Viewpoint: Don’t Reveal Detection Secrets

By Richard L. Francis Jr., Numismatic News August 26, 2010

This article was originally printed in Numismatic News.
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If you were a football coach would you make your “play book” available to the opposing team? The answer is obviously “no” as that would enable the opposing team to better compete against you.

As crazy as the above scenario may seem, that is exactly what the numismatic community is doing each time it makes information available that enables counterfeiters to produce a better product.

I am certainly not faulting the numismatic press, which publishes such information, as their intentions are good. However, instead of working with the counterfeiters, we must work against them. We can no longer ignore the elephant in the room and should most certainly stop feeding him peanuts.

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At this time, information regarding counterfeit detection is readily available to all who wish to find it. To me, this is comparable to sharing arms and ammunition with an opposing army. While we must inform the numismatic community how to detect counterfeit coins, it must be done in such a way as to keep counterfeiters from using this same information against the ones it was intended to protect.

To this means let me suggest a possible solution. I feel it would be beneficial to the numismatic community if information regarding counterfeit detection was treated as a business threat confidential information. In other words, treated with security and only released on a “need to know” basis to authorized personnel. By doing so, this would limit the counterfeiter’s ability to know which fakes have been identified, and how, making it more difficult for them to improve their products.

To the person who insists on having information regarding counterfeit detection readily available, let me ask you this. What value does this information have once placed in the hands of a counterfeiter? The “markers” noted that help identify the counterfeit(s) will certainly be corrected, the result being a more deceptive counterfeit. What value would Colonel Sanders’ fried chicken recipe have if it was available to everyone? The answer is quite obvious. The numismatic community must contain this “leak.” Counterfeiters cannot use information they do not have.

While the noted recommendation may seem drastic, unfortunately the implementation of such a plan is necessary in our battle against counterfeiters. In order to implement this program we must first ask the following questions. Who will be the caregivers of this information? Who will have access to this information? How will this information be stored and shared?

Let’s look at each in turn. Who will be the caregivers of this information? I feel the caregivers should be the certification services as it is their business to distinguish a genuine coin from a counterfeit coin. They are our first line of defense against the counterfeiters. They are the “go to” group for the established dealer, experienced numismatist or beginning collector.

On to our second question. Who will have access to the information? I feel this group should consist of any established coin dealer, as well as established ANA members. For the purpose of this proposal let’s define “established” as five years or more.

I would further suggest that any established coin dealer or ANA member who is part of the group be allowed, upon their personal recommendation, to add a numismatist to the group. This would essentially offer access to those with a legitimate need to have the information while making it more difficult for the counterfeiters to know which of their products we can identify and how. It would also encourage those who are not ANA members to join as well as encourage those who do not have a “dealer relationship” to start one.

Let us now address our last question. How will this information be stored and shared? I would suggest the use of a secured website. While much could be said about the design and features of the proposed website, I do not wish to get off point.

The idea of a proposed website begs the question, who will run the website and how would it be funded? I recommend the website be run by the certification companies or the ANA. While there would certainly be some additional costs in relation to certification fees or ANA dues, that is a small price to pay for what the numismatic community would receive in return.

To make this work a hobby commitment would be required by the numismatic press, certification companies, dealers and collectors.

In conclusion, this possible solution may be inconvenient to some, but we must look at the bigger picture. We must look at the greater good and do what is best for the future of our hobby.

Are we, as a group, ready to stand up and take action? If not, then we deserve what we get.

Richard L. Francis Jr. is a hobbyist in Cape Girardeau, Mo.

Article of the week

Earlier articles can be found in the archive section.

Creator of the Paduans: Giovanni da Cavino

by Ursula Kampmann

Giovanni da Cavino was born in 1500 in the city of Padua. Padua is not far from Venice and was politically ruled by that more powerful metropolis. The city, however, had its own history as centre of arts where Giotto had worked and Donatello had created the first life-size equestrian statue of Modern Times.

The Condottiere Gattamelata, the first life-size equestrian statue of Modern Times created by Donatello.

Giovanni da Cavino belonged to that new generation of craftsmen that evolved into artists. He was the son of a goldsmith. Up to the death of his father he was trained by him, after that he became an apprentice of a master called Andrea Riccio. Cavino’s first work, mentioned in contemporary documents, was two silver candlesticks he delivered between 1527 and 1529 for the Padua Cathedral. The young man also devoted himself to the rising art of medal production. In 1554, Cavino made and signed a medal with the portrait of Pope Julius III, in 1565 two medals with the image of Christ. Amongst collectors of Roman coins, however, Cavino is famous for other products. Allegedly, he is one of the first coin forgers in history.

Medal by Giovanni da Cavino. Rev. Busts of Alexander Bassianus (in the front) and of Giovanni da Cavino (behind) r. NAC 53 (2009), 569.

Cavino’s products, called Paduans after his native city Padua, are copies of the finest Roman bronze coins and are traded for their own sake today amongst connoisseurs of the Renaissance art. He created them in cooperation with the humanist and coin collector Alessandro Bassiano. In the course of his career, Cavino copied more than 100 ancient coin types; he even invented further ones he thought the just developing academic discipline of archaeology had not discovered but were worth existing. Alessandro Bassiano was his congenial partner supplying the expertise whereas Cavino possessed the artisanship.

