Doj Seizes More Than $1 Million Of Collectible Stamps As Proceeds Of Criminal Fraud Scheme

A "known collector" could well just signify that the bidder (a.k.a. "the Perp") had established a track record with Siegel of paying their bill(s).

On the other hand, a bunch of payments streaming in from third parties to cover one bidder's winnings does seem odd. It just a little bizarre that Siegel didn't think there was something fishy going on.

Anyway, look for the government surplus/seized properties auction to someday occur/ Could be some real bargains.

"On the other hand, a bunch of payments streaming in from third parties to cover one bidder's winnings does seem odd. It just a little bizarre that Siegel didn't think there was something fishy going on"

Seigel claims the payments were made in person at some branch(es?) of their bank, so they did not see checks or wires coming in from different sources.

More details as reported in Linns (https://www.linns.com/news/auctions...wrongdoing.)

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Stamps sold in Siegel auction swept up in massive fraud scheme

A web of crime that entangled broken hearts, large payments, online swindles and dozens of auction lots of collectible postage stamps was unraveled in late June when the Seattle, Wash., office of the United States Department of Justice opened a window onto what it called "a massive fraud scheme targeting seniors and other vulnerable populations."

As of Linn's deadline in early July, no criminal charges had been filed in the case, no suspects had been publicly identified, and no court appearances had been scheduled.

Listed as "defendant" in the in rem procedure (a legal action to recover property) on documents filed with the U.S. District Court for the Western District of Washington in Seattle were "approximately 149 lots of stamps and other collectible items, seized from Robert A. Siegel Auction Galleries, Inc."

The affected lots are from a Siegel auction of India stamps and postal history that took place in May 2023.

The Siegel firm has not been accused of any crime, according to the Department of Justice. Siegel, based in New York City, is one of the nation's largest and most prestigious philatelic auction houses.

(In mid-June, Siegel realized a total of more than $19 million for a two-day auction of William H. "Bill" Gross' complete collection of classic-era U.S. stamps. See the page 1 story in the July 8 issue of Linn's.)

In a July 3 email to Linn's, Siegel president Scott R. Trepel provided the following details about the investigation that began last year:

"The investigation first became known to Siegel in August 2023 when the firm was contacted by the FBI. Only one sale, the [May 11, 2023] Magnolia India Part 1 auction, is involved.

"The buyers involved are well-known collectors. One of them arranged for payments to Siegel to be made on their behalf through intermediaries who were never disclosed to Siegel.

"Payments from these buyers were made according to schedule by depositing the funds directly into Siegel's bank account at various branches throughout the country. Siegel was notified to expect the credits and how to allocate the payments among the invoices involved. Siegel never had possession of any payment instrument (cashier's checks, personal checks or money orders) in advance of deposit and could only obtain a visual record from the bank weeks after the deposit was made.

"At the time Siegel was contacted by the FBI, only one $20,000 payment was flagged as suspect. The list grew over several months as the FBI, with Siegel's cooperation, investigated every deposit and depositor to determine if they might be a victim of the alleged fraud.

"At the point it became clear that there were issues with multiple payments received by Siegel. Siegel determined it was prudent to hold the lots pending a complete investigation. In early 2024, the seizure warrant was issued.

"Siegel's cooperation with the FBI and DOJ investigation was instrumental in identifying the victims of the alleged fraud and hopefully will also assist in holding the perpetrators accountable. As stated in the [June 27] DOJ press release, Siegel is not accused of any wrongdoing."

A total of 28 victims from across the United States were swindled, according to a June 27 statement from the Department of Justice Attorney's Office for the Western District of Washington. Investigators said that they have traced $1,012,300 to the various victims. Funds deposited against invoices for purchase of the stamps total $1,383,437.

"Once the stamps have been forfeited to the United States, they will be liquidated by the U.S. Marshals Service and the government will seek to return the funds to the victims," the DOJ news release stated.

Linn's has reached out to the U.S. Attorney's office in Seattle to find out where the stamps currently are located.

A source within the U.S. Marshals Service Office of General Counsel told Linn's July 1 via email that "the stamps won't be destroyed."

"Only thing we destroy are contraband: illegal drugs; drugs precursor/chemicals; guns/firearms," the source said. "The USMS will hire experts to value the stamps. We do this with other forfeited items."

According to the source, "the stamps will be sold at auction by USMS. Then, the proceeds will be paid to the victims of the fraud scheme."

Several items from Siegel's May 11, 2023, sale of part 1 of the Magnolia India collection valued at more than $10,000 each (including Siegel's 18 percent buyer's premium) were among the various Siegel auction lots included in the government's folio of stamps.

