BREAKING NEWS: A Major Scandal at the Heart of a New "Alternative Asset Class" Market Is Clearly About Something Other Than Vintage Video Games

The bizarre actions of video game grading house WATA—including a new statement to Proof—raise questions about whether an alternative-asset market bubble is about to burst. Fallout could be huge if so.

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Reading Time: 19 minutes
📕 Section: Proof Games

Introduction

Given that video game grading house WATA was bought out just a few weeks before it found itself embroiled in a massive scandal relating to alleged conflicts of interest in its grading of video games, one might think that its new parent company, Collectors Universe, would simply clean house—removing from their positions the very small group of rich men whose actions have placed the company in a precarious position.

But this isn’t what’s happened at all.

Instead, WATA appears to be battening down its hatches to weather the storm now upon it: doubling down, attacking its critics, refusing to answer specific questions about its conduct, and making plans to expand its new video game grading empire—and its relationships to the auction houses and marketplaces that have risen up around it—even as the clamor grows for answers about how much of the eight-figure market for graded retro video games is a dangerous bubble. Indeed, with each new million-dollar sale of a cardboard box containing a mass-produced entertainment item, the video game bubble looks more and more like the sort of dangerously unsustainable fantasy that America hasn’t seen in a submarket since the housing crisis of the 2000s.

The story of greed and perfidy that follows is a continuation of this prior reporting by Proof. Proof recommends that readers read this prior reporting before continuing if at all possible, as the story presented here is as circuitous as it is strange and unsettling.

WATA Goes to War

Video game grading house WATA has retained public relations firm Goldin Solutions to help it manage the crisis in which it now finds itself. This crisis was launched by the Jobst Report, a 52-minute documentary by curatorial journalist Karl Jobst; a secondary factor in the present video game grading imbroglio is this recent report at Proof.

Most consequentially, however, both the Jobst Report and reporting at Proof on WATA—as well as what was (until recently) its exclusive auction-house partner, Heritage Auctions—has been picked up by nearly every major gaming-industry media outlet, including IGN, Kotaku, Eurogamer, Nintendo Life, SVG, Tom’s Guide, Video Games Chronicle, Nintendo Enthusiast, TechRaptor, GameByte, and even non-gaming entertainment-industry publications like NME, Screen Rant, Digital Trends, and Yahoo! News. The story has gone international as well, with coverage of Jobst’s curatorial journalism on WATA and Heritage Auctions in media publications from the United Kingdom, Canada, France, Russia, Brazil, Italy, Romania, Germany, China, Poland, Indonesia, Sweden, Portugal, Hungary, Australia, Spain, Slovakia, and Japan.

Goldin Solutions was founded in 2010 by Davidson Goldin, an unusual man to now be tasked (through his Executive Vice President John Eddy, who contacted Proof as the Goldin Solutions representative working the WATA crisis) with running interference on behalf of Deniz Kahn’s company.

The predecessor to Davidson Goldin’s Goldin Solutions was the 2008-founded media firm DolceGoldin, which was launched amid accusations of self-dealing and conflicts of interest against Davidson’s co-founder, Joe Dolce. Dolce and Goldin were allegedly brought together by author James Frey as reward for, as Gawker reported at the time, Dolce’s then-boyfriend John Burnham (a HarperCollins editor) inexplicably offering a book deal to Frey—which turned out to be an extremely lucrative deal—not long after Frey was accused by Oprah Winfrey and others of fraudulent conduct in the writing of his book A Million Little Pieces.

It was this fraudulent conduct by Frey, which he was rescued from by Dolce’s then-boyfriend, that led to Davidson Goldin being in a position to launch a media firm in 2008 and now (well over a decade later) to be representing WATA and its president Deniz Kahn as they face allegations of “fraud” from a documentary from Karl Jobst entitled (emphasis in original), “Exposing FRAUD and DECEPTION in the Retro Video Game Market.”

Goldin Solutions takes up WATA’s cause amidst uncorroborated rumors that Deniz Kahn is trying to make a hasty exit from the video game grading market by selling a portion of his possibly historic treasure trove of sealed video games, which can be seen in this bizarre fourteen-minute video. What makes the video bizarre? The fact that it was put together as a promo reel by an auction company, Goldin Auctions, which is also represented (like Kahn and WATA) by Goldin Solutions. Why would an auction house—more particularly, one that, like Goldin Auctions, is just two days from starting to sell graded video games, create a long advertisement for the video game collection of WATA’s embattled president? It seems the Goldin-Kahn video is a story unto itself.

On Goldin Auctions

Goldin Auctions—allegedly no relation to Goldin Solutions, though Proof research on this is presented below to try to resolve the question—was founded by Ken Goldin in 2012. According to a Bloomberg report, Goldin “[grew] up in South Jersey in the seventies”, the son of a man named Paul Goldin (who passed away in 1994). Together, father and son founded autograph firm Score Board Inc. in the 1980s. By 1989, the duo was doing $20 million in business annually thanks in part to, Bloomberg notes, “TV appearances in which [Ken] Goldin and athletes would hawk signed photos, bats, and cards.” By 1998, however, the sports card collecting bubble the Goldins helped create had burst, and Score Board Inc. declared bankruptcy. While collectors discovered that much of what they’d spent the 1980s purchasing was worthless, Goldin emerged a very, very rich man.

