'Illegal' (Double) Eagles
The Battle Over the 1933 "Saints" Begins
By Leon Worden
This Golden Boy is New York attorney Barry Berke, who on Dec. 5 lodged a federal complaint on behalf of a Philadelphia family that claims the government illegally seized their property: 10 double eagles with the legendary date of 1933.
The complaint accuses the government of violating the family's Fourth Amendment protections by seizing the coins without a warrant; their Fifth Amendment protections by denying them due process; and various federal statues by refusing to return the coins or initiate forfeiture proceedings.
No stranger to the pages of COINage, Berke was the attorney who in 2002 made a millionaire of Stephen Fenton completely reversing the British coin dealer's fortunes. Fenton had been arrested for possession six years earlier when he tried to sell one of the fabled coins. Four days before trial was to begin, Berke convinced the government to sell the coin and split the proceeds down the middle with Fenton. Each party grossed $3.3 million.
The U.S. Mint announced it would never again "legalize" a 1933 double eagle. However, Berke's court-approved settlement agreement with the government actually states that it has no bearing on the legality of any other 1933 double eagles that might exist.
That provision is significant, because at least 10 more do exist. In 2003, Joan Switt Langbord, 76, and her two sons, Roy Langbord, 54, and David Langbord, 51, discovered 10 specimens in a family safe deposit box at a Wachovia Bank branch on Chestnut Street in Philadelphia.
It would be more than a year before the public learned of the discovery. When the story finally broke, it rocked the numismatic world but if anybody were to find a cache of 1933 double eagles, logic dictates that it should be the Langbords.
Joan Langbord is the daughter of Israel "Izzy" Switt, a Philadelphia jeweler and antique dealer, now deceased, who is believed to have been the original owner of every 1933 double eagle that ever surfaced outside of the Mint and the Smithsonian Institution and perhaps a few more that have never publicly surfaced.
The Langbords knew of Berke's success in the Fenton case. In mid-2004, still holding onto their secret, they hired Berke to make sure the government wouldn't come after them if they brought their coins into the sunlight.
Surely they knew it would be an uphill battle from the get-go. Ever since 1944, the government has frowned on the private possession of 1933 double eagles, going so far as to put the Secret Service on their trail and melt them down.
Berke's first move? Place a phone call to Daniel P. Shaver, chief counsel to the U.S. Mint, telling him about the discovery and, a few calls later, inviting him to come and get the coins.
A treasonous act by an attorney gone mad? No. If the Langbords want to be free to hold or sell their coins openly, the government's official position on their legality must be reversed.
And the government isn't going to reverse its position voluntarily especially after declaring with such finality, just two years earlier, that the Fenton coin is the only 1933 double eagle that will ever be legal to own.
This would have to be done on the up-and-up, and it was going to take time.
Making a career of defending Wall Street "bad boys" who've had run-ins with the Justice Department and the Securities and Exchange Commission, Berke, 42, knows how to wade through the nation's somewhat arcane forfeiture laws.
In fact, although details are sketchy because the case was settled out of court and neither Berke nor the government discuss legal strategy, it was probably Berke's knowledge and understanding of a change in forfeiture laws that compelled the government to switch course mid-stream and capitulate to Stephen Fenton.
Prior to April 25, 2000, the burden was on the claimant to prove that the government's seizure of an asset was malicious. For the first four years he was tied up in the U.S. legal system, Fenton would have had to prove he had the right to own his 1933 double eagle.
But on that date, the Civil Asset Forfeiture Reform Act of 2000 (CAFRA) took effect. It altered the burden of proof, placing it squarely on the government. Now the government would have to prove that its seizure of private property was proper and legal.
The government's case was based on the idea that Fenton's coin had been stolen from the U.S. Mint in the 1930s. Initially, Fenton would have to prove it wasn't. Now, under CAFRA, the government would have to use material evidence (not hearsay or historical information) to prove a 70-year-old theft case where all of the material witnesses were dead.
In early 2001, the government agreed to drop the forfeiture action and split the proceeds 50-50 with Fenton. The rest, as they say, is history. Or at least it was, until 10 more 1933 double eagles showed up.
This time, the government isn't pursuing forfeiture. It's treating the coins as stolen government property and is simply keeping them.
