Jun 28, 2010 | BEP, counterfeit, currency, legal
When the British first founded colonies in North America, currency was limited to coins whose value was based on their metal content. When the King taxed his colonies to pay for wars in Europe, the colonies looked for ways of financing their own governments to provide services.
Since it was illegal for the colonies to coin money, they issued paper notes. These notes functioned as currency but actually were bills of credit, short-term public loans to the government. For the first time, the money had no intrinsic value but was valued at the rate issued by the government of the colony in payment of debt. Every time the colonial government needed money to pay creditors, they authorized the printing of a specified quantity and denomination of notes. Laws authorizing the issuance of notes were called emissions. The emission laws also included a tax that was used to repay the bills of credit with interest.
As taxes were paid using the paper currency, the paper was retired. As the notes were removed from circulation, that meant less payments the government had to make. On the maturity date, people brought their notes to authorized agents who paid off the loan. Agents then turned the notes over to the colonial government for reimbursement plus a com- mission. Sometimes, colonies could not pay back the loan. They instead passed another emission law to cover the debt owed from the previous emission plus further operating expenses, buying back mature notes with new notes. The colonists accepted this system since it was easier than barter and there were never enough coins to meet commercial needs.
Counterfeiting was rampant by the mid-18th century. In order to combat the problem, Benjamin Franklin devised the nature print, an imprint of a leaf or other natural item with its unpredictable patterns, fine lines, and complex details made it more difficult to copy.
To create a nature print, Franklin placed a leaf on a damp cloth. The cloth was placed on top of a bed of soft plaster that pressed the leaf into the plaster. Once the plaster hardened, it had a negative impression of the leaf. Molten copper was then poured over the plaster to make the printing plate. Franklin first used nature prints for the 1737 New Jersey emission. He also used different leaves for different denominations and elaborately engraved borders to further thwart the efforts of potential counterfeiters.
Franklin partnered with David Hall printing notes for New Jersey and Pennsylvania colonies. Along with his nature print, Franklin also included the phrase “Tis Death to Counterfeit.” Aside from trying to scare away potential counterfeiters, the penalty for counterfeiting in the 18th century was death. No convictions for counterfeiting colonial currency or death sentences have been recorded.
Later, Hall partnered with William Sellers to print Pennsylvania currency when Franklin was sent to England by the Pennsylvania assembly as their colonial agent.
Other printers tried different methods to thwart counterfeiters. James Parker of Woodbridge, New Jersey printed notes in two colors. With printing a labor intensive process, it was thought the process to cumbersome for counterfeiters to go through the process of the second printing. Also, Parker used red ink as the second color. Red was more expensive than black ink in the 18th century.
In Maryland, William Green of Annapolis used other anti-counterfeiting measures included using random wavy (indented) borders that had to match the original stub book, elaborate engravings, random punctuation, and superfluous characters. The example to the right is a “Half of a Dollar” from the Maryland emission of March 1, 1770. On this example, the engraver’s initials “TS” (Thomas Sparrow) appear at to the top, a small “a” was inserted between “half” and “dollar” while there is an accent mark over the “a” in “Exchange.”
Anti-counterfeiting technology has become very advanced since the colonial days. When the Bureau of Engraving and Printing introduced the new $100 Federal Reserve Note, its anti-counterfeiting technology included a watermark, a security thread, color-shifting ink, micro-printing and a new security ribbon that appears to animate as the note is tilted.
Rather than threatening death on today’s notes, our currency is protected under laws enforced by the U.S. Secret Service. The U.S. Secret Service was formed in 1865 as part of the Department of the Treasury following the Civil War to stop counterfeit currency that was printed in an to attempt to wreck the union economy. It was estimated that up to one-half of the currency in circulation was counterfeit.
The responsibility to protect the president, vice president, their families, and other national officials was added to their responsibilities in 1901 following the assassination of President William McKinley.
Today, the U.S. Secret Service is part of the U.S. Department of Homeland Security with the same mission to protect U.S. money from counterfeiting. They reported that during fiscal year 2009, there were 2,506 domestic arrests for counterfeiting as well as assisting with 360 foreign arrests. This helped remove $182 million in counterfeit currency from circulation proving they are one of the world’s premiere law enforcement organization.
