Judge Orders eBay Case to California

By David L. Ganz, Numismatic News July 28, 2009

 

 

 

 

 

California here they come. That’s the conclusion of a June 10 decision by U.S. District Court senior Judge Charles Sifton in the case of Universal Grading Service v. eBay, Inc.

The claim has been pending since early 2008 in the U.S. District Court for the Eastern District of New York.

Defendants include eBay, the American Numismatic Association, the Professional Numismatists Guild, and outgoing ANA President Barry Stuppler’s coin firm. The 20,000 word complaint (including nine separate exhibits) makes a number of technical allegations, and then some substantive ones.

Key point in the second amended complaint is allegation of anti-competitive conduct in a class-action complaint that demands a jury trial. The plaintiffs claim damages in excess of $75,000, exclusive of costs, interest and attorney’s fees.

Basis for the claim is an allegation of conduct “constituting violation of antitrust policies pursuant to 15 U.S.C. §§1 and 2 (the Sherman Act),” a century-old anti-trust law, as well as a claimed violation of anticompetitive conduct under the Clayton Act, another federal statute, and New York General Business Law § 340 (the Donnelly Act).

There is also a claim for “civil conspiracy and trade libel” pursuant to New York common law. Under the rules of defamation, truth is an affirmative (and absolute) defense to trade libel, if the action complained of actually took place.

The summons and complaint were filed in late August 2008. There are four plaintiffs: Universal Grading Service, LLC, a New Jersey company in the business of grading coins; John Callandrello, a shareholder of UGS; Joseph Komito, a New Jersey coin dealer who buys and sells coins on Internet sites including eBay; and Vadim Kirichenko, a New York coin dealer who also uses eBay and other means to sell coins.

In a nutshell, they claim a “conspiracy between [Barry Suppler & Co., LLC], ANA, PNG and eBay to obstruct the ability of the smaller coin grading services to participate in the coin marketplace on eBay.”

The basis of the claim: In 2001, eBay “formed a group that became known as the ‘Internet rules committee’ made up of coin industry insiders, including Barry Stuppler, in his capacity as then ANA governor and chairman of the ANA Consumer Protection Committee (the precursor to the Coins Community Watch Group), Doug Winter, a PNG dealer; and R. Steven Ivy” of Heritage.

eBay developed a policy permitting “only coins that have been graded by five grading services (NGC, NCS, PCGS, ICG, and ANACS) to be listed for sale on eBay as “certified” coins.” The protagonists claim these actions are anti-competitive and illegal.

Sifton’s decision responded to the defendant’s motion to dismiss the complaint for failure to state a claim for which relief can be granted or, alternatively, to move the venue to California, where eBay and the Stuppler firm are located.

“Aside from plaintiffs’ allegation that the injury to their reputations occurred in their places of residence, which in plaintiff Kirichenko’s case is New York, the state of New York has no material connection to the facts in this case,” Sifton wrote.

Sifton believed shipping the case off to the U.S. District Court for the Northern District of California would best serve all parties.

NGE Goes Broke

By David L. Ganz, Numismatic News July 30, 2009

National Gold Exchange of Tampa, Fla., a driving force in the rare coin market for a generation, filed for voluntary protection from its creditors under Chapter 11 of the Federal Bankruptcy Code on July 24, giving breathing room to the brothers Mark and Alan Yaffe and giving the firm a chance to reorganize.

There is about $35 million in secured debt and another $15 million in unsecured debt, according to filings with the U.S. Bankruptcy Court for the Middle District of Florida. The case has been assigned to Judge Michael Williamson.

Sovereign Bank of Providence, R.I., is the largest creditor with over $35 million listed on the debtor’s schedules.

On Monday, July 27, James Thorner of the St. Petersburg Times said in a copyrighted article that Judge Williamson allowed Sovereign Bank to continue to seize collateral in the form of valuable coins it held from NGE to help repay loans made totalling over $35 million.