Coin invented by Cavino that pretends to be minted by C. Julius Caesar. From CNG 132 (2006), 286.

At the times, Bassiano belonged to a small group of numismatic authors: he had already written a book on the coinage of the 12 Caesars containing drawings of coins as well as explanations on their iconography and legends. Most possibly he advised his friend in inventing a bronze coin of C. Julius Caesar.

Imitation by Cavino of a sestertius of Septimius Severus. The depiction of Mars on its reverse is not comparable with a product of a Roman mint in regard to its perception of the body. From CNG 132 (2006), 306.

Cavino’s products are easily recognisable. Their weight alone is revealing. They are minted from much thinner planchets than the actual sestertii with depictions that are considerably more delicate.

Medaillion of Caracalla with a depiction of Mars. From NAC 29 (2005), 569.

The artist was trained by Renaissance models with the bodies shown on his coins being very different from the ones we find on ancient coins. Cavino’s figures move naturally, their bodies are anatomically correct and far from appearing Roman.

Imitation by Cavino of a sestertius of Pertinax.

Cavino was least successful in imitating the Roman writing. Compared with an original sestertius of Pertinax, on the imitation by Cavino the lines of the writing appear boringly uniform.

Model for Cavino’s imitation: sestertius of Pertinax. From NAC 54 (2010), 1197.

The recesses at the letters’ beginnings and the varying depth of the die cut have become flattened and uniform. If there are still any doubts, it helps to have a look at the books devoted to the work of the Renaissance artist. They contain a most possibly complete catalogue – made with the help of the dies stored in the Bibliothèque nationale, Paris – of Cavino’s imitations (Z. H. Klawans, Imitations and Inventions of Roman Coins, 1977, with comprehensive bibliography).

Was Cavino a brilliant forger that supplied the just developing market for ancient coins? Or was he rather a craftsman that – in cooperation with the best numismatist of Padua – made copies of the coins the market could not provide to be present in every collection? To answer that question, it may help to collect some information on Cavino’s reputation. Actually, he had quite a good one. He was even appointed expert witness when two goldsmiths met in court in 1542. He would not have been entrusted with such a responsible had he be a person of dubious character. Apart from that, we know that from time to time Cavino combined the reverses of his imitations not only with the portraits of Roman emperors but with the recently made portraits of influential politicians and merchants of his native city as well. That would have been silly if his imitations really had tried to deceive collectors. The last proof of Cavino being honourably is the fact the there is a number of contemporaries that praise Cavino for his imitations. The first seems to have been a colleague. Enea Vico wrote in 1555 a study on Roman coins and mentioned Cavino as imitator (not as forger!). In 1560, Francesco Savonarola even praised both “fathers” of the Paduans, Cavino and Bassiano, in a verse: Your lives, o Ceasars, will shine forever by their (= Cavino’s and Bassiano’s, authors’ note) numismatic art.
Whoever calls Cavino a forger does him an injustice. He supplied a Renaissance want. The 16th century collector was not looking for what we today call authenticity. To him, the motive was important. Genuineness was of less relevance. Hence the lengthy galleries of “fake“ and real emperors’ portraits in contemporary Halls of Antiquities. They are not displayed separately but provide a tangled picture puzzle of genuine and fake. The only important thing was to cite antiquity – whether with a piece that really had come down from Antiquity or with a piece a modern artist created in the ancient spirit.

For more information on this subject please have a look at a monograph by Richard Hoe Lawrence from 1883 on the internet. Click here.

Coin Rarities & Related Topics: The PCGS Lawsuit Against Alleged Coin Doctors

 Print This Article Comment On This ArticleBy Greg Reynolds on Wednesday, June 2, 2010
Filed Under: Coins and the Law, Column: Coin Rarities, Commentary and Opinion, Featured

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.

The costs of coin doctoring in terms of the risks involved are now much greater than they were before this lawsuit, even if it is never proven in court that these six defendants are involved in coin doctoring conspiracies. It is very expensive and emotionally painful to defend oneself against such a lawsuit, which here includes allegations of breach of contract, fraud, unfair business practices, and racketeering. ‘Win, Lose, or Draw,’ this lawsuit will be tremendously beneficial to coin collectors and will result in much fewer coins being doctored than would have otherwise been doctored.

This lawsuit “is about winning the hearts and minds of collectors,” John Albanese exclaims. Further, the “PCGS had to protect their shareholders, they had to protect collectors, and they had to protect themselves.” It cost “a lot of money” for the PCGS to “buy back doctored coins.” Consider “$90,000 for a 1918-S dime,” which is specifically itemized in the suit. Additionally, “PCGS has become embarrassed by doctored coins in PCGS holders,” Albanese suggests. “They have a right to protect their reputation.”

How serious a problem is coin doctoring? Of the pre-1934 coins in PCGS or NGC holders that are submitted to the CAC, John Albanese states that “a significant percentage have been doctored.”

At lot viewing sessions for major or semi-major auctions, and on the bourse floor of major conventions, I often see coins with waxes, films, gels, putties and sort of paint-like substances. Among pre-1934 absolute or condition rarities, I find far too many that have been ‘doctored,’ and, undoubtedly, Albanese catches doctored coins that I have missed or would miss.

