Author Topic: Daniel Zhao of Hosane Auctions controversy?  (Read 20740 times)

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Offline poconopenn

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Re: Daniel Zhao of Hosane Auctions controversy?
« Reply #45 on: August 10, 2012, 01:32:29 AM »
Before we discuss the ethics issue, we have to determine the ownership of this coin. Based on Nick’s article, IMO, the transaction between US dealer and German company was never completed, since coin was never delivered to US dealer, while Zhao did not steal and bought this coin legally from the same German company. There is no question in my mind that the German company has handled this incident badly, before and after. It should cut the loss immediately by properly compensating the party involved to resolve the problem.
 
Recent fiasco caused by 30 minutes software glitch sent out thousands of unintended trades, distorting the stock market and leading to a $440 million loss at Knight Capital is a good lesson to be learned. The CEO, Thomas Joyce did not take the easy way out by filling bankruptcy and took the responsibility to cover all loss caused by his firm’s mistake. His honorable action has kept all major brokerage accounts to stay with him and injected enough money to keep his firm alive. This is the right way to correct the mistake by any company.

Let assuming that if the rare MCC market dropped about 50%, shortly after US dealer bought this coin from German company, I doubt we would discuss this incident at all. The US dealer would be very happy to receive the refund. There is no reason to even discuss ethic issue in this incident, since Zhao did not steal this coin from US dealer and bought this coin legally from this German company. IMO, this German company made a very poor judgment by offering Zhao a buyback price way below the market value, at least $90,000 lower, based on the auction result. This was not a good faith offer to try to resolve the problem, and make thing right. IMO, this is simply a business dispute, caused by German company’s mistake and poor crisis management skill. The significant price increase of this coin during that period made more difficult to resolve this issue since both US dealer and Zhao want to have this coin and handsome profit.

I do want to point out one critical point. It was hard to believe that such a high value rare coin was not being handled by a knowledgeable person in this German company. I would expect somebody in high level management to deal with Zhao directly in this instant. We simply do not have the whole story and something is not right.

By the way, I was not offended by GolderDragonGirls at all. We have a very healthy disagreement and mutual respect.

Offline GDG's

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Re: Daniel Zhao of Hosane Auctions controversy?
« Reply #46 on: August 10, 2012, 10:05:55 AM »
Thank you poconopenn.  I had absolutely no intent at being discourteous to you and don't believe I was. Disagree yes, discourteous no. I think Badon if off base with that discourteous remark. I hold poconopenn in high esteem on the board as his posts are always knowledgeable and interesting. I believe he is one of the best posters on the board but we all don't always have to agree with one another. After reading poco's and others comments I must agree the German Co. could have handled it better BUT I do not not like the way Zhao handled it at all. If it was a U.S. Auction House he would not have been able to sell the coin. I appreciate Honesty and Integrity above all.Case in point.  I've bought expensive coins from KonaJim many times. He sends me the coins even before my check has reached Hawaii. I love dealing with dealers for whom I have trust and they have trust in me. If I have no trust in an individual of auction house they will never get my business.

Online PandaCollector

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Re: Daniel Zhao of Hosane Auctions controversy?
« Reply #47 on: August 10, 2012, 11:25:29 AM »
I superficially looked into German property law and can say that it does differ from English law in how property rights can be transferred. For instance, "as a basic principle, assignees cannot acquire a claim or other non-chartered rights from an apparent holder." There are also different definitions for when property rights are transferred.

It seems to me that there is the possibility that a court may find that Mr. Zhao gained control of the coin through fraud. It is alleged that, when asked, his representative provided the German dealer with a grossly and deliberately inaccurate market value in order to buy the coin cheaply. So, to my mind, there is no certainty that Mr.Zhao's ownership will be upheld. If fraud is found than that may open up other legal issues, as well.

The German dealer does not come off well, either, and his financial liability potentially could exceed the auction price of the coin. As I see it his actions are the cause of the entire mess, and he passed up his last opportunity to bury his mistakes quietly by not buying the coin himself at the auction.

The person I feel sorriest for is the bidder. He bought himself not only a coin but a headache. At the least his ability to resell his prize is compromised for the time being.

