Upper Deck Vs Kanomi the Crimeline of Events

Dick

We have been swimming in legal documents for a few days now reading and disseminated as much as possible so we can bring you the facts, in an easy to follow format. So we bring you the Konami Vs. Upper Deck  crimeline. (you see what we did with the jok… you know what never mind)

To say this is a quagmire is an understatement, literally hundreds of pages of claims and counter claims, and an 84 page undisputed fact statement. We have taken information from many of these sources and put it together in a more user friendly way so that the general public can see what really happened and when. Everything published in this article has been taken from legal documents unless otherwise stated, and all of it has been found to be true and or undisputed by both parties.

Konami entered into an agreement with Upper Deck in 2002 which would allow Upper Deck to become the exclusive worldwide distributor for the popular Card Game Yu Gi Oh!. Upper Deck’s role was that of marketing and distribution along with game support and customer service, at no point were they manufacturing or legitimately printing Yu-Gi-Oh cards that would be sold. Konami had the cards printed and packed and maintained strict control over this aspect of the card game, and it’s production. Konami at all times owned and continue to own the Yu Gi Oh brand.

In August 2008 Konami became aware of counterfeit cards being sold in blister packs with real cards in Toys R Us shops in the Los Angeles area. Subsequently in October of the same year they filed suit against a company called Vintage who said that these cards were in fact from Upper Deck. 20 shipping boxes (thousands of cards) were recovered from Vintage. It is at this point that Konami contacted Upper Deck for information and also at this point that things started to take a turn for the worse. You see it was Upper Deck who had made these counterfeit cards. They didn’t admit that at the time but the subsequent chain of events would Upper Deck’s guilt to the forefront of card news.

In 2006 Upper Decks chairman Richard McWilliam (or DICK as many will now know him) asked the Brand Manger Stephanie Mascott to provide him with a list of the ten of the more sought after and valuable Yu-Gi-Oh! cards. She backhanded this request to a man named Leighton Kurashima because as she says in her deposition

“I don’t know the cards”

(not much of a brand manager Ed).  Kurashima on the other hand decided to plead the Fifth Amendment which prevents a party from giving testimony that would incriminate themselves. It should be noted that in a civil trial pleading the fifth amendment CAN be considered an admission of guilt and taken into account by the presiding judge.

On the 4th of June 2007 Kurashima sent Stephanie Mascott  an email called “Card Project” which contained a list of 9 rare cards which we will detail more about later. McWilliam (DICK) asked for Stephanie Mascott to have disk prepared for him which would contain the 9 card images and the back of the cards (the backs of Yu-Gi-Oh! cards are all the same so this was the reported “10 image disk” that has been talked about on other sites) The disk was created and given to Horst Riechers, the Vice President of Global Operations at Upper Deck, at McWilliam’s (DICK) request. . Horst plead the fifth when questioned.

(After reading a lot of this stuff Horst comes across as a bit of a bumbler definitely not someone I would want involved in MY multi million dollar counterfeit scam, DICK came to this conclusion to late)

Upper Deck employees Nancy Modaffari (graphic arts specialist and R&D) and Stacy Zuniga (lithographic Printer) then employed a company called Inner Workings Inc (run by Stephen and Genji Leclair), who set up the production and printing of the 9 cards in China, the cards were printed by “Goldhawk Package and Production Co.” In fact Nancy flew over to China to oversee the fake cards in production. It’s then that we get code names for the project.. Upper Deck went with  Wiz Kids and or Wizards in Training (WIT). Nancy provided additional details to Goldhawk regarding things like card finish stickers and varnish..  This is undisputed though Nancy (who we will see later is not very good at this stuff) did plead the fifth to several questions. She sent an email to Horst and Stacy Zuniga entitled “security foil HELP” which was asking for aid in obtaining the security holographic foil used in Yu-Gi-Oh! cards. She wanted this,  as she so subtly put it:

“to send to China for the secret project”

(Nancy is not the brightest bulb is she?)

On July 18th 2007 Upper Deck purchased silver Yu-Gi-Oh! foil from API Foils Inc. for it’s “WI Special Project” and asked that it be shipped directly to Goldhawk in China. The order forms were signed by Stacy Zuniga and Horst Riechers.

Nancy as we said before flew over to see that the printing was done correctly, she gave the OK on these cards and they were shipped to the US in 76 boxes.