Dr. Steven Duckor, a prominent collector for decades, is a renowned expert in early 20th century gold coins and in Barber coins. He has attended many major auctions and privately viewed thousands of choice gold coins and Barber coins. Dr. Duckor learned a great deal from David Akers, who is frequently regarded as the nation’s foremost expert in U.S. gold coins. Duckor declares that, of “uncirculated better-date Saint Gaudens Double Eagles, in PCGS or NGC holders, 15% have been doctored.”

For an explanation as to why natural toning is highly favored by sophisticated collectors and as to why ‘coin doctoring’ is so terrible, please see my three part series on this topic, Part 1, Part 2, Part 3. (As usual, throughout the text, clickable links are in blue.) It may suffice to say, at this moment, that doctored coins are often ruined.

Rarities that have been ruined now cannot be effectively collected, appreciated and understood by collectors in the near or far future. It is a big disappointment for a collector to travel hundreds of miles to a coin show or an auction in order to find out that some of the coins in which he is interested have been surgically altered or puttied. Besides, in almost all instances when a doctored coin, in a PCGS or NGC holder, is sold, the doctoring is not disclosed, and the buyer is often very hurt, emotionally and/or financially, when he or she finds out that the coin has been doctored.

John Albanese asserts that “coin doctoring is [ultimately] defrauding the consumer. It is illegal to pass off a doctored coin as a high quality coin or as a coin with no serious problems. If you buy a house,” John explains, “then the problems with the house should be disclosed. Realtors are bound to tell you. It is fraud not to disclose serious problems that relate to the value of the item. Coin doctoring [typically] involves an intent to deceive,” Albanese declares.

Coins that have been doctored often ‘turn’ over time; putties and other foreign substances chemically react or just ‘fall off’! Before citing two definitions of ‘coin doctoring’ in section three below, it makes sense to put forth some basic information for the benefit of beginning collectors. Knowledgeable collectors may wish to jump to the third section.

II. The Filing of This Lawsuit and the Grading Services

Although it became widely publicized when it was posted on CoinLink on Sat. May 29, this suit was filed a day or two earlier. Officially, the plaintiff is Collectors Universe, Inc., of which the Professional Coin Grading Service (PCGS) is a subsidiary. As the PCGS is the largest and most significant part of Collectors Universe, and is known to coin collectors throughout the world, I will here refer to the plaintiff as the PCGS, though this is not completely correct.

The defendants in this suit are alleged to have conspired in efforts, many times successful, to get the PCGS to assign numerical grades to doctored coins that are higher than the grades that were previously assigned or would have been assigned had the coins in question not been doctored. In the suit, the PCGS provides a list of a dozen coins that are said to be just a “few examples” (Section 14). Each of the named defendants is alleged to be either a dealer-submitter of doctored coins and/or a coin doctor who acted in concert with at least one dealer-submitter. (Click here to read the complaint filed by Collectors Universe-PCGS, or here to read the brief announcement on CoinLink.)

The PCGS and the NGC are the two leading grading services of U.S. coins. They each place coins in sealed, hard plastic holders and assign numerical grades to submitted coins that qualify for numerical grades. John Albanese was involved in the founding of the PCGS in 1986 and he was the sole founder of the NGC in 1987. He is no longer a shareholder of either.

David Hall was the primary founder of the PCGS. Hall and relatively new PCGS President Don Willis are the driving forces behind the bold new policies that the PCGS has implemented in 2010.

In 2007, Albanese founded the CAC. Coins that are already graded by the PCGS or the NGC are accepted by the CAC for examination. A coin receives a CAC sticker of approval if the CAC finds that its grade is in the middle to ‘high end’ of the respective grade range. One of the purposes of the CAC is to filter doctored coins that the PCGS or the NGC erroneously graded. Coin grading is very difficult and no one, not even Albanese, can ‘bat near one thousand.’ (For definitions of low end, mid range and high end, please see my article on The Widening Gap. For more discussion of the CAC, please see my articles on CoinFest, Jay Brahin’s Coins, the “MS-68+” 1901-S, and Dr. Duckor’s quarters.)

Among pre-1934 U.S. coins, it is not unusual for one grade increment to reflect a tremendous difference in price, often many thousands of dollars. So, if a coin is PCGS certified as Proof or MS-65, the owner of the coin may try to get the PCGS to grade it as 66. Sometimes, if a coin is repeatedly submitted, it will eventually upgrade. In other instances, coin doctors tamper with a coin to deliberately hide imperfections and/or to give it false additional characteristics and thus try to ‘trick’ the PCGS or NGC graders into awarding it a higher grade as a consequence of deliberately falsified characteristics.

III. What is ‘Coin Doctoring’?

How is ‘coin doctoring’ different from ‘conservation’? I have never felt comfortable with the definition that most often floats about the coin collecting community. Nonetheless, it has some merit and is widely accepted: ‘Taking something off a coin is conservation; adding something to a coin is doctoring.’ So, removing dirt, grime, toning, organic matter, or even a layer of metal via dipping, is ‘conservation,’ according to this definition. Adding metal, plastics, auto body putty, colored substances, gels, films, and a variety of other things, constitutes doctoring.

In my view, some so called conservation practices damage coins, sometimes irreparably. I admit, however, that a majority of influential dealers (though perhaps not most knowledgeable collectors) view a wide range of conservation practices as being legitimate. From my inquiries, however, I conclude that more than 95% of knowledgeable collectors and leading dealers, agree that coin doctoring, as defined above or below, is damaging and usually fraudulent.

