Stamp Collectors Against Dodgy Sellers
The story of the Saratoga Fakes is a story of philatelic fakery on a grand scale. It is an unfinished story, because the operation is still in progress. The buyers and sellers involved have been in business for about two years, and are no doubt confident of continuing in business for many years to come. They thrive in the seller-friendly laissez-faire environment of eBay. They have used the policies of eBay as shield and sword to protect their identities, conceal the details of their operation, and prevent their naïve customers from being warned of what they are buying. They have made many tens of thousands of dollars by selling 19th- and early 20th-Century U.S. stamps with implications of being genuine, but with alterations that render them virtually worthless if certified.
A small number of concerned philatelists from the SCADS team have worked long hours correlating and documenting their purchase, alteration, and subsequent resale of hundreds of stamps. These, however, are only a small fraction of the total output of the operation.
The sellers of the Saratoga Fakes have already done immense harm to philately. Even if their operations were to terminate today, their altered stamps would continue to circulate and multiply the harm. Many of their alterations have been sold to inexperienced people new to stamp collecting who think they have picked up a bargain. The philatelic community, especially those that learned they have been defrauded, will quickly become angry, disillusioned, and skeptical about hundreds of thousands of stamps on the market, and their buying confidence will plummet as a result. Many will quit the hobby altogether as a result of being defrauded.
Other altered stamps have been sold to dishonest sellers who will resell them on eBay, in bourses, or in other venues. For years, even decades, these stamps will reappear again and again, on eBay, in local auctions, in the inventories of careless or unscrupulous dealers, and when collections are broken up and resold.
The sellers of the Saratoga Fakes operate in Saratoga County, New York, north of Albany. They use eBay to buy faulty or low-value 19th- and early 20th-century U.S. stamps, which then become the raw material for the altered stamps they resell on eBay.
ID history of the Saratoga Ring:
We know some of the names associated with these IDs, but without on-the-scene investigation by journalists, postal inspectors, or law enforcement officers, it is impossible to conclude which of these names are real, how many people use these five IDs, or whether others are involved. For example, we have seen envelopes mailed in the course of their operations by chickfrdstk (buyer) and by schuylerac (seller) that clearly were addressed by the same person.
Both the schuylerac and chickfrdstk IDs have previously been linked. In November 1999, Linn's Stamp News reported that schuylerac was listing items with Gregory Stolow's disreputable SIGCC certificates of authenticity. The chickfrdstk ID, supposedly Stolow's sister, was temporarily suspended by eBay for "shilling" or manipulating the prices on schuylerac's lots. 
In the course of their operations, the sellers of the Saratoga Ring has offered stamps with the following types of alterations:
Thus far, many of the alterations have been amateurish, enabling them to be detected by experienced philatelists from the images alone. Some of the stamps from which the original margins have been removed, due to the addition of new perforations, are trapezoidal or have proportions completely dissimilar to the stamps original proportions. Their faked grills do not resemble real grills at all, but seem to bear the impressions of some nubbly object such as a stereo knob which has been rolled on the surface of the stamp. Most of these fakes would not deceive an experienced person for a second. The naïve collector is the target and victim of their efforts.
For those readers who are new to the world of stamp collecting, it is important to stress that these alterations do not make the stamps more valuable. Collectors' standards have changed over time. One hundred years ago, the appearance of a stamp was considered all-important, and flaws were largely overlooked. Stamps often were mounted on corkboards by punching holes through them with straight pins, without reservation, for display in stamp shops. Repairs and alterations to fix tears and improve the look of the perforations were considered acceptable.
Today, however, stamps are valued by discriminating collectors with authenticity foremost in the mind. The emerging stamp grading and authentication organization, Professional Stamp Experts (PSE), assigns a soundness value of 50 for regummed stamps, 25 for reperforated stamps, and only 10 for altered stamps (addition of grills or design elements, removal of cancels, etc.), on a scale of 100. The soundness value is combined with a centering value by PSE for a final stamp grade.
