Barrett-Jackson Auction Fraud Exposed

[MOPARHOUND!]

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Barrett-Jackson's Westworld Tent Turns Out to be a House of Cards

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 gross consumption...but now some hobbyists are claiming a worst: 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 seem to have really screwed themselves this year. Apparently, a well-known judge (legal, rather than concours) selling a vehicle at B-J this year has filed papers with the court, because B-J contracts specifically promise every car three minutes on the stand. Evidently, he was one of the sellers who had his car short-timed. He communicated the story, which got broadcasted via the Classic Thunderbirds List. According to the grapevine, this is already being discussed as translating into class-action status for the benefit of other sellers.

According to this judge and other sources, it appears Barrett-Jackson was operating a bit on the same level as an evangelical healing show. Allegedly 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.

Along with many collectors, 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 supported by at least one auction attendee this year that says he 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 screamed 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-[Edited by Moparts - Keep it clean] 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 believe 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 unkosher. 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.

And Keith got his chance at revenge today, when his piece in the New York times said: "the red-hot market was cooling a bit." He likened the high auction prices to the Dot.com craze, then went on to say: "While the prices of some types of cars remain strong, primarily low-production muscle cars with their original engines ("numbers matching" is the trade term) or sports racing cars like Ferraris, other more common cars produced in larger numbers, or cars whose engines have been replaced, are holding their values, at best."

If you want to get back at someone who owns an auction house, the best way, I suppose, is to tell everyone that prices are too high. Ouch!

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 admirable growth with a combination of intelligence, drive, ego, and greed. While there is nothing wrong with that combination, if 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 happened before, like the 2006 event's Futurliner debacle when investor Ron Pratt allegedly negotiated a $3.0M price (after B-J staff admitted to mistaking the high bid), but the reported sale was for $4.0M.

It's hard to predict the outcome. None of us have all the facts. Craig Jackson has become a very powerful man, and his company has pumps an estimated $96M dollars into the Arizona economy annually. He's allowed his say, and the appropriate judge/jury might very well decide he personally has done nothing wrong.

This all being said, there's no doubt that Barrett-Jackson "jumped the shark" this year. Unlike when Fonzi did it, this story has Craig Jackson driving 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.

[OneBadSuperbird]

MoparHound, that was the original article but it doesn't show all the blog entries that were made by Drew Alcazar, Bob Johnson, B-J's Steve David and otgers in response to the article.  It was in those blog entries where things started to really get interesting.

[Brock Samson]

yeah i thought the responses were at least as interesting... they pretty much admitted to the auction selling their own cars... to themselves.. to bump up prices.. what else do you need to see?..
   this greed thing is ugly... ugly ugly ugly.... 
anyhow, i was thinking because of what was mentioned about the "Bump" that similar vehicles experience from a 3 million dollar cuda sale,..
if this would affect me and my plans my road runner.
  for example the Dukes of Hazard movie bumped our '69s allot,.. but every yr. the B.J. auction bumps everything...

                          http://www.dodgecharger.com/forum/index.php/topic,2969.0.html
I'l be fine as i got mine for 14K and the book now says about 23K is what it's worth today... i bought mine to have fun with for a few years fix up drive and appreciate.. in evey sense of the word.. 

  so is there a shakeout comming?.. when will values readjust?..
will shill bidders, gas prices and tree huggers price folks out of the hobby?.. 

[pettyfan43]

With Craig Jackson's position in the collecitble automobile world, and the fact that he owns the company, combined with his purported arrogance and greed, one phrase comes to mind.

"Absolute Power corrupts, Absolutely"

Being in the position he is in, there is pressure to out do last year every year.

His circus depends on the values of these cars going up EVERY YEAR. It has been obvious over the past couple of years, in every circumstance except for at THe Circus, the values of those cars has planed off.

So How does he make the circus bigger and better every year?

If he is using shill bidders to artificially inflate the values of these cars, I truly hope he gets busted. He is creating problems and aggravation for everybody else in the car hobby if he's doing this.

How many of us have seen a 2500.00 Charger that the owner has for sale for 10k because he saw "the same car" sell on Barrett Jackson for 250K?

He is one of the people making it harder for Normal guys that truly love these cars to own them. A WHOLE LOT of the people who own them now have no clue
What a Torsion bars is or how it works. 

[OneBadSuperbird]

With Craig Jackson's position in the collecitble automobile world, and the fact that he owns the company, combined with his purported arrogance and greed, one phrase comes to mind.