The following is the definition of ‘coin doctoring’ put forth by the PCGS in this lawsuit, in Section 9B, and seems to stem from the agreement that dealer-members sign in order to be dealer-submitters of coins for PCGS grading. I have here removed the phrase ‘among other things,’ which appears repeatedly and is distracting. The parentheses and the words inside them appear in the PCGS definition as stated in this lawsuit.

According to the PCGS, coin doctoring “involves the alteration of the appearance of a coin to attempt to increase its value, and may involve: adding substances to coins (such as putty, wax, facial oils, petroleum jelly or varnish); treating coins with chemicals (such as potash, sulfur, cyanide, iodine or bleach); heat treating coins in any way to alter their appearance; re-matting (“skinning”) Proof gold; ‘tapping’ and ’spooning’ (i.e. physically moving surface metal to hide marks); filing rim nicks; or repairing coins (re-tooling metal).

Though there is no perfect definition of coin doctoring, and this PCGS lawsuit states that coin doctoring may also involve actions not listed above, this is a very good definition, not just in my opinion. It is strongly consistent with viewpoints expressed to me, over a period of years, by leading dealers and collectors.

IV. Is Coin Doctoring A Crime?

It is not clear whether coin doctoring is a crime. This is the first such civil suit. I am not aware of any criminal charges that are relevant to this case.

Since the modifications of a doctored coin are rarely disclosed, coin doctoring is usually fraudulent, largely because the intent is to deceive and to ‘counterfeit’ not an entire coin, but some desirable characteristics of a coin. Coin doctors are ‘counterfeiting’ positive characteristics of a coin. For example, a doctored coin may appear to be free of contact marks and hairlines in the right obverse (front) field, yet these are really there but are masked by added substances. A choice quality right obverse field is being counterfeited. Likewise, attractive blue, purple and green toning is often counterfeited.

“We as owners of rare coins are caretakers of history,” Dr. Duckor exclaims. “When you doctor a coin, you destroy history. If coin doctoring is not a crime now, it should be,” in Duckor’s view.

The PCGS lawsuit does assert that doctoring U.S. or foreign “legal tender” coins “is a federal crime under 18 U.S.C §331,” which is abbreviated in the lawsuit as follows, “Whoever fraudulently alters, defaces, mutilates, impairs, diminishes, falsifies, scales or lightens any of the coins minted at the mints of the United States … [or] … Whoever fraudulently possesses, passes, utters, publishes, or sells, or attempts to pass, utter, publish or sell … any such coin, knowing the same to be altered, defaced, mutilated, impaired, diminished, falsified, scaled or lightened … Shall be fined under this title or imprisoned not more than five years or both.”

It is thus argued in the lawsuit that someone who doctors a coin and/or someone who knowingly submits a doctored coin to the PCGS for grading is committing a crime, which is much more than a civil offense. It is not necessary for this argument to be accepted in order for the PCGS to win. Indeed, the PCGS does not have to prevail on all counts in order to win this civil suit.

The strongest arguments by the plaintiff may relate to the ‘breach of contract’ accusation, as each dealer-submitter agreed, in a contract with the PCGS, not to submit any doctored coins for PCGS grading. “Dealer and PCGS agree that PCGS would suffer irreparable damages if Dealer were to engage in coin ‘doctoring’ and that PCGS shall be entitled to not only compensatory damage but also [other legal measures against the Dealer] for any breach of the Dealer’s obligation not to ‘doctor’ coins or knowingly submit doctored coins to PCGS.”

Suppose, hypothetically, that an expert dealer submitted a substantial number of doctored coins to the PCGS for grading. Would much (if any) additional evidence be needed to prove that such an expert-submitter ‘knowingly’ submitted doctored coins?

V. The Accusations in the Lawsuit

So far, I have reported that the PCGS has claimed that the defendants have committed fraud and ‘breach of contract.’ The PCGS has made addition allegations, including “willfully, fraudulently, [and] maliciously” violating provisions in the California Business & Professions Code, and forming conspiracies, which I take to refer to allegations that the defendants worked in pairs or teams.

As it is widely recognized in the coin collecting community that coin doctoring constitutes fraud (except perhaps in the very rare instances where such doctoring is fairly disclosed), the two most curious and potentially explosive allegations are the first two counts. The PCGS alleges that the defendants “acts constitute an actionable wrong” under the Lanham Act, and the PCGS alleges racketeering under RICO statutes. I will probably discuss these two allegations next week.

VI. The Fight Against Coin Doctoring

I strongly believe that the coin doctoring problem can be contained. It can never be entirely abolished. The number of choice and rare pre-1934 U.S. coins that are doctored can be limited to a very small number each year.

Dr. Duckor “applaud[s] PCGS efforts and CAC efforts to control the coin doctoring problem. The hobby will be better off because of this lawsuit.” In Duckor’s view, the five most important advances in the history of coin collecting are: the founding of the PCGS in 1986, the founding of the CAC in 2007, the introduction of the PCGS SecurePlus™ program in March 2010, the filing of this lawsuit a few days ago, and the development of the PCGS CoinSniffer technology to detect some kinds of coin doctoring. “These five steps have revolutionized coin collecting,” Duckor exclaims.

