Better Business Bureau Warns of 'Madoff' Auction 'Scam'

Nov. 23, 2009 — -- There was another "Bernie Madoff Auction" in Syracuse, New York on Monday -- but the man running the sale couldn't guarantee that any of the items actually belonged to the disgraced financier or victims of his Ponzi scheme, prompting a spokesperson for the Better Business Bureau to call the auction itself a "scam."

Similar auctions have been held across the Eastern U.S., most, like the Syracuse auction, arranged by Atlanta-based Southern Star Auctioneers and affiliated companies.

"If a business advertises itself as a 'Bernie Madoff Auction,' but doesn't have any Bernie Madoff items, then I would call that a scam," Alison Southwick, national media relations manager for the Better Business Bureau, told ABC News.

According to Southern Star's John Schmidt, manager of the Syracuse auction, his company works with Madoff victims who are looking to liquidate their belongings. "They'll bring us their items that they have purchased and say, 'Well, I need to get some money back because I got screwed over in the Bernie Madoff scandal, can you help me?'" Schmidt told Syracuse ABC affiliate WSYR-TV.

Click here to go behind the scenes of Brian Ross' investigation into Bernie and Ruth Madoff.

But Schmidt couldn't name one item at the sale that belonged to Madoff or his victims. According to Schmidt, his firm is unable to provide such information because it doesn't do an inventory after every sale.

Schmidt told WSYR that to ensure the Madoff items are legitimate, his company requires the seller to sign a document verifying their authenticity. But Schmidt could not produce an example of such a document in Syracuse, saying he did not have one with him.

During and after the auction, which lasted from 11 a.m. to 2 p.m., a reporter for WSYR asked several attendees if there had been any Madoff-related items for sale, or if the auctioneer had indicated that any of the items came from Madoff victims. No one reported seeing or hearing about any such items.

WSYR reported that the New York Attorney General's office is looking into the auctions, and that investigators had attended the auction.

Similar Madoff auctions were held in Memphis, Tennessee on Saturday, and in Nashville on Sunday. Schmidt told WSYR that he had held an auction in Pennsylvania last week.

In the cities where its "Bernie Madoff" auctions are held, Southern Star typically takes out advertisements in local newspapers with the heading "Bernie Madoff Auction." The ads are stickers slapped on the front page of the paper, and include the claim that the auction is "Due to the Losses Caused by Bernie Madoff," as well as a list of the luxury items for sale, like artwork by Peter Max, Salvador Dali, and Norman Rockwell, Rolex watches and other "flashy items."

Click here to purchase "The Madoff Chronicles" from Amazon.com.

The language of the sticker affixed to the Syracuse Post-Standard says, in garbled English, that the items were "duly instructed by Millionaire's estate as well as other prominent traders" and says "Seized assets and general order merchandise will be auctioned off to the highest bidder to recover losses from Ponzi scheme." At the bottom, however, in fine print, it notes "Items available for sale did not belong to Bernie Madoff."

"The fine print doesn't always get you off the hook," said Southwick. "If enough people are getting misled, the fine print is too fine."

Southern Star solicits items from Madoff victims on its Web site, madoffhelpline.com. "If you have been a victim of the Maddoff ponzi scheme," it says (misspelling Madoff's name), "and would like to liquidate your fine art or jewelry at one of our future auctions contact us."

Representatives of the company have said that 20 percent of the items at past auctions came from Madoff victims. When asked by a reporter for the Nashville Tennessean to indicate which items at the Nashville auction were from Madoff victims, however, auctioneer Avi Asher said he could not. According to the Tennessean, Asher also did not mention Madoff during bidding at the auction.

Southern Star is registered to Dion Abadi of suburban Atlanta. Dion and his brother Gavin have operated various auction and estate liquidation firms in recent years, including Lyndhurst Auctioneers, DA Auctioneers, D & G Auctioneers, State Liquidation Services and Under the Hammer. Both Dion and Gavin have held auctioneer's licenses in multiple states. Calls and e-mails to the firms registered to Dion and Gavin Abadi were not returned.

According to a report earlier this month in Time magazine, Dion Abadi was sanctioned twice in 2008 by the Florida Board of Auctioneers for violating rules about "false, deceptive, misleading or untruthful advertising."

The Atlanta Better Business Bureau has given DA Auctioneers a failing grade for not responding to any of the three complaints they've had in the past 36 months.

"For a small company, that's fairly significant," Southwick said.

Click here for complete Blotter coverage of Madoff and his Ponzi scheme.

Ron Stein, whose in-laws were victimized by the Madoff scam, has asked Southern Star to take down its madoffhelpline.com Web site. In January, Stein founded his own Web site, madoff-help.com, a non-profit to help other Madoff victims.

"It's unfortunate that people are looking to make money off the very tragedy that has affected so many lives," said Stein.

Stein has repeatedly asked Southern Star to take the site down or change the name and says the company has refused to do so. "This has been going on for months now," he said, "but we have bigger fish to fry at this point."

"While it is upsetting," said the BBB's Southwick, "it's not really that surprising that someone is trying to fool people into thinking they can own a little piece of history connected to the Madoff Ponzi scheme."

Auctioneer John Schmidt told WSYR that anything Madoff is a hot item. "If it's got Bernie Madoff's name on it, it's like Gucci or Versace," he said. "They want it."

Fewer than 20 people attended the so-called Madoff auction in Syracuse, including a collector who traveled from Westchester, N.Y.

"I saw the ad, saw Bernie Madoff stuff and thought I'd come have a look," said Lester Ford, a private dealer in antiques and other collectibles. On November 14, he attended an official U.S. Marshals-sanctioned auction of the seized assets of the Madoff estate in New York City, which raised close to $1 million for victims of Madoff's Ponzi scheme. Ford came away empty-handed. He hoped to have better luck at the Syracuse sale, but wasn't very disappointed at the lack of actual Madoff items there.

"I really don't mind. A lot of the artwork they have is really wonderful."

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