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Barrett Jackson - Shill Bidding?

5 May 2005
Los Angeles
blog by Sam Barer over at The Four Wheel Drift:

January 27th, 2007 by fourwheeldrift
As a collector car journalist, I have been watching the Barrett-Jackson auction for years. For the last five or so years, it has been very apparent that the Scottsdale auction is at best a bastion of greed and manipulation…and at worse, all-out fraud.

I’ve discussed B-J with collectors, dealers and enthusiasts, many of whom would be considered “insiders,” meaning they’ve bought and sold cars at B-J and other auctions, or are well-known in the collector car hobby. For some reason, it is this year that people are all finally grumbling and passing rumors in unison.

The bottom line is that Craig Jackson and the B-J company have really screwed themselves this year. Their contracts specifically promise every car three minutes on the stand. Due to ego and greed, they expanded the Scottsdale ’07 auction to the point they could not provide this, plus they had the audacity to do it on live television.

A well-known former head judge in the Ford Thunderbird circles was one of the sellers who had his car short-timed. He has already filed a law suit against B-J, and this is already headed towards class-action status.
According to this judge and other sources, it appears Barrett-Jackson was operating a bit on the same level as an evangelical healing show. They had assistants milling around asking what specific sellers thought their cars would bring. Armed with this information at the control desk, if a lot passed the value at which a seller indicated he’d be happy, the car would be rushed off and the gavel would fall – even if bidding was still very much alive.

Because the event was televised on live television via the Speed TV network, the plaintiff(s) now have video/audio proof that buyers were signaling increased bids before the three-minute marks, but were denied by a too-fast last call and hammer.

While this all might cause Barrett-Jackson to have to pay money to sellers in the form of a judgment or settlement, it is something else that might land Craig Jackson in jail.

It is no secret that Barrett-Jackson owns many cars that are run through the auction – it was something I suspected many, many years ago. This was proven when they started maintaining a showroom of cars in Arizona. This is not illegal, but stay with me.

I’ve always suspected that the cars owned by Craig Jackson and the B-J company were often driven up by shill bidders working for the company. Essentially, the strategy works in the sense that ever since the auction focus moved from classics like Packards and Duesenbergs to muscle cars, B-J has been able to shill, say a Hemi Cuda or mid-year Corvette 427 they own, which causes the value of the 10 other identical cars to increase. They wind up “buying” their own car back, but the others go on to regular buyers, who now are paying higher because of the perception the market has moved up.

This suspicion has been validated by auction attendees this year that witnessed cars sold at auction headed in trailers back to B-J’s warehouse. The lawsuit allegedly points out that these cars also spent significantly more time on the block than others.

If this isn’t all interesting enough, during this year’s auction, fellow collector car journalist, Keith Martin of Sports Car Market, was booted from the Westworld premises and his media credentials revoked for voicing loud, specific concern regarding the event while sitting in the media room. Barrett-Jackson accused Keith Martin of “holding court” and attempting to send VIPs and journalists to the competing RM and Russo and Steele auction events. Among the alleged opinions included that the cars at B-J were of inferior quality (and had quality misrepresented,) as well as that the bidders were significantly over-bidding cars, which shouldn’t come as a surprise to anyone who has witnessed people paying six figures for cars they could have bought for under $50,000 any other day of the year!!!
This is somewhat of an interesting twist. Keith Martin’s publication has marketed the B-J events and has helped fuel its popularity. Keith is definitely one of the great “insiders” of the hobby, and has been a friend to Craig Jackson. In past years, Keith nor his publication have been critical of the goings-on and rumors, while other collector car journalists have been outwardly screaming that something stunk.

It makes sense, since Sports Car Market really only tracks the value of vehicles and other items sold at auction, rather than via private sales (which really has skewed SCM’s values for years!) So without kissing-ass to B-J, Keith would have missed insider info on the largest events covered by his mag. So we can only guess that Keith and Craig had a falling out of some type.

I applaud Keith for turning the corner on his view of B-J, but I’m with others I’ve talked to about this: I hate to say this about a colleague, but I felt his behavior was a bit unprofessional. As journalists, it is our responsibility to write what we think, but going to the show for years, then promoting RM and Russo+Steele while at Westworld is somewhat unprofessional. I agree that Keith, a true hobbyist who started out by writing an Alfa Romeo newsletter, was for a long time too much a part of the “circus” about which he finally rejected, and that SCM has to a significant degree helped to fuel misinformation and a house of cards regarding specific auction prices and bidding behavior. Keith, by all accounts, is a really good guy — an enthusiast, who maybe just needed to take a step back and a big breath and reacquaint himself with those outside of the very insulated collector car “in crowd” — and spend time with some car people who are not trying to exploit the collectors. There are plenty of guys who have dug themselves too deep into this little crowd, and are no longer fun to deal with, because they’ve put personal greed well ahead of the cars and the collectors. Keith will rebound — he has a great internal staff of really fantastic people, who hopefully will help him return to his roots.

