Meet the $100,000,000 fraud kingpins about to get rekt by blockchain

From wine forgeries to counterfeit baseball cards, “fake” consumer goods are estimated to cost Americans alone upwards of $600 billion every year.

Fake autographs net hundreds of millions of dollars in cash for criminals globally.

Counterfeits, it seems, have always been the enemy of collectors.

But sometimes these counterfeiters are the people you would least expect: collectors themselves.

Surprised?

You’re about to learn about some of the strangest, most unbelievable, counterfeiting cases in history.

Ponzi schemer Bernie Madeoff leaves a courthouse for a case which has surprisingly little to do with this article.

In one case, a collector named John Rodgers organized a multi-million-dollar conspiracy producing counterfeit sports trophies and memorabilia.

In another case, a major company for trading cards, Upper Deck, which had the exclusive distribution rights to authentic Yu-Gi-Oh! cards, also sold counterfeit Yu-Gi-Oh! cards out the back door, netting tens of millions of dollars.

These fraud cases are too common for them to be the doing of a few bad apples. This is human nature at play in a game of misaligned incentives.

The industry is rotten from the core.

In the current collectibles market, there is always the potential for one party to deceive the other on an item’s authenticity. After all, the only way to ensure authenticity is to rely on an authoritative source.

It’s far from a trustless system.

In this article we’ll talk about three of the most bizarre and lucrative cases of collectible counterfeiting. Then, at the end of it, we’ll discuss a solution that may be the key to stopping this widespread fraud: the blockchain.

Konami v. Upper Deck

If you’re over the age of 12, you’ve seen this logo before.

Upper Deck is a private company based in California, USA. The company is well-known for making trading cards and also produces sports-related memorabilia with the likes of Michael Jordan, Tiger Woods, Serena Williams, and others.

Put simply, it’s one of the three biggest companies in the industry globally.

However, despite their deep ties to the collectible industry, Upper Deck has engaged in shady business behavior over the years which has resulted in multiple lawsuits, one of them being Konami v. Upper Deck.

Komani gave Upper Deck the license to distribute their Yu-Gi-Oh! Trading

Cards via a partnership during the early 2000s. However, in 2008, Konami filed a complaint in the District Court for Central California claiming that Upper Deck was also selling counterfeit Yu-Gi-Oh! cards. Upper Deck responded by claiming Konami was unfairly slandering the company and counter-sued. What came from this was an international lawsuit that lasted years.

Upper Deck proceeded to file a lawsuit in Amsterdam in December, 2008. Although initially the court decided in favor of Upper Deck, the decision was overturned in 2009. By overturning the injunction, the Amsterdam High Court of Appeals ruled in favor of Konami and upheld the company’s termination with Upper Deck worldwide. This effectively returned the Yu-Gi-Oh! brand to Konami and Upper Deck lost.

Then the unbelievable happened: Upper admitted that they knowingly produced counterfeit cards.

If you can’t trust the official authorized distributor to sell you a genuine card, and you can’t trust a billion-dollar brand to not value their brand over a few dozen million easy dollars, then how can you ever confidently invest in collectibles?

Trophies and Trust, Fixtures and Fraud

What else can happen when you defer to authority to determine the legitimacy of collectibles?

Something like what happened in 2017, where a collector pleaded guilty to a multi-million-dollar fraud for sports memorabilia.

In one of the biggest cases of sports memorabilia

fraud in the last few decades, John Rogers admitted he had, among other things, fixed nameplates on replicas of trophies to make them appear authentic.

One of these fake trophies was used by University of Oklahoma running back Billy Sims as collateral for a loan, but the other party was under the impression the trophy was real.

Pretty clever scheme.

John Rogers was jailed for committing new frauds after being charged. Eventually, he would be sentenced to 12 years in prison for bilking multiple banks out of millions of dollars.

Rogers entered a guilty plea, in which he admitted that he routinely altered sports memorabilia. The plea in 2017 came three years after FBI agents raided his home in Arkansas on the charges that he was engaging in sports memorabilia fraud.

When asked why he did, Rogers replied simply — “Greed.”

Rogers is just one of many collectors, industry-partners, and companies to commit fraud with collectibles. The problem is so deep that, in the case of sports memorabilia, sometimes even sports players themselves conspire. For example, Eli Manning and NY Giants football team were hit with a multi-year lawsuit of selling fake “game-worn” memorabilia.

The reality is that counterfeiting collectibles and memorabilia is simply too easy. There’s no way to know how many people have simply just gotten away with counterfeiting without any repercussions whatsoever.

