Federal
Lawsuit Filed Against “Coin Doctors” by Collectors
Universe / PCGS By PCGS on Friday,
May 28, 2010
Professional
Coin Grading Service (PCGS) today
sent out a Press Release announcing a major lawsuit has been
filed in United States District Court, Central District of California,
against six individuals claiming they engaged in a pattern of
racketeering activity, breach of contract, conspiracy, unfair
competition and fraud for allegedly submitting “doctored”
coins to PCGS for grading on multiple occasions for a period
of years.
The
Defendants named in the suit include: Al Rossman
of Nevada, Rick Wesslink of California, Robert
Lehmann of Maryland, in addition to three members
of the Professional Numismatists Guild ; Eric Steinberg
of Florida, Silvano DiGenova of California,
and Greg Krill of California
PCGS stated
that as many as 10 other defendants could be added to the
Complaint.
The suit claims the dealers violated federal
laws, including the Lanham Act involving interstate commerce
and RICO racketeering statutes, and also alleges “unlawful,
unfair and fraudulent business practices” for submitting
coins that were deceptively altered in an attempt to increase
their value.
The Complaint states: “Defendants knew
that these coins had been ‘doctored,’ by themselves
and/or other persons engaged by them for that purpose. Their
methods included lasering the surfaces of extremely rare proof
gold coins to remove surface imperfections, building up commonly-worn
or weakly-struck portions of coins, and other physical and
chemical processes. Defendants represented to PCGS that these
coins had natural surfaces, intending to deceive PCGS’s
graders so that the ‘doctored’ coins would be
certified by PCGS and then sold in the rare coin marketplace.”
A couple of examples given in the complaint
include the following coins:
1885 $5 gold piece, originally
submitted to PCGS on Dec 16, 2009 by Steinberg on behalf
of Defendant Rossman. Foreign substance added to coin’s
surface to cover marks.
1879 $4 Stella gold piece,
Originally submitted by Heritage on May 8, 2008. Resubmitted
on August 28, 2008 by DiGenova after having been laser treated
to remove lines. PCGS refused to grade the coin.
The suit claims the “Defendants have
caused, and are continuing to cause, substantial and irreparable
damage and injury to Collectors Universe and to the public
and Defendants have benefited from such unlawful conduct and
will continue to carry out such unlawful conduct and to be
unjustly enriched thereby unless enjoined by this Court.”
Collectors
Universe is suing for triple damages as well as all profits
made through these deceptive submissions.
“Every owner of a PCGS coin should be
confident in the fact that PCGS stands behind its product
guarantee 100%. Over the past 24 years PCGS has paid over
$7 million under its guarantee program for coins which have
developed some type of problem due to coin doctoring or some
other issue,” said David Hall. “Occasionally our
graders have been deceived by the very clever application
of foreign substances only to have these substances eventually
spoil the coin and necessitate our buying it back. We believe
we have compelling evidence against several individuals who,
working together and separately, have made a business out
of this practice. We hope the courts will provide a suitable
remedy to this problem.”
“We firmly believe coin doctoring to
alter a coin’s appearance is clearly illegal under the
law,” Hall continued, “and we know that it often
ruins coins long term and certainly deceives grading services
and future coin buyers. Today’s announcements of the
development of scientific doctoring detection and also the
lawsuit filed against alleged coin doctors is another big
step in this process, but we will not be finished until we
eliminate this unsavory practice once and for all.”
PCGS is a division of Collectors Universe,
Inc. (NASDAQ: CLCT)