News and Analysis regarding scarce coins, coin markets, and the coin collecting community #3

A Weekly Column by Greg Reynolds

I. Today’s Theme

Welcome to the third installment of my column. I had planned to write more about auctions and about current demand for rare Liberty Seated coins. I was pleasantly surprised, however, by the most important lawsuit in the history of coin collecting: The PCGS lawsuit against six named individuals and other not yet named individuals regarding coin doctoring is pathbreaking and earth shattering.

Even if the PCGS does not prevail on all points or against all defendants, the educational value of this suit, and the impact that it will have on coin doctors, goes way beyond the fate of these defendants. For legal reasons, I will not comment on the defendants in this suit. I am asserting that a significant number of coin doctors who are not defendants will be discouraged by this lawsuit from doctoring coins.

The PCGS SecurePlus™ program, which was inaugurated in March 2010, also discourages coin doctoring. For some discussion of the ‘plus’ aspect of the program and my idea as to how the NGC can discourage coin doctoring, please see last week’s column.

Under the SecurePlus™ program, submitted coins are scanned, for purposes of identification, with CoinAnalyzer devices. The PCGS will be able to identify each scanned coin if it is submitted to the PCGS again in the future, and, when a match is found, the submitted coin will be closely compared to an image of the same coin that was taken when it was previously submitted. Changes in the appearance of each matched coin will be investigated. The positive effects of the SecurePlus program, though, will build very gradually over a period of many years. This lawsuit will be extremely effective at discouraging coin doctoring in the near future.

Four years ago, when coin doctoring was rampant in the dealer community, had PCGS officials threatened a coin doctor with a lawsuit, the coin doctor probably would have figured that PCGS officials were bluffing. I am almost certain that this is the first time that a grading service has sued some of its dealer-members for submitting coins that are allegedly doctored and misrepresented.

Now, if PCGS officials threaten a coin doctor with a lawsuit unless he stops submitting doctored coins to the PCGS, the threatened individual is likely to take the threat very seriously and believe that the PCGS might actually follow through with a suit. Yes, I realize that not every coin doctor will be deterred by the threat of a lawsuit. Most will be deterred, at least to an extent. (more…)

Guest Commentary By John Feigenbaum – David Lawrence Rare Coins

On Friday, May 28, the numismatic community learned of lawsuit filed by Collectors Universe (the parent company of PCGS) against a group of so-called coin doctors. There’s no reason to rehash the details of this lawsuit as you can find good information on the Coinlink.com site, including a PDF of the actual filing.

From my perspective, action against the “coin doctors” has been overdue. For years, these guys have enjoyed an unfair advantage in the U.S. coin market and their presence in the general marketplace and auctions made it more difficult for legitimate buyers to compete. But we all accepted their existence because these folks have been around as long as there was a profit to be made in artificially improving coins. The grading services were designed originally to eliminate this scourge, but these guys are good and their methods are ever-improving. The extent of the doctoring of late has been somewhat hidden during this time, so some of the revelations in the filing are news, even to me. Now, it seems PCGS has drawn a line in the sand and they are throwing the book at some known offenders. More like a hammer, actually.

The heart of the matter seems to lie in the definition of exactly what is meant by the term “coin doctoring”. Are we talking about the dipping, or conservation of a coin’s surfaces? Are we talking about artificial toning of a coin to cover past cleaning, or scratches? Or, are we talking about the most nefarious acts of moving metal (whizzing, lasering) and surface alteration, like the enhancement of the bands of a Mercury dime to achieve the Full Bands (FB) designation?

I absolutely applaud PCGS for taking this measure. It has been too long in coming and it’s high time the leaders of the coin market took a stand against the alteration of a coin’s surface to deceive the grading houses.

In filing this suit, PCGS has aimed a missile at the latter-mentioned offenders. The so-called “metal movers”. There is no room for argument in any of our minds that this is wrong and should be dealt with harshly. Clearly PCGS has known about these guys for some time because the examples they present in the brief acknowledge a “rebuilt full head standing quarter” back in 2005. So, why now? The most logical conclusion I can make is that – for too long — they hoped the problem would end on its own through better detection techniques, and now they have also announced something called a Coin Sniffer™, for this purpose. I suppose this is the other shoe in PCGS’ “Big One” announcement back in March.

So, if lasering, re-engraving and rebuilding are obviously wrong and (perhaps) criminal acts (see paragraph #47), the bigger question is what is the low-watermark standard for coin doctoring? Is adding any foreign substance to the surface of a coin to conceal damage of any kind (hairlines, gouges, etc) going to be considered “doctoring”?

I would like to see PCGS take the next step of defining what is legitimate conservation versus doctoring. Perhaps a consortium of industry leaders like PCGS, NGC, CAC and PNG could work together to create such a document. It’s not clear that PCGS is interested in doing so, but I hope they would consider such a move to unify the marketplace. (more…)

Below is a Hot Topics Article posted on www.LegendCoin.com.  CoinLink has reproduced it in it’s entirety. This article is the opinion of the author, Laura Sperber.

KUDOS PCGS!

Please, no one pinch me, this is one dream I do not want to end. My sincere congratulations to David Hall and Don Willis for taking the ultimate step in the fight on coin doctors-filing a lawsuit!

For years the situation with coin doctors has only been growing more desperate. The grading services have been fighting them as hard as they could privately. Every time they thought they had a handle, the coin docs just figured out new ways to continue their destruction. This lawsuit is not for glamour, rewards, or a money grab, it was a necessity. PCGS has done the absolute right thing. TO SEE A COPY OF THE SUIT, VISIT www.coinlink.com

LEGEND NUMISMATICS FULLY SUPPORTS THE COMPLAINT AND PLEDGES TO HELP PCGS BECOME VICTORIOUS.

THE DEALER CULTURE

There is a rotten to the core subculture of coin dealers close to these guys who truly believe that it is their right to doctor, recolor, or do whatever they please to coins for a living. These people have little respect and nothing but contempt for the grading services and the public. Its time they learn they are not above the law. I have already spoken to several dealers who making their living cracking out coins. They see no wrong because they do not consider themselves full coin doctors. Much to my shock, they have the attitude that PCGS is wrong and the complaint will be dismissed. WRONG!

Its mind boggling these greedy whores fail to realize is that FRAUD has been committed. One dealer said to me “Its the grading services job to not allow doctored coins to get through”. True. However, it is against the law to try and defraud them by altering the coins they submit. Once this complaint starts progressing, the peripheral players will be exposed. Those are the guys who really have to be sweating right now. They are the ones who quietly sent coins off to these guys to have the work done for them while they look clean. I think you’ll be shocked to see who some of these names are-especially including some well known longtime PNG members. Plus, sooner or later, it probably will be exposed about a few major firms who employ well known coin docs. They will be a tougher fight because they hire them and called them “conservationists or curators”. In the end, they won’t win-the evidence will be too overwhelming.

PCGS has started the fight “right”. They are not just shooting the dark, they gathered the most facts and proof possible then waited for the right opportunity to file the complaint. There never was any secret among major dealers who the real coin doctors are. Dealers like myself were helpless to fight them other than to publicly complain (if you notice few of my fellow dealers ever stood up and spoke out). I could name most docs, I know who a lot of these guys are, however I would have been sued for sure. PCGS can file suit because they have been directly harmed and they have the physical evidence with the proven patterns of deceit these guys followed. It will be interesting to see the defense tactics the defendants will employ. In my opinion, the best they can do will be to deflect and totally deny. Too bad for the docs, facts are facts-no court or jury should rule against a consumer injury by fraud. (more…)