The influential collector Jay Brahin remarks that this lawsuit is “long overdue. You can’t stop coin doctoring unless you expose coin doctors and their associates. Their greatest tool is secrecy. Many coin doctors [and their supporters] are in cahoots with each other. They work together,” Brahin has learned.

I hypothesize that there are fewer than seventy-five coin doctors who have the skills to often deceive graders at the PCGS and the NGC. As for coin doctors who can effectively laser the fields of Proof gold coins or build the heads on Standing Liberty Quarters, as mentioned in this lawsuit, Albanese estimates that “there are definitely less than ten, probably not even six who could do this.” I am glad to hear that there are so few. The PCGS should sue most or all of them now.

There are more coin doctors who are able to add putty and other substances, to disguise imperfections, and then get such doctored coins in PCGS or NGC holders. Albanese suggests that there are “twenty to thirty,” which, honestly, was my estimate before all the words even came out of his mouth. I finished his sentence. I could guess the identities of ten to fifteen of them.

With a few more lawsuits, similar to this one, the PCGS may be able to deliver many ‘knockout punches.’ Jay Brahin asserts that such lawsuits “would be great for the coin business. When you remove more doctored coins with counterfeit [characteristics], everyone will feel more comfortable.” Further, Brahin points out that, if “the cancer” of coin doctoring “spreads more” over the next several years, “it will become harder to cure.” It is best to “go after the coin doctors now and put them out of the coin doctoring business,” Brahin suggests.

Even if the PCGS does not soon file any additional lawsuits, this one will accomplish a great deal. Regardless of the fate of these six defendants, others will be discouraged from doctoring coins. The mere filing of this suit will save many rare coins from being damaged and will enhance the credibility of the PCGS. Plus, it will greatly contribute to the education of collectors.

©2010 Greg Reynolds

Related posts:

 

1. Coin Rarities & Related Topics: Upcoming LB Auctions, PCGS Secure Plus & Metallurgic Analysis
2. Commentary: Thoughts on the PCGS Lawsuit Against Coin Doctors
3. Federal Lawsuit Filed Against “Coin Doctors” by Collectors Universe / PCGS
4. New Weekly Column: Coin Rarities & Related Topics
5. David Lawrence Rare Coins View on PCGS’ Hard Stance Against Coin Doctors
6. The New PCGS Secure+ and what (it might) mean for the coin business…
7. PCGS Reinforces Rules for Suspected “Doctored” Coins
8. True Rarities Brighten Gloomy Baltimore – Pinnacle Rarities Market Report
9. NGC Settles First Strikes Lawsuit
10. PCGS Announces PCGS Secure Plus™, The Most Important Innovation in the Coin Industry Since the Advent of Third Party Grading.

Tags: CAC, Coin Doctors, Commentary, Dr Steven Duckor, greg reynolds, Jay Brahin, John Albanese, NGC, PCGS, PCGS Lawsuit

About the Author

Greg Reynolds is a numismatic writer, researcher and analyst. Greg has examined almost all of the greatest U.S. coins and most of the finest type coins and patterns, He has extensively researched the pedigrees of important numismatic properties, and he has written about and analyzed numerous auctions, private sales and collections.

Silver swindle: Counterfeit coin scam apparently reaches Peninsula

By JIM JOHNSON
Herald Salinas Bureau Posted: 05/05/2010 03:11:22 AM PDT Updated: 05/05/2010 08:35:51 AM PDT

Click photo to enlarge Nader Agha, owner of the Coin & Treasure Shoppe in Monterey, holds an… (VERN FISHER/The Herald)
An ongoing scam thought to be based in the San Francisco Bay Area involving the sale of “counterfeit” antique coins has apparently hit the Peninsula.

Peninsula developer Nader Agha, also a rare-coin dealer and owner of the Coin & Treasure Shoppe on Alvarado Street, last week purchased what he thought were three mint-condition U.S. Morgan Silver Dollar coins for $4,500 from a man who said he’d found them in an abandoned storage locker in Hollister. The silver dollars are generally regarded as one of the most popular precious coins among investors.

According to Agha, the man, who identified himself as Joel Silva and Jose Silva, returned the next day to sell Agha more of the coins. This time, the dealer decided to inspect the merchandise more closely and the man fled with an associate. Agha said he immediately called police.

Monterey police officer Kim Purcell confirmed that Agha had reported an alleged crime, but said the report was forwarded to the U.S. Secret Service because it involved a potential federal crime.

Purcell said local police wouldn’t release any details about the report, including a photo of the suspect, so they wouldn’t potentially compromise the Secret Service’s ongoing investigation. She said the Secret Service confirmed they have been investigating the counterfeit rare coin scam “for some time.”

Purcell said anyone dealing in rare coins should be aware that there may be someone pushing the counterfeit merchandise.

“This definitely sounds like something local coin dealers want to be aware of,” Purcell said.

Secret Service officials did not return phone calls from The Herald.

Agha said he later learned that the scam has netted several other victims, including some from as far away as Modesto. Other reports indicate the scam could have stretched all the way to Oregon. He said the scam is initially very believable and difficult to detect because the counterfeiters apparently splice two genuine antique silver dollars of considerably lesser value together to create the impression that they are more valuable, worth as much as tens of thousands of dollars. The coins, which are contained in protective plastic holders, even appear authentic under high-powered magnifiers, Agha said.