(We can only assume that Nancy Modaffari is very very bad at her job, and that’s being nice about it, the cards she said were OK were in fact far from it as will be detailed shortly. How this woman got a job is a mystery much less what sort of mastermind allowed her into a criminal enterprise like this… I guess we are all very lucky that the folks who run Upper Deck are this incompetent. I mean the stickers were the wrong colour, (silver rather than gold) a frikin 9 year old could spot these cards as fake..  ed).

Once in the US most of the cards were sent to Vintage, they received the following:

60,000 Elemental Hero Flame Wing Man,
`
50,000 Destiny Hero Dreadmaster,

60,000 Elemental Hero Aqua Neos,

50,000 Water Dragon,

60,000 Elemental Hero Electrum,

50,000Elemental Hero Mudballman,

50,000 The Flute Of Summoning Kuriboh,

55,000 Mist Body, and

60,000 White Horned Dragon

Interestingly in the cases of Flame Wing Man and Aqua Neos more of the fake cards were produced than the original Konami cards

495,000 were provided to Vantage at “No Cost” The head of Vintage Cards Chris Lawrence stated the cards were from Upper Deck and came in boxes labeled “UD Card Test” and “made in China” They then received another 36,240 cards in May 2008.

In late 2007 Vintage repackaged the counterfeit cards with packs of older poor selling Yu-Gi-Oh products and sold them to Toys R Us, as well as other retailers. It’s at this point that Upper Deck become implicated and soon after Konami terminated Upper Deck as it’s authorized distributor of Yu-Gi-Oh and ordered them to stop all transactions.

Upper Deck instead issued a number of statements which held that they would be

“maintaining business as usual and fulfilling orders and shipping product”

They said they remained the authorized distributor, and attempted to blame Konami for all the problems. They put out statements that claimed Konami had breached there contractual obligations by failing to ship new products to them for distribution.

Upper deck were ordered by the courts to stop claiming (falsely) that they were authorised Yu-Gi-Oh! distributors, and to halt all sales of Yu-Gi-Oh! merchandise they may have had in stock while the matters were settled. Upper Deck did not do this they continued to sell the items and continued to state the Yu-Gi-Oh! was an Upper Deck brand, they also continued to advertise themselves as the official supplier of Yu-Gi-Oh using Konami owned logos and marks in over 100 locations on there website.

It gets worse:  Stephanie Mascott has given us an insight into the whole affair in her deposition regarding details of a meeting in Richard (DICK) McWilliams office.  They discussed the counterfeit cards saying that they:

“didn’t look authentic enough” [Due to discrepancy's in] “the security foil hologram” [and problems with] “the finish, the varnish,the UV coating”

Then:

“Richard proceed to yell profanity’s at Horst blaming him for how the cards looked. Horst said he would have to talk to Nancy”.

(Nancy as we established seems to have no idea what a YuGiOh card should look like)

“Richard then yelled at him for sending the cards through Chyanne (Chyanne is the Upper Deck facility in Nevada) Horst replied and said the cards were shipped from Goldhawk to the customer not through Chyanne.”.

[Note: They were shipped to Chyanne first] During the same meeting McWilliams made a phone call and said to the person on the other end (believed to be Vintage)

“Remember you don’t know where you got the cards from okay?”

He then shredded sample of the counterfeit cards in his office. (McWilliam admits to shredding both the genuine and counterfeit cards during this meeting in his deposition).. This meeting took place in April 2008, as we have shown above in May 2008 Vintage received an additional 36,240 cards.

Once Konami became aware of the situation with Vintage Rick Dean stated in his deposition that Richard McWilliam told him he should say that he does

“not know the source in a lot of instances [of].. the product we purchase on the secondary market”

(for those that missed the point it is this: McWilliam was telling Dean (the head of Vintage) to tell Konami that the cards came from the secondary market so they didn’t know they were fake and it was nothing to do with upper deck)

Dean was not keen on that idea and did nothing of the sort.

All the while Konami was trying to stop Upper Deck from harming the Yu-Gi-Oh brand, and Upper Deck were trying by any means possible to blame someone else for the problems they created. They issued statements (as detailed above) trying to blame Konami, they changed URL’s so that when customers clicked links for information on Yu-Gi-Oh they would be taken to games that actively competed for the same market share, they lied and they took orders for products they had been told they would not get.  Richard McWilliam made a calculated attempt to alter the secondary for personal gain while directly harming Konami’s reputation and profitability.

