PCGS files lawsuit against alleged coin doctors...

[$ilverHawk]

Thanks, but please note that I said individual experience and fellow collectors. I am fortunate to be able to get the advice of some very experienced dealers and collector/members of the Palm Beach Coin Club. They have saved me from a multitude of bad buys.

 

Additionally, 80% of my high value buys are PCGS and NGC slabs. Of course, in the spirit of this thread that doesn't make me feel all that secure.

 

 

$ilverHawk

[Conder101]

If the main reason a company is in business is to act as a third party arbitor to establish the authenicity of a coin and they have on staff many trained experts to that end, why go running to the courts when your experts have failed in a small percentage of cases?

Because you don't allow someone to get away with fraud, or to continue trying, just because you didn't find out about it until after they were successful.

 

As an analogy, if you are an auditing firm in business to protect your clients finances and you learn that someone embezzed a million dollars from one of them 5 years ago and you missed it, would you not take them to court or would you give them a free pass because they were successful five years ago? What if you have evidence they are still embezzling? Do you just stop doing business with them or go to court for punishment?

[rrantique]

If the main reason a company is in business is to act as a third party arbitor to establish the authenicity of a coin and they have on staff many trained experts to that end, why go running to the courts when your experts have failed in a small percentage of cases?

Because you don't allow someone to get away with fraud, or to continue trying, just because you didn't find out about it until after they were successful.

 

As an analogy, if you are an auditing firm in business to protect your clients finances and you learn that someone embezzed a million dollars from one of them 5 years ago and you missed it, would you not take them to court or would you give them a free pass because they were successful five years ago? What if you have evidence they are still embezzling? Do you just stop doing business with them or go to court for punishment?

 

Excellent examples Mike . (thumbs u

[$ilverHawk]

That is not the point of my posting. That is one sentence. Consider my posting in it's entirity. The subject of altered coins and the ability/inability of TPG's to detect alterations is a very long and involved conversation ie. NT vs. AT etc. Coin doctoring has been going on as long as people have collected coins. You know that, I know that.

 

My posting considered the "coincidence" of the advent of certain technologies by PCGS and the announcement of lawsuits against a small number of coin doctors. Why weren't lawsuits filed years ago? Obviously, PCGS has been reimbursing submiters that received graded coins that later proved to be altered. Can't be because of recent technology advances. PCGS knew the coins they paid out on were doctored years ago. In my opinion this is not altruistic behavior, rather an attempt to increase market credibility and make PCGS appear to be the final arbiter of authenicity.

 

As to your analogy, The auditing firm would be on the hook for the million dollars in embezeled funds and would of course use whatever means possible to recoup their loss. As they should. I am simply suspicous of the timing.

 

Note. To date ANA, NGC, ANACS etc. have not joined PCGS in this suit or to my knowledge (limited) filed any civil actions against the reputed coin doctors.

 

$ilverHawk

[gmarguli]

If the main reason a company is in business is to act as a third party arbitor to establish the authenicity of a coin and they have on staff many trained experts to that end, why go running to the courts when your experts have failed in a small percentage of cases?

Because you don't allow someone to get away with fraud, or to continue trying, just because you didn't find out about it until after they were successful.

 

As an analogy, if you are an auditing firm in business to protect your clients finances and you learn that someone embezzed a million dollars from one of them 5 years ago and you missed it, would you not take them to court or would you give them a free pass because they were successful five years ago? What if you have evidence they are still embezzling? Do you just stop doing business with them or go to court for punishment?

 

Excellent examples Mike . (thumbs u

 

I actually thought it was a horrible example. Embezzlement is pretty cut and dry. Coin doctoring is not. Who is to say that what the submitter did was not considered OK by the TPG and that is why they graded. Perhaps the TPG net graded it. It was admitted in a very old thread that they allow things like tooling on territorial gold coins. Why not lasering on a Stella or cutting on a FB Mercury dime? Where does the line get drawn?