These alterations lower the value of stamps, unless they are hidden from the buyer. After all, value in the open market is determined by what the buyer is willing to pay for what he believes he is getting.
Estimating the total number of altered stamps that have been sold by the Saratoga group is not easy. The evidence is only available for a short time because the auction listings can only be viewed for two to three months, and the images are sometimes removed by the seller once the auction ends.
In late August 2002, SCADS provided to the US Postal Inspection Service a list of 145 fakes sold by schuylerac and pcheltenham on eBay between March 15 2002 and August 25 2002. These were "conclusively demonstrated" to have been altered, because the correlated auction listings showed when the stamps were bought and sold and by which eBay ID, and the associated "before" and "after" images made it possible to identify the specific alterations.
However, this is only a partial list for three reasons. First, because of time constraints, there were at least 50 conclusively demonstrated fakes sold on eBay during that same time period and which were not included in the list.
Second, this list only covered a period of roughly five months of the group's operation. The sellers were operating at about their present volume for a long time before that (almost certainly since mid-2001 and possibly as early as some time in 2000).
Third, only the stamps that could positively be determined from analysis of before and after images to have been altered between the time of purchase and the time of sale were included in the list. Presumably, many more stamps purchased and resold by the Saratoga group were altered in such a way that couldn't be detected in the images, or escaped tracking by the SCADS team.
A conservative estimate would be that the Saratoga group has altered and sold 1,000 stamps on eBay since mid-2001. George Kopecky, the SCADS team member responsible for correlating the stamps before and after alteration, is personally convinced that the real figure is several times higher than that. He estimates their sales at about $30,000 per month, or nearly one-half million dollars in the 15 months since July 1 2001.
The Saratoga sellers have taken careful steps to avoid the consequences of making false written statements about the stamps they sell. These consequences might include eBay account suspensions, civil lawsuits, or criminal prosecution for fraud.
The auction listings of schuylerac with high-valued catalog numbers appearing in the title but illustrating a common, low-valued, variety in the description customarily contained long disclaimers in capital letters stating that the stamp was being sold "as is." However, when schuylerac offered stamps which had been altered only in condition (i.e. reperforated, cleaned/bleached, cancellations removed, repaired), they were generally not listed with the "as is" disclaimer.
Schuylerac consistently operated on the legal theory that if a stamp is sold "as is," the seller would be relieved of all obligations after the sale. However, in a 10 Oct, 2002 MSNBC article, an auction law expert said that such disclaimers would not protect a seller who is knowingly auctioning altered goods.
Since the end of April 2002, the seller pcheltenham has used a single auction technique with little variation. His listings are titled "ESTATE COLLECTION" with occasional additions, and the body of the listing contains some unvarying boilerplate language stating that the stamps were found in a "handed down collection comprising of over 20 boxes." The buyer is instructed to evaluate the item from only a small scan of the front and back of the stamps, with a "what you see is what you get" caveat and the mention that "no scans have been manipulated". Sometimes, bogus additional information is provided, supposedly in the form of notations written on the envelope as received from the estate. This information may include the catalog number, or may include it with a question mark, or may contain qualifiers that identify the stamp as a rare variety, such as "Type IV," "perf 10, small watermark" etc.
The Internet auction venue typefied by eBay allows sellers to operate with nearly total anonymity and impunity relative to traditional venues. The following factors contribute to this unhealthy relationship between sellers and buyers:
The sellers of the Saratoga fakes have consistently operated on the legal theory that their repeated use of "as is" language and methods have insulated them from any legal liability for producing and selling philatelic fakes without disclosure. However, this view does not seem to us to be well founded:
First; it is a federal crime to remove canceling marks from any postage stamp, or attempt to sell any such stamp, that has once been used in payment of postage. Other forms of alteration may also be considered as "counterfeiting" if the federal government so chooses. In 1943, Secret Service agents brought charges against a group of New York dealers who were altering postally-used stamps, apparently doing much what the Saratoga group is doing. 
