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Motoring: At Treasury’s Garage Sale, Bidders Are More Entertaining Than the Cars

24.10.2006

Most bidders hid behind Elvis or Jackie O sunglasses and shied away from photographers like vampires avoiding sunlight.

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RANCHO DOMINGUEZ, Calif.

THE flier said, “U.S. Department of the Treasury Auction — Seized Exotic, Luxury and Classic Vehicles.”

An opportunity had arrived, it seemed — my chance to get to the bottom of those enticing advertisements that land in my e-mail in-box each day: “Learn the secret to finding bargains galore at government surplus auctions!

“Thousands of confiscated luxury cars — up to 95 percent off retail!

“Buy your dream car for 50 bucks!”

Really? Is the government auctioning off so much property that it does not know or care what any of it is worth?

In truth, my concern for the welfare of the federal coffers was offset by a more personal interest: this might be my chance to get one of those $50 Porsches.

In September, the Treasury Department announced that this would be the big one, its largest hot-car auction ever. In all, 19 cars — not hot in the sense of having been stolen, but hot as in must-have baubles — would be going to the highest bidder in a no-reserve sale.

On a Wednesday morning late last month I headed to a warehouse in an industrial area of Rancho Dominguez, Calif., 20 miles south of Los Angeles, where a federal contractor was holding the auction. Casing the premises for bargains, I saw a Rolls-Royce, a Maybach, two Ferraris and two Mercedes-Benz AMG’s, among other desirable wheels — a felon’s fantasy in getaway cars.

But there were no Porsches.

“People always come to these government auctions asking, ‘Where are the $50 Porsches?’ ” said Britney Sheehan, a spokeswoman for EG&G Technical Services, the contractor holding the auction.

“And we tell them, ‘Oh, we get them from time to time,” said Ms. Sheehan, who recently left the company. “They’re the ones that have been tear-gassed, bullet-riddled, burned beyond recognition and had the roof sheared off in the big crash after the high-speed chase.”

Mike Lewis, auctioneer for the sale, had heard the question a million times. “There are no urban-legend bargains,” he sighed as he made preparations to pound his gavel and start the bidding. “The $50 Porsche is as much of a myth as Sasquatch and the jackalope.”

First to cross the block was a black 2004 Jaguar XKR convertible: Mr. Lewis declared it sold at $55,000.

But wait — that car’s near-twin sold on eBay a week earlier for $46,000, and it came with a warranty. Everything at these auctions is sold in “as is” condition.

Where are the bargains? What’s the sport in this?

The sport is watching people like Randy Beck of Newport Beach, Calif., and Derek Miller of Monterey, Calif., get into a bidding war over a 1968 Ford Shelby Mustang GT500 KR. Mind you, this was a car whose authenticity could not be verified; an auction house that regularly deals in collectible cars probably would have said “no thanks.” The alleged Shelby, a black fastback, had been confiscated in Downey, Calif., from notorious Mexican drug lords; not much was known about its history. But the barest Joe Friday facts explain what makes a GT-500 KR so desirable: just 933 of the Shelbys were made and the horsepower was close to 400. With muscle car prices setting new records at every auction, it seems, this Shelby made the bidders’ blood boil.

A handful of bidders stayed in until the price hit $150,000. Then it was just Mr. Beck and Mr. Miller, trading bids like punches in $1,000 increments until Mr. Beck finally ran out of bravado, if not bankroll, somewhere around $175,000. Mr. Miller scored a TKO with a bid of $177,000.

For a long time after the auction ended, Mr. Beck grieved his loss, head in hands. A well-documented King of the Road (that’s what the KR stands for) might have sold for considerably more. So, while it was not my kind of bargain, maybe it was a steal for the wheeler-dealers.

The only bargain I could see was that winners paid no sales tax. Don’t laugh; in California, that is 8.75 percent, including local taxes. The Shelby buyer saved $15,488.

Mr. Miller was from an exotic car dealership in San Jose, Calif. He said he had done his homework, inspecting the KR the day before, when the public was allowed in for a pre-auction inspection. Mr. Beck said he arrived on the day of the auction and started bidding: “I just showed up.”

His motivation? “I liked it. I wanted a hot rod.” So why did he quit? “No air bags. I’ve got kids.”

Mr. Miller snagged another bargain: a 2000 Ford Excursion stretch limo, for $45,000.

Next up was this sale’s sexiest number, a 2004 Lamborghini Murciélago. This lime-green Italian stallion with 1,052 miles on the odometer had been one of 12 low-mileage cream puffs confiscated from a scam artist who ran an illegal pharmacy on the Internet.

In the back of the warehouse was a burly guy with a determined look in his eyes. He couldn’t find a seat. The auctioneer estimated that about 1,500 people had shown up; with only 500 folding chairs in the warehouse, the Lambo lover was lucky he was 6-foot-4. Every time someone topped his bid, he waved his blue card over the crowd.

“I wonder, where’s the power couple I saw in here yesterday?” Ms. Sheehan asked, scanning the room. “They were in love with that car. Looky-lou’s, I guess. We get a lot.”

The big guy got the Lambo. It went for $226,000, not much less than the value quoted by online used-car price guides. Was that too much?

“Nah,” he told me. “I was good for 240.”

The big guy said his name was Jeff, and he was from “somewhere in Riverside County,” about 90 miles away. He had certified funds ready, and an hour after the auction, he was the first new owner to drive away. He barely fit in the car.

“Don’t use my last name — I don’t want to see it in the papers,” he said, eyeing me warily, “I don’t want anybody else to see it in there either. You know what I mean?”

He said he did not want the people who lost that car to know who got it, or where he lives — in case the lawbreakers who forfeited these cars have separation anxiety or are mad enough to come looking for him.

Sorry, big guy. Hate to break this to you: Within 30 days, auction results become public record; serial numbers are traceable.

Still, the big guy seemed like a straight-shooter. He was one of few buyers or bidders willing to talk to reporters. Most hid behind Elvis or Jackie O sunglasses and shied away from photographers like vampires avoiding sunlight. The auctioneers warned them, though, photos were fair game; the shadier elements in the crowd were soon melting out the door.

At day’s end, EG&G tallied up the haul: nearly $2 million. The winners had 72 hours to make good on the balance due; deadbeats could lose their deposits. EG&G takes Visa, MasterCard and American Express, but only up to $99,999.99. Occasionally, some wise guy shows up with a briefcase full of Benjamin Franklins handcuffed to his wrist. Yes, EG&G also takes bundled cash; it’s just the Treasury getting back what it prints.

So how is the Treasury making out? Do the math: EG&G stages more than 250 of these garage sales each year. (According to the Treasury Department’s Web site, EG&G is now conducting personal property auctions on only a limited basis for the Treasury Department .)

Not all are as big as this, but once in a while there’s a pearl among the oysters.

“We just got rid of Duke Cunningham’s stuff,” Ms. Sheehan said cheerily of the disgraced congressman from San Diego who was convicted on tax evasion and fraud charges. “That was also a big one.”

Who benefits from all this?

“The proceeds go into the Treasury department’s asset forfeiture fund. They go toward things like compensating law enforcement agencies for their work, or making restitution to victims,” Ms. Sheehan explained.

Even though 529 people had shown up with the $10,000 cashier’s checks they needed to register as bidders, it seemed that only a couple dozen actually bid. The others? Maybe they were like me. Maybe they came for the $50 Porsches.

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