In the early 2010s, Bloomberg reports, Goldin “saw an opportunity” for a comeback in the emerging notion of “alternative assets”—the very category of asset to which sealed video games now belong. Yet by 2016, under a year before WATA was founded, Goldin was still, per Bloomberg, “struggl[ing] to get [card] sellers to see the company [Goldin Auctions] as a top-tier forum.”

But then Ken Goldin had an epiphany:

A friend approached him about selling an Upper Deck LeBron James rookie card…but he was wary; for his [Goldin’s] entire career [in card collecting], most serious collectors had only wanted cards featuring baseball players from before 1960 who were assured a spot in the sport’s pantheon. [Goldin] thought he’d get less than $100,000 for the James card. He got $312,000.

Goldin’s realization that collectibles featuring currently ubiquitous figures command as much or even more investment than do collectibles that are rare would echo the key principle behind the creation of WATA just a few months later. WATA’s founding premise was that big-time investors would pay to own a piece of Mario the Plumber—video gaming’s LeBron James—rather than hunting down the rare items that video game collectors had conventionally focused their attention upon. Goldin’s specialty became “modern” collectibles, which establish their worth not due to their rarity but the present ubiquity of the brand (being it Mario or LeBron James) with which they’re associated.

In speaking to Bloomberg about Ken Goldin, Brandon Steiner of sports memorabilia marketplace CollectibleXchange—a man who “lived through the [card collecting] boom and bust of the ’90s and sees [a recent Luka] Doncic [card] sale” (one that didn’t involve Goldin but was undergirded by his philosophy) as “evidence of an overheated market”—told the media outlet that “In a few years the [card collectible] bubble will break, and it will be a black eye for the industry.” This is exactly the fear many video game collectors and video game market watchers have now—and the fact that Ken Goldin is at the heart of both of these story-lines couldn’t be placing anyone at ease.

Indeed, Paul Goldin, Ken Goldin’s father, was even featured in Kathryn F. Staley’s The Art of Short Selling. On pg. 70 of that 1996 book, published two years after Paul Goldin’s death, Staley wrote the following about how the Goldins’ company (Score Board Inc.) responded to its 1993 collapse:

This may be starting to sound unsettlingly familiar to some readers—and that feeling of déjà vu is likely to continue.

One of Goldin Auctions’ investors—and a staunch believer in Goldin’s philosophy—is a man by the name of Nat Turner. Here’s what Bloomberg had to say about Turner in June 2021:

Turner, who sold his health-care company for $1.9 billion in 2018, owns tens of thousands of cards, including 2,000 [Michael] Jordans. He buys daily on eBay, the largest marketplace for the hobby, and he’s paid more than $400,000 for a card after someone messaged him on Instagram. (He won’t name the player.) His activity has made him a celebrity in the [card collecting] industry. He gets up to 100 DMs a night from people looking to talk about cards, he says, many of them strangers. This year, Turner and New York Mets owner Steve Cohen, the hedge fund billionaire, led an investment group that acquired Collectors Universe for $853 million.

You may recognize the name “Collectors Universe” from the fact that it just purchased WATA a few weeks ago, indeed just days after Bloomberg wrote up Nat Turner’s 2021 purchase of Collectors Universe. It seems that Nat Turner, and the group of ultra-rich investors of which he’s a part, has been moving with blinding speed to take over an alternative asset-class market now in danger of collapse due to the actions of Turner’s new employee, WATA president Deniz Kahn.

Deniz Kahn’s Lifeboat?

As Deniz Kahn and WATA face allegations of fraud and deception from Karl Jobst and many sealed-game collectors, rumors abound—all unconfirmed—that Kahn may be looking for a lifeboat (or that Collectors Universe may be looking for one for him).

The use of Kahn in Goldin Auctions’ promotional materials; contradictory statements given by Ken Goldin about his relationship with WATA (see below); Kahn’s refusal to speak for himself of late (employing Goldin Solutions, instead); ongoing confusion about whether Goldin Solutions represents Collectors Universe or WATA; the lack of any substantive response to the allegations against WATA in its recent press release; and Goldin Auctions’ release of a promotional video regarding the about-to-be-sold high-end video games of Nelson Laffey in the same 24-hour period that it gave identical treatment to Deniz Kahn and his collection of high-end video games, all suggests more may be happening at WATA than is now known. But at this point, the only allegation WATA has responded to is one that appeared at Proof, about Richard Lecce identifying himself as WATA’s “founder” and “starter” alongside Kahn and Kenneth Thrower.

(More on that in a moment. To unpack Kahn’s response to Lecce’s claims, one must first understand where Kahn sits as he offers, via Goldin Solutions, his reply to Lecce.)