Second; It is questionable whether there would be a legal right to flood the market with faked stamps even if fraud were not involved. In the 1930s, the American Philatelic Society succeeded in getting an injunction from a California court to stop a dealer who was openly selling stamps which had been faked to resemble valuable coil issues. This was prohibited even though the dealer, unlike the Saratoga sellers, made no secret of what he was doing. 
Third; it is arguable that the Saratoga listings are fraudulent in nature even though they currently attempt to avoid explicit descriptions of the stamps. The statements in the listings of pcheltenham that the stamps come from a "handed down estate collection" in envelopes "with writing on them" are demonstrably false, since they can be shown to be recent fakes, manufactured from stamps purchased in small lots on eBay. Furthermore, they have the important false implication that the seller doesnt have any reason to believe them to be fakes, whereas it is reasonably certain, based on the evidence, that he is intimately aware that they are fakes.
Fourth, the words "as is," "what you see is what you get," "you are buying a pig in a poke," etc., that have been used by the Saratoga seller IDs, are not magic words protecting a seller from charges of fraud. Sales on eBay are governed by the federal mail and wire fraud statutes, which prohibit anyone from using the mails for any "scheme or artifice to defraud." This language has been interpreted broadly by the courts. Legal liability does not depend on the details of the language of the auction listing, as if it were a logic puzzle, but on the intent of the seller and on the seller's behavior considered as a whole. The Supreme Court has said that the mail fraud statute "includes everything designed to defraud by representations as to the past or present, or suggestions and promises as to the future. The significant fact is the intent and purpose." 
If questioned under oath, the Saratoga sellers would undoubtedly say that they are not telling lies about the stamps they alter and sell. They are simply keeping silent about the alterations, letting the buyer make up his or her own mind. But under the law this does not get them off the hook. "The common law clearly distinguishes between concealment and nondisclosure. The former is characterized by deceptive acts or contrivances intended to hide information, mislead, avoid suspicion, or prevent further inquiry into a material matter."  The catalog of these "acts and contrivances" would begin with the alteration of the stamp, then proceed through the invented "estate collection," the use of the private auction format to prevent the buyers from being warned, and even the recent declaration by pcheltenham that he was using the private auction format to protect his buyers from investigation by the Department of Justice. 
By altering the appearance of the stamps, the Saratoga sellers attempt to create a false impression in the mind of the buyer. The stamp which has the pen cancel is made to appear not to have one. The separate stamp is attached to paper with another stamp and made to seem part of a more valuable "piece." These representations are false even though they are conveyed by the scan and not by the text of the description. As the U.S. Supreme Court has stated, "The gist of the action is fraudulently producing a false impression upon the mind of the other party; and if this result is accomplished, it is unimportant whether the means of accomplishing it are words or acts of the defendant, or his concealment or suppression of material facts not equally within the knowledge or reach of the plaintiff." 
Legal authorities recognize that "Any words or acts which create a false impression covering up the truth, or which remove an opportunity that might otherwise have led to the discovery of a material fact . . . are classed as misrepresentation, no less than a verbal assurance that the fact is not true."  The 9th District (in which eBay is headquartered) has held that "[O]ne who makes a representation that is misleading because it is in the nature of a "half-truth" assumes the obligation to make a full and fair disclosure of the whole truth." 
According to the Third Restatement of Torts, an element of fraud is a false representation, which can be made either explicitly (such as by falsely stating that the item comes from an old collection and thus is not a recent fake), or through concealing information that the victim has a right to expect to be disclosed. This expectation can come from general practices in the field, such as among stamp dealers. Since it is in fact the general practice in the field of stamp dealing that known faults must be disclosed, and that fakes are not to be made up wholesale and sold to the unwary, the question of fraud does in fact come into play.
On the basis of the facts and the law as we understand them, it is our conviction that the Saratoga operation constitutes a criminal conspiracy in violation of the mail and wire fraud statutes and other state and federal laws.
Concerned philatelists have tried to take action against the Saratoga operation in several ways, including education of the community, seeking publicity from the philatelic press and other media, and attempts to alert bidders, some of which violate the eBay User Agreement.