"The fraud occurred in two phases," the Department of Justice revealed in the June 27 press release. "In phase one, victims were called by a person claiming to be from a government entity such as the FBI, SEC [Securities and Exchange Commission], or DOJ reporting that the victim's bank account or personal identity had been breached and stating that the victim needed to send their funds to a different entity for safe keeping.

"In some instances, victims were told they had been implicated in a money laundering scheme and to prove their innocence and protect their funds they needed to send them to the account designated by the caller. Victims were told their funds would be returned once the matter had been resolved. Some victims were defrauded of hundreds of thousands of dollars.

"Some of the victims sent cashier's checks directly to [Siegel Auction Galleries]. Others were instructed to send the money via cashier's check to a second set of victims: romance scam victims. These victims were contacted via social media, and believed they were assisting a romantic interest with money from an inheritance, or an investment or to pay debts. This second set of victims were told to deposit the cashier's checks from the first set of victims and then withdraw the funds and send or wire the money to [Siegel Auction Galleries]."

A "verified complaint for forfeiture in rem" filed on June 24 shines a light on the elaborate, multi-layered scheme and the sly entrapment of the victims, including a man identified only as "Alpha."

Linn's will continue to follow any developments in this case.

Ouch.

My job, probably, makes me biased.

I have a hard time understanding how you can be oblivious to a possible crime being committed when a few people buy expensive stamps and have many others pay for it. If a financial institution in Europe would be as ignorant, no excuse will prevent being heavily fined. And if not a financial institution you might be visited by the fiscal investigation squad.

That's a fair question.

Maybe the answer is:




Maybe these scammers had established themselves to where they were "trusted" customers already.

Additionally, I don't get the sense that this had gone on for long at all -

Fully agree with nsk.
From a European standpoint, the Treppel statement seems to leave out a lot of facts. In Europe, Siegel would be in deep, deep, deep, deep (can't add enough deeps here...) trouble had it happened over here.

Also: Getting more information is rather difficult. Everything seems to be behind a paywall...

That is a bit concerning, with regard to getting the proper audience in order to maximize the return.

Hopefully, Linn's, or someone in the philatelic world, will announce when this is going to happen.

"Some of the victims sent cashier's checks directly to [Siegel Auction Galleries]."
and
"This second set of victims were told to deposit the cashier's checks from the first set of victims and then withdraw the funds and send or wire the money to [Siegel Auction Galleries]."

This flies in the face of Seigel's claim that "Payments from these buyers were made according to schedule by depositing the funds directly into Siegel's bank account at various branches throughout the country."

If you believe the Seigel account of what happened, they wouldn't have known money was coming in from multiple sources that were not the buyers If you believe the account as reported by Linn's they clearly had to be aware.

Essentially, that is what an agent does. Realistically, it would be almost impossible to know who is buying or who is paying if the agent does not say.

I thought an agent bids for you. S/he doesn't pay for you, that is your job if you won...

"Essentially, that is what an agent does. Realistically, it would be almost impossible to know who is buying or who is paying if the agent does not say."

Unless an agent wants to be responsible (hint, they don't) for paying for the lot if their client fails to pay, the agent tells the auction house who the bidder is. Before the auction starts they give the house a list of people they are bidding for and a code for each, and when a lot is won, the announce that code (that is how it worked in person - not sure how it works if the agent bids by the internet, or if they perhaps have to do phone bidding so as to be able to supply the buyer's code). So the house knows the buyer, just the public is left guessing. And as DK said, the agents don't get involved in the payments.

An agent can either be an agent of a disclosed principal or an agent of an undisclosed principal. Normally philatelic auction agents are agents of a disclosed principal and disclose the bidder to the auction house. The agent executes bids on behalf of the principal and the auction house bills the principal and ships lots to the principal. On rare instances, philatelic auction agents will bid on behalf of an undisclosed principal. I know of one agent that offers that service (I assume at a higher agent fee to compensate for the additional work and risk). The agent pays for, and takes delivery of the lots from the auction house as if he was the buyer, and then sends the lots on to the principal (the true buyer).

Unless you allow the agent to make it impossible to see multiple persons pay the invoice for a single person's or few persons', it remains hard to understand.

In the alternative case, the inland revenue, at least in Europe, will have a very good case for considering your business too sensitive to facilitating money laundering. You, still, would be in very deep trouble here.

If it was an anonymous transaction through an agent, it answers the question what is meant by 'well-known' collectors. That must mean known to the public as collectors, as they cannot have been 'well-known' to the auction house.

I still wonder if the well-known collectors were in on the scam or somehow got innocently duped into participating, like those folks who get convinced to send money here and there to get a loved one out of jail.

My image of a well-known collector -- someone in a cardigan, smoking a pipe, whose name people in this forum would recognize -- just doesn't jive with someone knowingly involved in money laundering schemes.