A duel sparked by value of rare Colts


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Mayo
December 20, 2005, 01:46 PM
http://www.bradenton.com/mld/bradenton/news/nation/13448615.htm

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TechBrute
December 20, 2005, 02:05 PM
Interesting. I didn't really understand if the dealer misrepresented the guns or not. If he did, then that's a crime.

If we were to assume that the dealer did not misrepresent the guns, a free economy dictates that an item is worth what the market will bear. The buyer paid $X because the guns were worth that to him. They're worth exactly $.05 to a scrap metal dealer, but he found some other intrinsic value. Now that someone told him that they aren't worth what he paid, he finds less value in them?

Jim K
December 20, 2005, 02:44 PM
Good point, TechBrute, because the guns appear to have been absolutely genuine.

But if I sell you a High Point pistol for a million dollars (implicitly or explicitly saying it is objectively worth that) and it is later appraised by an objective appraiser at $100, that might not be fraud, just one person taking advantage of another person's ignorance, and that person overpaying for something he wanted very much to own.

But if I forged documents, or used shills to bid up the price, or used other means to inflate the price, that, it seems to me is fraud and conspiracy.

Jim

waterhouse
December 20, 2005, 02:46 PM
Murphy hired Ellis as his expert consultant and agreed to pay a commission on each weapon purchased, 10 percent up to $1 million and 5 percent beyond $1 million.

All told, Ellis helped Murphy spend $30 million to create one of the nation's foremost private collections of antique revolvers.

Wait a minute. If I'm doing the math right you can make 1.55 mil spending someone else's money to help them buy guns?

Where do I sign up?

Weimadog
December 20, 2005, 02:54 PM
Interesting. I didn't really understand if the dealer misrepresented the guns or not. If he did, then that's a crime.

If we were to assume that the dealer did not misrepresent the guns, a free economy dictates that an item is worth what the market will bear. The buyer paid $X because the guns were worth that to him. They're worth exactly $.05 to a scrap metal dealer, but he found some other intrinsic value. Now that someone told him that they aren't worth what he paid, he finds less value in them?


I think the problem is that the dealer allegedly asked a 3rd party to show an interest in purchasing the guns for the inflated amount. The 3rd party then got a kickback (commission).
Still, if somebody pays $x for an object, that kind of proves it's worth $x.

dfariswheel
December 20, 2005, 02:55 PM
If I'm reading this right, it's a matter of collusion in order to defraud.

You hire Mr. Brown to help you buy guns from Mr. Green.
Mr. Brown and Mr. Green conspire together to artificially run up the price of the guns above their true value.
Mr. Brown is taking my money to represent me, but secretly, he's in effect working with Mr. Green.

There's a big difference between Mr. Green offering to sell me a $1000 gun for $2000, and me accepting.
I go to Mr. Green. He offers to sell me a gun for $2000, I accept.
Later I find out the gun is only worth $1000.

That's a matter of Cravat Empretor, or "Buyer Beware.
I screwed MYSELF, Mr. Green is at worse, guilty only of taking advantage of a fool.

It's another for Mr. Green to ASSURE me that the gun is in fact worth $2000.
That's fraud.

For Mr. Brown and Mr. Green to conspire together to misrepresent a $1000 gun as worth $2000 is conspiracy to commit fraud.

TechBrute
December 20, 2005, 02:56 PM
In any case, I think a buyer should always beware. How does one make all that money without taking the necessary precautions to prevent that sort of thing?

Jim K
December 20, 2005, 03:13 PM
Seems to me Mr. Barnum had something to say about that.

Jim

Father Knows Best
December 20, 2005, 03:56 PM
This is really quite simple. Murphy was the wealthy collector and victim. He wanted to acquire rare firearms. He was not an expert, however, so he hired Ellis to help him. Ellis's job was to help locate rare and valuable firearms for Murphy, and help him decide how much to pay for them. In other words, Ellis was supposed to help Murphy determine what a reasonable price was. Ellis got a commission on the purchase price -- roughly 10%.

Thus, Ellis and Murphy go to a show together. Ellis shows Murphy a really nice gun and says, "the dealer has it marked $5,000 but you should be able to get it for $4,000." Murphy buys it for $4,000 and pays a $400 (10%) commission to Ellis. Everyone is happy.

