Auctionata closes after burning $95.6 million in venture capital
Why did online auction start-up Auctionata close after burning $95.6 million in venture capital if it purportedly was online global leader in art and luxury collectibles?
An objective financial accounting will show Auctionata's astonishing sales and purported record growth vs. prior years was pure fiction.
Robert Grunder and Joseph K. Levene co-authored several critical articles about Auctionata, including Auctionata Guarantee is a Guaranteed Risk where we assessed the meaningless 25 year Auctionata guarantee; in this article for The Fine Art Blog, we stated:
|Alexander Zacke erroneously tells 2013 IDCEE conference Auctionata fastest growing company|
Auctionata was never global leader of anything.
For the two years between 2014-2015, only 11 of the top 33 Auctionata lots that sold for over €91,000 were art.
- 10 lots sold over €91,000 were watches/clocks, a partnership with Chrono24.
- 8 lots sold over €91,000 were cars.
- 4 lots sold over €91,000 antiques.
- In addition, Auctionata deceptively erased 44 unsold photography lots in its 2/26/15 auction.
In 2014, Ben Hartley, then International managing director at Auctionata erroneously boasted most Auctionata lots sell between $5,000 and $20,000.
In our judgment, every $50 lot sold by Auctionata had an incremental administrative cost of at least $125 per lot. And we stated that to avoid unnecessary financial ruin, it behooves Auctionata to immediately cease selling low-end lots under $150-$250, which will never be profitable even with their almost 50% combined commission rate from buyers and sellers. After all, Auctionata was just burning money and filling the pockets of Alexander Zacke as it was building auction studios around the world; had a team of over 300 employees and 300 experts, etc.
In 2015, Auctionata purportedly sold 5 art lots for over $200K, each with competing bids, yet all were mysteriously erased from sold auction results, including a mediocre Claude Monet and Paul Klee, even though Live Auctioneers showed numerous competing bids, all above the respective low estimates, obviously shill bids created to falsify results. The same exists for numerous 2015 lots in other categories such as cars, watches, clocks, etc., many also apparently sold with competing bids, yet all magically erased after their respective auctions, an issue not addressed in the KPMG audit.
Although press releases subsequent to the KPMG merger and recent bankruptcy announcement stress transparency, nothing could be further from the truth.
|Auctionata & Paddle8 have burned over $146 million in venture capital|
Auctionata's investors were largely unaware or condoned Alexander Zacke's shocking lack of ethics, management inexperience and naivety about art and the online auction market because they continued to provide five rounds of venture capital funds even though there was no corroborating sales support.
|Why wasn't Alexander Zacke, his wife Susanne Zacke & complicit members of its supervisory board dismissed for fraud?|
Why wasn't Alexander Zacke, his wife Susanne Zacke and complicit members of its supervisory board immediately dismissed after results of the KPMG audit indicated massive patterns of fraud by the Zackes, inappropriate consignments and buying by his mother Irene & son Maximilian Zacke?
Auctionata's response to the KPMG audit was hardly transparent nor honest.Robert Grunder and Joseph K. Levene co-authored "Auctionata & Paddle8 merge despite serious trade violations by CEO". In this article for The Fine Art Blog, we referenced Alexander Zacke's lame excuse where he stated "Our bidding activity in 2013 and 2014 during which we bought some paintings and other things was […] to decorate our Berlin apartment; others also made purchases for similar reasons." Zacke statement: disingenuously defends the egregious civil and criminal activity stating: "Naturally we made mistakes in the beginning, but such mistakes are common in start-ups. It would be rather astounding had this not been the case."
The KPMG audit indicates the Zacke's implemented the Auctionata scam by buying and consigning material which helped inflate auction results right from the beginning of the company's launch.
There is no question Zacke's scam was abetted by the international press who never challenged Auctionata's erroneous growth.
Alexander Zacke never had requisite experience to be CEO of online start-up Auctionata.
It is incredible no one had the foresight to say, wait a second, what does Alexander Zacke know about running a complex online art business where ethics and transparency are vital? Only the German press hinted at Alexander Zacke's mysterious dismissal as Dorotheum Asian art department head. Auctionata's investors were either unaware or condoned the ethics violations Alexander Zacke committed as Dorotheum Asian art department head as well as Zacke's shady eBay history.
Alexander Zacke claimed to be a major eBay seller yet his listings and sales were never public.
|KPMG audit confirms Alexander Zacke guilty serious trade violations, including insider trading & shill bidding|
The KPMG audit indicated the scam included numerous instances of shill bids, hyperbole, conflicts of interest, poor evaluation procedures, fraudulent material along with a meaningless 25 guarantee that up until the KPMG audit, was not challenged.
For the sake of Auctionata's investors and to aid in a potential criminal investigation, Auctionata should issue revised financials for 2013-2015 purging all lots with shill bids including those manipulated with bots by Alexander & Susanne Zacke along with settlements paid to customers affected. Given the scope of the accusations detailed in the KPMG audit, it wouldn't surprise us if Auctionata investors request criminal prosecution of Alexander and Susanne Zacke and the board of directors who failed to operate without prejudice in an arms length manner. Former CEO Thomas Hesse blames former CEO Alexander Zacke for contributing to the insolvency with the takeover of Paddle8. He says "The merger of Auctionata and Paddle8 cost a lot of money," says Hesse. The truth is the problems started well before the Paddle8 merger, and Alexander Zacke used the merger to hide the results of the KPMG audit.
— Brian Boucher (@briankboucher) February 28, 2017