It’s almost poetic that this case wasn’t solved by a tip from a seasoned detective. Two people who did it for fun had spreadsheets and too much free time. Two online collectors—the kind of people who argue about card corners and centers at midnight—began to see a pattern. Cards were graded by a big appraisal firm, then bought in secret by a certain dealer, returned in different condition, regraded with higher scores, and then sold through a well-known auction house. The way the sequence used every link in the chain was almost beautiful.
Since then, the FBI has started a full criminal investigation into what seems to be a well-planned scheme that involves several states, several institutions, and what one could describe as the heart of a billion-dollar collection industry. At the center of the story is an alleged “card doctor” who was the dealer who handled the cards between grading submissions. This person has denied any wrongdoing. He says all he did was find cards that were undergraded and send them back for a second opinion. In theory, that’s possible. It’s also, to be honest, an easy way to explain a pattern that keeps happening over and over again.
You need to know how card grading works in order to understand why this is important. In the 1990s, when professional appraisal firms started giving card conditions numbers on a clean scale from 1 to 10, they didn’t just make a system. They set up a store. A card with a PSA 9 grade could sell for a lot of money. If the card was a 10, it could sell for thousands of dollars. Forbes has said that this secondary economy has done better than the stock market over the past ten years. It is powered by that gap. What’s wrong is that some of the data used to make those returns came from the auction house that is now the subject of a federal investigation.
It’s hard not to see the conflict that’s built into all of this. When the FBI looks into an appraisal firm, they charge customers based on the grade given, not a flat fee, but a percentage of the value. That by itself isn’t always corrupt. But it does make people more likely to give high marks, and in a market where one point on a 10-point scale can mean a tenfold difference in price, this is not a small problem. That’s the whole game.
Things like this have happened before in the world of memorabilia. Operation Bullpen, the FBI’s 10-year investigation into fake sports autographs that took place from 1999 to 2005, led to the convictions of over 60 people and showed that between 50 and 90% of the sports memorabilia on the market at the time was fake. Forgers put baseballs in shellac to make them look old, stored things in dog food bags to make them smell old, and bought old ink just to get by inspection. It was very careful, surprisingly creative, and very bad for collectors’ trust. This investigation feels like a spiritual follow-up; it uses different methods but still has the same wound.
This is a very uncomfortable situation because of the time. The National Sports Collectors Convention was coming up in Chicago at the same time that the FBI story came out. The convention is the biggest event of the year for the industry. It’s where deals are made, collections are shown off, and buyers and sellers reaffirm their trust in each other through handshakes and word of mouth. Going into a place where there is a federal investigation going on changes the atmosphere in ways that are hard to measure but easy to feel.
People who collect cards have always believed the same things: that the grade on a slab means something, that the auction price shows what the card is really worth, and that the market is at least mostly honest. That belief is now broken, and it’s still not clear if the institutions involved will be able to keep their credibility after this. The hobby lived through Operation Bullpen. It’s really not clear if it can keep going after a scandal that targets the grading system, which is what made modern collecting possible in the first place.
