CONSUMERS : Auction Ads: Let Buyers Beware

WASHINGTON — Everyone likes to get something for nothing--particularly from Uncle Sam.

So when radio advertisements air, saying “the government is auctioning cars, homes and boats seized from drug dealers . . . and selling everything at bargain prices--they’re practically giving everything away,” it sounds like a deal worth checking out.

And that is precisely what 5,000 people a week have been doing, sending in money from Los Angeles, Washington and other cities in response to an ad that promised “inside secrets about these auctions, their special hot line phone numbers, and even . . . the government’s special mailing list. Call right now and find out what’s available. . . . One man bought a $200,000 house for only $15.”

The ad pushed a book, “The Action Guide to Government Auctions.” Those who dialed a listed 800 number learned that the guide costs $79.95, plus $6 shipping. Included in the deal, promised Rex Publishing of Clearwater, Fla., are various supplemental materials.

The 266-page paperback contains brief descriptions of different ways government material is auctioned, along with how to contact various agencies. The book has liberal white space, quotations (“Ability is of little account without opportunity”--Napoleon), and definitions of such words as government and agency.

Spokesmen for the U.S. Marshals Service (which also handles material seized by the FBI and Drug Enforcement Agency) and the General Services Administration (the principal government agency for disposal of surplus property) said the ad is exaggerated.

“You’re not going to get the type of bargains implied . . .” said Bill Tesh, chief of the sales branch in the GSA’s property management division. Steve Boyle of the Marshals Service agreed: “It’s simply not true that one can obtain the kinds of special deals or bargains that are suggested.”

Well, hardly ever true. The bit about the $15 house is accurate, said George Chelekis of the Action Guide: It happened a couple of years ago at a sheriff’s auction near Atlanta. But forget about that sweet deal, he advised; that version of the ad only ran because of an error. Most of the time, he said, the Action Guide ad talks about a $50,000 fishing trawler that was auctioned for $10.

This really happened in East Matunuck, R.I., with a boat seized from a convicted hashish smuggler, though Boyle of the marshals service argued that case “certainly was an aberration. Typically, there’s a minimum bid set at approximately the appraised value. If no one bids up to the appraised value, the sale is simply canceled.”

The ad airs in Los Angeles, Washington, New York, Boston, Detroit, San Francisco, Houston, Tampa, Miami and Philadelphia. Paying all those radio stations (as many as 10 per city) is responsible for the book’s high price, Chelekis said.

Meanwhile, he said the current ad is generous in its implications--but then, he argued, so is every commercial.

Further, he asserted, auctions can be very profitable, indeed.

“Say there are 10,000 auctions conducted in the U.S. that, in one form or another, are somehow government-related. You’re going to find a good bargain comparable to that $50,000 boat at 1% of them; at the other 99%, I think you’ll be able to find a savings of 30% to 50% over what you normally would pay.”

But even one of Chelekis’ competitors, Matthew Lesko, said it’s not that easy. He heard the ad, read the book, and observed: “There are bargains, but they take effort. . . . To get something (like the house) claimed in the ad is like winning the lottery. The lottery says you can win $5 million, but the chances are a zillion to one.”

The recent rise in government auctions, Lesko added, has been accompanied by an increase in those who would guide you through the process. Lesko and Chelekis are by no means the only entrepreneurs with a finger in this pie.

“Unfortunately,” Lesko said, “the get-rich-quick people say, ‘Get this book, and it’s magic.’ But if you get the book, you’re not really further along. You have to go to the auctions to learn. All the book is saying is where it is. And if you want to know that, you can call the government.”

(For information on U.S. Marshals Service auctions of seized property, write to the Office of Congressional and Public Affairs, U.S. Marshals Service, 600 Army-Navy Drive, Arlington, Va. 22202. For pamphlets on how to buy from the General Services Administration, write to: GSA, Federal Supply Service Bureau, Surplus Sales, Washington, D.C. 20406.)

Lesko’s theory is that in seven phone calls, you can find out anything. So why does he keep publishing books such as “Government Giveaways for Entrepreneurs” from his Chevy Chase, Md., office?

“What keeps me at it, besides making a nice living, is that people are disenfranchised from the government. They hate it. The average guy out in Ohio, all he hears is the government buys hammers for $1 million. But there’s also a lot of help there to do whatever you want, and the fat cats use it. . . . “

Doesn’t everyone want to get rich? Chelekis is fond of citing a variety of stupendous auction sales: a New York co-op appraised at $225,000 that went for $94,000; a mink coat for $115; a new washer-dryer for $15. He likes sheriff’s and bankruptcy auctions, and thinks postal auctions can be particularly good.

But few of the government spokesmen contacted agreed with Chelekis about the potential for bargains. Perhaps, he mused, their response “is a backlash to all those promoters who talk about $1 homes and $50 jeeps. Maybe they’re worried they’re giving things away.”

Lesko, the information entrepreneur, saw a different lesson in the increasing number of guides to what the government can do for you. “Information is the biggest buyer-beware market,” he noted. “Most of it is really free. So what are you buying?’