If ‘acclaimed’ and long-time collectors like Rogers were able to get away with selling counterfeit collectibles and/or using them as collateral for loans, then what does that say about the state of collectibles? How do we ensure their authenticity from rogue deceitful actors or, in the case of Upper Deck, deceitful card-producing companies?

The Most Valuable Collectible Card of All Time Was a Fake

So far we’ve talked about company and individual fraud when it comes to collectibles and sports memorabilia.

However, what about cases of where the card is “authentic” but is altered to increase its value? Maybe the card was damaged around the edges and, since all cards have slightly varying shapes and sizes, the collector decided to trim the sides to raise its value — who would even notice? This is exactly what happened to the T206 Honus Wagner Card which sold for sold for $1,620,000 in 2008, $2,106,000 in 2013 and a record-setting $3,120,000 in 2016.

The T206 Honus Wagner Card is one of the rarest and must expensive cards in baseball history. Once owned by Wayne Gretsky, considered to be the greatest hockey player in history, the card has attained legendary status among collectors.

So the world was shocked when it was exposed that one of the world’s most trusted baseball card authenticators was behind a con-job that lasted decades: trimming the edges of the T206 Honus Wagner Card to raise its value.

Pictured: most valuable piece of cardboard of all time. If you look closely, you can tell by the pixels that it’s been shopped.

The FBI raided his house, and Mastro admitted to his crime.

Mastro was also involved in other conspiracies of counterfeiting. For example, the U.S. attorney also accused Mastro’s auction house of selling a fake 1869 Cincinnati Red Stockings trophy ball to a collector for $62,000 in 2006.

The Solution

So how would one go about solving this problem of counterfeit collectibles? The solution would have to involve two key features:

(1) an account of each collectible in a digital database that cannot be altered

(2) a trust-less system for verifying the legitimacy of each collectible

It is only through these two features that a solution would be possible. If implemented correctly, such a solution could make cheating impossible.

In other words:

Blockchain technology.

Putting Blockchain to Work

Trustless blockchain technology can’t disrupt the collectibles industry quickly enough.

There’s just too much money at stake, and too much fraud.

Let me tell you one final story, about the biggest heist of all.

Around ten years ago, the old card companies (Topps, Panini, Upper Deck, etc) realized that computers and the internet weren’t fads, but rather were here to stay, and a lot of collectible card brands went digital. Since then, digital collectible cards have grown into a billion dollar industry.

They’ve found the most success when tied to games.

This billion-dollar digital collectible card game market includes popular titles like Hearthstone, FIFA Ultimate Team, and, one could argue, Pokemon Go.

But this transition to digital has created a new problem:

The cards sold in this billion-dollar digital collectible card game market aren’t truly collectible.

I’ve spent a lot of time thinking about what makes something collectible, and it comes down to ownership and rarity. But when it comes to current digital collectible cards…

You can’t truly own them in any meaningful sense, and they aren’t truly rare.

If Nintendo wants to make more Pikachu’s, they can, and if they ban your account, you lose yours. Even if they don’t, you can’t even trade them.

So in what way are they really yours?

When we moved from physical collectible cards to digital collectible cards, a massive robbery occurred that almost nobody noticed. This single heist dwarfs all of the frauds that were ever committed in the physical collectible world by an order of magnitude.

Back in the day, card sellers made a little bit of money from the initial sales of booster packs, and that was it. When a card became rare and sold for millions of dollars a half-dozen times on the secondary market, they got nothing.

Now, card sellers sell you digital cards that you can’t even trade, and which can be taken from you at any time, and which can be diluted to an unlimited degree.

This is what a billion-dollar heist of an entire economy looks like.

At our startup, we’re giving control of this economy back to the collectors and gamers. And if blockchain makes counterfeiting impossible in the process, well — all the better!

Then, the large established players will realize that, like computers and the internet, blockchain is no fad.

We’re calling our platform Gamedex.

It’s like Steam, but just for Digital Collectible Card Games. Gamedex will serve as your digital card wallet, store, and exchange, and as your game store and launcher.

Kind of a big deal.

Gamedex’s platform will allow for credit card purchases, and you’ll be able to buy Gamedex tokens (GDX) in physical retail stores via scratch-off cash packs, much like Steam, PlayStation, and other platforms.

The market for collectibles is valued at $370 billion per year. The PC gaming market is worth more than $110 billion per year. We are excited to bring all of the benefits of blockchain to such a massive consumer market, and we’re excited to bring billions of dollars of value back to the masses.

Join us at www.gamedex.co, or on telegram.

Thanks for reading,

Cam @ Gamedex