Author Topic: Daniel Zhao of Hosane Auctions controversy?  (Read 21764 times)

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Offline NBM

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Daniel Zhao of Hosane Auctions controversy?
« on: August 07, 2012, 04:53:48 PM »
Picked up on this from the newly released Pricepedia.

How Can This Be Allowed to Happen in our Industry ?

http://www.majesticrarities.com/pages/blog/bad-modern-chinese-coin-dealer/
« Last Edit: August 09, 2012, 05:39:19 PM by NBM »

Offline didochili

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Re: Daniel Zhao, of Hosane Auctions, Zhao-on-Line selling stolen coins?
« Reply #1 on: August 07, 2012, 07:27:32 PM »
nice.
I did a google search of "daniel zhao coin", and you know what, this story was the first in the search result.
I think it's important for this type of story/experience to be published online, so people have a chance to see the other side of these large companies.

Offline badon

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Re: Daniel Zhao, of Hosane Auctions, Zhao-on-Line selling stolen coins?
« Reply #2 on: August 07, 2012, 10:39:41 PM »
Thanks for posting this. The next question is, are there ANY Chinese auction houses that are NOT consorting with criminals?

Offline dobedo

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Re: Daniel Zhao, of Hosane Auctions, Zhao-on-Line selling stolen coins?
« Reply #3 on: August 07, 2012, 10:46:52 PM »
Honesty aside, is this legal? If not illegal, what can to be done?

Offline badon

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Re: Daniel Zhao, of Hosane Auctions, Zhao-on-Line selling stolen coins?
« Reply #4 on: August 07, 2012, 10:57:06 PM »
It would be illegal in the West, since the coin is the property of someone else. The West is kind of harsh in enforcing those property rights at the expense of unknowing buyers, but because of that, it discourages buyers from pretending they don't know property is stolen. For example, if your coins were stolen, and then someone sold them to me, the coins would have to be returned to you at my expense regardless of the fact that I had bought them honestly, and I did not know they were stolen. Next time, I would be sure to ask more questions about why the coins are so cheap :)

That kind of law in the West has pretty much strangled the black market for stolen property. Pawn shops are now very careful about who they buy things from, and the positive benefit is that the reputation of the pawn shop industry has been rehabilitated from what it was in the 1980's and earlier. Back then, pawn shops were more or less a marketplace for launderers of stolen property.

Offline Panda Halves

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Re: Daniel Zhao, of Hosane Auctions, Zhao-on-Line selling stolen coins?
« Reply #5 on: August 07, 2012, 11:01:37 PM »
Honesty aside, is this legal? If not illegal, what can to be done?

It is really quite simple...
Step one crook exposure: (Thank you Nick)
Step two: vote with your wallet

To be an efficacious dealer you need three basic elements:
Inventory, Purchasing Power, and Trust (Reputation)
Good established dealers know this and that is why stories like this are so frustrating.
Shenanigans like this are bad for the collecting community in general.

Offline PandaCollector

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Re: Daniel Zhao, of Hosane Auctions, Zhao-on-Line selling stolen coins?
« Reply #6 on: August 08, 2012, 12:07:06 AM »
I commend all those in the Chinese numismatic community (and there are many) who tried to resolve this matter before it turned into a train wreck. As I understand it many potential buyers held off from bidding on a coveted item. It's a very positive sign for the future growth of this field.

My hat is off to Nick Brown. Bravo!

Best wishes,
Peter Anthony
China Pricepedia
http://www.pandacollector.com

Offline Gilmore

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Re: Daniel Zhao, of Hosane Auctions, Zhao-on-Line selling stolen coins?
« Reply #7 on: August 08, 2012, 08:02:14 AM »
This whole story is very surprising to me as a regular customer of Zhaoonline. For the past few months I participate in their auctions every month at least twice and have nothing other than just good experience so I am quite shocked reading this.

"Zhao purchases coins and then places these coins in either the Hosane or the Zhao-on-line auctions and inflates the prices".
I purchased coins on auctions in much lower prices than what any Chinese dealer offered me so I do not find this specific argument to be 100% accurate. "Buy it now coins" are overpriced, but is it any different than eBay?

"Zhao-on-line sells many raw coins that have flaws".
This is true. The English website does not have a description of the condition of the coins. The Chinese website however details the imperfections of the coins. I purchased some coins with little problems and found them to be in much better condition than described.
 
Their customer service is phenomenal. No better way to describe it.

I have developed a lot of trust to Zhaoonline over the past few months and really enjoyed doing business with them. Reading Nick's article is very shocking to me and frustrating.

Offline badon

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Re: Daniel Zhao, of Hosane Auctions, Zhao-on-Line selling stolen coins?
« Reply #8 on: August 08, 2012, 04:32:29 PM »
Hopefully after the shock has passed, peer pressure will succeed in making sure these kinds of problems don't happen again.