Maryland Currency image courtesy of the Coins and Currency Collection at the University of Notre Dame.
Image of the new $100 FRN complements of the United States Bureau of Engraving and Printing.
Jun 1, 2010 | ancient, legal, policy
According to the Ancient Coin Collectors Guild (ACCG) noted that 1,934 discrete addresses used their fax service to send notes opposing import restrictions on ancient coins from Italy. I would like to thank my readers who were amongst those who sent faxes to the U.S State Department’s Cultural Property Advisory Committee (CPAC).
ACCG Executive Director Wayne Sayles attended the meeting and wrote about the meeting from his perspective. ACCG Board member Peter Tompa wrote a full report about the meeting. Both are worth reading.
The Washington Post also sent a reporter who filed this story.
CPAC has not yet resolved the issue. I hope our efforts writing to the CPAC in conjunction with the ACCG prevents the Memoranda of Understanding with Italy from being modified to include ancient coins.
May 31, 2010 | legal, national park quarters, US Mint
According to the lawyers at the U.S. Mint, the term “America the Beautiful” cannot be used when referring to the quarter series without noting that it is a trademark.
Coin World is reporting that Numismatic Guarantee Corporation will change the labels they use on certified 2010 quarters to remove “America The Beautiful” from across the top because the lawyers at the U.S. Mint complained.
According to registered trademark number 77823874, the trademark is for the term America the Beautiful Quarter™ with the disclaimer “No claim is made to the exclusive right to use America or Quarters apart from the mark as shown.”
Although NGC said that they would not fight the request, NGC’s original label did not use the word “Quarter” and is well within the spirit of what was written in the trademark application.
Prior to the quarters program, many of us knew America the Beautiful as the patriotic song based on the poem by Katharine Lee Bates and music by Samuel A. Ward. We also knew the phenomenal rendition by the late Ray Charles. Does the U.S. Mint’s actions mean that Charles’s estate can issue a cease and desist order against the U.S. Mint?
But did you know there was a documentary titled America the Beautiful asking whether is America obsessed with beauty? The film had a limited release in 2008. Does this mean that the U.S. Mint is infringing on the filmmakers copyright?
Will the U.S. Mint and the United States Geologic Survey become entangled in an inter-Executive Branch tussle over the name? The USGS sells the “America The Beautiful – The National Parks and Federal Recreational Lands Annual Pass.” that allows the holder to use these lands without paying an additional fee. Will this be the case of prior usage when the Department of the Treasury fights it out with the Department of the Interior? DoI may not be in a good mood given their involvement with the current disaster in the Gulf of Mexico.
This is an overzealous prosecution by the U.S. Mint’s Office of Chief Counsel (OCC). It appears that the U.S. Mint is taking a common phrase out of the American lexicon and claiming it as their exclusive rights. In the process, OCC is using legal antagonism against the secondary market that serves the collecting community who is being asked to buy these coins.
Considering the reduction in sales caused by the “Great Recession” and collector fatigue over yet another series, it is not in the U.S. Mint’s interest to alienate the collecting community. I urge the U.S. Mint to reread Bates’s historic poem and reconsider its actions regarding a name.
AMERICA THE BEAUTIFUL!
Not a trademark but a sentiment.
May 30, 2010 | grading, legal
Late Friday afternoon, Collectors Universe, the parent company of PCGS, announced that they are suing six defendant and 10 “Does” (unknown people) in U.S. District Court for the Central District of California for allegedly doctoring coins. The named defendants are:
- Al Rossman of Nevada
- Eric Steinberg, a PNG member and owner of Broward County Coins in Plantation, Florida
- Rick Wesslink of Mission Viejo, California (it is possible this name is misspelled in the complaint)
- Silvano DiGenova, a PNG member and owner of Tangible Investments in Laguna Beach, California
- Greg Krill, a PNG member and co-owner of North Bay Rare Coin & Jewelry of St. Helena, California
- Robert Lehmann a coin shop owner in Cumberland, Maryland
The complaint alleges that the defendants conspired to doctor coins using “techniques [that] are designed and intended to avoid detection by [PCGS] and the coins’ owners for many years.” Amongst the method allegedly used are chemicals that would show up over time and laser alteration to fix or enhance coins. Owners of doctored coins later received compensation from Collectors Universe under the PCGS Guarantee.
