By Peter J. Nash
March 13, 2015
 |
In our last report we detailed several issues that sources said would surface in the RR Class Action Lawsuit related to allegations of shill-bidding and fraud and the reported suicide of RR’s CFO and bookkeeper Karen “Kay” Burris. Late Thursday the class action website posted a 2008 affidavit written by Burris for her attorney that alleges a myriad of criminal activity that occurred at the New Hampshire auction house and shows that the former RR employee feared for her safety after experiencing “veiled threats” from her boss (and RR owner) Bob Eaton. Just two weeks after signing the 12-page affidavit making the serious allegations against Eaton and his company Burris was found dead in her home in what the current Amherst Chief of Police described to Hauls of Shame as a “self-inflicted gun-shot wound.”
Sources indicate that Plaintiff Michael Johnson and his attorneys posted the affidavit on the lawsuit website after it was officially submitted as evidence in the Santa Barbara, California, court house serving as the venue for the litigation. Before the detailed affidavit was posted on the website, Hauls of Shame contacted the Amherst Police Department to confirm details of Burris’ death and to ask whether any statement written by her alleging wrongdoing by RR Auctions was ever entered as evidence in the case. Chief of Police Mark Reams told us he had never seen any such statement and that evidence in the case presented by RR after the company fired her showed that “she embezzled money from the company.” Chief Reams also stated that Burris’ husband settled a civil case with RR by paying back funds claimed by the auction house. Reams was the officer called to the Burris household and found the ex-RR bookkeeper dead and the victim of what he described as a “self-inflicted gunshot wound to the head.” Reams also confirmed that he did not have any autopsy report in the Burris case file and was not aware of any claims that Burris feared for her life before she was found dead. In 2012, Reams replaced former Police Chief, Peter Lyon, who was his superior at the time of Burris’ death.
Karen Burris signed an affidavit just weeks before her death stating that she feared for her own safety and the safety of her family as a result of divulging information detailing alleged fraud and shill-bidding at RR Auctions.
The 2008 Burris affidavit posted on the class action website, however, appears to shed some more light on her relationship with RR and Eaton and shows that Burris did, in fact, fear for the safety of herself and her family. Burris also stated that her lawyer John Kacavas was going to “vigorously” defend her against RR’s claims of “financial improprieties.”
We followed up with Chief Reams and sent him a copy of the Burris affidavit for comment and he responded, “I am not in a position to review the affidavit, but can say that the alleged embezzlement was reported to our agency on 3/6/2008 at which point we initiated an investigation. Mrs. Burris died less than one month later on 4/2/2008 in the midst of that investigation.” Reams also confirmed that Burris died ”prior to the issuance of an arrest warrant.”
The 12-page affidavit prepared and signed by Karen Burris (left) was posted on the RR Class Action Lawsuit website on Thursday. Amherst Police Chief Mark Reams (right) says the police had no knowledge of Burris' statement at the time of her death and is currently "not in a position to review" the affidavit.
At the beginning of the document she gives an overview of her career at the auction house and the scope of the illegal activities she alleges:
“I believe that for the past five-plus years I have been working as a key employee of a privately-held company that systematically and knowingly defrauded certain buyers and sellers via its international auctions of important documents, important autographs and historical ephemera. I also believe that R&R and its principals have organized a group (of) industry insiders and associates that regularly colluded via phone, email, the U. S. Postal Service, and private couriers to regularly fix bidding in its monthly international auctions to affect the outcomes in favor of certain buyers at times; and certain sellers at other times.”
Burris continues her narrative and describes how she worked for the company for close to six years and rose from the position of office manager to CFO and bookkeeper after receiving training from Bob Eaton’s mother, Janet Eaton, who held both of those positions before she left work after developing cancer. Burris noted her work with Eaton, Bobby Livingston, Bill White and Elizabeth Otto and also revealed that Otto had “intimate knowledge of several years of R&R’s and Bob Eaton’s chicanery with allowing items into auction knowing their respective authenticity was either questionable, or many times knowingly fake.”
The Burris’ affidavit reveals that the CFO became part of the Eaton family “inner circle” and assumed a myriad of responsibilities which put her in a position to witness what she alleges are auction house improprieties:
“During the course of my employment with R&R I was provided almost daily briefings which included intimate details of illegal and dubious practices designed to defraud R&R clients (consignors) and the general public (bidders and successful buyers). On numerous occasions and on behalf of the family, I was asked to solve problems on a case by case basis, ranging from: Inquiries of claimed theft and fraud from former and current bidders/clients; from the US Justice Department regarding several instances where items appearing in R&R’s auctions were deemed stolen from the US National Archives; to members of the U.S. Congress and other luminaries claiming the same with their respective personal items either bought or sold via R&R; to numerous attorneys for their respective clients whereby “official notice” was demanded claiming ownership of various documents in R&R’s possession…..”
The Burris affidavit alleges that PSA/DNA authenticator John Reznikoff engaged in shill-bidding on his own consignments and that his monthly proceeds from RR auction sales ranged from the "$1,000's to $100,000."
Burris’ affidavit gives the most intimate details in relation to what she describes as rampant illegal shill-bidding at the auction house which she claims involved Bob Eaton and PSA authenticator and RR consultant John Reznikoff. In regard to Reznikoff Burris stated:
“A major consignor (to) R&R is allowed to bid on his own items to move up bids to the point that he is willing to sell the item. A special procedure was designed by Bob Eaton to permit collusion on prices, bid rigging; and profits for items placed into R&R auctions by Reznikoff. Reznikoff’s bidder number is 204.”