"It is the Treasury Department's and the Mint's position that the (Langbord) pieces were and always have been property of the United States," Mint attorney Shaver told this writer in August.
In his Langbord complaint, Berke implies that the government hasn't followed the forfeiture laws this time, as it did with Fenton, because it knows it can't win, since it bears the burden of proof.
"The Mint's claim that, by merely asserting that the coins are and always have been the property of the United States, the government may unilaterally and without any legal process deprive the Langbord family of its property is entirely meritless, in direct violation of United States law, and a tacit acknowledgement that the government simply cannot establish, based on any reliable or admissible evidence, how the 1933 double eagles left the Mint over 70 years ago or that the coins are properly subject to forfeiture."
In late December, after the complaint was filed, Shaver and Mint spokesman Michael White refused to answer this writer's questions designed to shed light on how the government knows they coins were stolen such as when and how they were stolen, and by whom. Nor would they say whether they know the answers and just aren't telling.
"It is our policy not to discuss pending litigation Mint and Treasury policy," White said.
If you first read about the Langbord coins 14 months ago in COINage and you think it has taken a long time for the matter to go to court, you're right. It has. There's a word for it. Bureaucracy. It's not because Berke or the Langbords have dragged their feet.
On Sept. 22, 2004, a month after Berke's initial phone call to him, Shaver walked into the Market Street branch of Sovereign Bank in Philadelphia with some Secret Service officers and other Mint officials in tow. The Langbords had transferred the coins from Wachovia to Sovereign "for safekeeping following their discovery," according to the complaint. There, Roy Langbord handed them over to Shaver "solely for the purpose of testing the coins" to make sure they were authentic 1933 double eagles manufactured by the U.S. Mint.
That was Step 1 on the road to clearing the Langbords' title to the coins. After all, if they were fakes, there would be no Step 2.
Step 2: Wait, with fingers crossed.
On June 22, 2005, following nine months of alleged disputes between the Mint and Secret Service and other bureaucratic delays, Shaver met with Berke and told him that yes, they're real, and by the way, we're keeping them.
Days later, in July 2005, Berke wrote his first letter asking for the return of the coins.
In August 2005, according to the complaint, the Mint said no, adding that forfeiture proceedings would be "entirely unnecessary" because the coins "are, and always have been, property belonging to the United States."
In September 2005, Berke filed a "seized asset claim," giving the government 90 days to file a forfeiture action or give back the coins.
Nearly the full 90 days later, on Dec. 5, 2005, Shaver and Treasury attorney Arnold I. Havens returned the claim "without action."
Berke's objections the next day, and in the days and weeks to follow, fell on deaf ears.
This, according to the complaint, constituted the Mint and Treasury Department's "final action to confiscate the coins."
Step 3: Go through the formal administrative process, exhausting all out-of-court remedies. You don't start by going to court. You end there. Lodge a federal complaint before you've gone through the process, and the judge will laugh you out of the room.
On May 8, 2006, Berke filed administrative claims with the Mint and Treasury Department. The claims set forth three alternatives for the government: Give back the coins, initiate forfeiture proceedings, or pay the Langbords the full, fair-market value of the coins.
To date, neither Berke nor Mint officials have divulged the dollar amount of the demand. The presumption is that the figure was based on an estimate of how much the coins would fetch if 10 of them came on the market at once. One can assume that if a number of examples of a formerly unique coin come on the market especially at one time the unit price drops somewhat.
The government had six months to respond to the formal claim. During that time, the Mint put the 10 coins on display at the American Numismatic Association's "World's Fair of Money" summer convention in Denver and granted an interview to this writer reasserting the government's ownership of them.
The Mint and Treasury Department allowed the clock to run out completely before sending Berke the formal letter of denial on Nov. 6, 2006.
Twenty-nine days later, Berke was ready to lodge his 33-page complaint. After all. He'd been given more than a year to write it.
Since 2001, Berke has drawn no small measure of criticism from some professional coin dealers and writers for not going all the way in the Fenton case and duking it out in court so confident are they that 1933 double eagles left the Mint through legal channels even if they were never "issued" into the Federal Reserve System for distribution to banks.