The problem here is that Ellis conspired with Zomber to cheat Murphy. First, you need to understand that Murphy was not buying commodity guns. The stuff he was buying was so rare it would not show up at a gun show. He was buying from other wealthy collectors. Ellis would locate an item that Murphy might be interested in. As these are by definition unique items, there is no "market" to refer to for a price. The value is whatever someone is willing and able to pay, right now. If Murphy is the only potential buyer, the value might not be that high. The owner of the Walker Colts, for instance, may want to sell them, but if no one is willing to offer more than $1 million, then $1 million is what they are "worth." Murphy could have bought them for $1 million, and Ellis would have gotten a $100,000 commission.

In this case, though, Ellis got his friend Zomber to pose as a disinterested buyer for the purpose of driving the price up. Zomber expressed (false) interest and a willingness to pay a lot of money for guns Murphy was also trying to buy. As a result, the price Murphy had to pay went up, just as if they were at an auction and Zomber was acting as a shill bidder. Ellis benefitted from driving the price up because he earned higher commissions, which he then paid a part of to Zomber.

The point is that Murphy ended up paying a lot more than he would have had to pay if Ellis and Zomber hadn't scammed him, AND he ended up paying Ellis more in commissions than he had rightfully earned.

the real deal
December 20, 2005, 04:09 PM
Interesting. I didn't really understand if the dealer misrepresented the guns or not. If he did, then that's a crime.

If we were to assume that the dealer did not misrepresent the guns, a free economy dictates that an item is worth what the market will bear. The buyer paid $X because the guns were worth that to him. They're worth exactly $.05 to a scrap metal dealer, but he found some other intrinsic value. Now that someone told him that they aren't worth what he paid, he finds less value in them?

I beg to differ a bit. Sure, you should not look back at something you might have over paid for, however it looks like this guy was taken for a ride for his entire collection. He was paying Ellis to help him make purchases that were acurate. Since he was paying hima percentage, he let Wilsom be overcharged so he could make more money. Who knows how many deals he worked out deals with previously to get a cut of the over pricing.

Omni04
December 20, 2005, 04:17 PM
i think father knows best summed it up perfectly. Similar to people who use numerous ebay accounts to drive up there own auctions.

1 old 0311
December 20, 2005, 05:10 PM
Gun people are some the most honest people around, for the most part, but then again BIG money does strange things to people.:( :( :( :( :( :(


Kevin

DonP
December 20, 2005, 07:40 PM
Story sounds familiar.

I know of an older industrialist type that decided to "collect art" as an excuse for his travels with his trophy wife.

It seems if you are traveling to "buy art" for a not-for-profit 501 C-3 museum, which of course he founded near his home and thoroughbred breeding ranch in FL, you can write off a good chunk of your travel expenses as a tax dodge.

He knew diddley-squat about art and hired a museum director to help him. The guy gave him a list of artists and dealers in Europe and other spots he wanted to visit. Big surprise it turned out the director got kickbacks from the dealers and about 30% or more of the pieces he bought were fakes.

Now his kids are trying to "gift" the museum to a university (and take another big deduction for the "gift") and they don't want it because it's full of undocumented and phony crapola.

I guess the moral of these stories is either know what you are dealing with or have someone you trust implicitly to be honest ... and then hire a guy to check up on him. Didn't Reagan say, "trust but verify". Good advice in a lot of situations.

redneck2
December 20, 2005, 08:18 PM
When I took business law, I believe the term was "fudiciary duty" (sorry if the spelling is incorrect)..anyway...

If somebody hires and pays you to do a job as a professional, you're supposed to be a professional. If not, you're liable.

You took money to do the job, so you do the job. If not, you're a thief pure and simple.

joab
December 20, 2005, 08:50 PM
How does one make all that money without taking the necessary precautions to prevent that sort of thing?He hires experts to advise him

ceetee
December 20, 2005, 10:56 PM
Imagine you and your spouse buy a house.

After the paperwork is all signed, and the mortgage is in your name, you find out that your realtor went behind your back, and arranged for the asking price to be double what the house is actually worth. He even has an appraiser on the take, so his appraisal says the same thing. You just paid twice what the house is worth.

Wouldn't you be a bit perturbed?

Stevie-Ray
December 20, 2005, 11:18 PM
But if I sell you a High Point pistol for a million dollars (implicitly or explicitly saying it is objectively worth that) and it is later appraised by an objective appraiser at $100, that might not be fraud, just one person taking advantage of another person's ignorance, and that person overpaying for something he wanted very much to own.

That would be fraud on both counts. a High-point will never be worth $100.:D

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