The Times also reported that NGE was acting on a tip that NGE co-owner Mark Yaffee had used $12 million to $15 million in coins pledged in collateral for the $35 million business loan for impermissible purposes – to build a $25 million residential mansion in Avila, Fla.

Sovereign called in the loan and attempted to confiscate the coins, typical of the way that most secured transactions work when the lender is insecure.

Unsecured creditors include A-Mark, American Coin, American Express, Brian Fazio and Bruce Kutscher, Emporium Hamburg,, Gene Sanders, Kirk Kelly, Liberty Coin Galleries, Republic National Business, and several others.

Unsecured creditor sums range from amounts as low as about $1,800 to $5.5 million.

Mark and Alan Yaffe are owner-directors of NGE. The company Web site claims to be the world’s largest gold coin and silver wholesalers. The same Web site lists offices in Zurich, Brussels and Paris in addition to Tampa headquarters.

Some of the unsecured creditors are European banks.

Bankruptcy laws offer a debtor a period of 180 days protection during which time creditors can proceed slowly and deliberately, but not in a suffocating manner, while the debtor puts forth a plan of reorganization. Creditors may form a committee and offer a competing vision of the future of the company.

NGE’s saga began July 21 with the filing of a 17-page complaint in Hillsborough County Court against National, a European subsidiary and the Yaffe brothers. It claims that the firm borrowed more than $4 million over the amount permitted by its credit agreement.

The judge asked both sides to reconvene in court on Aug. 3. NGE would like access to its coins so that it can continue to operate its business.

James Thorner of the St. Peterburg Times contributed to this report.

Posted by Dave

Nearly everyone enjoys a good David and Goliath story. The idea that size and power that would usually overwhelm the little guy can be beaten inspires all the would be Davids of the world.

The news that a court in Pennsylvania will make the U.S. government prove its ownership of 10 1933 double eagles seized from the Langbord family by having to prove that the coins left the Philadelphia Mint illegally three-quarters of a century ago warms the heart of most collectors.

This ruling on July 28 doesn’t mean that the government won’t muster the proof and won’t eventually seize and then destroy the coins. But it raises the possibility that this will not be the outcome, that suddenly there might be 10 more 1933 double eagles available to collectors.

That might make the owner of the only legal example in private hands upset that he paid $7.59 million for it, but it would open the door to other collectors to add the coin to their Saint-Gaudens $20 gold piece set.

Even though I knew I would never own a 1913 Liberty Head nickel, I have followed it since Aubrey Bebee bought one for $46,000 in 1967. The price has since escalated into the multi millions of dollars. Every collector who as ever looked at a hole in a Whitman album and wondered how it would ever be filled knows what it must be like to be one of those special buyers who can afford to finally acquire that missing key to their coin set.

Dreams are part of what motivates collectors. Individuals don’t know what they can do until they try to do it. Some Davids do win. Some difficult sets are eventually completed. Some numismatic Davids do get their names placed on auction catalogs.

Even if the 10 1933 gold $20s never leave government hands again, this court ruling has helped inspire further numismatic dreams.

Dreams do come true, whether it is through the luck of the lottery, or by hard work. Dreams that come true are the essence of being a collector.

What impact National Gold Exchange bankruptcy?
Posted by Dave

Yesterday bags and rolls of American Samoa quarters went on sale at the Mint and the news hit the hobby that a major player, National Gold Exchange of Tampa, Fla., filed for bankruptcy protection Friday.

Both items are important to the future of the hobby, but if I had to make a bet, I would say that the readers of Numismatic News would consider the availability of the quarters they are trying to collect to be more important than the business news.

I am equally sure that commercially active readers would have the opposite opinion – there just aren’t as many of those.

There is no question that National Gold Exchange was a player. At shows it had multiple tables in prominent locations on the bourse floor.

The question becomes one of assessing damage. Did other dealers see it coming and protect themselves, or is there a lot of paper out there. “Paper” in hobby parlance is issued but uncashed checks, but primarily unpaid invoices called memos whereby one dealer gives a coin to another dealer on memo, trusting that he will be paid when the second dealer sells the coin.