The counterfeiter also had the coins in a box from a well-known grading company, Professional Coin Grading Service of Southern California, according to Agha. A call to the company confirmed that the scam has been underway for some time, Agha said.

“This is very, very bad,” Agha said. “This not only undermines the confidence in PCGS but compromises all buyers and collectors’ confidence in the grading companies.”

According to David Stag, a Santa Rosa-based rare-coin dealer who does business all over the western U.S., the counterfeit scheme is believed to be part of a larger criminal conspiracy that has been in operation for at least seven months. Stag said he had seen 10 of the counterfeit coins himself in the past seven months and had even purchased them before realizing they weren’t authentic. He said he’d heard there had already been at least three arrests in connection with the scam.

According to Agha, his first experience with a counterfeit rare coin scam began late on the morning of April 28 when a man he described as African-American in his late 30s with braided hair entered his store. The man, who introduced himself as “Joel Silva,” told Agha he had discovered “very rare coins” after buying a self-storage locker in Hollister, and offered to sell them.

Agha said he had never seen such beautiful coins in his 40 years in the business, describing them as “phenomenal” and in mint condition, and said he was concerned they were stolen, not counterfeit. He paid the man with a $4,500 check, though he said his suspicions were further aroused when the man asked him to write the check to “Jose Silva.”

The man later cashed the check at Monterey County Bank, Agha said, and his image was captured on their video surveillance system.

The next day, Agha said the man called back and offered to sell more of the coins, and brought one of them by the store later that morning. When Agha pulled out a high-powered scope to inspect the coin more closely, the man immediately said he had to go to his car to get more coins and rare stamps.

Agha and an associate followed him out of the store and saw the man get into a white truck with another man and drive away quickly. Agha said he called police, as well as the grading company, and learned about the apparent extent of the scam. He said the man called back a few hours later and said he was coming by to pick up the coin, but never showed.

Jim Johnson can be reached at 753-6753 or jjohnson@montereyherald.com.

PCGS’s Secure Plus tier

4/26/2010

By Steve Roach COIN VALUES Market Analyst Last week’s market analysis focused on the possible market impact of the new “plus” grade at Professional Coin Grading Service and Numismatic Guaranty Corp. This week we will focus on the second prong of the PCGS announcement of Secure Plus. Specifically, Secure Plus uses digital technology to capture a unique “fingerprint” of each coin, to be entered into a permanent data base. The system is supposed to catch whether a coin has been artificially toned or processed in an effort to get a higher grade, also called coin doctoring. PCGS officials have said that for Secure-Plus coins, “Neither the coin’s appearance nor its grade can be changed without flagging the system.” Secure-Plus is optional for all coins except for coins submitted under two grading tiers: Rarities, coins submitted with a maximum coin value of $200,000, and Ultra Rarities, with unlimited values. PCGS Secure Plus is the only option for these coins. PCGS has stated the technology will provide a better understanding of rarity for top coins by eliminating resubmissions, and the problem of the same coin reappearing on the market – with different looks and grades at different times – will be eliminated. Ultimately, PCGS believes that the program has the potential to achieve five goals: “More precise and consistent grading; improved detection of altered coins; less chance of ‘gradeflation’; more likely recovery if a Secure Plus coin is ever lost or stolen; and increased value of high-end coins within each grade.” The digital fingerprinting concept also has the potential to protect the high end of the market from the dangerous counterfeit coins emerging from China. But, because for most coins it is an opt-in process, it will take some time to determine what its impact will be, and generally, Chinese counterfeiters have not successfully replicated high-end coins. Additionally, it remains to be seen whether dealers and major auction houses will use the Secure Plus tier as it may alienate one of the key groups of coin buyers and bidders at auction – the coin doctors who pay strong premiums for coins they can upgrade.

Fakes Share Certain Surface Characteristics

By F. Michael Fazzari, Numismatic News February 25, 2010

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If someone asks you to name some of the defects commonly found on counterfeit coins what would you say? What would you look for on a coin that you suspected to be counterfeit?

Did you say weight? One authenticator that I have worked with routinely weighed any coin he suspected might not be genuine. I cannot argue with his thoroughness, yet there were many times I had to suppress a smile or comment.

You see, most of the coins that were out of tolerance were not very good fakes to begin with. Besides, long ago, the people making deceptive fakes became more careful about the weight of their products.

Did you say color? As I have discussed here before, color gives us an important clue about the alloy composition of a particular coin.

What about its surface texture?

Let’s examine a group of recently made counterfeit coins from various countries to see what they have in common. Before looking at the illustrations, I’ll give a short description of what each looks like to the naked eye.

The coin in Figure 1 is a Danish 5 ore, KM#794.1 made of bronze. It grades MS-68 red. There are no marks on it and its surface is fully lustrous and spot free. And why not? It was probably just made to order a few weeks ago.

Figure 2 is a 30X view of a 1936 French 20 francs, KM#879. This coin would also grade very high, perhaps MS-66 because of a few dings. Its reeded edge feels very sharp to the touch and the fields of this fake are almost semi-prooflike. This would be an awesome coin if it were genuine.

Both of these coins fall into the category of “too-good to-be-true” and that alone should make one suspicious of their authenticity. The counterfeiters are not stupid. They have learned that it is easier to pass a dark, slightly circulated coin off as a genuine specimen.