Burris goes on to describe further how Eaton and John Reznikoff engaged in shill bidding activity similar to the actions that took down auction kingpin Bill Mastro and Mastro Auctions:
“In any given auction, if Reznikoff “wins” his own item in a particular auction because he or Eaton could not max-out the bidding on that item with an unknowing bidder (or bidders), it is processed internally by Bill White differently than all other winning bids are processed- there is no sales invoice generated for him and the item shows as unsold on the “after auction profit list.” This system was designed by Bob Eaton, in direct collaboration with Reznikoff , so that Reznikoff was guaranteed a profit to his personal liking on any particular item; and a “no sale-no commission” policy so that he would continue to supply a higher quality (supposedly) number of items when R&R couldn’t get or didn’t have enough in any given auction. I know of numerous instances of this occurring over the past five years. Reznikoff consigns to almost every auction and has usually 10 or more items in each. Monthly consignor checks to Reznikoff range in value from $100’s to $100,000 each month. He bids on his own items with the full knowledge and consent of Bob Eaton and Carla Eaton.”
Burris also revealed her intimate knowledge of the bidding process and the RR computer system:
“To get the R&R bid logs one needs an administrative password- log-in to the website using that password and then you can click on any item, see the current high bidder, the maximum that they have on an item and there is a button you can use to see the bid log. It gives the name, number and amount of the bid as well as the time it was placed. Under the administrative password there is also a report called “auction totals.” When selected this generates a complete report of the current sales totals for the auction in process. It was designed as part of the web bidding process and implemented by Steve Long. Steve Long was told that when designing the report to ensure that the total omitted any high bids by the house auction bidder 0. These are the reserve bids. However, the totals on the administrative report generated off the website are subsequently not correct as they include bids from those consignors who are bidding on their own items on either their own bidder number of the bidder number given to them specifically to bid on their own items. The true auction sales report is generated in the company’s internal system after the auction by Bill White- after he has taken out the fictitious bids.”
Burris alleges that Heritage CEO Brian Halperin (left) was shill-bid by Eaton and RR on a Charles Schulz item (2nd from left) that sold for close to $40,000.
In one passage Burris details how Heritage Auctions executive Brian Halperin was shill-bid on a Charles Schulz autographed item:
“Some consignors have been given separate bidder numbers specifically so that they can use those to bid on their own items…Joe Long, uses an account set up in the name “Gerry Long”. A “Gerry Long” bid on “Joe Long” items and to my knowledge has never bid on anyone else’s items. In this February 2008 auction Gerry Long bid on the Charles Schulz item, item 594 catalog 330 and the eventual sales price was $38,569.09 (with bidder’s premium) “Joe Long” was the actual consignor of this Schulz item. This item was ultimately purchased by the CEO of Heritage Auctions, Mr. Brian Halperin, so much so that an avid R&R bidder, Mrs Charles Schulz herself, deemed the final price too high for the value of this particular Schulz item.”
In another passage Burris described in great detail how another RR client named Simone Peterson was defrauded by Eaton:
“When I first worked there, bidder 5461 was used to bid against maximum bids. I noticed it because I always took the bids placed by a regular client named Simone Peterson (NY) bidder 6132. Simone is an insisting collector on items that start out at $100. I noticed that many times she was being bid against by bidder 5461 who never won the item but always took her to one or two bids below her maximum. In this way, she paid huge ridiculous amounts for items because Eaton knew what she would be willing to pay for any given item because of the maximum bids she already placed on the item that he could see on his computer screen. He knowingly and amusedly took advantage of her “addiction” for especially desired items—almost as a sport. At some point I checked on who the “counter” bidder was in these bidding wars with my “client” Simone and realized that it was not an actual person or persons, but rather an account kept by R&R to bid in its own auctions. At the time bidder 5461 had a name: O. Wright from Kitty Hawk.”
Burris claims that RR sold a large number of fake items alleged to have been signed by famous artists like Pissarro (left). According to Burris, many fake Pissarro prints were consigned to RR by attorney Danny Brams (right).
Burris’ affidavit also deals with issues of authenticity and alleges that RR and Eaton at times knowingly sold non-genuine autographed items including an Elvis Presley signed guitar, a Beatles album and a large group of material consigned by attorney Danny Brams from Florida:
“R&R has sold numerous (more than 100) items purportedly signed by Chagall, Miro, Picasso and Dali. Most of these were consigned by Dan Brams dba as Paper Treasures. They came to my attention originally when I fielded questions about them from bidders concerned about their authenticity. A number of these were returned to R&R when subsequent review by art experts confirmed their non-authenticity. Bob Eaton and I had a conversation about not taking these items anymore and while he agreed that they were problems with these items, that Dan Brams had an explanation for them so we would continue to list them. Among these items, as an example, R&R sold a Pissaro Item 377, Catalog 269, selling price $5,850, which was recently returned by the purchaser after it had been examined by the Pissaro Institute and determined to be non-authentic. R&R has sold 100s of these prints/book photos and has issued refunds on all that have been returned. However, there are still dozens of these in the hands of R&R winning bidders and the potential loss for the continued refunds would be in the $100,000’s.”
Sources indicate that several FBI agents have received copies of the Burris’ statement and according to one hobbyist familiar with the RR lawsuit the FBI has shown an interest in the case and in the recent news that former Mastro Auctions IT director William Boehm also worked for RR. Boehm, who plead guilty to one count of lying to FBI agents after destroying Mastro bidding records, was scheduled to be sentenced in Chicago Federal Court earlier this month but sources say sentencing has been postponed until at least June.
Here is the entire Karen Burris Affidavit.