On August 24, Goldin Auctions published a Deniz Kahn advertisement entitled, “The Best Video Game Collection You’ll Ever See—Deniz Kahn.” If it seems rather rushed for Ken Goldin to announce on June 23 that his auction house is entering the sealed video game market (boasting, via his auction house’s announcement, of its ability to generate “record prices”, and its particular focus on “WATA-graded”, “highly sought after”, “high-grade” games like those owned by Deniz Kahn); for a company owned by Goldin Auctions investor Nat Turner to purchase WATA on July 20, less than a month later; for Goldin Auctions to be pumping up the collection of highly sought after, high-grade games owned by WATA’s co-founder (Kahn) by August 24, just thirty-five days after that; and for the first WATA-themed auction at Goldin Auctions to be scheduled for August 31, a mere week after it released its advertisement of Kahn’s collection, at the very moment market watchers are wondering if Turner’s Collectors Universe will seek to replace the embattled Kahn at WATA; well, you’d be right for thinking that this is a number of seemingly connected events unfolding in a very compressed timeframe.

It certainly looks like Kahn is exiting the market he helped create at a time he stands accused of using dubious tactics to goose it. {Note: Karl Jobst has just published a private email from Kahn in which the WATA co-founder writes that he “did not start WATA [in 2017] to be just be [sic] an alternative [to 2008-founded grading house VGA] and say ‘hey send us games.’ Most of my efforts have been to GROW the market and that’s what it’ll always be about…” (emphasis in original).} Of course, as we know, looks can be deceiving.

When Proof inquired with Goldin Solutions about whether fears of a major sell-off by Kahn via Goldin Auctions were true, the reply was curious. When Goldin Solutions ultimately issued a statement to Proof said to originate from a “WATA spokesperson”, the statement was focused only on Richard Lecce’s claim of being a WATA co-founder.

Goldin Solutions did write that “Deniz is [not] selling his collection”, but this claim wasn’t attributed to either Kahn or WATA, didn’t match the specific Proof query it was responding to (whether Kahn would be selling any portion of his collection via Goldin Auctions), and couldn’t be independently verified (and can’t be the subject of any later accountability) because Goldin Auctions doesn’t reveal sellers’ names. Indeed, what fears of a massive Kahn sell-off required was a response from Kahn himself stating that not only would he not be selling any part of his collection via Goldin Auctions or Heritage Auctions, but that it’d be against WATA policy for him to do so—as it would present a conflict of interest if the games had first been graded by WATA (which they would have to be in this instance, given that Heritage Auctions exclusively sells WATA games, and at present Goldin Auctions is only selling WATA-graded games). But no such statement from Kahn was forthcoming, just a response from a PR firm that has waffled (see below) about whether it even represents WATA, and which response was non-responsive to the question, promising Kahn wasn’t selling his “[entire] collection” when this isn’t the fear that video game market watchers currently have.

Goldin Solutions Takes the Stage

It’s with all of the foregoing in mind that Davidson Goldin of Goldin Solutions had his EVP John Eddy contact Proof to demand that this publication immediately retract its story about Richard Lecce representing himself as a co-founder of WATA—a claim Proof substantiates with documentary evidence of Lecce unambiguously making this representation in commercial digital correspondence now in the possession of Proof.

And yet, for as many times as Proof explained to Goldin Solutions that it was Lecce himself, not Proof, who made the claim that Lecce co-founded and co-started WATA with Kahn and Thrower, Goldin Solutions insisted that the statement originated with Proof. It did not, though the fact that Goldin Solutions seems certain it did raises the question of whether it has been in contact with Richard Lecce, and whether Lecce is disavowing the—unambiguous and impeccably sourced—digital evidence Proof holds.

At a time when Lecce’s association with Kahn and WATA could substantially dampen the financial prospects of a massive auction being run by an auction house that was once (and is possibly still) invested in by the new co-owner of WATA, Nat Turner, it’s understandable that all of the foregoing persons and entities—from Davidson Goldin and Goldin Solutions, Ken Goldin and Goldin Auctions, Nat Turner and Collectors Universe, Deniz Kahn and WATA—would want Richard Lecce discredited. Lecce’s claims of being a co-founder and co-starter of WATA with Kahn and WATA grader Kenneth Thrower are right now casting WATA and Heritage Auctions’ past dealings in a terrible light. This has been observed not just by Proof, but all of the major-media gaming-industry outlets referenced above in their articles on Karl Jobst’s reporting.

{Note: Again, see Jobst’s video and Proof’s reporting to get caught up on why Richard Lecce is such a liability to WATA at this point.}

The problem with Proof blithely reporting, as Goldin Solutions demands, that Lecce isn’t a co-founder of WATA, is that Proof cannot confirm one way or another whether this representation by WATA is accurate. Indeed, as all of the above details, WATA and the men associated with it have a great deal at stake in Lecce being discredited right now, before Goldin’s first WATA auction—whether or not that auction includes any items from Kahn’s historically lucrative cache of sealed video games.