The counterfeit Russian ruble, KM#19.2, in Figure 3 is an example of a coin that might have a better chance of passing undetected because it appears to have circulated. This coin is gray with dark accents around its relief.

Its “details” grade is XF/AU. However, there is virtually no actual friction wear on the coin. There are many “fresh” contact marks on its surface and there are also many depressed marks that were transferred from the original coin used to make the fake dies. These depressions have the same surface as the rest of the coin and will carry over to similar coins having a different date.

Figure 4 shows part of the reverse on a circulated Bust dime that is counterfeit.

Now let’s take a look at the micrographs to see what these coins have in common. All have small pimples on their relief. The Russian coin also has many in the field.

When two dealers get together to discuss a suspect coin you’ll often hear them mention a rough, granular surface or pimples. These characteristics are commonly found on fakes made by casting. More recently, they are seen on fakes struck using dies made by a spark erosion process. Many of the new Chinese counterfeit coins have these defects and they cannot be polished off without affecting the coin’s design. Do you see the tiny pimples in each of the micrographs?

One note of caution is in order. I have found that sooner or later, every defect seen on a counterfeit will turn up on a genuine coin and the reverse is also true. For instance, environmental damage can give a genuine coin a rough granular appearance and a few stray pimples on a coin does not prove it’s a counterfeit. In fact, one variety of 1883-CC Morgan dollar is covered with little pimples on its reverse.

Should you wish to appreciate the severity of the Chinese assault on numismatics, log on to eBay and check out what’s available under copies and replicas. For the moment, most of these coins will fool many collectors but they are easily detected by major dealers and numismatists.

Nevertheless, I have already alerted you to the fact that at least one Chinese outfit, possibly with help from the highest authorities, is producing much more dangerous fakes that the ones I illustrate here.

As always, buy from reputable dealers. If you don’t feel comfortable about your authentication skills, purchase slabs and have any suspicious coins checked by a major grading service.

By Allen Rowe

Counterfeit coins have been around almost as long as coins themselves. In the early years most coins were only worth as much as the metal they were made of, so fakes were relegated to copies made with inferior metal to the original.

Today coins are worth more than their metal value, so fakes are more lucrative to a counterfeiter.

Counterfeiters have several different ways of making fakes. They can alter the date or mint mark, splice two coins together, or just make the coin themselves. Coin grading companies have stopped a large part of these fakes, but now they are becoming targets themselves.

The reason for writing this article is that lately there has been a rash of counterfeits coming into the market. Most of these counterfeits are coming out of China and through popular online auction sites. I have just returned from the Florida United Numismatics convention in Orlando, one of the largest trade shows in the country, where I was privileged enough to look at some of the new counterfeits coming out of China.

For years the wave of fakes and forgeries has been growing and with it so are the techniques the counterfeiters are using.

At first much of what was being produced were fantasy pieces, coins that were never made with a particular date and mint mark combination. From there counterfeiters went into producing low level fakes. Wrong sized or non-precious metal planchets were dead giveaways for these pieces.

But soon the counterfeiters were using precious metals and spending extra time to make them the correct size and weight. Most of these pieces were easy for experts to detect as the die characteristics were all wrong for an authentic piece. These fooled many novices, but not many experts.

Today two new threats are reaching the market. First are die-struck counterfeits where high quality fakes are being produced from laser cut dies. It takes an expert to discern these fakes. Using knowledge of minute die characteristics is the only way to ferret out these counterfeits.

Secondly counterfeiters are now targeting the grading services themselves.

Recently a batch of counterfeited certified coins hit the market. Two genuine coins were used to make one fake coin, which was then housed in a counterfeit certified holder.

The example I saw was a 1904-S Morgan dollar in a fake PCGS MS64 holder, worth about $5000 if real. The coin was really a 1904-O dollar, a $30 dollar coin, with the back shaved off paired with a 1879-S dollar, a $35 coin, with the front shaved off. The two coins were then glued together and put in a fake PCGS holder. This would fool many collectors and lower level dealers.

If you are buying coins, especially if you are buying them through the internet, be very alert to these threats. Relying on experts in the industry will help you navigate through these potentially costly traps being laid out in this newest wave of counterfeits.

• Allen Rowe is the owner of Northern Nevada Coin in Carson City.

Seeing Genuine Coin Helps to Catch Fakes

By F. Michael Fazzari, Numismatic News January 04, 2010

There have been several letters published in this newspaper offering suggestions for articles. I read the letters too and one sure way to success is to give readers topics they want.

Let me answer one of the issues dealing with counterfeit coins that all authenticators have faced in their professional career: How much information to divulge to the public about specific counterfeit coins.

I became a coin authenticator in 1972. Looking back, the fakes of that time were crude compared with some of those we see today. Armed with the knowledge we possess today, nothing back then would have been deceptive; however, authentication was also in its infancy. Forty years ago, fakes were detected by measuring their weight, diameter, fineness and style. The general use of stereo microscopes for coin authentication had not caught on even though this tool, coupled with fluorescent light, was regularly used at the U.S. Mint Lab to examine coins.

When the American Numismatic Association established their Authentication Service in Washington, D.C., a stereo microscope was on the list of necessary equipment. In a relatively short time, we realized how great an authentication tool it was. Coins looked different under high power. It became obvious; why try to authenticate a coin with the naked eye or using one eye and a 10x hand lens when you could examine the fabric of its surface closely with two eyes at up to 80x?

