Spitzer Files Lawsuit Alleging Bid Rigging Conspiracy At Postage Stamp Auctions
Attorney General Spitzer today announced that New York, along with Maryland and California has filed an antitrust lawsuit against seven individuals from the United States, England, France and Holland charging that they engaged in a multi-million dollar conspiracy to rig bids at postage stamp auctions across the United States for nearly two decades. It's alleged that the ring cost stamp sellers at least $5 million and prevented full and open competition in the stamp auction market.
The lawsuit alleges that the defendants, John Apfelbaum, Etienne de Cherisey, Davitt Felder, Anthony Feldman, Dana Okey, Stephen Osborne, and Kees Quirijns, together with several affiliated corporations and others, illegally conspired to restrain competition at postage stamp auctions held in New York City, Baltimore, San Francisco and elsewhere. According to the lawsuit, the ring held secret pre-auctions amongst themselves prior to the public auctions in order to make agreements about the purchase price of lots of postage stamps.
To carry out the scheme, the ring members agreed ahead of time that only the winner of the secret auction would bid on the stamps at the public auction. The other ring members agreed to withhold bids, and were compensated after the public auction through an elaborate system of pay-offs made by the ring member who won the public bidding. The pay-offs to the co-conspirators typically totaled thousands of dollars per auction.
"My office will aggressively pursue those who defraud the public by carrying out illegal bid rigging schemes," Spitzer said. "These defendants' collusive practices adversely affected sellers and undermined the marketplace, which relies on fair and competitive bidding practices. New York is an international business center and anyone who does business here must obey the law."
In 1996 and 1997 the ring allegedly fixed bids at most of the large stamp auction houses in the U.S., including Sotheby's, Christie's, Daniel Kelleher & Co., Harmer-Schau Auction Galleries Inc., Mathew Bennett, Inc. and Ivy & Mader Philatelic Auctions, Inc. The complaint identifies 14 specific auctions where the ring operated, most of which occurred in New York City. In one instance, in a secret auction held in March of 1997, a ring member won by placing a bid of $57,000 for a lot that was subsequently purchased at the public auction for $26,000. On that lot alone, the ring deprived the seller of more than $31,000.
The lawsuit further alleges that the ring illegally deprived those who sold their stamp collections at public auctions of the benefits of true competitive bidding. As a result, stamp sellers received significantly less for their stamps than they would have under competitive market conditions.
The lawsuit seeks damages and restitution for the hundreds of sellers who were harmed by the conspiracy, as well as civil penalties, costs and attorneys' fees and injunctive relief to prevent any future anti-competitive conduct by the defendants. In 2000 alone, more than $150 million in stamps were sold at public auction. The suit was filed in federal court in Manhattan.
This case is being handled by the Assistant Attorneys General Robert L. Hubbard, David Weinstein and James Yoon of the Attorney General's Antitrust Bureau, under the supervision of Bureau Chief Jay L. Himes. Zachary Weiss, Deputy Bureau Chief of the Attorney General's Criminal Prosecutions Bureau and Ken Dreifach, Chief of the Internet Bureau assisted in the investigation.