While one can appreciate Kahn’s unwillingness to risk the obvious conflict of interest of having his personal fortune in sealed video games sold by WATA-affiliated Heritage Auctions—not that potential conflicts of interest between WATA and Heritage have in any way estopped Kahn from certain actions in the past—that he is now using Goldin Solutions as his PR firm and appearing in a promotional video for Goldin Auctions may present issues all its own, especially as the former places pressure on Proof to report as fact what is in actuality a “he said, “he said” situation: Lecce, in a piece of digital commercial correspondence Proof has reviewed and still possesses, clearly establishes himself as having a financial motive for making his claims of association with WATA; meanwhile, Kahn, in a piece of digital correspondence with Proof through a PR firm—the timing of which correspondence clearly establishes Kahn as having a potential financial motive for saying what he says—contends that Lecce is lying about his association with WATA. There is no basis upon which any reader of Proof could trust either of these men, though below Proof conducts an analysis of SEC data to see if one of another of their stories is more probable.

But first, readers should know a little bit more about Davidson Goldin, the man whose high-powered PR firm is now trying to intercede in this national scandal to aid WATA.

According to a 2017 report by the New York Observer, PR flack Goldin—who specializes in representing rich people facing crises of their own making—has “a profile so low he’s practically underground.” A blurb from the Observer is prominently located atop the website of Goldin Solutions: “[Goldin Solutions is] a kind of secret weapon for corporate and crisis clients”, it reads.

{Note: The first of these two laudatory squibs heralding Davidson Goldin’s skill-set appeared in the Observer in the same year Jared Kushner announced he’d divest himself of ownership of the media outlet; he’d been accused of killing stories he didn’t like, and promoting ones he did.}

One can see why Davidson Goldin would want a low profile, considering his clientele.

Goldin has worked as a flack for Glenn Dubin, the Jeffrey Epstein friend who the New York Post reports “has long been tied to the Epstein scandal—with longtime accuser Virginia Roberts Giuffre naming him in court documents as one of many men she alleges she was forced to have sex with.” As recently as 2014, the then-61 year-old Epstein was telling associates that if he married someone it would likely be Dubin’s teenage daughter Celina Dubin, who was then just 19. While there is no evidence that Epstein and Celina Dubin ever had a romantic relationship, the family concedes that the two spent a significant amount of time together—including after Epstein’s 2009 conviction on a child sex charge (Celina Dubin was only 14 when the Dubins wrote Epstein’s probation officer, in 2009, to announce that they were “100% comfortable” with her spending time with the then-56 year-old man she called “Uncle Jeff”; Eva Dubin, Glenn Dubin’s wife and Epstein’s ex-girlfriend, was just 20 when she began dating the then-28-year-old pedophile Epstein in 1981).

And as noted Goldin advised James Frey, perhaps the most infamous literary fraud of the century—so bad an actor he even made an enemy of Oprah Winfrey. Goldin’s firm has also represented Billy Bush (yes, the “locker room talk” buddy of Kushner’s father-in-law, Donald Trump). But most troublingly, Davidson Goldin represents the Leon Black-advised Russian Direct Investment Fund—which was at the center of the Trump-Russia scandal. Black is a good friend of Jared Kushner and Ivanka Trump, as well as one of Kushner’s lenders; he’d certainly have wanted to see positive coverage of his PR guy in New York media. When contacted by the Daily Beast to explain his firm’s attempts to assist an entity which—through its secret dealings with “Donald Trump envoy” Erik Prince in the Seychelles—sought to interfere in U.S. elections, current WATA PR flack Goldin “declined to discuss why RDIF chose his firm or to elaborate on the specific media services provided to the fund.” Besides Kushner pal Leon Black, another member of RDIF’s elite international advisory board is Stephen Schwarzman of The Blackstone Group—a company that, through 2013, was a longtime nine-figure business associate of GOP mega-donor Steven A. Cohen, who is now WATA’s current top-level co-owner. Worth noting, here, is that the third new WATA owner alongside Cohen and Turner is Daniel Sundheim’s D1 hedge fund, which is co-run by former deputy Trump White House economic adviser Jeremy Katz. Katz was deputy director of Trump’s National Economic Council, a deputy assistant to President Trump, and the co-author of Trump’s controversial tax plan—which infamously offered enormous benefits to collectors of high-value items.

Katz’s involvement with WATA underscores that all of this is about much more than just retro video gaming—as it is, as Proof has noted, about a cadre of very rich men, some with very powerful ties, seeking to establish a new alternative asset class market bubble from which they can profit fabulously before (if past is precedent) pulling the rug out from the middle-class suckers who were taken in by their rapacious fantasies.

After the Daily Beast reported on the foregoing about Davidson Goldin’s involvement with the Trump-linked RDIF, an apparently rattled Goldin wrote the media outlet to insist that “my firm [WATA PR firm Goldin Solutions] has done nothing to shield anyone or any [Russian] entity from any [United States] sanctions.” Goldin did not explain what other reason RDIF—a sanctioned entity run by the government of a hostile nation currently in a cyberwar with the United States—would have had to retain Davidson Goldin in the same manner that WATA’s bosses now have.

It’s no wonder why, in August 2021, Business Insider named Davidson Goldin one of the nation’s “top public relations experts”, and a man who “CEOs scramble to hire in a crisis.” Goldin has, as we’ve seen, a history of representing some very shady characters—and at this point there’s at least some evidence to suggest that the head of WATA (and for that matter James Halperin, the head of Heritage Auctions, whose name was wiped from the WATA website as soon as WATA was bought by Cohen and Turner) would qualify for that designation.