There are always secondary effects. Who bought something last week planning to sell it to someone else who in turn would be offering it to NGE?

The disentangling process will be the topic of many a conversation at next week’s American Numismatic Association convention in Los Angeles.

 

The Real Solution
SilverSeek
Last week, I made the case that the level of the speculative position limit in COMEX silver was completely out of line with the level of the limits in all other commodities, including gold. I pointed out that, based upon annual production, silver had a position limit from five to more than sixty times greater than a wide variety of commodities, including gold, copper, crude oil and grains. In terms of world bullion inventories, silver’s position limit was more than 100 times larger than gold’s limit.
[ Read Full Article]

Do Gold Bugs Have A New Gold Leg?
GoldSeek
It’s that time again when the gold bugs come crawling out of the wood work. Monthly, weekly and daily charts are all about to move close together and when then happens be ready to buy gold and gold stocks (golden rockets). Technically speaking we are still a long way from the HUI monthly chart breaking out to the up side. But if this bullish price action continues our weekly and daily trading signals will reap big rewards as we enter gold early before the next leg (rally) higher.
[ Read Full Article]

Lincoln cent distribution widens
Posted by Dave

I had lunch yesterday with Cliff Mishler, Fred Borgmann and his wife Kathy. The conversation is always interesting when we get together.

Fred retired from Krause Publications two years ago and Cliff, who was once CEO of Krause, is about to become the president of the American Numismatic Association.

Kathy at one point opened her purse and said that she had gotten one of the new Formative Years Lincoln cents. She handed it to me, saying, “I want you to have this.”

I looked immediately at the date side. It was a 2009 Philadelphia issue
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Observing what was going on, Cliff interjected that he had just gotten one of the new cents also and had put it in his next Numismatic News columns.

Earlier that morning Lisa Bellavin had come to work with the news that she had received one of each of the new cent designs, the Birthplace and the Formative Years, when she was at Plymouth, Wis., over the weekend.

Even though I have not yet personally received one of these commemorative cents in my own change, I can take note of what is going on around me.

It would seem that the new coins are definitely making it into circulation. That’s a good thing for all those collectors who have been patiently awaiting release in their areas.

Wisconsin is not exactly at the forefront of new coin issuance, and Iola is not even in the running. Our local bank actually generates more coins in its business than it needs, so unless there is a special effort, as was the case with the first Presidential dollar, new coins will arrive in Iola only when they find their way here through use.

I am sure there are still people like me who are awaiting that moment when they receive their first new cent. I know it will happen. The only question is will anyone besides myself still be interested when it finally does?

Supply Side Economics – How Is Gold Going to Fare This Year?
Safehaven
Gold started the summer doldrums looking strong and has retreated since, but what are its prospects for the rest of the year and beyond? That will largely be determined by the interplay between supply and demand; let’s take a look at the supply side. Reports of dwindling supply are accurate in some areas; however, the story is not that simple. Unlike most metals that are consumed in industrial use, most of the gold ever mined is still around. Gold is forever. Thus newly mined, refined, and fabricated gold is not all that’s entering the marketplace; there are multiple ways of meeting demand. Here’s a look at each.
[ Read Full Article]

Swiss banks running out of storage space for gold bullion
MIneWeb
In a note entitled No more space for Gold Bars, Swiss news website 20 Minuten Online reports that Swiss banks are running out of secure storage space for gold bullion held by investors and institutions. Fears of hyperinflation, the economic downturn and the success of gold index funds (ETFs), which are supported by physical gold, has led to a run on precious metals investment – and in gold in particular, and in the necessary secure storage space in which to hold it..
[ Read Full Article]

China to Issue Commemorative Silver and Gold Panda Coins

J&T Coins LLC is offering  these on a  pre sale basis. They will be available for delivery the first 7-10 of August 2009. Click here to order.

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