Twelve examples of coin doctoring dating back to 2001 were listed as examples in the complaint.
CU alleges that the defendants are in violation of the Lanham Act (Trademark law) by allegedly misrepresenting the details of the coin; the Racketeer Influenced and Corrupt Organizations Act (RICO) alleging that they knowingly acted as an “enterprise” to defraud CU and PCGS; that the “Defendants acted willfully, fraudulently, maliciously, and in wanton disregard of CU’s rights;” and violated the California Unfair Competition Law.
As part of the complaint, it says that “PCGS is a leading coin authentication and grading service in the world,” and spends several paragraphs describing their work and guarantee. This is followed by the complaint that the defendants doctored coins. However, if PCGS is a professional service, how could they allow these defendants to allegedly submit and they encapsulate coins for over nine years without prior action?
There have been informal discussions in various forums as to whether the third party grading services may becoming overwhelmed with submission and questioning the results of their services. Along with the grading of classic coins, the third party grading services grade many modern coins, some directly from the packaging as shipped to dealers from the US Mint. Could coin doctors use this to try to hide their patterns over the years?
One solution was the formation of a service that verifies the grading of the third party graders. After a very public “spat” between the top grading services and notable dealers, some came together to form the Certified Acceptance Corporation (CAC), an authentication service that verifies the grading of the third party graders. While this may have slowed the coin doctors, it has not eliminated the problem.
In the mean time, PCGS reports that they have paid over $7 million under their guarantee over 24 years. While PCGS should pursue those that attempt to defraud them and the collecting community, PCGS may need to examine its own grading practices to understand how these coins passed their scrutiny.
Apr 17, 2010 | ancient, legal, policy
The Ancient Coin Collectors Guild (ACCG) issued a press release calling for action by all collectors to petition the U.S. State Department’s Cultural Property Advisory Committee (CPAC) to not include ancient coins with the Memorandum of Understanding (MOU) with Italy that will claim them as State cultural heritage.
The State Department issued a Notice of Meeting of the Cultural Property Advisory Committee announcing that they will meet in open session on May 6, 2010 starting at 9:30 A.M. to discuss the Italy’s request to expand the MOU. Anyone wishing to attend the meeting must reserve a seat by calling (202) 632-6301 by April 22, 2010, 5:00 P.M. Eastern Time.
Anyone wishing to address the committee or provide written testimony must submit their comments in writing to the committee by faxing it to (202) 632-6300 for statements 5 pages or less. Those more than 5 pages must be mailed with 20 duplicates to Cultural Heritage Center, SA-5, Fifth Floor, Department of State, Washington, DC 20522-0505.
This is where you can help. ACCG is asking for collectors to send letters to the CPAC to oppose adding ancient coins that may be considered “Italian” (e.g., ancient Rome). Such a rule would make almost all Roman and early Greek coins contraband, even if they entered the U.S. from other countries without documentation. Have you ever walked the bourse floor and seen piles of ancient coins in trays on dealers’ tables? These coins have been sold around the world for hundreds of years and not part of any antiquities collections belonging in a state collection.
With one ruling, the CPAC can seriously damage the hobby for everyone. Yes, EVERYONE! It may start with Italy, but where does it stop? Will Canada come after my collection of Canadian coins? What about the 1912 Russian banknotes my relatives brought with them when they landed at Ellis Island? Once this snowball begins to roll downhill, what is to prevent congress from declaring pattern coins as contraband? It reminds me of a numismatic version of the “First they came…” attributed Pastor Martin Niemöller about the inactivity of German intellectuals following the Nazi rise to power and the purging of their chosen targets.
ACCG will help you contact the CPAC using their free fax service at www.vcoins.com/fax.