In October 2001, an article describing their operation was published online.  This was followed up in 2002 with analyses showing detailed magnified images of the altered stamps  and an article presenting to the collecting community many alterations illustrated by comparisons of the "before" and "after" images from the different buyer/seller combinations.  In August 2002, the scads.org website was established as an on-line "newspaper" for reporting the latest updates on philatelic fraud on eBay and elsewhere, as well as providing educational resources for the community.
Parody auctions were used since late 2000 to draw the attention of bidders to the sales pitch and altered material of schuylerac and pcheltenham. They offer similarly described items in the same categories, but the wording of the description satirizes the tactics of the fraudulent sellers and educates their potential victims. In the last year, these have connected bidders to the educational material now available on websites. Since the formation of SCADS in March 2002, similar "educational" auctions have occasionally been listed to publicize the educational material on scads.org and related websites.
Concerned collectors have often used eBay's chat and discussion boards to publicize information about the Saratoga sellers and other dishonest sellers. From the beginning of 2002, the boards were used more purposefully to alert others to the selling tactics and alterations of schuylerac, but this became a violation with the change of eBay's Board Usage Policy in April. Subsequent discussions of fraudulent auctions on the site or posting links to websites documenting the alterations were met with sporadic censorship of postings by eBay moderators, with some users receiving sanctions and, in two cases, 30-day suspension of board posting privileges. The Stamps threaded discussion board was then discontinued by eBay in late July.
In early 2002, attempts by collectors to encourage the philatelic press to publish details of the Saratoga operation met with no success, with editors appearing to prefer to await a criminal prosecution against the group before reporting on the its activities. However, the general media took more of an interest when contacted by members of the SCADS team and other collectors in July.
TV coverage in August gave prominence to the problems with authenticity and "dodgy sellers" in the Stamps category, when the PBS Jim Lehrer NewsHour , as part of a story on eBay, aired an interview with SCADS member Richard Doporto, who prepared the on-line before/after comparisons of stamps matched by George Kopecky. MSNBC reporters followed up on the work done by SCADS in exposing the alterations in the face of eBay's complacency. The October article "Ebay's tough talk on fraud doesn't withstand scrutiny"  and its follow-up, "Cautionary tales of two auctions" , highlight eBay's lack of reaction to documented cases of fraud on the site.
Some collectors over the years have attempted to contact the purchasers of altered or misdescribed stamps in order to warn them, although this is now prohibited by eBay. The "private auction" format, however, makes it impossible to do this, until and unless the buyers post "feedback" after they have received the stamps. Even then, it is impossible to determine which lots they bid on.
Others have used "guerrilla tactics", such as bidding on the sellers' items, then retracting the bids, and stating, as a reason for the retraction, that the stamp is altered or misdescribed (eBay has since made it impossible to make such explanations of a retraction); or bidding on the stamps, purchasing them, and leaving "negative feedback;" or even creating false IDs and bidding on stamps which they do not intend to purchase (an illegal and dangerous practice which we do not encourage).
These methods have had limited effect. The scope of the Saratoga operation is so great (they post over 1,000 auctions per month) that it is impossible even to keep up with the task of documenting their alterations, let alone hope to disrupt them by means of "guerrilla tactics." Educational articles, discussions and media coverage are of limited effect, because these and other dishonest sellers rely on a pool of naïve or inexperienced collectors who do not know about the educational resources that exist or do not use them.
An effective end to the Saratoga operation would require action by eBay, law enforcement, or both.
For over a year, we have tried to educate eBay about the Saratoga operation and to persuade it to take action. For most of this time, eBay has been completely unresponsive both with regard to the Saratoga sellers and with respect to fraud in the Stamps category in general. It has clearly been worried that taking action against even the most obvious instances of fraud would start it down the "slippery slope" away from "venue status" and toward taking on the responsibility for guaranteeing the authenticity and ownership of all of the millions of items sold on eBay.