"Absolute Power corrupts, Absolutely"

Being in the position he is in, there is pressure to out do last year every year.

His circus depends on the values of these cars going up EVERY YEAR. It has been obvious over the past couple of years, in every circumstance except for at THe Circus, the values of those cars has planed off.

So How does he make the circus bigger and better every year?

If he is using shill bidders to artificially inflate the values of these cars, I truly hope he gets busted. He is creating problems and aggravation for everybody else in the car hobby if he's doing this.

How many of us have seen a 2500.00 Charger that the owner has for sale for 10k because he saw "the same car" sell on Barrett Jackson for 250K?

He is one of the people making it harder for Normal guys that truly love these cars to own them. A WHOLE LOT of the people who own them now have no clue
What a Torsion bars is or how it works. 

I totally agree.  I knew Craig Jackson was a VERY shady and arrogant character when I first met him the two times rhat I attended the B-J in 1990 and 1991.

[Brock Samson]

has any math wizards figured the percentages?..
i think that article on the General Lee said the bump from that movie the week it opened was 8%.
i think i'm gonna go look up Keith Martin on google, He's the guy who supposedly knows these things..

[whitehatspecial]

and this from comments on the 4 wheel drift blog....

I understand Barrett Jackson is the big dog and you seem to have given a free pass to Russo and Steele. The most blatant offendor in auction fraud is Drew Alcazar, I happen to know as a fact there have been as many as 50 cars running through Russo and Steele's auctions that belong to Drew Alcazar. There is shill bidding, false sales reporting, fake numbers, fake buyers, it's all smoke and mirrors at Russo and Steele. He took what he learned from Craig and perfected the disception to an art. Read this www.russoandsteal.blogspot.com I understand Barrett Jackson is the big dog and you seem to have given a free pass to Russo and Steele. The most blatant offendor in auction fraud is Drew Alcazar, I happen to know as a fact there have been as many as 50 cars running through Russo and Steele's auctions that belong to Drew Alcazar. There is shill bidding, false sales reporting, fake numbers, fake buyers, it's all smoke and mirrors at Russo and Steele. He took what he learned from Craig and perfected the disception to an art.

[Charger_Fan]

Pretty crazy. I'm left wondering how this will affect Mopar prices in the next few years.

[hotrod98]

Somebody's in trouble. The article is missing in action. I smell a libel suit.

[Troy]

I think it was removed due to unsubstantiated "facts" that were tossed out there soley based on "opinion". Hey! That sounds a lot like some of the threads here.

The main complaint as far as I can tell is short hammering or whatever they called it. The assumption was that BJ employees were asking people what they thought a car would go for and then once the bidding reached that point the hammer would drop with little or no warning - even if bidders were still trying to get in on the action. The author also made the assumption that each car was "guaranteed" 3 minutes on the block but that was never in a contract - it was an estimate that they were going to try to do 20 cars per hour. There was another statement to the affect that BJ owns a lot of cars themselves and were closing the bids on cars they were buying to sell in the future. There was even an "eyewitness" who saw truckloads of freshly auctioned cars making their way back to the BJ warehouses. I think both of those statements were debunked later on so three major "oops!" moments in one article could cause one to reconsider. The article also portrayed an inocent journalist who was thrown out merely for voicing his opinion. Later on it was revealed that this reporter had been fired and had an axe to grind with BJ. There was a claim that they offered to let him buy a standard ticket (with no VIP privileges) and re-enter if he wanted but he turned it down. SOme of the comments were obviously posted by friends and enemies so it was a lot to dig through.

Troy

[Ghoste]

I will add that all of the auction companies buy and sell their own vehicles.  They always have and to my knowledge, it has always been above board.  Shill bidders?  I can't speak for the others but I do know that RM doesn't use shills.  In fact, if they have owned a car too long, they will take a loss on it just to turn over inventory and I imagine it is the same at the others.  Do some private sellers use shills?  I don't know it for fact one way or the other.  As for trucking cars to B-J's warehouse, as much as I can't stand Craig Jackson, it doesn't prove they are all his cars.  RM transport a lot of cars and the bigger customers very frequently keep cars at any or all of RM's warehouses.

[jasonfromIKILLYA]

I thought it was kind of fishy when the narrators said things like "oh, too bad.  They didn't bid fast enough".  I understand if you sit and wait for the last second, but I saw several consistent back n forths get shut down.  oh well.

[472 R/T SE]

Which proves there's two sides to every story. 

[topduarte]

Basically, BJ is a shark searching for more blood ($$$$).