If you need help constructing a letter, the fax service has suggested text. If you want something a little different, the following is what I sent:
Ms. Katherine L. Reid
Chair, Cultural Property Advisory Committee
United States Department of State
Annex 5
2200 C Street, NW
Washington, DC 20522-0505
Dear Ms. Reid:
I am a collector of historical coins and want to see that US collectors retain the same rights as collectors in the EU, where restrictions on the transfer of historical coins between EU countries are specifically forbidden. Please do not allow the rights of US citizens to be further infringed.
I have been advised by the Directors of the Ancient Coin Collectors Guild that renewal of the Memorandum of Understanding with Italy pertaining to importation of cultural property from Italy is being considered on May 6-7, 2010. Based on comments made during the recent interim hearing, it seems likely that a request will be made and considered to remove the exemption currently in place for ancient coins.
Coins of a type produced at mints in Italy during antiquity literally circulated throughout the known western world at that time as a result of the reach of the empires that occupied the land. Coins from these eras have been found from Britain to India as the empires grew. Because of this wide circulation, it is impossible to determine whether these coins came from Italy or were used in other areas of the those empires. For example, a hoard of copper Roman coins were found in Cardiff, Whales by someone searching with a metal detector in 2007. By removing the exemption currently in place for ancient coins, U.S. collectors would not be able to add any of this hoard to their collections.
The ACCG, the Numismatic Trade and the wider numismatic community have all presented, and will present, a wealth of justification for retaining the current exemption. This would allow Americans to continue to enjoy preserving, studying and displaying coins just like their fellow collectors in Italy and the rest of the European Union. I support the position of these organizations and oppose any attempt to restrict the importation of coins under the terms of this MOU.
Respectfully yours,
Scott Barman
I adopted this note from ACCG’s suggested text and the first paragraph is provided by ACCG from a form that was based on an answer I provided on the second page of the process.
Please help now! The ACCG has made it easy. Even if you use their suggested text or mine, act now. And when you are done, consider giving ACCG a donation to help with their effort. I did!
Mar 12, 2010 | commentary, legal, scams
Over the last few months I have been receiving invites to join Numis Network. Numis Network is a multi-level marketing (MLM) program whose primary purpose seems to have people recruit a network of other interested people and have them join the network. There is a fee to join and a commission that is paid up the organization chart as new members join.
Multi-level marketing goes under many names: network marketing, direct selling, referral marketing, and pyramid selling. Regardless of the name, it is a marketing scheme where the structure creates a marketing and sales force through the use of compensating promoters for selling products but creating additional distributors. The multiple levels creates a type of pyramid where those closer to the top of the pyramid makes the most money. Numis Network exhibits all of the characteristics of an MLM scheme. It emphasizes the network, growing the network, and receiving commission from the network.
It is important to note that a MLM scheme is not the same as a Ponzi scheme (which is what Bernie Madoff did) since there is supposed to be real marketing behind the network. In the case of Numis Network, they try to keep this scheme on this side of legal by touting their compensation is derived from the sales of certified coins. Numis Network uses a binary plan to grow the network using two subtrees, a power leg, which has new members, and the profit leg, which has your direct recruits. The key is supposed to be that your profit leg provides your best chance to make money. However, I found the following in Wikipedia:
In truth this benefit is slight because the new members who are recruited by your ancestors are shared among all the available leaf nodes. For example, your immediate ancestor in the tree only puts half of his new recruits in your downline, on average. Likewise, his ancestor only puts one fourth of his recruits in your downline. Following this argument to the root of the tree, the total approaches just one person recruiting for your downline (1/2 + 1/4 + 1/8 + 1/16 + 1/32 + … + 1/2n, where n is your tree depth). This is often insignificant in comparison to the number of people required in your downline to make yourself profitable.
If you calculate the amount of compensation per person diminishes as the number of downline people increases. In order to make money, you would need to recruit quite a few people and have them buy and/or sell coins in order for you to make a profit.
The only people making money in a MLM scheme are those at the top of the overall pyramid—the root node. Not only are they making money on the your initial purchases, but they are collecting on the commissions from the new recruits, which they earn a share of every one of them since they are at the root of the scheme. Remember, they are also the ones selling the coins. Once you buy the coins to resell, they have made their profit and it is up to you to sell the coins at a higher profit in order to earn a large enough commission.
Most of the people who have sent an email note asking me to join will probably never see a profit. I hope they can earn back their original investment.