The counterfeits of the day “fell apart” under that close scrutiny. The ANA launched a new era of counterfeit detection. We faced a dilemma each time we discovered a new fake coin at the ANA Certification Service. Some wanted to keep all diagnostics of the new fakes private so as not to help the counterfeiters. The biggest proponent of this view wrote an entertaining column featuring fake coins; yet he rarely gave readers a clue about how to detect them.

At first, I agreed with this approach; but more liberal minds, plus the need to educate dealers and collectors convinced me that the best approach was to divulge just enough diagnostic information to help collectors even though the fakers benefited too. We knew that publishing diagnostic information would definitely make our job harder as it would help the counterfeiters improved their product.

The validity of our concern was quick to come. In the ANA counterfeit detection course at the 1974 Summer Seminar, we showed slides of a newly discovered $10 Indian counterfeit and not two months later we saw the exact same fakes at the Certification Service, but missing the diagnostic markers we had revealed to the class! Today, some counterfeits are so deceptive that I should hesitate to release any diagnostics in print but then my columns would become virtually worthless.

Enough background, let me address each reader who wishes they could open a book and look up the diagnostics for a specific counterfeit coin. It has been done before and it was only useful over a short period of time. Many of the fakes had the same dies. Soon, the book became obsolete as technology changed, the fakes improved, and we became more experienced authenticators. Remember, I’ve experienced first hand that the stereo- microscope allowed us to quickly surpass all the reference books available to us in the 1970s.

Let me suggest a better approach based on my experiences. In 1972, the Certification Service blindly followed the spurious opinion of a respected numismatic authority concerning the authentication of a foreign coin. When we learned of our error, I voiced what should have been plainly obvious at the time: “The most important requirement for coin authentication is to know what a genuine specimen looks like. That is why a book or collection of columns showing the defects of a specific counterfeit coin is less important than your own study of the characteristics found on genuine coins while using a stereo microscope. With study, you may not know for sure if a specimen is counterfeit; but you will be positive that it looks different than any genuine coin you have seen.

With that for you to think about, here is this month’s fake. Micrographs 1 shows a genuine Cuban 1915 5-peso gold coin. The piece shown in Figure 2 is a counterfeit. Both coins are virtually uncirculated. The counterfeit is a tenth of a gram light and its edge reeding does not match that of the genuine coin. Neither of these characteristics is alarming by itself. In fact, the different edge reeding became apparent only after I obtained a genuine comparison coin.

Now, let’s compare the micrographs. The digits on the counterfeit look fine until we compare them to those on the genuine coin. The genuine coin also shows radial metal flow near the edge and between the letters. Note that the shape of the denticals is different on the fake. In the shield design, there are many subtle design differences between the two coins. The key, sun, and scene are different and the horizontal lines on the fake are crude. The color of the gold is correct so the composition of the fake is good. Thus, anyone not familiar with the appearance of a genuine specimen could easily overlook this fake. If you fall into this group, it is best to purchase coins certified by a major grading service.

 Tungsten and its use in making fake gold

 By Mike Hewitt

In early 2008 it was reported that at least some of the gold bars in the vaults at the National Bank of Ethiopia were fake. The discovery was made when bars shipped from Ethiopia to South Africa were returned after they were identified as being gilded steel.

Gilded steel is a very unconvincing form of fake gold because the density of the iron alloy is significantly less. A steel bar identical in volume to the standard 400 troy ounce gold bars commonly used in bank-to-bank trades would weigh only 162.5 troy ounces (about sixty percent lighter). Anyone familiar with handling gold bars would easily identify them as counterfeit.

Even lead, a common heavy metal, is a poor substitute as it is only 59% the density of gold. One of the things that historically made gold so attractive to be used as money was its unmistakable density.

Nowadays we know of several metals that have similar densities to gold, such as the heavier platinum-group metals. However, using these metals to produce fake gold is unprofitable due to their high cost.

There are two metals that are suitable, from both a density and economic perspective, for manufacturing fake gold – uranium and tungsten.

These metals aren’t without their give-aways either. Different chemical and electro-magnetic properties exist. Uranium is of course radioactive. Tungsten is extremely brittle – the exact opposite of gold. Additionally, tungsten has the highest known melting point of any non-alloyed metal at 3422 degrees Celsius, making it difficult to work with. However, it appears that at least one high-temperature furnace is producing gilded tungsten products.

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A Chinese company called Chinatungsten is advertising imitation gold merchandise on its website. The following quote is taken directly from their Tungsten Alloy for Gold Substitution page:

“a coin with a tungsten center and gold all around it could not be detected as counterfeit by density measurement alone … We are well accustomed to exploit more innovative applications of tungsten products. Gold-plated tungsten is one of our main products.”

This raises a few (somewhat rhetorical) questions. What kind of customer is this company looking to sell its imitation gold products to and for what purposes are they intended? Furthermore, what exactly are the “more innovative applications of tungsten products” that this company is hinting at

Mike Hewitt is the editor of DollarDaze.org, a website pertaining to commentary on the instability of the global fiat monetary system and investment strategies on mining companies. His website also provides a no-cost market data feed service with up-to-date quotes on currency exchange rates, commodity prices and major indices. Mike can be emailed at mikehewitt@hotmail.com..

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