BTW, if Mr. Zhao would like to tell his side of this story publicly I offer him equal space in China Pricepedia to do so.

A final note: It seems fitting that this coin's number is 19, a prime number that is not divisible except by 1 (and itself). The rights to this coin are like that, and in the end only one person will own it all.

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

Offline badon

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Re: Daniel Zhao of Hosane Auctions controversy?
« Reply #48 on: August 10, 2012, 02:34:16 PM »
BTW, if Mr. Zhao would like to tell his side of this story publicly I offer him equal space in China Pricepedia to do so.

This is a very important thing. So far, we have all voiced opinions without hearing his side of the story. This subject is controversial even amongst people known for high ethical standards.

Offline goldpanda

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Re: Daniel Zhao of Hosane Auctions controversy?
« Reply #49 on: August 25, 2012, 07:44:58 AM »
Just found the other side of the story from Hosane's latest announcement.
http://www.hosane.com/newsdetail.asp?newsID=469&LANG=eng


A 1998 Spring Festival 5oz Gold Coin at Hosane’s 2012 Spring Auction

It’s known to all that, to prove something in question, legal procedures must be taken. The fact is, it’s something unusual and completely unethical in the numismatic community that somebody, in our industry of numismatics, tries to circumvent the law with the “help” of others by making others take liability and encroaching someone else’s ownership of property in attempts to “help” a greedy dealer group.

As a matter of fact, such an important, invaluable 5oz gold coin (please note, GOLD COIN), was actually “missing” for over one year without being noticed. Is there any hidden reason? That’s what the people involved in the transaction should know.

The truth is, Hosane got in touch, quite timely, with this US dealer unwilling to mention his name (Why he’s unwilling to state his name? Did he has any common interest with somebody?), hoping he could provide certain legal documents to prove the ownership of the coin, some documents issued by court, certificate of hand-over or certificate of payment. Instead, what Hosane received was an inventory, a quote list, and a long statement. The US dealer stated that he “has” the ownership of the coin without any legal documents. As an auction company authorized by the law, Hosane is quite experienced in handling any disputes regarding ownership. In fact, such case was a very common civil dispute for auction companies, which there’re regular procedures to follow.

In fact, this coin never went missing. It’s always with the German dealer. Probably the transaction was stopped due to conflicts caused by price or payment. Did any problem occur in the transaction, resulting in the US dealer’s failure in getting this coin legally? Almost all Chinese numismatic collectors knew several versions of the story.

The fact is, this coin went “missing” without any written notification to either Hosane or Zhaoonline. All Chinese dealers would feel absurd about the issue! Is there any case filed and public written notification made for so important a coin went “missing” for so long? Definitely not!

Actually, this coin became invaluable long time ago. That’s a CHINESE FIVE OUNCE GOLD COIN. How could professional personnel of a numismatic company think a Chinese 5oz gold coin of small value? At that time, the coin was worth EUR 100,000. That employee hadn’t even seen anything so valuable in his life, how could “not realizing its extreme value” as claimed be justified? Furthermore, it’s told that the person who handled and sold this coin is the chief official of this German company. Interestingly, further investigations revealed that not only this coin, but a series of the so called “missing” coins showed up on Ebay or at the German market.

The truth is, the US dealer only purchased part of the items in the coin collection of the Germany dealer (please note “PART”), total value around three million US dollars, while their actual selling amount by the US dealer was over ten million US dollars. Does everyone think the US dealer’s price reasonable? It’s even more ridiculous that a slander occurred. Mr. Zhao has never got involved in the purchase of this coin, let alone meeting the German dealer. Actually, Hosane’s coin auction department comprises just 5 people, and holds up to 5% of Hosane’s business volume. It highlights artworks and antiques. As a CEO who has over 300 employees and whose business involves 700,000 lots hitting over 100 million US dollars annually, Mr. Daniel Zhao’s not even possible to intervene in the auction of an item at such level. It’s after the US dealer contacted Mr. Zhao, hoping that “help” may be offered to let him take the coin away immediately that Mr. Zhao asked his employees to report to him what really happened, for the US dealer had known Mr. Zhao 15 years ago. We can’t help suspecting that someone got Mr. Zhao involved intentionally.

