Heritage Auction Galleries, is being sued by a former employee alleging that Heritage executives perpetuated a "massive auction scam." The lawsuit charges that the Heritage used an undisclosed shill bidder at auctions to inflate the price. Co-defendants of the suit include Heritage executives Gregory J. Rohan, Steve Ivy, James L. Halperin, Marc D. Emory, Paul R. Minshull, and Dagmar Byers.

Filed on May 22, the suit alleges that Heritage and its executives violated the Racketeer Influenced and Corrupt Organizations Act (RICO, Title 18, Chapter 96), and the Texas Pawn Shop Act [PDF].

The suit was brought by Gary Hendershott, an alleged expert in Civil War memorabilia and was recently joined by Montana businessman Chris Kortlander. Kortlander claims to have "consigned thousands of individual historical manuscripts and photographs to Heritage," and claims to have been deprived of profits because of the use of the shill bidder.

Along with Kortlander's claim, Hendershott claims he is owed $1.6 million for commissions on auction sales. Part of the sale includes two paintings purchased by a trust Hendershott was working with. A judge ordered that sale be arbitrated after the filing of suits and countersuits.

So let me see if I understand this lawsuit. Kortlander is suing Heritage because they use a shill bidder to increase the hammer price to levels higher than if the shill was not participating and Kortlander claims he was deprived of profits? What would the profits have been if the shill was not bidding on the auction? Would the same prices have been realized?

With Hendershott's attorney Mark Senter being accused of rewriting the suit with "salacious headlines," the filing reads like one of a disgruntled employee and his attorney looking for attention to force Heritage to settle rather than experience the negative press.

One could only wonder what Judge Judy would say!

To read the original blog post, see:Heritage Accused of Racketeering(coinsblog.blogspot.com/2009/09/heritage-accused-of-racketeering.html)