How to spot a fake: there are honest merchandise dealers for auctions.

FACT 1: Charities have been hosting physical auctions for decades, but most have little or no knowledge about running the online version.

FACT 2: Charities know even less about the memorabilia industry than they do about auctions.

FACT 3: Crooked memorabilia dealers are honing in on this ignorance and using the charity auction as a vehicle for doing bad while looking very, very good.

FACT 4: If they've been targeted, the vast majority of charities running auctions don't find out about the scam until after the fact.

"We've convicted several people who as a part of their fraud scheme did just that--went through a charity auction," said Tim Fitzsimmons, special agent with the Federal Bureau of Investigation (FBI) in San Diego. "The big benefit to them is that they're building a good reputation for themselves, many times getting a letter of thanks from the charity."

Following the convictions of several forgers and their business partners through Operation Bullpen, a nationwide investigation into the world of memorabilia fraud, the FBI discovered forged memorabilia had been placed in several charity auctions. Fitzsimmons noted those held during the late 1990s by The Junior Seau Foundation, the namesake charity of the former San Diego Chargers linebacker, now a member of the New England Patriots.

"This was just after the fact, when we convicted these people, as part of their debriefing," Fitzsimmons said of the conviction of a forgery ring that targeted the Seau Foundation. Warned Fitzsimmons, "The charities haven't caught these things."

According to Mike Kinkelaar, board member and outside counsel for the Seau Foundation, creating a paper trail "of who's giving the item, verifying that it's legitimate," is key to avoiding future scams. Other best practices, said Kinkelaar, include accepting donations from "people we know," and handling the auctions internally.

The charity, which hosts two physical auctions annually raising a cumulative $130,000, has no plans to run the online version. "The nice thing about the way we do it, is it's very personal," said Kinkelaar, who said Seau acts as auctioneer. "They just trust us."

Fitzsimmons noted another incident, this time closer to home. "We even had an agent here who bought a John Elway football at a school's charity auction--and it turned out that it was from one of the subjects in the (Operation Bullpen) case," said Fitzsimmons. "We didn't know anything about it until we took the case down."

Of the 63 Operation Bullpen convictions to date, eight to 10 were found to have targeted charities "to make their business appear more legitimate," said Fitzsimmons. With the advent of online charity auctions, he noted the likelihood of that number growing.

Booming industry

Charities accounted for $14.6 billion of the more than $240 billion in gross sales generated by live auctions in the United States during 2005. That amount was larger than the proceeds from auctioning residential real estate ($14.2 billion), art, antiques and collectibles ($12.1 billion), and personal property ($10 billion), according to the National Auctioneers Association (NAA).

Closing in on the wildly popular physical charity auction, the online version is gaining momentum. A Google search by The NonProfit Times using the words "charity," "auction" and "online" produced 8.4 million results, among them myriad companies offering auction services.

But just as the auction business has skyrocketed, so has the number of erroneous items on the market. And while it's impossible to estimate the exact percentage of fraudulent sports memorabilia being circulated, most industry experts will ballpark it at more than half.

Countered the FBI's Fitzsimmons, "you can't make a blanket statement" that a certain percentage of autographed items by athletes are forgeries. You almost have to look at it on an athlete-by-athlete basis." As for A-List movie actors' autographs: "Now that's an area, particularly with the 8x10 photos, where you might be getting into the 90 percent" being forgeries.

Building an infrastructure

When the FBI launched Operation Bullpen in 1997, many of the major companies that produce and distribute sports memorabilia signed on to assist. The FBI credits Upper Deck, Steiner Sports, TriStar, Mounted Memories and others for helping police the industry, as well as Major League Baseball, which unveiled its own memorabilia authentication program at the height of the investigation.

"In the off-season or in retirement, athletes (sign autographs) as a means of income," said Fitzsimmons. "And so there's an infrastructure around athletes." To get some of the more popular autographs, like Michael Jordan's or Dan Marino's, the autograph seeker must go through an agent as well as the distribution company with which the athlete has an exclusive autograph contract.

Consumers also play a part in policing the industry. "They recognize there's a problem, so they look for items backed by reputable companies," said Fitzsimmons.

In Hollywood, however, the demand for infrastructure just isn't there. "The problem is, it's a completely different world than the sports world," said Fitzsimmons. "It's not scrutinized because (A-List actors) aren't selling their autographs. Nobody's looking into it, worrying about the money." Fitzsimmons blamed Internet auction sites with helping blanket the nation with forgeries of Hollywood's biggest names.