Offline fwang2450

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Re: Daniel Zhao, of Hosane Auctions, Zhao-on-Line selling stolen coins?
« Reply #9 on: August 08, 2012, 08:38:32 PM »
To play the devil's advocate, I don't see anything illegal in Zhao's transactions. The coin was sold by an employee of the German company to his office in Germany. So he legally possessed the coin, if the employee did not steal the coin out of the company.  If there was anything to blame, it was the messy internal mangement of the German company, whose employee could not tell an expensive coin. I totally agree that from the perspective of business ethics, the coin should have been returned to the German company. But ethics is a different story from law. It depends on good will and conscience. Who among us has not purchased a coin well below its market value, taking advantage of the ignorance of the seller? Like the person who purchased the piefort Year of Children silver coin on eBay for $5600? Is this ethical? Do we call this stealing since the seller lost at least $15000?

On the pricing of Zhao Online, the collector community in China all agree that the coins are much cheaper there than from the dealers. Zhao Online is a big service to Chinese collectors, freeing them from the grip of local dealers whose purchase price can be 40% lower than their selling price. It will develop despite the boycott from this side of the ocean.

Offline didochili

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Re: Daniel Zhao, of Hosane Auctions, Zhao-on-Line selling stolen coins?
« Reply #10 on: August 08, 2012, 09:29:39 PM »
I agree this issue is more about ethics rather than law.

Offline PandaCollector

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Re: Daniel Zhao, of Hosane Auctions, Zhao-on-Line selling stolen coins?
« Reply #11 on: August 09, 2012, 12:41:08 AM »
To play the devil's advocate, I don't see anything illegal in Zhao's transactions. The coin was sold by an employee of the German company to his office in Germany. So he legally possessed the coin, if the employee did not steal the coin out of the company.  If there was anything to blame, it was the messy internal mangement of the German company, whose employee could not tell an expensive coin. I totally agree that from the perspective of business ethics, the coin should have been returned to the German company. But ethics is a different story from law. It depends on good will and conscience. Who among us has not purchased a coin well below its market value, taking advantage of the ignorance of the seller? Like the person who purchased the piefort Year of Children silver coin on eBay for $5600? Is this ethical? Do we call this stealing since the seller lost at least $15000?

On the pricing of Zhao Online, the collector community in China all agree that the coins are much cheaper there than from the dealers. Zhao Online is a big service to Chinese collectors, freeing them from the grip of local dealers whose purchase price can be 40% lower than their selling price. It will develop despite the boycott from this side of the ocean.

Here is where this gets messy. Under USA law if the first buyer succeeds in establishing his ownership he may legally seize, or confiscate, the property without any obligation whatsoever to compensate the second buyer. The law does not recognize any rights for the second buyer, no matter how innocent they are. If someone who knows German law could chime in, that would be helpful. One person told me that German law is similar to American in this regard. As the coin changed hands in Germany it may be German law that decides the matter, at least outside of China.

So where does Mr. Zhao's alleged actions leave the high bidder for this coin in the Hosane auction? Possibly with a coin that can never be taken to much of the Western world. I really don't think a bidder in a public auction should ever find his purchase ensnared in a legal dispute. Why would an auctioneer place his own customer in this position?

Best wishes,
Peter Anthony
China Pricepedia
http://www.pandacollector.com

Offline fwang2450

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Re: Daniel Zhao, of Hosane Auctions, Zhao-on-Line selling stolen coins?
« Reply #12 on: August 09, 2012, 12:58:02 AM »
Under USA law if the first buyer succeeds in establishing his ownership he may legally seize, or confiscate, the property without any obligation whatsoever to compensate the second buyer.
The question is how the first buyer can establish his ownership. I would assume that the German company returned his payment for the coin after they failed to deliver it to him. I cannot imagine that the US dealer would still pay for a coin he had never received. If he did not pay for the coin, he did  not own it. He attempted to own it but failed. I would call it stealing if the German company took the money for the coin and refused to return it even though they could not deliver. 

Offline PandaCollector

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Re: Daniel Zhao, of Hosane Auctions, Zhao-on-Line selling stolen coins?
« Reply #13 on: August 09, 2012, 01:16:59 AM »
I'm speculating here, but I don't believe the money was ever returned because it was always assumed that the coin would turn up, and the buyer wanted the coin. So the sale was never canceled, and remained the property of the purchaser. The good faith of the German dealer was never in question.

Best wishes,
Peter Anthony
China Pricepedia
http://www.pandacollector.com

Offline PandaCollector

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Re: Daniel Zhao, of Hosane Auctions, Zhao-on-Line selling stolen coins?
« Reply #14 on: August 09, 2012, 01:34:38 AM »
An interesting legal analysis of this situation has been posted by yennus at:

http://forums.silverstackers.com/topic-29334-daniel-zhao-of-hosane-auctions-selling-stolen-coins-page-2.html

Best wishes,
Peter Anthony
China Pricepedia
http://www.pandacollector.com