In fact, Hosane never confirmed what the US dealer said would be effective once he acknowledged the ownership of the coin. Instead, very strict legal documents were required as a backup. Would you hand over all your properties to someone else should he acknowledges that they belongs to him? The statement of the people with the conflicts of interest is pointless. And another problem is that so far the US dealer is still unable to provide any proper legal documents to prove that he has the ownership of the coin. He couldn’t bring any lawsuit to any German or Chinese court to claim the ownership of the coin either. Why? That’s because Hosane has consulted many German and Chinese legal experts and was told that this dealer was actually insisting on seizing the property of someone else’s. Although this coin changed multiple hands, its ownership by Hosane’s consignor was legally acknowledged. That’s the reason Hosane did not stop auctioning this coin. One thing should also be clarified is that Hosane never buys any coins. The Spring Festival gold coin was consigned to Hosane by an investor. Nick’s blog was misleading folks into believing that Hosane purchased the coin.

Actually, the inventory provided was full of loopholes. Many gold and silver coins in the inventory (including the other 5oz gold or silver coins) were listed on Ebay. The fact is, the Germany dealer stopped supplying the US dealer and started legal sales on Ebay. Would the US dealer go to a German court with a statement saying all the coins in the inventory but listed on Ebay belong to him? Hosane is a platform similar to Ebay. It seems that the US dealer and Mr. Nick Brown should sue Ebay for covering the seller and the buyer in trading so many coins “in a group of many pieces”. If Mr. Brown and this US dealer unwilling to state his name send a letter like this to Ebay, Hosane will absolutely respect Ebay’s decision!

It’s more ridiculous that any of the certificates requested-certificate of hand over or certificate of payment-was always unavailable! There’s no legal basis of ownership transfer, as neither certificate of hand-over nor payment could be provided. Noticing this coin becoming more and more valuable, they just wanted to share the interest by taking away that of the collector.   

Actually, if this coin really belonged to the US dealer, measures should have been taken to get it back in either Germany or China by legal means. Why not take any legal measures, while “offer $100,000”? It’s unreasonable to buy back his “own” item instead of bringing lawsuit. Here everything gets clear that they did not have the ownership. They’re clear that no legal support would be on their side, no matter it’s German or Chinese law. What they really knew was the actual value. They just wanted to share with Hosane’s consignor the interest brought by the appreciation of the coin. Hosane should, not only ethically, but also legally, protect the consignor’s interest.

As we can see, such things only happened with those two American dealers. It’s believed that they will never happen with other US or Chinese dealers. Even though such things happened, Hosane was still communicating with the US, German dealers and the consignor so positively, with hopes that each party will feel satisfied after mediation. Unfortunately, it’s ridiculous and terrible that the US dealer actually threatened Hosane by an email that they have the power to destroy the reputation of Hosane and Mr. Daniel Zhao. Since it received the threatening statement from the US dealer, Hosane has ceased any contact with the US dealer. Although we only know a little about the US numismatic community, we firmly believe that Hosane will never compromise before any threat. Hosane would never get involved in the numismatic community if it is forced to be on some greedy US dealer’s side to harm the interest of the consignors.

Zhaoonline and Hosane are well known in Asia and Europe. Mr. Brown’s attempts to slander and stain their fame will be deemed nonsense by most collectors!

Why was Mr. Brown taking some much time and efforts to fabricate the so-called evidences in order to slander Hosane? It’s because there’s interest. They can do anything for it! Mr. Brown, in collaboration with the US dealer, cheated the coin collection out of the German collector. Every Chinese coin collector knew what the story really was.

The fact is, neither can Mr. Brown threaten Hosane, nor he can threaten the Chinese numismatic community. We really hope that he can tell us the terrible shill bidding story in which he bid on his own consignments together with the US dealer sitting in the first row in the Hong Kong auction, and how he cheated the coins out of the German collector.

