Auction uses exaggerated claims to draw buyers

LEE'S SUMMIT, Mo. -- The newspaper advertisement boasted an "auction of international merit and acclaim" at the palatial home of a "Major Real Estate Mogul."

But Consuela Thomas is not a real estate mogul and the items up for auction at her home were not even hers.

Hundreds of bargain hunters sweated in a big tent on Thomas' rural Lee's Summit property last weekend as Persian rugs, fine jewelry and lithographs said to be signed by Salvador Dali and Pierre Auguste Renoir were offered for sale.

Although the advertisement claimed the "famous Multi-Million Dollar Lee's Summit Mansion" would be offered for auction, Thomas' home was not put on the block.

"I really didn't want my house up for auction," Thomas said, explaining why no such sale occurred. "I didn't have any belongings that I wanted to auction."

Instead, the items were brought to Thomas' home by FGC Auctions, a company owned by Azam and Anwar Khan. They offered an auction to attract potential buyers for Thomas' $1.9 million home while the home attracted buyers for the items on sale.

The Khans have held auctions at stately venues across the country, even if none of the items for sale are connected to the site.

While not illegal, the Khans' tactics have been questioned in several states.

Permanent injuction

In 2001, the Oregon Department of Justice obtained a permanent injunction against Anwar Khan, claiming his newspaper ads "misled the public into thinking the faux art, furniture and carpets auctioned were connected with the family selling the estate and, therefore, gave Khan's auction items added worth."

Jan Margosian, a spokeswoman for the Oregon attorney general, said a court order now requires Anwar Khan to submit advertising to Oregon consumer-protection officials for approval. Oregon, like other states, requires auctioneers' ads to accurately represent their sales and the items sold.

"He's very misleading, which is why he's under a court order. But he seems to be complying with it," Margosian said. "He has hooked himself up with realtors selling multimillion-dollar homes. It's a traveling road show."

The Wisconsin Auctioneer Board reprimanded Azam Khan for deceptive ads that suggested the federal government authorized his auctions. The Khans' actions have also been questioned by authorities or media in New York, New Mexico, Arkansas, Maine, Texas and the Washington area.

The Missouri attorney general's office said Tuesday it had received no complaints from people who bought merchandise at the weekend auction in southeast Jackson County.

"If consumers wished to file a complaint -- if they believed there was misrepresentation between the ad and what took place -- we'd certainly take a look at it," said Scott Holste, spokesman for the Missouri attorney general's office.

Only one or two bidders at the event questioned the value of auction items after purchasing them and refunds were given in those cases, said Zahid Butt, who said he worked for Maryland-based First Guarantee Credit Corp.

"Everyone seems happy with the merchandise," Butt said.

Anwar and Azam Khan did not immediately return a phone message left for them Wednesday at FGC by The Associated Press.

Thomas' listing agent, Sheryl Hendrickson of Coldwell Banker Weber & Associates, announced to the Sunday crowd that her client's home would not be auctioned and that other items were not related to the mansion.

Hendrickson said she asked the company to publish an apology for the auction. She said the ad had "really crummy wording," noting Thomas is not a "mogul" and her 4-year-old house is not "famous."

"We don't need to do junk like that to sell a home," she said.

Diane Ruggiero, chief executive officer of the Kansas City Regional Association of Realtors, said it can be tough to find qualified buyers for million-dollar homes.

"This approach sounds new and unusual," Ruggiero said, "but if it just winds up being a hassle for home sellers, it won't become a trend."