{Note: While it’s not hard to get a detailed overview of Davidson Goldin’s professional career, accessing information about his family to see if he’s related to Ken Goldin was more difficult. They are certainly not brothers; the New York Times’ May 1994 obituary for Paul Goldin makes this clear. Ken Goldin’s mother Carole held shares in Score Board Inc. after the death of Ken’s father, according to the SEC; she passed away in 2016. Her obituary notes, besides Ken Goldin, a daughter named Sharon and a sister identified only by a first initial (“A”). As for Davidson Golin, his marriage announcement indicates that his mother’s name is Marjorie (“Margie”) and his father’s name was Gurston. Both men are from the New York/New Jersey area. Margie Goldin is a Senior Vice President at real estate agency Stribling & Associates. While John Eddy says that Goldin Solutions has no ties beyond coincidental ones to Goldin Auctions, Proof did due diligence on this score—because Goldin Solutions now says that is represents Goldin Auctions—and could not find any other ties between Davidson Goldin and Ken Goldin.}

A Historic Auction

In publishing its nearly fifteen-minute promo reel on Deniz Kahn’s apparently multimillion-dollar sealed video game collection, Goldin Auctions appended the following:

Deniz Kahn, Founder and President of Wata Games, owns one of the world’s largest video game collections, including sealed and CIB games from NES, Super NES, Playstation, Gamecube, N64 and others. His collection includes titles likes Super Mario Bros. 1, 2, & 3, Zelda, Mario Party 64, Twisted Metal, Resident Evil, Goldeneye, Tony Hawk Pro Skater, Micky Mania [sic], MIchael Jordan: Chaos in the Windy City [sic], MIke Tyson's Punch Out [sic], FInal Fantasy [sic], Metroid, Contra, Duck Tales [sic], Shaq FU [sic] and many other classics. Deniz provides an all access tour of his incredible collection and takes you on a nostalgic journey of video game history. Goldin Auctions[’] first ever Comic, Video Game and TCG Auction debuts on August 31st and runs through September 18th.

On its face, it’s not clear what the last sentence here has to do with any of what precedes. But a little more digging provides some significant answers.

Two weeks before purchasing WATA in mid-July 2021, Collectors Universe “finalized a deal to bring Goldin Auctions under its umbrella”, reports Darren Rovell of Action Network. In the same report, Rovell notes that The Blackstone Group, which suddenly withdrew over $500 million in assets from WATA co-owner Steven A. Cohen’s hedge fund in 2013, had just purchased (also in July 2021) CGC—which quickly announced that it would imminently be building a new video game grading division intended to compete with WATA.

What CGC does not have—at least yet—are affiliated auction houses. WATA does, of course, in the form of Heritage Auctions and Goldin Auctions.

{Note: Darren Rovell would post, and then quickly delete, the following tweet about the Proof expose on WATA, Deniz Kahn, and Richard Lecce. The tweet came on August 26, 2021 at 11:36 PM—just eight minutes after the 10,554-word Proof story on WATA was published.}

Collectors Universe’s deal to buy Goldin Auctions gave it a place, at least in theory, to help WATA’s troubled co-founder unload some of his video games if he chose (or was forced) to make a hasty exit from the graded-video-game market he had helped create—a “pixel parachute,” as it were, that if it ever came to pass would be highly lucrative for Kahn and resolve a potential nightmare for WATA’s new owners. This scenario is exactly what market watchers had been worried about since a company, Collectors Universe, that owns an auction house then immediately purchased a grading house as well (as this is precisely the sort of conflict of interest that has now been identified with respect to WATA and Heritage Auctions). Indeed, Sports Collectors Daily (SCD) wrote at the time Collectors Universe purchased Goldin Auctions that

Collectors Holdings and Goldin Auctions say that while one company now owns the other, they promise each will continue operating as independent companies and that no significant operational changes will occur.  In other words, they know you’re wondering about what might appear to be conflicts of interest between a grading/authentication company and an auction house that’s in the business of selling collectibles for as much as it can.

Ken Goldin went still further than this, assuring SCD that “There will be a firewall between Collectors Universe and Goldin. I will not get better service or preferential grading from [WATA].”

The question, of course, is why Goldin took less than sixty days from this statement to use his same-company preferential access to WATA co-founder Deniz Kahn’s historic video game collection to promote his first-ever auction of WATA games. This does not seem like a “firewall” between the two operations, but rather an attempt to synergize a “grading/authentication company” (WATA) and “an auction house that’s in the business of selling collectibles for as much as it can” (Goldin Auctions)—exactly the fear expressed by SCD when the July Collectors Universe-Goldin Auctions deal closed.

Here’s what Goldin himself had to say about his decision to sell his company, this time in a little-seen video chat with collectors, rather than journalists from a media outlet:

I could have taken a large friggin’ check [in the deal with Turner’s group], or I could have taken stock in Collectors Holdings [the company Turner and his associates formed to buy Collectors Universe], which [stock price] is, I believe, basically, a barometer for the future of the hobby. Because there are a lot of [hobby] components [now under Collectors Holdings]: there’s an auction [house] [Goldin Auctions], there’s a marketplace, there’s a grading company [WATA], there’s authentication [at WATA], there’s soup-to-nuts.

