Upstart Stamp Dealer Collects Criticism Over His Style

There is an old saying among philatelists: “A stamp is worth what a knave can make a fool pay for it.”

And while stamp dealers acknowledge that it is difficult to determine how much a collector will be willing to pay, many are astonished by the prices reportedly received by upstart stamp entrepreneur Marc Rousso.

Rousso, a 38-year-old dealer who recently opened a Newport Beach office, has created a stir within the philatelic community with his widely publicized claims of big-ticket stamp sales.

The transactions that have earned the greatest attention involve one stamp, which Rousso’s firm, Coach Investments, has described as the “rarest U.S. stamp in existence.” Last year, Coach announced it had sold the “Lady McGill” stamp for $1.1 million to a bank, at the time the highest price ever paid for a stamp. Then just last week, Coach announced that the bank had sold it for $1.3 million in stamps and cash, with a Coach agent acting as the dealer for the buyer.

The Lady McGill transactions could not be independently verified. But another dealer said the same stamp was priced at only $3,000 at a public auction in 1986. Rousso says previous dealers had failed to recognize the value of the stamp.

Questionable Value

Rousso’s claims and bold salesmanship have drawn criticism from stamp dealers and hobbyists who complain that he is persuading newcomers to pay large sums for stamps of questionable value. They say he finds obscure stamps that, while rare, are not in great demand and are not recognized as valuable by the rest of the philatelic community.

Others are skeptical that some of the high prices Rousso claims to have gotten for his stamps were ever paid because he does not disclose the details of these private transactions.

Newport Beach Police Detective Mark Fisher said his department two weeks ago began investigating allegations that Coach Investment employees insisted that a prospective client invest $5,000 in the company before it would consider selling his stamp collection on the exchange. The district attorney’s office is participating in the investigation.

“We’ve got a problem with a company that calls itself a stamp exchange but is only willing to sell stamps and not buy them,” Fisher said.

Rousso has dismissed the investigation as groundless.

Rousso’s marketing techniques prompted Florida’s office of the comptroller to investigate Coach Investment’s Miami operations in 1986, but no charges were ever filed.

The scorn of more traditional stamp dealers and collectors may reflect disapproval of Rousso’s methods: He has applied telemarketing and a Wall Street approach to what has traditionally been a gentleman’s hobby. But, mostly, they say clients of Coach Investments will be disappointed when they try to cash in on their collections.

“One day, when they go to sell, they are going to discover their stamps are worth only 10% of what they paid for it,” said Michael Laurence, editor and publisher of Linn’s Stamp News, the most widely followed stamp newsletter in the country. “Then they won’t just blame Rousso, but all philatelists.”

No government agency regulates the buying and selling of collectable stamps, long considered more of a hobby than an investment, although there are several hobbyist and dealer associations. The American Stamp Dealers Assn. has about 1,000 members, including Rousso, and puts on stamp shows around the country. The American Philatelic Society is a network of 50,000 hobbyists and the Philatelic Foundation in New York is considered the leading stamp authenticating body in the country.

Coach Investments is headquartered in Greenwich, Conn., where Rousso works, and has a branch office in Miami. In March, it opened a third office in Newport Beach. Coach Investments, a public company, said it earned $1.6 million on $5.2 million in sales for the three quarters ending Dec. 31, 1987.

Rousso promotes stamps as an alternative to investing in the stock market. In 1985, he founded the International Stamp Exchange--a computerized trading system that enables stamp investors to buy and sell stamps through their personal computers--believed to be the only exchange of its kind. Rousso describes the system as the philatelic equivalent of the over-the-counter stock exchange. He said that about $2 million worth of stamps has traded on the exchange over the past six months.

Rousso’s electronic exchange and his private deals represent a sharp break with established stamp-collecting practice of buying and selling stamps at public auction.

“This man is a detriment to the hobby, because at the heart of this hobby are collectors, not investors,” said Richard Frajola, a Connecticut stamp dealer. “There are hundreds and hundreds of unknown and unique stamps that are rare, but that does not in itself make them valuable.”

Rousso, however, said in an interview that he is expanding the market for stamps and improving the hobby. He said that he feels he is being unfairly attacked by competitors who simply haven’t been as successful in tracking down rare stamps with the potential for appreciation.

“Other people don’t know where to look for stamps,” Rousso said. “And they certainly are not going to promote what they don’t have. I prefer to recommend extremely rare stamps that have potential for tremendous appreciation in value.”

‘On Cutting Edge’

At a “stamp education seminar” last month in Costa Mesa, Coach Investments sales manager Christopher deJesus told about 40 participants that they were on “the cutting edge” of stamp collecting.

“The exchange has already revolutionized the stamp industry and will probably change the investment world,” deJesus said.

In a series of press releases issued over the past three years, Rousso claimed to have sold, traded or donated stamps at prices that many stamp authorities consider astounding:

- In October, 1987, Rousso said he sold the Lady McGill, an 1852 stamp issued by a private mail carrier in Pittsburgh, for $1.1 million. He said it was the highest price ever paid for a single stamp. Coach did not identify the buyer until last week, when the firm disclosed that World Security Bank had made the purchase. Efforts to locate the bank were unsuccessful.