That being said… While I’ve never met him, the buzz among those in the hobby — both collectors and journalists, is that Craig Jackson is quite arrogant, so don’t expect many to come to his rescue. He inherited his father’s company, and has fueled B-J’s growth with a combination of intelligence, drive, ego, and greed. While there is nothing wrong with that combination, when it results in unethical and possibly illegal activities, that’s inexcusable.

Like many surrounding the hobby, I will be watching the events unfold. Will the Westworld tents come down like a house of cards, or will everything just go away with an exchange of a little money? It’s hard to predict. Craig Jackson has become a very powerful man, and his company has pumped billions of dollars into the Arizona economy over the years.
This all being said, there’s no doubt that Barrett-Jackson “jumped the shark” this year. Unlike when Fonzi did it, Craig Jackson drove his allegedly shill-bid Hemicudas over the tank and down a ramp that could lead to six years in a minimum security prison-issued orange jumpsuit. If that’s the case, maybe he can get Sports Car Market in the slammer to keep-up on Russo and Steele, RM and Kruse auction results.
excerpt from http://www.autoblog.com/2007/02/06/barrett-jackson-rumblings-trouble-in-westworld/

A return visitor to the original link would find a retraction in place of the original article. As Barer explains in this new replacement blog, after some soul searching (and being contacted by B-J President Steve Davis) he decided to take it down. Barer claims he decided to post an explanation because, "after widespread rumors, many emails and telephone calls, I wish to set the record straight." Barer says he went too far and didn't balance the piece by getting B-J's side of the story. Although he sticks to his guns on the material he previously ran, he knows it's only fair to allow Davis to respond to the points made. Barer says he will give B-J and others more time to address the claims and if and when the responses come in, he may update the story. One thing we can count on is that this won't be the last we'll hear of the Arizona auctions, or Barrett-Jackson in particular.
These auctions never really sit well with me. I wouldn't want to have my bid run up by a bidder on a cell phone. Even bidders in person on site can erroneously run bids up. (I know of a few such episodes where competing bidders enjoy seeing their oposing bidder having to pay a higher price by making a bid that they themselves are not really willing to pay for a vehicle.) The sight of B-J representative sitting at a table talking to someone (?) on a phone and bidding up has just always made me a little uneasy.
I only watched a couple hours of the Scottsdale coverage this year and in that time there were several final-sale-price retractions/corrections that took place long after the sale of said vehicle. Some of these "corrections" were relatively large (up to ~20k if I remember correctly) and they came several minutes after the car sold (sometimes 1-2 cars later). To me this would throw red flags everywhere if I were a buyer.
I, as a "green pea", have purchased higher-end cars at dealer auctions on many occasions. It's a thin line you walk when you bid with extreme confidence (to show other bidders you're "the buyer") yet show a little hesitation at times to keep the auctioneer honest. I have had the uneasy feeling that I was bidding against a wall on several occasions but the dealer auctions generally won't run you up more than a few hundred dollars, so it's not a huge deal. It's also nearly impossible to prove.

I may be wrong but I read into these "corrections" at B/J as more than just a little mistake, particularly when it happens with such frequeny.

Scenario 1: Bidder 1 is bidding against fake bidder 2. Bidder 1 unexpectedly stalls as fake bidder 2 is left holding the high bid - oopsy!

Scenario 2: Bidder 1 hesitantly stalls his bidding (as many eventual buyers do) while the auctioneer continues to inflate the price with fake bidder 2 and fake bidder 3. If bidder 1 doesn't hop back in or if another real bidder doesn't come forward (as the auctioneer predicted) the auctioneer goes ahead and "sells" the car for the high (fake) bid amount.

How they get themselves out of that kind of jam is beyond me but I assume they hold bidder 1 to his high bid (he's probably agreed to it somewhere in that fine print contract he signed) and claim that the other bidder(s) flaked.

Next time one of their live auctions is running on tv, pay attention to whom the camera is watching. Remember that the cameras can hit any square inch under that tent with a seconds notice (yellow handkerchiefs attached to over-caffinated auction reps/jumping beans are fairly easy for the cameras to pick out). If a car sells w/out the "buyer" being shown on tv there's a chance the selling price will be "corrected".

At a dealer auction all they have to do is rerun the car at a later date. The owner/seller accepts this risk because the auction was trying to "help" them by getting more money for their car.

As for B/J, maybe there are some innocent mistakes here and there (as the crowd is comprised of relatively "green" bidders and it's nearly impossible to actually keep tabs on whom you're bidding against) but B/J might just see that as all the more opportunity to take advantage of the situation.