So my viewpoint was that I would rather take stock at the valuation today and look three years from now, five years from now, ten years from now, and see it five to ten to twenty times that as opposed to take cash. So I took no money out of the [Collectors Holdings] deal.

….

I look at the business [of collecting] and say, “Am I better off owning a larger piece of a standalone company? Or am I better off owning a smaller piece of a much larger conglomerate?” I look at Collectors Holdings as the S&P [Standard & Poor’s 500] of the [collecting] hobby, because you’ve got a marketplace, you’ve got card prices [services], you’ve got grading, you’ve got authentication…you’ve got other things coming that I can’t discuss [Goldin Auctions had just a week earlier announced that it would be selling video games at auction, but had not yet issued significant details about its plan to do so], but it is really something that I was very, very excited about, which is why I did it.

While to media Goldin discussed a “firewall” between Goldin Auctions and WATA, in the statement above—which he said was directed to the collector class, from whom “I got a couple emails” as well as seeing “a comment on Cardporn, [where] people [collectors were] disappointed” that “Ken sold”—he had a different story to tell about the relationship between Goldin Auctions and WATA: “soup-to-nuts”, he called it, a term defined as “covering every detail or part of something” and setting an “entire procedure.” If there’s an antonym to the word “firewall,” it’s the phrase “soup to nuts.”

So why does a member of the new “conglomerate” that includes WATA want media to hear bright talk of a “firewall” even as he gooses the collecting market, in chats with collectors, via talk of a well-integrated authentication, grading, and auction process?

And how much less of an apparently-only-mythical “firewall” would media consider there to be if Goldin Auctions were in fact to eventually seek to host a highly lucrative auction for Deniz Kahn at a time he represents a big liability to Collectors Universe?

Certainly this was the reaction of viewers of the Goldin-Kahn promo reel on YouTube. User Trey Price wrote angrily to Goldin Auctions, “[You’re] hyping his amazing collection to sell it before he bursts the [national graded video game] bubble.” Nearly three dozen other viewers of the video “liked” Price’s comment, thereby underscoring that Ken Goldin and Deniz Kahn had created exactly the appearance of impropriety the two men had promised to avoid.

To try to determine if Goldin Auctions would indeed be selling any games from Kahn’s collection in its first-ever WATA-themed video game auction on August 31, as noted above Proof asked WATA’s agents as it manages its current PR crisis, Goldin Solutions. The response was the odd one recited above. What this means is that game collectors cannot now have any repose on the question of whether the August 31, 2021 auction at Goldin Auctions is intended in some way to help Deniz Kahn exit the game-collecting ecosystem a very, very rich young man.

And lingering in the air, still, is WATA’s demand that Proof declare that Richard Lecce is not affiliated with WATA. This, of course, is something Proof cannot do. But what it can do is pass on the allegations now being made by WATA against Richard Lecce.

WATA and Richard Lecce at War

On August 25, Goldin Solutions told Kotaku that it didn’t work for WATA, but for the outfit (Collectors Universe) owned by Nat Turner, Steven A. Cohen, and a hedge fund (D1) co-run by former Donald Trump deputy assistant Jeffrey Katz. Goldin Solutions was insistent on this point—that it did not work for WATA—indeed so much so that it made separate contact to Kotaku, the industry-leading gaming publication, exclusively to clarify this. Why Goldin Solutions deemed it important to tell news consumers that it was working on behalf of WATA’s new ownership (Turner, Cohen, and D1) rather than its prior owners (Kahn, Thrower, and an investor class that at various points is confirmed to have included Richard Lecce and James Halperin) wasn’t immediately clear, though it could certainly be guessed at—as Kahn and Thrower were at the time Goldin Solutions spoke to Kotaku embroiled in a national scandal would have given Turner and his crew good reason to distance itself from WATA executives may well be on their way out of the company.

But in its subsequent, on-the-record messages to Proof on August 28, Goldin Solutions took a new and quite unusual approach to the issue of which entity it was representing, first writing, via its EVP John Eddy, that “we work with Wata Games” and “we” (i.e., Goldin Solutions) are saying “[Richard] Lecce is not a Wata co-founder.” When Proof pressed on this representation—which is not one that Goldin Solutions could possibly make without first speaking to the two men Lecce said he co-founded WATA with, Kahn and Thrower—Goldin Solutions seemed to subtly change the story it had told Kotaku, declaring that “We represent Wata” rather than merely working “with” them.

So what happened between August 25 (Kotaku: “A spokesperson for Goldin Solutions reached out to clarify that the firm actually works for Collectors Universe”) and August 28 (Goldin Solutions: “We represent Wata”)?

{Note: Goldin Solutions’ urgent communication with Kotaku was in response to this version of Kotaku’s article on the Jobst Report. See below for a screenshot of the relevant Kotaku text.}

Within 72 hours, however, Goldin Solutions was telling Proof “We represent Wata”—seemingly the very claim it had just contested when it was published by Kotaku.