While it is legal to create a pyramid scheme whose compensation is based on a real sales commission, the truth of the matter is that the further you are away from the top of the pyramid, the less money you will make. And think about it, how many coins would you have to sell to make a profit and how many coins could be sold? How many coins will you have to sell in order to break even after spending $500 (for the Fast Track Collector’s Kit) or the $75 (Basic option) plus the $9.95 per month for the Numis Network ecommerce website? Think about how the premiums on bullion coins have lowered as the US Mint has raised the supply then ask yourself if there are enough interested customers out there to even sustain the effort.
Since Numis Network is located in Tampa, Florida you may want to familiarize yourself with the well written advice from Florida Attorney General Bill McCollum. If there are any questions, you may want to contact Attorney General McCollum’s office for assistance.
While Numis Network may technically be legal I question its ethics. It is something I would never be involved with. If someone were to ask me for advice I would suggest that you not involve yourself with this program.
Dec 10, 2009 | BEP, currency, history, legal
As the hostilities began to build between the Union and Confederacy that lead to the Civil War, the US Mint began to lose control of branch mints in the areas that seceded from the union. When Louisiana voted to secede from the union on January 26, 1891, the prolific New Orleans Mint was taken over by the Confederate government. The New Orleans Mint had working dies, presses, and metals to coin their own money. With New Orleans being at the mouth of the Mississippi River, a major trading route, the Confederacy could use this to import metals from other parts of the world to fund their war effort.
Since the San Francisco Mint was too far away to be effective in helping fund the war effort, the Philadelphia Mint was secured to protect it from a possible takeover but did not have the capacity to produce as much coinage as necessary. In fact, the war caused a threat of metal shortages that lead to hoarding of all types of US coins.
With the need to fund the war effort and to prevent the counterfeiting of US coins, congress voted to allow the federal government to print paper currency for circulation. The authorization to print paper money was passed on July 17, 1861 and promptly signed by President Abraham Lincoln. On August 29, 1862, the Printing Bureau was started in the basement of the Treasury Building. When congress authorized the Office of the Comptroller of the Currency in 1863, the Printing Bureau was transferred to OCC and became known as the “Currency Department” or the “National Currency Bureau.” In 1875, legislation was passed to change the name to the current “Bureau of Engraving and Printing” with its own budget and appointed director.
As the government moved to standardize the look and issuance of banknotes, the BEP grew to be the largest printer of security documents in the United States. Originally, original large notes (189 × 79 mm or approximately 7.421 × 3.125 in.) were works of art that continue to be appreciated today. However, when the BEP went to the small sized currency we use today (155 × 66 mm. or approximately 6.14 × 2.61 in.) starting in 1928, the design settled into the one that would not be changed until the 1996.
Frankly, the design of small currency notes have been less than inspiring. In the book, 100 Greatest American Currency Notes by Q. David Bowers and David M. Sundman, the only small notes recognized are large denomination issues (such as the 1928 $1,000 Gold Certificate [#76]) or notes of historical importance (like the $1 Silver Certificate with the “HAWAII” over print [#65]). None were recognized for their designs. When the notes were redesigned in starting in 1996, the notes were given “modern” interpretations of their 1928 uninspired designs.
While each design change since 1996 was made to be able to incorporate new anti-counterfeiting features. But when the BEP make minor updates to the design of the Series 2004 $20 Federal Reserve Note, they entered a new era of adding color to US currency. The addition of color has little artistic meaning to the notes. In fact, it is as if the BEP is dabbling in color rather than adding color to enhance the notes’ look. The design of US currency is less than inspiring.
In an article in The Washington Post discussing a bureaucratic issue with the BEP they note that the bureau is planning to offer buyouts to 227 workers because orders for currency has dropped by 2 billion notes. The reduction is attributed to the economy and the increased use of credit cards. With the slowdown in currency production, now is the time to make make changes to the way the BEP works.