Actually, everyone is clear who’s unethical, the person who plundered someone else’s ownership; who sought dominating world numismatic community; who used illegal measures to threaten others; and who said to someone else, “Your coins are mine” without any legal basis!

Perhaps both US dealers got hurt in the transaction with German dealer; however, it’s not justifiable that the US and German dealers tried to force Hosane into submission by throwing mud at it. Hosane never reveals any information of its customers or that of the mediation unless required by the law. Hosane also tried not to let the problem of Nick and the two dealers go public even if it’s hurt so deeply. Complete confidentiality is a very important code of conduct for all auction houses. Folks who already read Nick’s blog may also notice that it’s weird and questionable that Nick kept mentioning Mr. Zhao’s name while left the US and German dealers in shadow. 

Finally, we thank Nick very much for letting US numismatic collectors know Hosane (www.hosane.com) and Zhaoonline (www.zhaoonline.com). Perhaps not so many US folks knew them before, but now, people may think, the companies Nick took huge efforts to fight with are great companies and worth exploring. In the end, people will find out that, what Hosane and Zhaoonline built up for decades suits every one-being FAIR, SQUARE and LEGAL!
 

Offline fwang2450

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Re: Daniel Zhao of Hosane Auctions controversy?
« Reply #50 on: August 25, 2012, 10:33:55 AM »
Thanks for posting. The key is the transaction records between the German and the US dealers. (I also found it weird that the names of the dealers have to be hidden. Why did Nick speak out, but not the dealers?)

Online PandaCollector

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Re: Daniel Zhao of Hosane Auctions controversy?
« Reply #51 on: August 25, 2012, 12:52:04 PM »
"Why did Nick speak out, but not the dealers?"

For starters, I believe just about everything in this statement that concerns  Mr. Nick Brown is inaccurate. To the best of my knowledge (and I've heard quite a bit) Mr. Brown had no role, or financial stake, in the purchase of the disputed coin from the original collector. That was entirely a matter between a German dealer and a German collector. Furthermore, I don't believe that Mr. Brown has, or ever had, a financial interest in the coin. It was ordered and paid for by a different American dealer. Based on what I've been told by several sources, the suggestion that Mr. Brown somehow cheated the German collector in any way is totally, 100% wrong.

Why did Nick speak out? As I understand it that's pretty simple: He thought it was the right thing to do. It wasn't about money, but principle. Not everyone may agree with what he says, but I'm certain he wasn't motivated by making a buck on this.

About the only item in the Hosane statement that I agree with is that the dealers (both German and American) who paid for the coins should stop being anonymous, and come forward. As this is now a public matter there's no alternative in my view. I will leave the rest of the public discussion to the parties directly involved, who may all be headed to court. I will also put a link to this statement in the next China Pricepedia so that people can read it and make up their own minds.

Hosane may be right that any publicity is good publicity, but in this case it looks to me like it will take a lot of washing to get all the mud off everyone before this story is over.

Best wishes,
Peter Anthony
China Pricepedia
www.pandacollector.om

Offline BChung

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Re: Daniel Zhao of Hosane Auctions controversy?
« Reply #52 on: August 25, 2012, 01:23:05 PM »
I am glad Zhao made a come back. The blog post by nick is so empty and so blatantly bias is hard NOT to believe that he is intentionally trying to smear Zhao for his own benefit. As a matter of fact I find Nick's revelation of the identity of Hosane without their consent & protecting the identity of the US and German Dealer in question, much more unethical that what he is accusing in his blog post, which IMO is nothing more than his "opinion", with literally 0 hard evidence backing it up.

I also have to agree with Zhao, why not sue first. Than we can all back to the case so we can all see who the dealers are. I can understand why no one trust Chinese courts, but then sue in the German courts then. Even if the German verdict might have no affect on Hosane or Zhao, at the very least we will see who is truly guilty, then collectors from everywhere can back away from them.

I say its time to reveal the identity of the US and German Dealer, hard evidence needs to be provided, or simply take legal action. If not I suggest that Daniel Zhao should take the fight back to their backyard and sue Nick in the US and China for Defamation.

