Saturday, July 16, 2011

Heirs Battle U.S. Mint Over Prized Gold Coins

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Joan Langbord, who still works in the Philadelphia jewelry shop started by her late father, a Depression-era coin dealer, found her gold treasure in a family safe-deposit box in 2003—ten Double Eagle gold coins dated 1933,
The Double Eagles—with a face value of $20—were minted but never released, prompting a similar coin owned by someone else to fetch $7.6 million at a Sotheby's auction the year before Ms. Langbord's discovery.
When the family handed over the ten Double Eagles to the U.S. government for authentication, they hoped their find would be worth millions of dollars.
Mint officials confirmed the coins were legitimate—and among the rarest, according to collectors—then confiscated what they said was U.S. property. Now the Langbords are fighting back in federal court.
The government claims Ms. Langbord's father, Israel Switt, who died in 1990, must have obtained the coins illegally.
The 1933 Double Eagles were never released by the government and were ordered melted back into bars amid President Franklin D. Roosevelt's efforts to combat gold hoarding during the Great Depression.
"This is a crime the government has been waiting to put to rest for 70 years," Assistant U.S. Attorney Jacqueline Romero told jurors in opening statements at a trial last week.
Ms. Langbord and her sons Roy and David, grandsons of the coin dealer, say federal attorneys have no proof they coins were obtained illegally.
"Mint records don't show how the coins left," their lawyer, Barry Berke, told jurors. "It is the government's burden to prove they were stolen."
The U.S. Mint's Philadelphia factory made nearly 450,000 of the coins dated 1933. In coin vernacular, which dubs a $10 coin an "Eagle," they were known as Double Eagles. Etched onto opposing sides of the coins are a soaring eagle and liberty figure resembling a Greek goddess. It was designed by sculptor Augustus Saint-Gaudens in the early 1900s at the behest of President Theodore Roosevelt, who wanted to beautify American coins.
But the 1933 coins were never circulated because a newly inaugurated President Franklin Delano Roosevelt issued an order prohibiting the release of gold from the Mint. It was part of an effort to rescue the banking system, which was endangered by people withdrawing gold at an alarming rate.
The Langbords' case is being closely watched by collectors because it involves some of the most prized coinage in the world.
"These coins were legendary," said Robert W. Hoge, curator of North American coins and currency with the American Numismatic Society. Their scarcity, design and historical provenance all have contributed to their value, he said.
Underscoring that value, the Mint displayed the 10 coins at a coin-collector conference in Denver in 2006, after they were submitted by the Langbords. They've since been stored at the U.S. Bullion Depository in Fort Knox, Ky.
The bulk of 1933 Double Eagles were eventually melted into gold bars by 1937. None of the coins was legally issued to the public, according to the government; two were sent to the Smithsonian in Washington for its coin collection and 20 were sent for testing and destroyed.
Nevertheless, other coins have surfaced. In 1944, the U.S. Treasury Department issued an export license for a 1933 Double Eagle purchased by King Farouk of Egypt for his collection, according to court records. In the 1990s, a British collector tried to sell what he claimed to be the King Farouk Double Eagle in New York.
The U.S., which maintains that the original export license to King Farouk was a mistake, tried to block the British dealer's sale. After six years of litigation, the U.S. and the dealer agreed to auction off the King Farouk coin and split the proceeds. That single coin sold to an unidentified buyer for $7.6 million at a Sotheby's auction in 2002, a record for a public coin auction.
In the 1940s, the U.S. Secret Service, whose duties include protecting the nation's money supply as well as government leaders, investigated appearances of other 1933 Double Eagles after one was listed for public auction. The agency traced at least nine such coins back to Mr. Switt, who eventually admitted he had sold them around 1937, according to court documents.
A faded copy of Mr. Switt's 1944 sworn statement to the Secret Service is among the documents being presented at the current trial. "… I do not remember when, where or from whom I purchased them, as they were received by me in collections with other coins at different times," Mr. Switt wrote. He did write, however, that he didn't get them directly from the U.S. Mint or its employees.
The Secret Service wanted to prosecute Mr. Switt for theft of U.S. property, according to the government, but the statute of limitations had expired. The government eventually recovered at least nine of the coins believed to have been sold by Mr. Switt and destroyed them.
The government believes Mr. Switt obtained the coins from a former Mint cashier who had exclusive access to the 1933 batch.
Members of the Langbord family declined to comment outside the courtroom.
Mr. Berke said it was illegal for the government to take the coins without going through legal forfeiture proceedings. He also said the government wouldn't even have known about the 10 coins if the Langbord family hadn't voluntarily notified the Mint.
If the coins ever become available for sale, they would probably sell for at least $1 million apiece, numismatic experts said.
On Friday, jurors heard from a witness called by the government, David Tripp, the former head of Sotheby's coin department who wrote a book about the 1933 Double Eagles published in 2004. Mr. Tripp walked jurors through copies of Mint records from the 1930s which he says show that none of the 1933 batch made it out to the public as legal tender.


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