I saw the show last night and they talked to the parking lot guy in charge of finding "curbers".  These are peopl ewho bring their car "near " B-J to sell.  I understand not selling in their parking lot as one guy tried to sell an old yellow mustang.

Parking lot guy called the Scottsdale police to get him to leave.

The one that pissed me off is when th eparking lot B-J guy said, " B-J is losing 16% on these cars sold out here".  Crap, they are making millions!!

But there was a midyear corvette that looked like it was parked behind a chain link fence and parking lot guy called the owner to move the car within one hour or it is gone!!  WTF!!!

Greedy bastards!!

I am not surprised this has happened.  I did also notice the announcers from SpeedTV say on numerous occasions that "Oh well, that bidder missed out!!"  Bullshit!!

On a side not, my brother in law just got hired about 1 month ago by the Scottsdale Police.  I need to ask him about B-J.

They even gave him a so called new black undercover charger as his patrol car!!

Off the soapbox now!!

[Ghoste]

I can understand the parking lot thing too though.  It'd be no different than taking your car to the local Dodge dealers lot and trying to sell it there or even setting up a hot dog cart at the parking lot of a McDonalds.
But you're right, the guy should have explained it like that instead of whining about the percentage lost.

[66mopar]

I don't think this article surprises many people that have been into the automobile hobby for a while. Any real car guy knows that a 70 chevelle convertible is not worth 1 million dollars in fact I don't even think that car was worth one quarter of that. Even as a mopar guy I know a 67 GTX hemi clone (fake) is not worth 120 thousand, maybe half that.

If you like Craig Jackson or not you really got to give him credit for being a good salesman. Anyone that can sell an ugly piece of four door crap with an air purifier in the trunk like the Howard Hughes' 1953 Buick Roadmaster for $1.62 has to be good at something. It is somewhat of a joy watching these wealthy guys giving money away. 

[Doright]

Smoke and Mirror's??
I have been too lots of deferent auctions Barrett J, Kruze int. Ect...  I cant say I have ever bought or sold at BJ But I have at Kruze int. At many different shows of theirs NV, OK, MO, TX.
They all have there own cars or friends cars going threw all the time, There are a lot of guy's out there with a collection of show cars 20-30 and more! Two of the guy's I have met have museums with no less than 150 cars in warehouses these are Multi millionaires with a little time and money to burn that have Cars that are trucked from auction to auction and the owners go with the cars they are friends with the owners of the auction house's generally and these cars do get more auction block time! Come on? if I had a return customer at almost every show you don't think he is going to get special treatment? Especially when he's paying 1k-2k every time that car goes up on the block sale or no sale!?   
These are the guy's controlling the upper end of the market but the cars they are bidding on are show room condition and they are paying top dollar for extremely nice cars if they don't already have one in their collections yet! Its an ego trip for them.

General car guy's see there car or a car like there's sell for an extreme X amount at these auctions and they think they can get X amount for there basket case road warrior.
These are the ones doing more harm to the hobby than collectors of fine cars. 
These are generally dreamers of restoring there cars that have no real idea of how to do it or the equipment to do it, let alone have time, money, experience, or Tooling to perform a full restoration of any thing!
But they have the car in their back yard that they are going to restore, and if you want to buy it its for sale for an extreme X amount or not for sale at all.   
A good example would be a plain Jane 318 66-71 charger basket case 2-30k average asking price.
Keep in mind IM talking about a plain Jane not an RT. or a Rally or a Hemi car you see it all the time on Ebay or the local paper, Mag. Internet, Ect....

Shrill bidding I don't think so! Hi reserve's yes! you bet your butt!
Now on Ebay you see a lot of Shrill bidding so watch out!

Getting shorted time on the Block? Maybe sometimes especially if the car doesn't have the interest of the bidders. Or the owner is not willing to drop his reserve and its no were near the reserve they will roll it on out! Car's staying on the block a little longer even if it isn't getting any bids? yep seen that too! one of my own cars a 48 Lincoln Zephyr show room stock perfect in every way just wasn't enough bidders left at the show and it should have went a lot higher and they knew it and they were trying to get more for it, they make there money from a % of final bid sales. my car was on the block for almost ten minutes did I pay more for it to be up there longer? no. am I friends of there's? no. I just dropped the reserve so it would sell. Kruze wrote out my check not the purchaser! 

Missed bidders
If you are bidding at one of these things you need to get down in front! If you don't have one of the callers working with you or for you will your bid get missed you bet its happened to me at a couple different shows the Auctioneer is watching his callers not bidding cards their are way more people at these things than an Auctioneer can watch and few bidders so he watches his callers.