In January 2009 Upper Deck issued a press release stating that any suggestion that they were involved in counterfeiting was “absurd”

On December 1st 2009 Richard McWilliam gave a deposition in which he admitted producing more than 600,000 unauthorized (counterfeit) Yu-Gi-Oh Cards.

360 degrees in 12 months.

This may not shut Upper Deck down but at the very least it should slow them a little, it shows what sort of company they are, and perhaps open a few eyes to the sort of practices that go on in the card industry.  The damages are assessed on the 26th of Jan 2010 and you can be sure we will bring you the details as soon as we have them.  Richard McWilliam deserves all the scorn and mockery he may get.  Personally I hope he is out of a job soon. The near comical screw ups that took place all the way through this would make it almost laughable. Almost, but it’s not because it’s another black eye to an already hurting industry.


You can find all of our source material and more by following these links:

Note than several of them are PDF Files.

Link Link2

Link3 Link4

Link5 NSU Thread Link


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20 Responses to Upper Deck Vs Kanomi the Crimeline of Events

  1. Been There, Done That says:

    Deja Vu – you can read all about Upper Deck and counterfeiting in “Card Sharks” by Pete Williams.

    The company was started in 1989 by real card people (Paul Sumner) who went to Pelton & Associates who was the marketing genius (now an adventure icon) that sent Upper Deck from 0 in sales to $240M with a 60% profit in three years. We are talking about selling shiny paper here remember. Mac as he is known (not Dick) was caught counterfeiting and backdooring error and rare cards which were going for 60 to 1200 dollars EACH. You can do the math on how much of McWilliams income is from criminal activity.

    McWilliam blackmailed the board who had been given cases and kickbacks. Sumner and the original crew were out and sales fell to $90M then $60 then who knows how low.

    There is another famous legal case that is now taught in school where McWilliam was supposed to give his stock back and the board sued to get it back. Seems like the lawyer (Richards former “good friend” who wanted the stock couldn’t get it back because he was Upper Deck’s lawyer and it was a conflict of interest.

    Upper Deck has been sued by plenty of people they tried to screw up and they have lost. Dwayne Buice, Topps, Mickey Mantle, Pelton, all got their pound of flesh from the Upper Deck which seems like its just a criminal organization posing as a card company. Remember that McWilliam’s buddy Bruce McNall went to prison, its only a matter of time until “Mac” joins them.

    So you will see that McWilliam (a former accountant) and alcoholic igures out how to line his pockets (the guy is already stinking rich) hires dimwits to cover his tracks and then the dimwits either turn on him or he actually fires them and they turn on him.

    Good research but do a little research and you can almost hear court transcripts being repeated verbatim.

    http://en.wikipedia.org/wiki/Upper_Deck_Company

  2. Katherine says:

    Yup, Been There Done that, agreed, check out the book Operation Bullpen too, the book I was in when I was undercover in Operations Foul Ball and Bullpen for the FBI on Counterfeits working at Upper Deck. Unreal!

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  4. Devil's Advocate? says:

    Some thoughts –

    The Upper Deck / Konami relationship was a little more tangled than this post – or, perhaps, the legal documents – make it out to be. While Konami was always the official manufacturer and maintained strict approval rights, Upper Deck did most of the work that usually falls on a “manufacturer” and Konami acted more like a licensor. Upper Deck was responsible for primary translation, for all the prepress work, for sourcing the printing, delivery of files, setting quantities, conducted some of the press checks, handled customer service, created and paid for ads, ran tournaments, and on and on. The product was even printed primarily in the Upper Deck building (by a third party leasing space from Upper Deck). About the only justification for calling Konami the manufacturer of anything besides the original Japanese product (besides the legal contract and text on the product) were approvals and the flow of cash.

    Things went south in the relationship when sales declined. UD felt they were taking the bulk of the business risk and the bulk of the work, while Konami was demanding more money on their end (and always received the majority of the revenue).

    Most of UD’s other products were straightforward licensing deals, where UD was the official manufacturer, and paid royalties to the licensor based on a percengate of product sales.

    Other thoughts –

    Pretty much all the product UD printed in China most likely went through Nancy Modaffari. Some of it is very high quality. Some is not. But, there’s a lot of it, and this sounds like a relatively small job from a print-buyer’s point of view. (The country where printing takes place is generally indicated on UD product packaging). If you figure $0.05/card, 600,000 cards would only cost $30K to print, where typical jobs are often in the $100K to $1 million + range.

