of the 231,493 reports filed in 2005. But in other ways it is quite unusual:

• Evidence documenting the scam is overwhelming, thanks to a vast store of documentation assembled by the stamp collectors.
• Sophisticated forgery techniques that are used repeatedly and easily traced demonstrate how simple it is for serial fraud artists to sidestep efforts by Internet auction sites to kick them off.
• Because there is solid circumstantial evidence pointing to the mastermind’s identity, the case illustrates how high the bar has been set for prosecution of Internet auction fraud cases — especially if they involve many transactions for relatively small amounts of money.

The stamp scam likely would never have come to light had the collectors not noticed in the late 1990s that an increasing number of stamps being sold on eBay had been altered. After months of sleuthing, they determined that some of the stamps were being purchased in poor condition on eBay and then resold after undergoing undisclosed cleaning or repairs — making them appear to be in better condition and thus worth more to collectors. In other cases, they found that stamps had been altered to make them appear to be completely different postage franks that were far more valuable than the originals.

At that point, the collectors formed SCADS and began compiling a library of “before” and “after” images showing what undisclosed alterations had been done to each stamp and how much profit the scam was generating. The database has grown to include nearly 2,000 matches.

They also created a Web site and began publicizing the exploits of the forger, which used post office boxes and addresses in upstate New York to send and receive stamps.

‘A little pissed off’
“I am not a stamp expert. I’m just a collector who got a little pissed off by what I saw as criminal activity going on with impunity,” said George Kopecky of Atlanta, a SCADS member who has spent approximately 5,000 hours documenting the scam and trying to bring its perpetrators to justice. “I seem to have an overinflated sense of justice. This shouldn’t happen in this country. When you watch a whole bunch of people being ripped off, to me the thing to do is to try and do something about it rather than just walking away.”

Elissa Eubanks / Special to MSNBC.com George Kopecky shows one of his many files that illustrate how the eBay forger alters stamps before reselling them for a profit. “I’m just a collector who got a little pissed off by what I saw as criminal activity going on with impunity,” he said.

He said he and his SCADS colleagues track the sophisticated forgeries by compiling images of stamps from auction listings, then matching them to altered stamps when they resurface on eBay and other sites. They can trace them through their “fingerprints,” unique traits that make each stamp identifiable — uneven perforations, stains, rips, ink “cancels,” thin spots and color irregularities.

“You basically get snowflakes — no two alike,” the 60-year-old Kopecky said.

Kopecky, an accountant by trade, said the perpetrator uses a variety of techniques to make a stamp appear to be more valuable than it really is, including removing ink “cancels,” clipping or adding perforations and painting on design elements.

“This is a very sophisticated repair and restoration operation,” Kopecky said. “They can reperforate stamps so they look natural … and even add the tiny perforation tips back on if they’re missing. The paper looks slightly different from the back, but otherwise it’s impossible to detect.”

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