While possibly just a matter of semantics, this may also be an indication that between August 25 and August 28 the PR firm did indeed establish more clearly its agency on behalf of WATA by speaking with top executives there, including Kahn and Thrower. Indeed, it was only after this 72-hour window that Goldin Solutions informed Proof that, per a “WATA spokesperson”, the claim made by Lecce in the digital commercial correspondence Proof possesses—to wit, that he “founded” and “started” WATA with Kahn and Thrower—was “false.”

So what do the relevant SEC (U.S. Securities and Exchange Commission) documents have to say about this?

In July 2017, WATA filed a document (Form D) with the SEC that listed Deniz Kahn as a “director” and “executive officer” and Kenneth Thrower, Garrett Cochran, and Dain Anderson as “executive officers.”

Just four and a half months later, in December 2017, WATA filed a new Form D that listed both Kahn and Thrower as “directors, executive officers, and promoters” of WATA, with Mark Haspel now listed as a “promoter” and Doreen Tho listed as an “executive officer.”

In July 2018—a year after its founding—WATA filed a third Form D that again listed Kahn and Thrower as “directors, executive officers, and promoters” of WATA—with Haspel still a “promoter”—but now listed Darren Adams, Jeff Meyer, and Ryan Sabga as “directors.” Cochran, Anderson, and Tho are entirely absent from this document.

Given that the SEC defines an “executive officer” as someone who performs a “policy making function” for a company, the above signifies that, at various points, all five of Deniz Kahn, Garrett Cochran, Dain Anderson, Kenneth Thrower, and Doreen Tho occupied policy-making roles at WATA at various points in its first year of operation. Meanwhile, Kahn, Thrower, Darren Adams, Jeff Meyer, and Ryan Sabga had all been, under the SEC definition of a director, “a director of [the] corporation or any person performing similar functions with respect to [the] organization.” This explains why Kotaku writes, of Anderson and Meyer, that the two men “were at times involved in running WATA as well, something the rating agency didn’t disclose in a blog post about the collection [it graded for Meyer after he bought it from Anderson]. It also appears to contradict Kahn’s claims in the past that WATA employees are not allowed to have the company grade their games or sell games they owned that had previously been WATA-graded. Meyer also went on to nuke the NintendoAge forum, depriving collectors of easy access to historical pricing information in the process.”

The subsequent press release from Meyer, who runs GoCollect, declaring that he was “never employed by WATA” is not, apparently, supportable under SEC guidelines. It is likely irrelevant, legally, that Meyer appears to believe that only by receiving salaried compensation from WATA could he be considered an employee of the company. The SEC doesn’t appear to agree with him, from a reading of the definitions on its website.

Under SEC regulations, “founders” of a company are defined as “promoters” rather than “directors” or “executive officers.” This said, it’s not clear that the “Related Persons” section of the Form D—in which a company declares its “promoters”—is, or is intended to be, exhaustive. Indeed, the SEC definition of a “promoter” is so broad it could include a large number of individuals associated with a company as well as a wide range of actions or activities associated with that company (emphasis supplied):

Any person who, acting alone or in conjunction with one or more other persons, directly or indirectly takes initiative in founding and organizing the business or enterprise of an issuer; or any person who, in connection with the founding and organizing of the business or enterprise of an issuer, directly or indirectly receives in consideration of services or property, or both services and property, ten percent or more of any class of securities of the issuer or ten percent or more of the proceeds from the sale of any class of such securities.

However, a person who receives such securities or proceeds either solely as underwriting commissions or solely in consideration of property shall not be deemed a promoter within the meaning of this paragraph if such person does not otherwise take part in founding and organizing the enterprise.

In other words, while investing in WATA—something Kenneth Thrower appears to confirm Richard Lecce did do (see here)—and taking no other action with respect to the founding of the business would not make someone a “promoter” requiring declaration in the view of the SEC, this does not also mean that a person who invests in a company and takes part in “founding and organizing” it must necessarily be declared to the SEC as a “promoter.” How do we know this? Because the SEC acknowledges that promoters may well work with “other persons” to be involved in the “founding” of a business, and it isn’t clear that a roster of all such other persons would in every case be listed on a Form D. In other words, while WATA’s 2017 and 2018 SEC filings don’t denominate Lecce a founder of the business, they also do nothing to conclusively preclude that possibility. Indeed, while this event post-dated by sixteen months WATA’s third SEC filing, as or after he was an investor in WATA Richard Lecce appeared on the History Channel show Pawn Stars to publicize the very game (a rare Super Mario Bros. variant previously owned by self-described WATA “friend” Dan Maresca) upon whose rarity WATA had launched its brand nationally in 2018; this could well be deemed “services” for WATA, though whether such services were “directly or indirectly” related to Rich Lecce’s prior or outstanding investments in WATA (whose details remain unknown) is unclear.

In short, a “WATA spokesperson” now claims that any representation by Lecce that he “founded” and “started” WATA with Kahn and Thrower is “false”; meanwhile, given that Lecce is unambiguous, in his commercial digital correspondence, that did indeed “found” and “start” WATA with Kahn and Thrower, Proof and its readers must presume that Lecce would equally call “false” the claims now being made by WATA, Kahn, and Thrower. Proof cannot adjudicate between these warring claims, especially as all concerned have been less than forthcoming about their actions—and therefore can’t be deemed reliable sources on this subject by this or any media outlet.