    It sounds like they may have been using these as unauthorized sweeteners for repackaging of existing purchased-but-unsold product… which, using authorized cards, is a tactic UD previously used with Konami approval.

    Hoping Richard McWilliam is out of a job soon is pretty foolish; it’s hard to lose your job when your job is running multiple companies that you own… at least, as long as any of the companies stick around.

    Overall, it sounds like Konami is the wronged party and UD was doing some clearly illegal stuff. There is a reasonable argument to be made that UD did more than just act as a distributor, and that UD should be compensated for the value they added to the brand in anticipation of a longer relationship; it’s also reasonable to argue that by acting illegally, they’ve lost any such rights.

    But, think of it like this… you’re a shady businessman. You have exclusive world-wide rights to a product. On your own dime, you build a massive tournament structure, create and pay for advertising, even, in some markets, pay to have the TV show the product is based on broadcast. You buy large quantities of the product, knowing that not all of it may sell. You make a lot of money, and your partners make even more than you do.

    Then, when sales start to decline, your partner demands even more money, and insists that if you don’t cooperate, they’ll not only take back the brand, but they’ll insist you can’t sell the inventory you have AND they’ll take over the tournament structure you built, and they will make continuing sales based on the ads that you paid for. If you haven’t been above breaking the law before, well… you can probably guess what happens next.

  5. steve mullan says:

    with no competition in the card market,the upper deck product has really been watered down the past few years (barely being able to compensate half your money back from a box break) WHEN YOU HERE STORIES LIKE THIS JUST MAKES YOU WONDER WHO UPPER DECK HAS SELLING THEIR GOOD CARDS ONLINE.i FEEL LIKE I’VE BEEN CHEATED, I hope upper deck executives all get replaced!!

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  7. Thank you for putting this together.A thread in our forum has had close to 7000 views in regard to this case.We are always looking for any news in regard to anything hobby related.

    http://www.blowoutcards.com/forums/news-announcements/51688-lawsuit-news-yu-gi-oh-no.html

  8. Naomi Baba says:

    A very interesting article. I had links to all those documents, but was overwhelmed by the amount, so I appreciate you dug up all these facts for us. I just want to point out some typos though. First of all, in the title of the article, you wrote KANOMI instead of KONAMI. Also, the time when Vintage repackaged the fake cards with older cards was 2008 (instead of 2007).

  9. Alan Christensen says:

    Who is Devil’s advocate anyway?? The reply asks for a name and not a ‘cover!’ I can understand where ‘Devil’s Advocate’ is coming from, but at the same time, not to mention being under contract, UD can’t take matters into their own hands, produce fakes and repackage to sell! UD, you have to get on the horn with Konami, talk with Konami and come up with a strategy to help push product! Now look what you have on your hands… you have ‘fake product’ out in the market along with the ‘real’ product and a card industry Infuriated! There has to be accountability here and UD has to take the blame for it. Justifying your own actions, taking matters into your own hands and most of all, trying to cover up the whole operation, just doesn’t fly!

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  12. Chris says:

    Here are a couple more Upper Deck links. The first is a statement from Major League Baseball addressing UD’s production of unlicensed sets.

    http://beta.beckett.com/group/185223/?tab=tabArticles&p=967005#ViewArticle

    This one is Upper Deck’s spin on the Konami lawsuit.
    http://www.upperdeck.com/marketing/news_article.aspx?aid=7451

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  14. Jezebel Cane says:

    I assume everyone commenting on this are adults. Calling people names is not necessary, and stating false information is not necessary either. A lot of what was in the settlement w/Konami was confidential and very little… almost nothing was released to the public. For people to so called “detail” what was negotiated is absolutely absurd so therefore the information is false. Calling someone a criminal and wishing harm? Come on people. For those that are upset, fine.. but be a little more civilized.
    Upper Deck has produced a profound number of amazing products and a lot more is to come in the future. We are all collectors, so lets focus on our passion of the art.

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  17. Sal says:

    Great article. Thank you for putting this together.

    @ Been There, Done That – Bruce McNall going to prison was unrelated to anything that had to do with Upper Deck. I read McNall’s book, “Fun While It Lasted,” and his legal problems were his own. And I don’t think McNall and McWilliam were buddies, even though their names both start with Mc :)

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  20. ELwood says:

    Very interesting story. I believe that Vintage was owned by Rickard McWilliams.

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