PCGS Law Suit

[syzygy]

Here is the link to the PCGS news release -> LINK

 

I am not interested in commenting on the particulars of the law suit with regard to the people or the legal positions. But one aspect of the the issue, in general, is certainly notable and alarming. Essentially, the claim seems to be that coins were altered in a very sophisticated manner and submitted to PCGS for authentication. New steps are being implemented to detect alterations...from the news release..."Using energy dispersive X-ray spectrometry (EDX), Fournier [sIC] Transform Infra-Red Spectral analysis (FT-IR), Raman Spectroscopy and other similar analytical techniques, this detection process (code-named by PCGS the PCGS Coin Sniffer™) will analyze the surfaces of a coin in a matter of seconds to detect foreign substances and provide quantitative information about the coin."

 

Look, I know that forgery and doctoring has always been been around with coin collecting - there is no news there. What saddens me is the realization that doctoring is advancing further and faster than I can keep up with ("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.").

[thedeadpoint]

I was actually going to post the same article yesterday for the other half - the "Coin Sniffer". I see your concern. At what point do we just give up with our own perception of authenticity and submit to the grading service?

[Art]

It's interesting. The law suit will hopefully bring some teeth to stopping these practices. I'd love to see the list of defendants.

[SMS]

I have not commented anywhere on this matter since finding out about it a bit back. But, I must say that you should be disgusted by the fact that PCGS is suing a client for using their services for their intended purpose: to authenticate a coin's genuineness. There are two aspects to the service which you are purchasing: authentication and opinion of preservation and marketability. Regardless of the contractual requirements of special customers who have tailored relationships with PCGS, to try to bring criminal tort against a customer disgusts me.

 

PCGS offers services which include authentication. They are paid for these services. If their business model cannot support their desire for higher profits, then they need a new business model. Suing your customers under criminal tort is not a business model...at least not one that leaves a savory taste in the mouth.

 

If a contractual agreement was breeched, then PCGS should simply be bringing contractual tort against the accused customers and either deny any further contractual prices (and make them pay full price for the services) or deny service altogether to these individuals. If PCGS lost money based on their guarantee policy, then that is their problem. They are the ones who were paid for a professional service and they failed in that service.

 

In my opinion, PCGS itself committed fraud by claiming expert status with regards to numismatic authenticity and not performing on such by not one, but three, supposed professionals failing to properly authenticate a coin's genuineness and marketability. And this, not just once or twice, but numerous times!

 

It is like going to a bank and cashing out two grand in $100 bills. then going back the next day to cash one in to your bank account and them having you arrested for giving them a counterfeit note. They were the ones to utter you the note to begin with!

 

PCGS is slabbing coins that are neither genuine in their preservation nor marketability and now suing their clients for their own shortcomings.

 

I firmly believe it will not be long before Jo Average faces the PCGS firing squad if they get away with doing this to other coin "experts". Why shoot geese out of the air when you can shoot ducks out of water?

[SMS]

It's interesting. The law suit will hopefully bring some teeth to stopping these practices. I'd love to see the list of defendants.

Al Rossman, Rick Wesslink, Robert Lehmann, Eric Steinberg, Silvano DiGenova, and Greg Krill...with at least ten more to be enjoined at a later date.

[SMS]

I would add also that this particular "business model" has been used in the past by the RIAA, MPAA, and BSA. They all first went after large "professional" entities and landmarked cases against them. Soon following, all three entities began suing "John and Jane Doe" defendants by the thousands. These "john and jane does" were also almost exclusively customers.

 

As well, their main basis for proof is a "new" technology. The accurateness of this technology has only been "proven" by their own insider "experts". There are still initial reports of this technology as recent as this year that admit to errors in the system and that it is in a state of constant improvement.

 

Now with that, one clause in the complaint states that an 1879 $4 Stella gold piece submitted by Heritage on May 8, 2008 was resubmitted on August 28, 2008 by Silvano DiGenova after having been laser treated to remove lines. Apparently PCGS refused to grade the coin.

 

Obviously, this pre-dates the current reports on this new technology. Furthermore, PCGS did not have any loss on this particular item. They were paid for their service, they could not guaranty the genuineness of the surfaces, and refused to grade it. That is exactly what their services were meant for.

 

Now, to prove that DiGenova personally altered the surfaces, or that he was in conspiracy to do so, is going to be quite the task. First question would be, did PCGS conduct themselves in a deceptive manner to try to entrap, persuade, or trick the defendant into submitting an altered coin?

 

You should understand that these are dealers who deal in literally thousands, if not tens of thousands, of coins per annum. the very reason they submit to the TPGs is to do this portion of their job for them: to authenticate the genuineness of the coins.

 

The very fact that an altered coin was submitted to begin is moot. That is the entire basis of PCGS's business. If there is no question as to the authenticity of a coin, there is no logical reason to utilize their authentication services. Why would anyone submit a coin for authenticity if they already know the answer?

 

PCGS claims it was in order to defraud. They can claim whatever they want. The fact still remains that the whole basis of their service is exactly that: authentication. They are paid for this service. And now they want to sue their clients for utilizing this service? Are their so-called "professionals" (not just one, but a quorum of three) lacking so much in their expertise that they cannot identify an altered coin?

 

If they are able to, then good for them, they did the job they were hired and paid to do. If not, then i would have to question their level of expertise.

 

Finally, it is absolutely necessary that everybody remembers the most important thing: Collector's Universe (CLCT) is a publicly traded corporation. As such, they have only one goal which they are required by law to accomplish: conduct themselves in such manner that they are working in the best interest of their holders (ie make a profit). You the collector are only the means to that end...one way or the other.

[Mark Stilson]

The case you cite I don't quite see how they could claim loss. (Unless they have other coins from him they have already paid out for. And can prove intent. )

 

"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."

 

It does seem like they are shotgunning the law suite.

 

"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."

 

Since they say federal laws including etc.... I wonder how many different laws they are trying for.

 

I can see why PCGS is doing it though. I wonder how much they have lost since the new secure plus has come on line. So far they say 7 million, but that includes coins submitted prior to secure plus. With the new system they have it could get pretty large. If a coin was previously graded by them then resubmitted in original slab for secure plus with their guarantee they would have to make up the difference.

 

An aside note. A coin dealer I used to go to I got a funny feeling about. Some change I received from his store was polished. I wondered if that was experiments and just did not go there any more. Gut feeling nothing more.

[Mark Stilson]

BTW here is a link to the lawsuit

 

Coin doctor law suit

[Corina]

can we say highly doubtful they will win

[Mark Stilson]

Better then a soap opera. I did not know Silvano DiGenova was a co-founder of pcgs. Was CEO of Superior Galleries. The list goes on. Pretty impressive resume.

 

Part of me agrees with the lawsuit, part doesn't.

Through out this I wonder how many people will be implicated. Not necessarily charged or convicted of anything but a guilt by association.

 

End result I think pcgs will win. Primarily due to the size of the shot gun blast. How much who knows.

[coinsguy2010]

Lota High end coins out there now not worth a plug nickle,but will rise like a hurracane for the doctored coins to be collected now,since it was the top grading company fooled and scamed