BTW I find that Hosane and Zhao not releasing the identity of the US and German Dealer in question open, just and ethical, the same cannot be said for Nick, who selectively reveal without consent and protecting the identity of the dealers in question.

Maybe Nick is just hot headed, righteous and simple, but unfortunately speaking for myself only. I Choose not to believe so.

If hard evidence cannot be provided or no legal action taken, I will choose to believe Zhao's & Hosane version of the story.

Offline SANDAC

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Re: Daniel Zhao of Hosane Auctions controversy?
« Reply #53 on: August 25, 2012, 02:14:44 PM »
Wow!  whoever wrote this "press release" sure know how to fling muds and end up splattered the reputation of Hosane and Zhaoonline in his zeal.  That was 18 paragraphs of rambling innuendos when a simple statement like "Hosane has examined the ownership document and deems it appropriate to auction the item.  Hosane does not own the coin, and Hosane respects the confidentiality of the consignors" would do.  Hopefully Hosane will back away from these statements in the next few days.

Offline SANDAC

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Re: Daniel Zhao of Hosane Auctions controversy?
« Reply #54 on: August 25, 2012, 02:25:01 PM »
I thought perhaps the rambling "press report" was due to bad translation so I went to hosane.com to look for the original Chinese text.  I can't find it.  Please post a link if anyone found the Chinese text.  Thanks.

Offline Silverfever

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Re: Daniel Zhao of Hosane Auctions controversy?
« Reply #55 on: August 25, 2012, 03:20:14 PM »
Wow!  whoever wrote this "press release" sure know how to fling muds and end up splattered the reputation of Hosane and Zhaoonline in his zeal.  That was 18 paragraphs of rambling innuendos when a simple statement like "Hosane has examined the ownership document and deems it appropriate to auction the item.  Hosane does not own the coin, and Hosane respects the confidentiality of the consignors" would do.  Hopefully Hosane will back away from these statements in the next few days.

+1

They have definetely taken the low road if this statement had in fact been released by them.

Offline dobedo

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Re: Daniel Zhao of Hosane Auctions controversy?
« Reply #56 on: August 25, 2012, 04:50:36 PM »
Ethics is absolutely subjective. Legality is relatively less so. When a coin is worth more than my house, as a buyer I'd demand not only a clear title but also buy title insurance for it. Except I can't afford it anyway, so this is only a good learning opportunity for me, and possibly a good business opportunity for those who would consider selling title insurance for coins. BTW this is also a good soap material. I really enjoying reading about it.

Offline didochili

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Re: Daniel Zhao of Hosane Auctions controversy?
« Reply #57 on: August 25, 2012, 08:08:23 PM »
Wow!  whoever wrote this "press release" sure know how to fling muds and end up splattered the reputation of Hosane and Zhaoonline in his zeal.  That was 18 paragraphs of rambling innuendos when a simple statement like "Hosane has examined the ownership document and deems it appropriate to auction the item.  Hosane does not own the coin, and Hosane respects the confidentiality of the consignors" would do.  Hopefully Hosane will back away from these statements in the next few days.

+1
it sure made Hosane look desperately defensive

Offline pandaccumulator

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Re: Daniel Zhao of Hosane Auctions controversy?
« Reply #58 on: August 25, 2012, 08:24:58 PM »
Perhaps Mr. Nick Brown should come up with the names of both the US & German dealers,instead of just mentioning Hosane and Zhaoonline, then the US dealer could provide evidence to show the legal ownership of the coin. After that point, it would be clear who was telling the truth and who was the real greedy one of the whole drama.

Offline fwang2450

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Re: Daniel Zhao of Hosane Auctions controversy?
« Reply #59 on: August 26, 2012, 12:10:12 AM »
"Why did Nick speak out, but not the dealers?"
Why did Nick speak out? As I understand it that's pretty simple: He thought it was the right thing to do. It wasn't about money, but principle. Not everyone may agree with what he says, but I'm certain he wasn't motivated by making a buck on this.
Peter, you answered half of my question. How about the other half? Why did the dealers choose to remain silent and anonymous? After all, they are the first hand source of information and had their own interests encroached on.