[MarkFeld]

If the main reason a company is in business is to act as a third party arbitor to establish the authenicity of a coin and they have on staff many trained experts to that end, why go running to the courts when your experts have failed in a small percentage of cases?

Because you don't allow someone to get away with fraud, or to continue trying, just because you didn't find out about it until after they were successful.

 

As an analogy, if you are an auditing firm in business to protect your clients finances and you learn that someone embezzed a million dollars from one of them 5 years ago and you missed it, would you not take them to court or would you give them a free pass because they were successful five years ago? What if you have evidence they are still embezzling? Do you just stop doing business with them or go to court for punishment?

 

Excellent examples Mike . (thumbs u

 

I actually thought it was a horrible example. Embezzlement is pretty cut and dry. Coin doctoring is not. Who is to say that what the submitter did was not considered OK by the TPG and that is why they graded. Perhaps the TPG net graded it. It was admitted in a very old thread that they allow things like tooling on territorial gold coins. Why not lasering on a Stella or cutting on a FB Mercury dime? Where does the line get drawn?

The grading company is to say what the submitter did was not considered OK. And as dealer members, submitters agree not to do certain things to coins or submit coins that they know certain things have been done to. And that's regardless of whether they (and you) think those things are OK or not.

 

Sure, you can look for gray areas. But that doesn't mean there aren't plenty of black and white ones, the type of which appears to be involved in this lawsuit.

[braddick]

Mark, why does/did PCGS allow for the alteration and tooling of territorial gold? Why not a zero tolerance policy on all doctoring regardless of the coin type?

[mommam17]

I am surprised that PCGS has done this. I never thought this would happen. My experience is that the good guys are PCGS, and also NGC and CAC.

[$ilverHawk]

Never forget that TPG s are a business. They will do whatever is possible to maximize profit. What is the main profit stream? The submission of coins for grading. Therfore, the major TPG s will always act in whatever direction will increase profit.

 

Be assured that all major TPG s have entire departments dedicated to evaluating the upside and down side of changes that are introduced into the market. That's just good business. Because of this TPG s are market makers. Astute dealers/collectors know this and adjust their buys to reflect market realities.

 

Why did/does PCGS allow these submissions? Because they send a message to the market that they will accept these coins for grading. It's just business.

 

$ilverHawk

[EVillageProwler]

I have no real insight into the technical merits of the sniffer (other than that I think they misspelled "Fourier") nor the legal merits of the lawsuit.

 

However, I feel both are a good thing, regardless of intent. Why would any collector not like this, even if they feel that the odds of the lawsuit succeeding is small?

 

EVP

[gmarguli]

If the main reason a company is in business is to act as a third party arbitor to establish the authenicity of a coin and they have on staff many trained experts to that end, why go running to the courts when your experts have failed in a small percentage of cases?

Because you don't allow someone to get away with fraud, or to continue trying, just because you didn't find out about it until after they were successful.

 

As an analogy, if you are an auditing firm in business to protect your clients finances and you learn that someone embezzed a million dollars from one of them 5 years ago and you missed it, would you not take them to court or would you give them a free pass because they were successful five years ago? What if you have evidence they are still embezzling? Do you just stop doing business with them or go to court for punishment?

 

Excellent examples Mike . (thumbs u

 

I actually thought it was a horrible example. Embezzlement is pretty cut and dry. Coin doctoring is not. Who is to say that what the submitter did was not considered OK by the TPG and that is why they graded. Perhaps the TPG net graded it. It was admitted in a very old thread that they allow things like tooling on territorial gold coins. Why not lasering on a Stella or cutting on a FB Mercury dime? Where does the line get drawn?

The grading company is to say what the submitter did was not considered OK. And as dealer members, submitters agree not to do certain things to coins or submit coins that they know certain things have been done to. And that's regardless of whether they (and you) think those things are OK or not.