It has also become increasingly difficult to contact identifiable people in the eBay organization. eBay does not accept complaints about auctions, lots, or sellers, except through the use of mechanical routines. eBay does not publicize its phone numbers, organizational chart, or e-mail addresses anywhere on its site. The names of the persons who manage the Stamps category or who have responsibility for policymaking are unknown to us and there is no way to contact them individually. The one exception is eBay's new Vice President for Trust and Safety, Mr. Rob Chesnut.
All complaints about fraud are now handled through a menu-style web form, which, until recently, lacked an option for reporting a fraudulent auction. When complaints are made, the maker usually gets an automated acknowledgement but is not told when or whether it has been acted upon or why it has not. With very few exceptions, the only time that any user receives any communication from an individual on the eBay staff is when he or she receives a e-mail warning for having violated eBay policies (for example, by communicating with a victim of fraud or writing honestly about fraudulent auctions on a discussion board). The senders of these warnings are identified by first name at most ("email@example.com", to invent an example).
Furthermore, the persons who have dealt with our complaints have had no knowledge of stamps and have not expressed any interest in acquiring any. It seems to us that it would be a good idea for persons dealing with complaints to be assigned certain categories to work with, so that they can develop some specialized knowledge about those auctions. To the best of our imperfect knowledge, this has never been done with the Stamps category. We have been told, for example, that "you can't tell anything from a picture" or that "there is no way you can prove that a stamp has been altered from scans alone." These comments can only be made by persons who have never taken the time to look at scans of stamps of the period in question, particularly the "before" and "after" scans which demonstrate the alterations which have been made (Such a comparison pair was displayed in the MSNBC article intended for a general audience.) 
The excuse that "we can't be experts in everything" has been used to defend eBay from the charge of inaction with regard to all forms of fraud in the Stamps category. However, we do not believe that the detection of the Saratoga group's altered stamps requires a level of philatelic expertise beyond that which their staff could readily obtain. Furthermore, eBay could readily obtain expert knowledge, either from paid consultants or from volunteers, sufficient for them to deal with many common types of fraud. Certainly there is no shortage of experts, using the most rigorous definition of the term, who will tell eBay, today, tomorrow, or any other day, that the evidence of scans is quite sufficient to prove that the stamps which pcheltenham sells in September are indeed the altered versions of the stamps which stazy4 and chickfrdstk bought in July and August. So far, eBay seems determined not to hear this news, and to put up barriers distancing itself from this evidence.
Recently, however, there have been some glimmerings of progress. A petition calling for eBay to take some elementary measures against fraud in the Stamps category, initiated by postal historian Richard Frajola and signed by 200 concerned collectors and professional dealers, was delivered to eBay in August, 2002.  Since that time, eBay has made it easier to report some kinds of fraudulent auctions, and they say that they are seeking additional solutions.
Action by law enforcement is a separate matter. If our understanding of the law is correct, then the Saratoga group has consistently committed criminal fraud and other violations of law throughout the course of its alteration operation. Action could be taken against them by the U.S. Postal Inspection Service, the F.B.I., and the Department of Justice, as well as the New York State authorities, and, for that matter, the authorities of the state of residence of any victim of their fraud.
The question is not whether they could take action, but whether they will choose to do so. Certainly in the 1940's there was a public perception that the federal authorities took stamp alterations very seriously.  More recently there have been other cases where the U.S. Postal Inspectors have investigated and shut down fake operations.  But cynical people today argue that the postal inspectors are busy doing other things today, and have neither the time, inclination, or ability to bring an action against criminals who prey on stamp collectors. We are not convinced of this.
It would be wrong to assume that stamp collectors have no influence over what eBay does or what law enforcement does. Actions by small, unfunded groups of eBay users have already had some limited effect on eBay's attitude. The voice of the philatelic media and philatelic societies has mostly not yet been heard.
We should bear in mind that, while the Saratoga Ring is a particularly busy one in terms of their output of newly-altered stamps, there are other very active fraudulent sellers of stamps. Tacky, cut-down Washington-Franklins and Second Bureau definitives are shamelessly sold as rare coils or imperforates. Purposeful and repeated misidentifications of all but the most common the U.S. issues are widespread.
