Colonial-era coin at the center of lawsuit
By Dana Parsons - August 18, 2009 | From The Los Angeles Times
Plaintiff
says the owners of a Brasher Doubloon reneged on a deal to
pay him for information that he says shows the coin was the
first made under the new U.S. government -- which would boost
its value.
The Brasher Doubloon is steeped
in historic reverence and mystique. It dates to Colonial America
and the dawning of the new federal government, when Spanish
gold doubloons circulated alongside other foreign gold and
silver as part of New World commerce.
The coin takes its name from Ephraim Brasher,
a respected New York City gold- and silversmith who lived
next door to George Washington. In 1787, Brasher began making
gold coins, presumably to be used as currency for the soon-to-be-formed
republic.
Seven of them remain and are sanctified as
the first truly American gold coins. That fact, along with
their distinctively American design and Brasher's friendship
with Washington, attached a permanent legacy to the coins.
The coins are nearly identical, but one of
them is first among equals. And it is that coin, worth $15
when Washington was president but most recently sold for nearly
$3 million, that is at the heart of a lawsuit filed in Orange
County Superior Court. Rare coin researcher William Swoger
says he told the coin's owners that he had "specialized
information" about the coin and that they reneged on
finalizing a contract to pay him in exchange for the information.
Orange County coin dealer Steven Contursi
and his Northern California partner, Donald Kagin, teamed
up to buy the Brasher Doubloon in 2005 for $2.99 million,
then the second-highest price ever paid for an American coin.
Swoger's lawsuit alleges that he approached Kagin and Contursi
several months ago and told them the coin was worth much more
than they realized.
The key, he told them, is that the coin wasn't
the first of the seven struck by Brasher beginning in 1787.
Contrary to the prevailing view in numismatic circles, Swoger
says it was the last, and probably not struck until 1793.
That later date is crucial, Swoger says, because
this coin was fractionally heavier than the others and made
to conform to a 1793 act of Congress that established weight
standards for gold coins in the new republic. The other six
coins are of identical weight and predate the formation of
the new government, he says.
Kagin and Contursi "knew they had a unique
coin," says Richard Herman, a Newport Beach attorney
who is representing Swoger. "They knew it was very valuable,
very rare. But they thought it was the first one [in the series]
and not the last one. Turns out that makes all the difference
in the world. One's a Colonial coin made by a jeweler, and
it's a very nice coin, but the other is the first coin made
for circulation under a law of the United States. That's heavy-duty."
One side of the coin shows an eagle with wings
spread. Thirteen stars representing the original colonies
surround its head, and its talons hold olive branches and
the arrows of war. On six of the coins, Brasher's "EB"
stamp appears on the eagle's wing. On Kagin and Contursi's
coin, the "EB" stamp appears on a shield on the
eagle's breast -- a unique design element that distinguishes
it from the others and is part of the reason many numismatists
call it America's most treasured coin.
One theory is that Brasher made the change
for purely aesthetic reasons. But Swoger contends that, as
the last coin in the series and made to conform to the congressional
act, Brasher put it there to distinguish it from its predecessors.
According to the lawsuit, Swoger informed
the owners that he had discovered information that would make
their coin much more valuable and asked for a $500,000 fee.
They countered with $250,000, the suit alleges, and then asked
for a meeting at which Swoger would disclose the information.
Swoger met with Kagin, explained his thesis
and was given a gold coin valued at $35,000 as a down payment,
the suit alleges. Swoger alleges Kagin said he and Contursi
would prepare a contract but never did. Swoger is suing for
millions of dollars in damages.
On the advice of their attorney, Contursi
and Kagin declined to discuss the matter. But Contursi, the
president of Rare Coin Wholesalers in Dana Point and a two-thirds
owner of the coin, wrote in an e-mail:
"I greatly regret that Mr. Swoger has
chosen to sue me and my partner. We never sought anything
from Mr. Swoger regarding the Brasher Doubloon and never benefited
in any way from any information he volunteered to us. The
lawsuit is utterly frivolous, and I urge him to withdraw it."
Armen Vartian, an attorney representing the
coin's owners, said, "I don't think the complaint will
survive a motion to dismiss."
In an interview, Swoger, who is 65 and lives
in Lake Odessa, Mich., said he is confident he can prove the
coin was the last in the series and not the first. He declined
to provide details.
His attorney said an ad in a 1790s New York
newspaper spurred Swoger's research about the sequencing of
the doubloons. Swoger acknowledged that but said learning
the exact weight of the historic doubloon -- that it was slightly
heavier than the others in the set -- was what led him to
conclude it was struck after the others and linked to the
congressional act.
"Logic takes me right there," he
said.
Asked if he'd been nervous about disclosing
his information to Kagin without a contract, Swoger said,
"Yes, I was, but how can they buy a pig in a poke? So,
it was a necessary step."
Kagin subsequently said they weren't going
to use his information and felt no need for further payment,
Swoger said. "Whether they use it or not, I delivered
it," he said. "They know it and now other people
are going to know it. They can't give it back to me."
The lawsuit alleges that Swoger's theory would
elevate the coin's value to $10 million.
"If I'm wrong and they can prove me wrong,"
Swoger said, "they owe me no money for the information.
If my information is correct, it gives much more importance
to Ephraim Brasher himself and his other gold coins, because
it gives him a longevity that was not known before."
The lawsuit is an uncommon event in the world
of rare-coin collecting, but there's no doubt that the Brasher
Doubloon is fertile territory for intrigue.
"There's still quite a bit that's unknown
about these coins," said Beth Deisher, editor of Coin
World magazine, in a phone interview from her office in Sidney,
Ohio.
The first "official" U.S. coin wasn't
produced until 1793, she said. The country never authorized
a $15 denomination, but that doesn't mean that a coin containing
that precise gold value wouldn't be legal tender, she said.
Coin World will report on the lawsuit this
week, but Deisher declined to express an opinion on it. Swoger
has written for her magazine and is respected for his research
in the coin-collecting world, she said. He has not published
any documentation for his theory about the Brasher Doubloon.
And if Swoger's theory is correct?
"It would elevate the coin's historical
importance," Deisher said. "Whether that translates
to value is something that would have to be determined by
the marketplace."