 

Sure, you can look for gray areas. But that doesn't mean there aren't plenty of black and white ones, the type of which appears to be involved in this lawsuit.

 

In the case of whether to terminate the dealer membership, I agree, PCGS should have that sole decision. However, PCGS is asking for triple damages and/or all profits from these coin sales. That is something that I'm sure you'd agree we do not want them to be the arbitrator of whether the dealer broke the agreement and they are entitled to this monetary compensation. I have no problem with the court deciding this, but not the so-called injured party.

 

As for what dealers agree to and not to submit, doctoring is a subjective term. For example, in the lawsuit it specifically mentions using chemicals on coins, yet it is well known and even mentioned by PCGS that they will grade properly dipped coins. These coins are dipped in chemicals. Hell, PCGS will even dip coins in chemicals for you if there is a problem with the coin. The defense lawyer just confused the hell out of the jury.

 

I also find it quizzical that on Page 7 they discuss what is considered illegal including the mutilation of coins, yet on page 16 they want the doctored coins turned over to them so they can be destroyed.

[$ilverHawk]

If the main reason a company is in business is to act as a third party arbitor to establish the authenicity of a coin and they have on staff many trained experts to that end, why go running to the courts when your experts have failed in a small percentage of cases?

Because you don't allow someone to get away with fraud, or to continue trying, just because you didn't find out about it until after they were successful.

 

As an analogy, if you are an auditing firm in business to protect your clients finances and you learn that someone embezzed a million dollars from one of them 5 years ago and you missed it, would you not take them to court or would you give them a free pass because they were successful five years ago? What if you have evidence they are still embezzling? Do you just stop doing business with them or go to court for punishment?

 

Excellent examples Mike . (thumbs u

 

I actually thought it was a horrible example. Embezzlement is pretty cut and dry. Coin doctoring is not. Who is to say that what the submitter did was not considered OK by the TPG and that is why they graded. Perhaps the TPG net graded it. It was admitted in a very old thread that they allow things like tooling on territorial gold coins. Why not lasering on a Stella or cutting on a FB Mercury dime? Where does the line get drawn?

The grading company is to say what the submitter did was not considered OK. And as dealer members, submitters agree not to do certain things to coins or submit coins that they know certain things have been done to. And that's regardless of whether they (and you) think those things are OK or not.

 

Sure, you can look for gray areas. But that doesn't mean there aren't plenty of black and white ones, the type of which appears to be involved in this lawsuit.

 

In the case of whether to terminate the dealer membership, I agree, PCGS should have that sole decision. However, PCGS is asking for triple damages and/or all profits from these coin sales. That is something that I'm sure you'd agree we do not want them to be the arbitrator of whether the dealer broke the agreement and they are entitled to this monetary compensation. I have no problem with the court deciding this, but not the so-called injured party.

 

As for what dealers agree to and not to submit, doctoring is a subjective term. For example, in the lawsuit it specifically mentions using chemicals on coins, yet it is well known and even mentioned by PCGS that they will grade properly dipped coins. These coins are dipped in chemicals. Hell, PCGS will even dip coins in chemicals for you if there is a problem with the coin. The defense lawyer just confused the hell out of the jury.

 

I also find it quizzical that on Page 7 they discuss what is considered illegal including the mutilation of coins, yet on page 16 they want the doctored coins turned over to them so they can be destroyed.

 

Very good examples. Understand that NCS uses chemical alteration to "change" coins to be market acceptable. It goes by the nomenclature of "conservation". A submitter rolls the dice. Same for PCGS. Just what is a "properly dipped" coin?

[JJSingleton]

I must agree that this is the best news I have seen come from PCGS in many, many years.

 

I must admit, I am somewhat surprised that there are so many posts here that appear to disagree with their actions.