Coach revealed the identity of the bank at the same time it announced in a press release that two buyers together paid $1 million in stamps and $265,000 in cash to purchase the Lady McGill. A sales agent working for Coach Investments in Miami helped arrange the transaction on behalf of the buyers. The agent, Paul Baron, said the stamp was sold jointly to a Florida man and a Canadian businessman.

When asked last week about the $1.3-million sale, Rousso said he was unaware of it and the press release that announced it.

According to Frajola, the Connecticut stamp dealer, the Lady McGill stamp was priced at only $3,000 at a public auction in Danbury, Conn., only a year before the $1.1-million sale.

“There is no question that this is the same stamp that Rousso supposedly sold for $1.1 million,” Frajola said. “There is only one.”

David Champagne, a Melbourne, Fla., stamp dealer who, some months after Frajola’s auction, sold the stamp on behalf of a client to Rousso for an undisclosed amount, said he was astounded to hear that Rousso sold it for $1.1 million.

“I don’t know anybody in philately who gets numbers like that for a recent find,” Champagne said. But he said he has no reason to doubt that the sale took place.

More Skeptical

Laurence, the stamp newsletter editor, is more skeptical. “It’s so staggeringly unrealistic that he could have sold that stamp for $1.1 million that in the absence of some proof, I’m not going to believe it,” he said.

Rousso stands by the figure.

“It had not sold before because nobody realized the value of the stamp,” he said. “That auctioneer did not have the information that the stamp is unique. It is unique and genuine, and I can prove it.”

- In November, 1985, the American Afghan Education Fund announced that Rousso had donated a rare Afghan stamp valued by Rousso at $2.5 million to help finance Afghan rebels who were fighting Soviet troops.

After the announcement, Rousso’s company put the stamp up for sale on the International Stamp Exchange.

A month later in an Associated Press story, Rousso described the stamp as one of 85 printed in Paris in 1981, then smuggled back into Afghanistan. Only three of the stamps got past Afghan government postal authorities and out of the country, and one was ruined outside Afghanistan, Rousso said.

Unable to Sell Jewelry

Rousso said he traded the stamp for 500,000 pieces of costume jewelry. Andrew Eiva, executive director of the American Afghan Education Fund, said the organization was unable to sell the jewelry.

“We didn’t get $2.5 million for the jewelry. We couldn’t get $2,500 for the jewelry. In fact, we couldn’t get anything for it,” Eiva said. “We did receive some marginal support from Rousso for a few months in the form of secretarial services and Xeroxing, but it was not $2.5 million for the Afghan people.”

Other stamp dealers estimated the value of the bartered stamp at $400 to $500. Jacques Schiff, a New Jersey stamp auctioneer, said he sold the one other known stamp of its kind at public auction in 1986 for $300.

“I opened the bidding at $500. There were no takers, so I moved the price down to $400 and then to $300. Frankly, that’s more than I thought it was worth,” Schiff said.

Rousso said that because the stamp auctioned by Schiff was not the one he donated to the Afghan group, the comparison is not valid. And he declined to discuss Eiva’s claims that the group received no proceeds from the stamp swap.

“This is so far from the truth, I will not respond,” Rousso said.

- In September, 1987, Rousso announced that he had sold four misprinted Iranian stamps depicting an upside-down Shah of Iran for $200,000, or $50,000 each, to an unidentified buyer.

Rousso said identical stamps are now priced by his office at about $25,000 each.

“The value of this stamp has been fluctuating widely. It moved up to $50,000 at one point, but considering it was worth just $5,000 a few years ago, it has still been a good investment,” he told participants at the stamp seminar in Costa Mesa.

Peter Robertson, curator of the nonprofit Philatelic Foundation in New York, said he has his doubts.

“As far as we know, these stamps were never issued by the Iranian government nor sold to the Iranian public, which makes them less desirable,” Robertson said.

Rousso, however, said he is certain the stamps are genuine Iranian issues.

- In January, Rousso reportedly sold another misprinted Iranian stamp to Newport Beach attorney Michael T. Walsh for $75,000. That stamp was issued in 1950 and depicts an upside-down Iranian postal ministry.

The stamp is valued in the 1988 edition of the Scott Standard Postage Stamp Catalogue at $225, according to the Philatelic Foundation.

But Rousso said the stamp he sold was a cover stamp, meaning that it was still affixed to its original envelope. As a result, he said, the Scott catalogue citation is not a valid comparison.

Walsh did not return a reporter’s phone calls.

- Schiff, the New Jersey stamp dealer, said he recently received a phone call from a Southern California accountant inquiring about a 1987 Certified Public Accountants commemorative stamp with a printing error that has made it of interest to collectors. The accountant told Schiff that he had been contacted by Coach Investments, which offered to sell him the stamp for $2,500.

Schiff said the stamp was authentic but that he had recently sold an identical stamp for $325.

Responded Rousso: “I’d gladly buy those stamps myself for $2,500.”