By the same token, Goldin Solutions says—though this isn’t attributed to a “WATA spokesperson” but to WATA’s PR flack John Eddy—that it’s “not correct that Deniz [Kahn] is selling his [entire video game] collection.” Proof does hope this is true, for the reasons articulated above; however, there is no way to verify this claim without Kahn himself making it unambiguously. There is nothing preventing Ken Goldin and Goldin Auctions from selling games provided to them by Kahn without identifying them as such, especially as Goldin is unlikely to make the “Carolina Collection” mistake WATA made in advertising the fact that it had graded games now known to have been owned by Meyer of GoCollect (a WATA “director” at the time). There is no way for a buyer in a Goldin Auctions video game auction to confirm whether Goldin Auctions is or is not selling the very games it just inexplicably released a promotional video to boast about on the eve of its first ever WATA-themed video game auction. Certainly, given Goldin’s past contrary statements about whether there’s a “firewall” between his auction house and Kahn’s grading company, a cautious buyer would have reason to be concerned that the coming auction at Goldin is part of a lucrative exit strategy for the beleaguered Kahn that speaks only ill of today’s video game “bubble.”

Conclusion

A picture is emerging of a relatively small cadre of men who sought to produce a new alternative asset class out of thin air and become even richer than they already are. In establishing this new asset class, these men benefited from the ongoing and stunning lack of collectibles regulation from the FTC—indeed, one of the men, James Halperin, had cause to know that even grave misconduct in the collectibles market is often met with an easily survivable, slap-on-the-wrist FTC fine—as well as new tax regulations involving luxury collectibles that were written by one of the men in question.

These men were aided, too, by fawning, uncritical coverage of their activities by the legacy media, with embarrassingly credulous headlines that did little to question the conspicuously inorganic nature of the nation’s newest market bubble. And in one case, a History Channel “reality” show knowingly or negligently let two men from this cadre pretend not to know one another on-air—a historically galling television segment that played a critical role in moving the video game market from a tiny, niche market to the eight- or even nine-figure one it has become just thirty months later. Over this period, a small group of WATA-linked video game sellers and middle-tier market investors who regularly have their stock graded by WATA—and now form WATA’s most avid, even violently aggressive defenders (indeed, one such told this journalist to “swallow something sharp”)—have gotten very rich, in doing so making video game collecting financially impossible for millions of Americans, creating an artificial bubble whose inevitable burst could bankrupt many, and creating a haven for bad corporate behavior like collusion, fraud, self-dealing, money laundering, and worse.

And yet there’s still no indication that anyone will do anything about any of this.

Fortunately, what America does have is a class of independent journalists—individuals affiliated with no legacy media outlet—who are exposing the sort of behavior that rich men have long engaged in with impunity in this country. The last time rich men were allowed to create an artificial market bubble designed to enrich themselves at others’ expense, it almost collapsed the American economy. The 2008 housing bubble created what is now known as the Great Recession. U.S. media missed the big story then, and government did almost nothing to protect Americans thereafter. Now a new bubble is being created, and again legacy media and the federal government are absent. Here’s hoping that Americans come to appreciate the critical role of independent journalism in protecting America before this new cadre of rapacious mavens again leads America into financial ruin. With both a global pandemic and a domestic insurgency ongoing, America can ill afford to let this new, inorganic collectible market spiral further out of control. It’s already hit a level of volatility—and is defined by a level of misconduct— that marks it as a potentially serious threat to many, many Americans going forward.

While of course video games are not homes, when a nation is in the midst of three things simultaneously—a public health crisis; a political crisis; and an economic crisis—the likelihood that many people move into new asset-class markets and submarkets to take risky bets on their own financial futures increases, as older models of wealth development suddenly seem particularly fraught. Media plays a significant role in this; if, as is happening now, a network like CNN is recklessly publishing articles with headlines like “Why Your Old Video Games May Be Worth Millions”, it entices many regular folks into a market they don’t understand but that seems fabulously lucrative—when in fact it might be largely artificial.

Because video gaming is now “the largest and most expansive industry in the world of entertainment”, it has the capacity to attract a volume of investors and hobbyists that is larger than any other entertainment sub-sector. But it was only recently that a large, seemingly welcoming front door was put right at the front of that sub-sector: collecting graded video games as a long-term investment. And so it is that, with media pumping the prospect and the federal government doing nothing to regulate it, it does start to look like a bear trap for unwary Americans disoriented by the triple crises in American life (public health, political, and financial). Everything the cadre of rich men described above can possibly do to convince people that video games are not for gamers but for all sorts of investors, they are now doing. And the growth of the retro video game market—a level of growth very few markets of any kind ever see, with ubiquitous reports of investors making 2x or 5x or even 10x returns in under a year—makes clear that the marketing efforts of these men, however disingenuous, are having an effect.

It’s with this in mind that Proof, and many other sources of independent journalism, are trying to ring the alarm bell on this market bubble early rather than, as happened in 2008, waiting until it’s too late.