A bidder let out of a bid?  :icon_smile_question:WOW never seen that happen  :oif you bid you better be willing to pay that amount when you bid, bids are final and binding!
Most all of these Houses require a Bank letter stating how much your good for before they will let you be a bidder.
I have seen guy's bid a car up and then try too back out of buying and paying I believe at Kruze they will pay the bill for the bidder and actually go after the bidder legally if necessary to collect the funds bid for a car themselves, As they hold the title for the car especially if there is a no reserve on it or if you remove the reserve for a sale they are the owner of the car per say so you cant back out even if it isn't enough its too late! So keep your reserve pay the fee's for it.

But too say they have shrill bidding going on at these Big auctions now that's big time trouble for all auction houses and for the hobby and if an one is guilty of it Hang Em hi.   

[mikepmcs]

That was very interesting.   

[Doright]

Another thing about the car market 30 years ago it was model A's and T's that were bringing Big money then 5 years latter it was T Birds, Mustangs and 40 ford coupes and 30S era cars.
It goes in cycles in 5-10 years muscle will be out and it will be something else probably rice burners bringing big money right now you have the generation X in the market and Baby boomer's bidding and both have made good money in realestate and other things and have some extra money to burn to relive their child hood and they want that back one way is to get that car they had or always wanted but couldn't afford when they were a teenager.
In all cases its always 40-65 year old guy's buying to relive their teens so it goes in cycles.
just my 2 cents

[694spdRT]

I was wondering if the car in question did have a reserve. If the bidding was stalling at a number way less than the reserve then I can understand moving on to the next car.  I think if you want "Prime Time" exposure at Barrett Jackson you have to go with no reserve and roll the dice.

[Doright]

Rolling the dice with your favorite car is like killing your Dog, kid or wife if you ask me I couldnt part with any of them it would kill me.
But lets say I had a Hemi Superbird or any other kind of car for the last 5-30 years its kinda wore off well I wouldnt want to sell but if some one offerd the right amount of money You bet I would sell why not money is money and its only a car.

I recently found a good replacement for my teenager days I wouldnt sell that car for any thing right now but in 5-10 years its a gonner as it will have worn off but Im not going to give it away.   

[Old Moparz]

People keep mentioning a reserve for the B-J auctions, but it was my understanding that one of the rules for B-J is you can't have a reserve. One of the marketing tactics is that "ALL" cars will be sold.

Maybe I'm wrong, but I've read this or heard it more than once. 

[694spdRT]

People keep mentioning a reserve for the B-J auctions, but it was my understanding that one of the rules for B-J is you can't have a reserve. One of the marketing tactics is that "ALL" cars will be sold.

Maybe I'm wrong, but I've read this or heard it more than once. 

I was looking at the Barrett website and I think you are right. It states in the consignment info that an 8% commission is taken for "No Reserve" sales and that all cars will sell. I seem to remember a few years ago there were reserves allowed but I would bet that there were too many no sales.

[Doright]

If you want Prime time at any of these shows you have to get in for mid to early afternoon Saturday's not Friday or Sunday you have to reserve your spot sometimes up too a year in advance at some shows and yes if the reserve is set to hi and your not budging on the reserve and they are not getting the bids they will roll it on out!
Drop the reserve and it will stay up a bit longer with bidding going on even after its rolled out the door on many occasions!
If you go in with no reserve on your favorite ride and it goes threw Sunday night or early Friday mourning with no bidders around you might just give your car away for penny's! by the way these are the best times for buying! I am always looking for a good deal as are a lot of people at these auctions with no reserve cars getting a lot of attention especially if they go threw early Friday or really late Sunday.
You should always stay on hand and be there on the block with your car I always drive mine threw myself.

I speak from experience

[Doright]

Ya right all thease cars have reserves unless stated other wise as I said early fridays and Sundays are prime time for sharks like me at theas shows, With out a reserve youd be watching these TV shows selling Hemi cudas and Chevels Camero's ect for cheap not watching them for how expensive they are!

Its true you pay less in fee's for a no reserve auction and no reserve auctions are generaly get reserved for prime time auction times mid afternoon saturdays.
Then there are the rest of us who have a reserves paying the fee's to put the car up their 1-2K a pop sale or no sale.
Fee's are set to a percentage of reserve price what ever that may be.
The last time I went to the Tulsa show it cost me almost 4K in fee's no sales! try swallowing that!