When fractional-share business Collectable ran into financial difficulties, its assets — including its interests in trading cards, jerseys and other memorabilia — were sold off for $1.6 million in the summer of 2023.
That included high-end items such as a Mickey Mantle 1953 Topps card, graded PSA 10, and a Marvel Precious Metal Gems set that had a declared value of more than $1 million during the COVID-19 collectibles boom. Like buying stock in the market, collectors bought small pieces of those items, hoping to profit as the value of high-priced memorabilia climbed.
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The new owner, Philip Neuman, effectively disabled trading in those items by failing to provide amended information to the Securities and Exchange Commission. Neuman moved the assets out of the vault of PWCC (now Fanatics) in Oregon to a front-facing gallery in New York and started to pitch new investors to invest in items that were already owned by Collectable backers.
Now, at least one original investor in Collectable is taking legal action.
After failing to get answers from Neuman, nor the people who he appointed to manage the day-to-day operations, investor Justin Cornett served Collectable Sports Assets with a demand letter last month that Neuman was required to answer, under Delaware law, in five days.
When that period lapsed Friday, Cornett sued in the Delaware Court of Chancery asking for the court, in this case a single judge, to compel Neuman to open his books.
The Court of Chancery said Neuman must meet with Cornett within a week (by next Monday) to discuss next steps. Cornett's lawyer told cllct Thursday that Neuman still hasn't reached out.
"Collectable’s interference with investors’ ability to trade or otherwise liquidate their assets, clandestine relocation and utilization of Assets to promote NoCor (a separate investment fund owned by Mr. Neuman), and complete lack of communication with members raise concerns of wrongdoing that Plaintiff wishes to investigate," the suit reads.
As part of the acquisition, Neuman’s company is required to operate under the last agreement Collectable had with its investors at the time of the sale of the company.
But Cornett said because there have been so many companies that have been involved, and no information shared to investors, it has become impossible to understand exactly what is going on.
The last agreement with Collectable mandates the assets must be stored in a mutually agreed upon secured location.
But the company has moved many of the items to Broome Street in New York, where it boasts the opportunities to invest with a company called Nocor, in the very items Collectable investors already own.
Cornett only learned that when he, in a stroke of luck, discovered a gallery called Dretore on a recent trip to New York, displaying items he says he partially owned in the window.
Adeliza Perez-Johnson, the former hotel concierge who was appointed as lead executive to manage Collectable, stepped down amidst Cornett's request to open the books. The company filed paperwork with the Securities and Exchange Commission on Wednesday saying Perez-Johnson resigned her position.
Based on what Collectable acquired, offered in an IPO and sold, it appears Neuman received possession of 97 total items in the acquisition, representing 41% of what Collectable owned. Neuman's deal with Collectable included the company's stake in all of the assets, which added up to slightly more than the amount Neuman paid.
While Neuman was given full possession, he doesn't own the majority. For example, he only owns 2.4% of the 1952 Topps Mickey Mantle card in the gallery. He owns just 4.4% of the 1955 Topps Sandy Koufax card and only 10.4% of Kobe Bryant's first game-worn No. 24 white jersey.
Multiple calls placed to the Dretore gallery were not returned.
Darren Rovell is the founder of cllct.com and one of the country's leading reporters on the collectible market. He previously worked for ESPN, CNBC and The Action Network.