It is perhaps too easy to overlook the inherent difficulty of persuading a federal judge in a federal courtroom to rule against the federal government especially when the only prior case law, from the 1940s and 1950s, favored the federal government. "I was disappointed on a professional level (that I) didn't get the opportunity to try the Fenton coin case, although I was pleased that the result was this favorable for my client," Berke said in the January 2006 edition of COINage. Berke's opportunity to overcome that disappointment and perhaps to redeem himself in the eyes of critics came sooner than anyone could have imagined.
What comes next will likely be months of legal motions, discovery and more delays. The government has 60 days from the date of service to file an answer, i.e., mid-February. So far, two assistant U.S. attorneys in Philadelphia have been assigned to handle the case for the defendants, which include the Treasury, the Mint, new Treasury Director Henry M. Paulson Jr., Treasury chief counsel Stephen Larson, new Mint Director Edmund C. Moy, Mint attorney Shaver, Deputy Mint Director David A. Lebryk (who was in charge when the Mint refused to return the coins), and the United States of America.
What arguments will Berke present? A complaint is really just a bare-bones outline testimony about the "facts" in the case come later but the Langbord complaint provides at least two important clues of what is to come.
For one, Berke asserts that it was common in the 1930s for the Treasury Department and the Mint to distribute interesting coins directly to customers.
"The Department of the Treasury made uncirculated coins available for purchase by mail in exchange for payment of their face value and a small surcharge for shipping and handling," the complaint states. "In addition, the Philadelphia Mint made newly minted coins available directly to collectors, dealers and other members of thee public at its facility in exchange for payment of each coin's face value or an older coin of the same denomination or, in the case of gold coins, in exchange for gold of equal value."
As described more thoroughly in recent issues of COINage, one school of thought is that Israel Switt obtained his coins in this latter manner.
Of the 445,500 double eagles that bore the date of 1933, none had yet been manufactured when Franklin D. Roosevelt signed orders on March 6 of that year, declaring a bank holiday and banning the issuance of gold.
However, for three weeks following their first minting on March 15, 1933, the law still allowed the public to walk up to the customer service window at the Philadelphia Mint and "exchange" gold (including older gold coins) for new gold coins.
In fact, 1933 double eagles continued to be struck through May 1933, despite the executive order of April 5, 1933, banning the private possession of gold. Mint officials apparently thought the ban would be temporary.
No doubt, the documentary evidence of legal gold transactions uncovered by COINage contributing editor Robert W. Julian and numismatist-author Q. David Bowers during the discovery phase of the Fenton case will come into play.
Second, and possibly more direct, is the argument that in 1944, the Mint knowingly signed off on the private ownership of a 1933 double eagle.
There was an exemption in Roosevelt's gold ban for coins that had "recognized special value to collectors."
In 1944, an envoy to Egypt's King Farouk, a prominent coin accumulator and playboy, filed for a license to export a 1933 double eagle. Seeking to determine whether a 1933 double eagle met the standard for "recognized special value," Mint Director Nellie Tayloe Ross sought the opinion of the Smithsonian, which had two of the coins in its collection.
As noted in the Langbord complaint, the answer came back in the affirmative, and on March 11, 1944, Ross authorized the release of the coin to Egypt.
That might be that, if not for the fact that just three weeks later, a different Mint official, responding to an unrelated inquiry, realized that no 1933 double eagle had been released into the Federal Reserve System and on that basis alone, he determined that the coins are contraband. Over the next eight years, nine 1933 double eagles every one outside of the Smithsonian and Farouk collections was confiscated and melted.
A few disenfranchised owners took the government to court in the late 1940s and early 1950s and lost. To their detriment, they apparently didn't know of the "customer service window" transactions.
Nor could they take advantage of subsequent changes in the law that might prove beneficial to the Langbords. In 1954, the Treasury Department authorized the private ownership of all gold coins minted prior to April 5, 1933 (again, the first 1933 double eagles were recorded in the Mint's books on March 15). Then, in 1965, Congress decreed that all coins and paper money of the United States are legal tender, "regardless of when coined or issued."
©2007, MILLER MAGAZINES INC./LEON WORDEN. RIGHTS RESERVED.
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