 

I for one, do not see this as a tough one to win in civil court. Fraud is all about intent to deceive. And the actions of these coin doctors over the years are clearly all about deception. I am sure that PCGS has a laundry list of doctored coins and they have the record of who submitting them. Don' t forget, bagged coins count too. Whether PCGS catches them or not, it still creates a record of intent to deceive. As to being bagged or slabbed will only matter when it comes to the dollars awarded at the end. It ain't a criminal court. Just civil where all that is needed is preponderance of the evidence.

 

Maybe someone here can come up with some other reason to doctor coins, but the only reasonable one that I come up with is to deceive others.

[mrearlygold]

This should slow down the average person buying coins at auctions based on images.

[$ilverHawk]

Good points. And you're right any action to stop coin doctoring should be supported. And I would support your sentiments but both PCGS and NGC have "dirty hands" when it comes to the alteration of coins. PCGS grades tooled territorial coins and allows certain types of dipping etc. NGC has a division, NCS, that uses various processes to enhance/preserve coin value in the name of conservation. I believe we would all be better served if PCGS, NGC, ANA etal. would clearly define acceptable coin alteration.

 

The situation is not cut and dried. The very definition that PCGS uses in it's Dealer Agreement precludes altered coins. Yet PCGS accepts "properly dipped" coins and tooled territorial dollars. See the quote, note treating coins with chemicals and retooling. You can be sure that the defendants attorneys will bring this up in court.

 

"PCGS is reminding dealers of the specific language of their Authorized Dealer Agreement regarding impaired or altered coins. The contract states in part:

 

Dealer shall not “doctor” coins or knowingly submit to PCGS coins which have been “doctored”. Coin “doctoring” involves the alteration of the appearance of a coin to attempt to increase its value, and may involve, among other things, adding substances to coins (such as, among other things, putty, wax, facial oils, petroleum jelly or varnish); treating coins with chemicals (such as, among other things, 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).

 

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 preliminary and final injunctive relief for any breach of Dealer’s obligation not to “doctor” coins or knowingly to submit “doctored” coins to PCGS. Dealer agrees that in the event PCGS incurs any attorney fees and/or cost and expenses as a result of said “doctoring,” including but not limited to investigating claims of alleged “doctoring,” and engaging in legal proceedings with Dealer or any third party relating to same, PCGS shall be entitled to reimbursement of such fees and costs from Dealer."

 

I suppose the question then becomes what is market/legal acceptable alteration and what is not. IMHO because of past and current actions by TPG s, this case as filed has no legs. That's why I said it is grandstanding. I hope I'm wrong. I'd love to see individuals/companies that alter coins to deceive buyers stopped. Unfortunately, the suit as filed will not be able to do this.

 

It appears that we are in a transitional phase where technology will be able to uncover the alteration history of any coin. Going forward that will change the face of collecting. At any rate, it will be interesting to follow the progress of this case.

 

$ilverHawk

 

 

[just-john]

their new ads should read PCGS were know to make a mistake now in then

or PCGS if you fool us will sue

people really pay for these services I'm in awwww

[WinstonWare]

My worthless

 

 

It looks bad for PCGS win or lose. How can you be the “The Standard for the Rare Coin Industry” and have been incapable of detecting so many doctored coins that you need to sue to recoup all your losses? I don’t think winning or losing the case will have any bearing on the value of the PCGS product. The admission that there have been significant issues in detecting doctored coins will likely have more influence on what the PCGS product is worth.

 

[Doogy]

it has to sting for PCGS to know that one of its co-founders (Silvano DiGenova) is involved in this.

 

 

[dean1345]

Greed is a powerful drug. Greed has no loyalty to anyone including family.

[mike169]

My worthless

 

 

It looks bad for PCGS win or lose. How can you be the “The Standard for the Rare Coin Industry” and have been incapable of detecting so many doctored coins that you need to sue to recoup all your losses? I don’t think winning or losing the case will have any bearing on the value of the PCGS product. The admission that there have been significant issues in detecting doctored coins will likely have more influence on what the PCGS product is worth.

 

I agree completely.