With the growing awareness of the scads.org website as a center for fighting fraud in the Stamps category, eBay collectors of other countries are coming to us and telling us of similar problems--misidentification of Swedish stamps, for example--or forged overprints on Chinese stamps.
In July, one audacious seller bought an album page of forgeries of Swiss cantonals, each marked with the word "facsimile." This individual then obscured this word on each stamp with a blotch of black ink and is now selling them "as is" as the genuine article.
An ongoing effort of investigation, education, and pressure would be more effective than isolated campaigns against this gang or that racketeer. We would like to propose that the APS authorize the creation of a task force to study the incidence and varieties of fraud in on-line venues; to educate the APS membership, and other collectors, about the extent of that problem and how they can protect themselves; and to deal directly with venues like eBay, serving as a source of ideas and expertise, to help them deal with their fraud problem.
What can you, the reader, do to help bring this and other similar fraudulent schemes to an end? We have some concrete suggestions.
 "Internet stamp certificate raises eyebrows on eBay", Linn's Stamp News, November 1, 1999
 "Elsewhere in this issue you will read of the arrest of several New York dealers alleged to have engaged in the counterfeiting of perforations, grils, coils, rare recuts, cracked plates, overprints, etc. ... [T]he U.S Attorney remarked at the arraignment, 'They were under a misapprehension that tampering with used stamps was not illegal.'" - George Sloane, Stamps, Mar. 6, 1943, reprinted in Turner, Ed., Sloane's Column, p. 99
 Lawrence, "Expertizing U.S. Coil Stamps," American Philatelist 112:3 (Mar. 1999), 222-227, at 224
 Durland v. United States, 161 US 306, at 313, cited in United States v. Daniel I. Colton, [http://www.law.emory.edu/4circuit/nov2000/994142.P.html] [This instructive opinion is the source of several of the other citations.]
 United States v. Daniel I. Colton, op. cit.
 "pcheltenham speaks out: YOU'RE BUYING A PIG IN A POKE!" [scads.org/alterations/schuylerac.htm], Sept. 5, 2002
 Stewart v. Wyoming Cattle Ranche, 128 U.S. at 388
 W. Page Keeton et al., Prosser & Keeton on Torts 106 (5th ed. 1984)
 Meade v. Cedarapids, Inc., 164 F. 3d 1218, 1222 (9th Circuit 1999)
 Oswald, "eBay - forgeries, fakes, dodgy sellers, scams: the tip of the iceberg", [http://www.sheryll.net/Forgeries/Forgeries_article.htm]
 Doporto, "Fakes and Forgeries Purchased on eBay", [http://www.slingshotvenus.com/stamps/fakes.html]
 Kopecky, Doporto, and Oswald, "Fraud on eBay Exposed!", [http://www.sheryll.net/Forgeries/Fraud/Forgeries_article_Fraud.htm]
 Spencer Michels, "Bidding for Success", [http://www.pbs.org/newshour/bb/economy/july-dec02/ebay_8-15.html] PBS Jim Lehrer NewsHour, Aug 15, 2002
 Mike Brunker, "EBay's tough talk on fraud doesn't withstand scrutiny", [http://msnbc.com/news/809148.asp] MSNBC, Oct 9, 2002
 Mike Brunker, "Cautionary Tales of Two Auctions", [http://www.msnbc.com/news/818257.asp], MSNBC, Oct. 10, 2002
 "Frajola petition goes to eBay with 200 signatures", [http://scads.org/ebay/petition.htm] Aug. 16, 2002
 "The eagle's retribution is swift and devastating when he swoops, and Federal cases are usually waterproof when his minions go to bat." - George Sloane, Stamps, May 11, 1940, in Turner, Ed., Sloane's Column, at 133
 Collectors Club of Chicago, "Flying Fakes", [http://www.askphil.org/ap_salm06.htm] Lawrence, "The Friendly Faker: The Story of Ray Gregor and the Buffalo Fakes," American Philatelist 110:1 (Jan 1996), 14-22
© 2002, SCADS (Stamp Collectors Against Dodgy Sellers), All Rights Reserved.