The Bureau of Engraving and Printing is run solely by the Department of the Treasury with no rules other than what Treasury deems as appropriate. While nearly everything the US Mint does is prescribed by law, the law governing what the BEP can do, 31 U.S.C. §5115 is 62 words long. Thus, this gives the Director of the BEP (currently Larry Felix) more autonomy of the BEP than the Director of the US Mint has over his bureau. According to the 2008 Plum Book [PDF], the Director of the Bureau of Engraving and Printing is a career government professional—which might explain why it is so well run in comparison to the US Mint which is run by a politician.
First change would be to change the law to make the lowest denomination of currency five dollars. It require congress to make a two word change to 31 U.S.C. §5115(a)(2). This will make the dollar coins more useful and cut production at the BEP by 45-percent.
Previously in this series, I proposed an organizational change for the US Mint that would create a board to oversee the Mint’s operations and subsequent changes to the management of the US Mint Public Enterprise Fund. This should be the same structure used for the Bureau of Engraving and Printing with the exception of bullion issues (obviously). As part of the reorganization, the same rules for coinage design should apply to the design of US currency with the U.S. Commission of Fine Arts and the final arbitrator of artistic design.
The BEP should be able to issue commemorative currency. Currently, the BEP uses “tricks” to manufacture collectible issues whether it is special packaging or using serial numbers to tie the notes to special events. In this plan, commemorative currency can be created by changing the reverse of our current designs or special issues in the same manner that the US Mint produces coins. One idea was The Liberty Bill Act promoted by the Liberty Middle School of Ashland, Virginia.
As part of the reorganization of the BEP, they must address the meaningful access to US currency. This is the study ordered [PDF] by the court in the suit filed by the American Council of the Blind to force the BEP print US currency more easily accessible by the blind and visually impaired. This report was published in July 2009 and there has been no comment from the BEP. It is time for the BEP to publish their recommendations.
Finally, the future is today. With production falling because of the use of credit cards and the declining economy, it is time to consider the era of the cotton-linen paper notes. The BEP should not only consider using polymer-based notes, but done so in a way to allow the BEP become a printer for the rest of the world. Polymer notes allows for the government to add new security features to the notes, but could be the basis to satisfy the court order regarding meaningful access. If the BEP embraces polymer notes, they can use the capacity not being used to print US currency to print currency for the rest of the world. While it may put the US in competition with Australia for polymer note printing, the BEP has two facilities that can out produce almost any other currency printer in the world. A little competition is good for everyone!
The last entry of the series will wrap up my thoughts on the reformation of America’s currency.
Sep 23, 2009 | legal, legislative, US Mint
One of the more interesting aspects of writing this blog is to be able to look into various aspects of numismatics and being able to explain what I discover to my readers. Sometimes, this research allows me to use what I write as a teachable moment to others. While I certainly subscribe to Aaron R. Feldman’s recommendation to “buy the book before you buy the coin,” but sometimes it may pay to read the blog.
Not long ago, I read an article printed in Numismatic News that had the valid point that the US Mint needs new and innovative direction. However, the writer placed the blame on the Mint itself without considering the law that govern everything the Mint does.
Long time readers may have remembered my post Sausage Making And Coin Production that described the process of how a coin or medal goes from being an idea to becoming a coin in detail. It is a sausage making process that would even scare Otto von Bismarck!
I felt that the writer of the opinion piece did not take into consideration that nearly everything the US Mint does is prescribed by law, as i described in my posting. So I took that posting, reworked it a bit to be more suitable for printed media, and sent it to Dave Harper, editor of Numismatic News. I learned from a colleague that the article has appeared on their website.
Long time readers will recognize the topic. Newer readers can use it to catch up. In either case, we might want to alter Feldman’s advice to “read the blog before buying the coin or writing the editor.”
Thank you to all of my readers for being my inspiration.
Sep 20, 2009 | coins, gold, legal, US Mint
Thanks to an article that appeared in The New York Times, the case of Langbord v. U.S. Mint was back in the news. Apparently, the order [PDF] for the government to turn over the ten 1933 Saint-Gaudens Double Eagle coins to the Langbord family was posted to the website for the US District Court for Eastern Pennsylvania.
