Illustration: Aïda Amer/Axios

The FBI has launched a criminal investigation into the world of baseball card collecting — one that involves an industry-leading appraisal firm, a well-known memorabilia dealer, and an auction house, WashPost reports.

Details: This scandal began after two online collectors tracked hundreds of cards as they were (1) graded by an appraisal firm, (2) obtained by a "card doctor," (3) altered and resubmitted for a higher grade, and then (4) sold through an auction house.

  • Collectors rely on appraisal firms to determine the condition and market price of cards. The higher the grade, the higher the cards' market value.
  • For his part, the alleged "card doctor" told WashPost that he doesn't alter cards, but rather seeks out cards that he believes were "undergraded" and resubmits them in hopes of better value.

The backdrop: Modern baseball card collecting erupted in the 1990s when appraisal firms began grading cards' conditions on a 1 to 10 scale.

  • This offered collectors an objective measurement of a card's condition for the first time and gave hobbyists an easy way to upgrade their collections: simply purchase a higher-graded card.
  • "That encouraged friendly competition ... and some card connoisseurs began treating their collections as financial assets, similar to stocks, bonds or works of fine art," notes WashPost's Jacob Bogage.

The big picture: Forbes will tell you that, if a decade ago you had put your money in trading cards instead of the stock market, your payoff would be more than twice as big.

  • Yes, but: That fact is based on data generated by the auction house at the heart of the FBI's investigation.
  • And the cards they sold were graded by an appraisal firm that charges customers based on the grades they give their cards rather than a flat-fee, thus incentivizing them to give higher, possibly inaccurate grades.

The bottom line: Card collecting is a hobby — and a billion-dollar industry — built entirely on trust, and this scandal threatens to erode that on the eve of the National Sports Collectors Convention in Chicago.

"This is a crisis. There's just too much upside to being unethical in this industry. ... This is bad. This is really bad."
— Darren Rovell of the Action Network tells Axios

Go deeper

7 hours ago - Podcasts

Facebook boycott organizers share details on their Zuckerberg meeting

Facebook is in the midst of the largest ad boycott in its history, with nearly 1,000 brands having stopped paid advertising in July because they feel Facebook hasn't done enough to remove hate speech from its namesake app and Instagram.

Axios Re:Cap spoke with the boycott's four main organizers, who met on Tuesday with CEO Mark Zuckerberg and other top Facebook executives, to learn why they organized the boycott, what they took from the meeting, and what comes next.

Boycott organizers slam Facebook following tense virtual meeting

Illustration: Sarah Grillo/Axios

Civil rights leaders blasted Facebook's top executives shortly after speaking with them on Tuesday, saying that the tech giant's leaders "failed to meet the moment" and were "more interested in having a dialogue than producing outcomes."

Why it matters: The likely fallout from the meeting is that the growing boycott of Facebook's advertising platform, which has reached nearly 1000 companies in less than a month, will extend longer than previously anticipated, deepening Facebook's public relations nightmare.

Steve Scalise PAC invites donors to fundraiser at Disney World

Photo: Kevin Lamarque-Pool/Getty Images

House Minority Whip Steve Scalise’s PAC is inviting lobbyists to attend a four-day “Summer Meeting” at Disney World's Polynesian Village in Florida, all but daring donors to swallow their concern about coronavirus and contribute $10,000 to his leadership PAC.

Why it matters: Scalise appears to be the first House lawmakers to host an in-person destination fundraiser since the severity of pandemic became clear. The invite for the “Summer Meeting” for the Scalise Leadership Fund, obtained by Axios, makes no mention of COVID-19.