You're not alone

"The standard answer is to find a third-party authenticator to give that item a blessing, to ensure that it is not a forgery," said Dan Schmidt, manager, casino and charity sales, at Carlsbad, Calif.-based Upper Deck, which has under autograph contract the signatures of Michael Jordan and Tiger Woods. Schmidt noted that leveraging one's nonprofit status can result in a "better deal" as far as payment for such services.

Often charities will overlook this step, because as much as donors want to believe that purchasing anything from a charity is a sale bet, charities want to believe that donated items, from signed baseballs and old coins to movie actors' autographs, are the real thing.

Upper Deck, said Schmidt, will expand its reach with its new 501c Charity Auctions program. According to Schmidt, the program will enable participating 501(c)(3)s to include on consignment any Upper Deck product and keep proceeds over the wholesale price. Included within the program is tipper Deck's five-step process, which guarantees the authenticity of its memorabilia.

Steiner Sports has been helping charities run successful auctions for nearly 10 years, raising more than $1 million for charity each year from the sale of the autographed items the New Rochelle N.Y.-based company provides on consignment. The company also holds periodic "Charity Days" at its branches, where just as with the auctions, proceeds above wholesale price (or lower-than-wholesale price) go to the participating charity.

According to Larry Davis, executive vice president at Steiner Sports, while he "always tell(s) charities to get anything you can for free," Davis makes sure to throw in a few words of caution: "Unfortunately, in this business you have some bad people." Added Davis, "I think it's definitely easy for (scammers) to slip their merchandise into these kinds of events--charity auctions."

HOW TO SPOT A FAKE

According to the experts, experience holds that the best guarantee of authenticity is to simply march up and request the autograph in person. If that's not possible, there are readily available, inexpensive, and oftentimes do-it-yourself ways to make sure a donated item is authentic.

* DO IT YOURSELF. Best case scenario: someone from your organization gets the autograph in person. "We closely monitor every single signing," said Dan Schmidt, manager, casino and charity sales, at Upper Deck. "And we'll never take a product unless we were there for the signing." Schmidt said the athlete signs the product as well as an affidavit. Another route is to send a letter directly to the athlete's team or actor's agent requesting that an enclosed item be autographed. Include a self-addressed, stamped return envelope, and an additional letter requesting information about where you can purchase signed items if the athlete or actor does not accept mailed requests or has an autograph contract with a particular company.

* HIRE A THIRD-PARTY AUTHENTICATOR. "If you don't have a (contract) in place with an authenticator, and you're really concerned about pushing a fraudulent piece and it might hurt your reputation, yeah, you might want to steer clear of it," said Schmidt, who noted some authenticators will reduce charges for charities.

Another option is employing authentication services of Steiner Sports, Upper Deck, MLB, and companies like PSA/DNA (psadna.com). No authenticator is infallible. "Some forgers that we've convicted, they got their stuff through every person out there," said Tim Fitzsimmons, special agent with the Federal Bureau of Investigation in San Diego.

* NO DOCUMENTATION (OR HOLOGRAM), NO WAY. If an item doesn't come with supporting documentation, "you might not want to include that item," advised Schmidt. "It's not good business taking items that don't have some kind of supporting documentation." The item should also have a uniquely numbered hologram, which major sports memorabilia companies place on every single signed item. The companies provide buyers with an online system where they can go and verify the number.

* NOT SO FAST: DOCUMENTATION/HOLOGRAM DOESN'T EQUAL AUTHENTIC. According to the FBI, scammers often included a Certificate of Authenticity (COA), allegedly from a third-party expert or major company, often a knowing or unknowing, and incompetent, participant in the fraud. Ensure the COA says who it's from, and isn't a copy, said Fitzsimmons.

A photograph of an athlete signing is no guarantee. The numbered hologram is not an absolute indication of authenticity either. "We've convicted people that were selling forgeries with numbered holograms, That's not the key," said Fitzsimmons, who said to go online and check the unique number on the hologram.

* IF THE PRICE IS TOO GOOD TO BE TRUE, IT IS PROBABLY A FAKE. On the flip side, a high price does not by any means suggest authenticity.

* BE AWARE OF ALLIANCES. If your organization receives a signed baseball from a specific athlete with a COA that does not match the athlete's exclusive contract company, the item is questionable.