In the order, Judge Legrome D. Davis, Jr. agreed with the plaintiff (Langbord family) that the coins were illegally seized and order the government to turn over the coins or initiate a judicial forfeiture procedure by September 28, 2009. There has been no comment issued by the US Mint or the Department of the Treasury. It is expected that the government would file a forfeiture procedure that would have to prove the coins were stolen from the US Mint. Since the alleged crime occurred 75 years ago and none of the principals are still alive, the government has a very high standard to meet.
The 1933 Saint-Gaudens Double Eagle coins has been the source of legends. After the sale of the Farouk-Fenton Coin for $7.59 million in 2002, its story became the inspiration for two books, Illegal Tender and Double Eagle, and inspired legislation to protect older coins and patterns that left the Mint under allegedly nefarious conditions.
But would the addition of ten coins reduce the value of the Farouk-Fenton specimen?
Along with condition and rarity, any special story or provenance of a coin will affect its price. The story and provenance of the Farouk-Fenton specimen is extraordinary. It was the subject of international intrigue including the overthrow of King Farouk of Egypt and the chase by the US Secret Service for the coin that lead to the sting at the Waldorf Astoria Hotel where British coin dealer Stephen Fenton was arrested trying to buy the coin.
Two books, a court case, and a sale by Southeby’s for $6.6 million (plus the 15-percent buyer’s fee making the total $7.59 million) makes it a one-of-a-kind coin.
Even if the Switt-Langbord coins enter the market they may never reach the status of the Farouk-Fenton example. The only factor that could bring down the price of the Farouk-Fenton coin would the be effect of the economy. Otherwise, it will stand alone as the first 1933 Saint-Gaudens Double Eagle that comes with a very unique story.
Image courtesy of the US Mint and NY Times.
Sep 16, 2009 | auction, legal
Heritage Auction Galleries, the third largest auction house in the country and probably the largest auctioneer of coins, is being sued by a former employee alleging that Heritage executives perpetuated a “massive auction scam.” The lawsuit charges that the Heritage used an undisclosed shill bidder at auctions to inflate the price. Co-defendants of the suit include Heritage executives Gregory J. Rohan, Steve Ivy, James L. Halperin, Marc D. Emory, Paul R. Minshull, and Dagmar Byers.
Filed on May 22, the suit alleges that Heritage and its executives violated the Racketeer Influenced and Corrupt Organizations Act (RICO, Title 18, Chapter 96), and the Texas Pawn Shop Act [PDF].
The suit was brought by Gary Hendershott, an alleged expert in Civil Was memorabilia and was recently joined by Montana businessman Chris Kortlander. Kortlander claims to have “consigned thousands of individual historical manuscripts and photographs to Heritage,” and claims to have been deprived of profits because of the use of the shill bidder.
Along with Kortlander’s claim, Hendershott claims he is owed $1.6 million for commissions on auction sales. Part of the sale includes two paintings purchased by a trust Hendershott was working with. A judge ordered that sale be arbitrated after the filing of suits and countersuits.
So let me see if I understand this lawsuit. Kortlander is suing Heritage because they use a shill bidder to increase the hammer price to levels higher than if the shill was not participating and Kortlander claims he was deprived of profits? What would the profits have been if the shill was not bidding on the auction? Would the same prices have been realized?
With Hendershott’s attorney Mark Senter being accused by Heritage President Greg Rohan of rewriting the suit with “salacious headlines,” the filing reads like one of a disgruntled employee and his attorney looking for attention to force Heritage to settle rather and experience the negative press.
One could only wonder what Judge Judy would say!
Corrected second to last paragraph (as marked) to clarify the quote.
In Maryland, William Green of Annapolis used other anti-counterfeiting measures included using random wavy (indented) borders that had to match the original stub book, elaborate engravings, random punctuation, and superfluous characters. The example to the right is a “Half of a Dollar” from the Maryland emission of March 1, 1770. On this example, the engraver’s initials “TS” (Thomas Sparrow) appear at to the top, a small “a” was inserted between “half” and “dollar” while there is an accent mark over the “a” in “Exchange.”
Anti-counterfeiting technology has become very advanced since the colonial days. When the Bureau of Engraving and Printing introduced the new $100 Federal Reserve Note, its anti-counterfeiting technology included a watermark, a security thread, color-shifting ink, micro-printing and a new security ribbon that appears to animate as the note is tilted.
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