Cautionary tales of two auctions

Teamwork unmasked alleged forgeries

If the trading card auction shows how an opportunistic tag-team can occasionally uncover wrongdoing, the case of an alleged stamp forgery ring demonstrates the power of relentless teamwork.

Well-known U.S. stamp authority Richard Frajola and other philatelists operating under the umbrella of SCADS (Stamp Collectors Against Dodgy Sellers) say they have lodged “innumerable complaints” with eBay asking it to shut down what they say is a fraud ring selling altered postage stamps.

The SCADS experts have assembled a damning dossier showing that the ring has systematically purchased stamps with obvious flaws that diminish their value, then altered them to make them appear to be in better condition or to be different, more-valuable stamps.

The alterations use techniques like bleaching cancellations, recutting and reperforating and overlaying “grills” — an anti-counterfeiting measure that the U.S. Post Office used in the late 1800s — to improve the appearance of the stamps or otherwise increase their value in the eyes of unwary buyers, SCADS charges.

To hide their tracks, the group uses two eBay accounts — “chickfrdstk” and “stazy4” — to buy the stamps, and two others — “schuylerac” and “pcheltenham” — to sell the altered stamps, according to SCADS.

Stamps put under microscope
The stamp sleuths use techniques that would be at home in the FBI crime lab to keep track of the sales, including microscopic examinations of the “before” and “after” versions that show they share flaws like uneven perforation that would otherwise be undetectable. The comparisons demonstrate “with 100 percent certainty” that the stamps have been altered, SCADS says.

The cancelled 15 cent "Scott" postage stamp at left was bought on eBay for $24.95 on April 16. When it reappeared in May, center, the cleaned stamp brought $239.50. At right, the cancellation remains faintly visible on the back.

The stamps are matched using a database that the group began assembling early this year after linking the various identities.

“We would basically capture all the things that ‘chickfrdstk’ and ‘stazy4’ would purchase … then we would watch the other two gentlemen and we would capture all the auctions of everything they sold,” said SCADS member Richard Doporto of Oakland. “It quickly became very clear what they’re doing.”

“Schuylerac” is an eBay power seller while “pcheltenham” is not, though not because he doesn’t qualify for the rewards program. Since SCADS began tracking their sales in late March, the pair has sold nearly $89,000 worth of altered stamps after spending less than 10 percent of that for the originals, Doporto said.

MSNBC.com attempted to contact all four members of the alleged ring, but received a response only from “pcheltenham” — or Percy Cheltenham, according to his e-mail.

“I can only refer you to my feedback file, which represents actual participants and buyers,” he wrote, referring to his eBay rating showing more than 1,474 positive comments from purchasers and only a dozen negative ratings.

'Disclaimer' on auctions
He also referred the inquirer to a “disclaimer” on a recent auction that warned would-be buyers they were buying “a pig in a poke” — an expression that refers to buying something without knowing its inherent quality.

The statement says the stamps in question are part of a “handed down collection of over 20 boxes,” and adds, “It is the obligation of the buyer to determine which stamp it is, and to determine its condition, and subsequently the buyer’s decision on how much he is willing to pay for it.”

Proffitt, the auction law expert, said that the disclaimer would not protect a seller who is knowingly auctioning altered goods.

“The ‘as is’ disclaimer would do nothing to alleviate a knowing and intentional misrepresentation done with the purpose of defrauding the unknowing out of their money,” he said, adding that such conduct also could violate federal laws against stamp alteration and counterfeiting.

SCADS members say eBay’s apparent lack of action is particularly puzzling given that “schulyerac” and “chickfrdstk” have previously been brought to the attention of the company’s fraud investigators.

Accounts reportedly suspended

Both accounts were suspended in 1999 amid allegations of shill bidding, Linn’s Stamp News reported. Those allegations surfaced after eBay users complained to the company that bogus grading certificates were being advertised on “schulyerac” auctions with the apparent intent of duping unsuspecting buyers, the philately publication said.

EBay spokesman Pursglove said he could not confirm that the accounts were previously suspended or comment on the current allegations, citing the privacy policy. But he again said that the company’s fraud team reviewed the complaints and was confident they had been correctly handled.

While eBay has not taken any discernable action to shut down the alleged fraud ring, SCADS members say they did eventually succeed in getting the company’s attention.

After members started flooding the eBay stamp billboard with discussion about the alleged fraud ring, the company eliminated the stamp section of the billboard, Doporto said. Then, after SCADS members began contacting bidders on suspect auctions to warn them that they may be bidding on altered goods, eBay suspended several of them for up to 60 days for “auction interference,” he said.

Frajola, the stamp expert, said that eBay’s lack of response to the complaints has persuaded virtually all the veterans of the site’s stamp-collecting community that eBay is putting profit ahead of customer protection.

“This is criminal activity, cut and dry, and they don’t want to know and they don’t want it to be exposed,” he said.

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