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Pierre_Henri

PCGS in huge Court Case in the USA

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Pierre_Henri

PCGS is currently suing some of their own clients for sending them “doctored” coins for grading. Some very high valued coins were graded but now after a year or two, the “doctored” coins are beginning to show clearly that have been tampered with.

 

 

I hope BoB will allow the following link to the papers filed by PCGS in the Central District Court of California...

 

http://www.coinlink.com/News/pdf/CU_vs_Coin_doctors.pdf

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mellowred

Excuse my ignorance, but I am just very curious.

 

If a grading company charge a fee for verifying an item, are they not responsible for "missing" the tampering in the first place?

 

Particularly when tooling shows up. The chemicals may remain hidden for a few years, but surely tooling would be as evident on day one as it would 10 years later.

 

There are also a number of chemicals mentioned. Perhaps I watch too much TV, but surely there is a very simple test to check for traces of these chemicals when grading(?)

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Lukeness

PCGS has in place policy that forbids dealers to submit doctored coins and they have to accept these as terms and conditions of the grading service. From what I gleaned from the document it seems they provide a grading service, not an analytical one, so the assumption is that coins received are not doctored and they are graded accordingly.

While detection of chemicals etc is possible, as with gems, in some cases only very sophisticated laboratory equipment and often destructive testing methods can CONCLUSIVELY identify those substances.

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alloway65

I will make comment when I am not so busy re the "pregnant" Springbok issue!!!:rolleyes:

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Guest Guest

Is PCGS shifting the blame?

 

For someone who has never submitted a coin for slabbing this PCGS policy seems to open up a real can of worms - for the collector submitting the coins.

 

This is why I feel this way...

1) A collector might have innocently purchased a coin some time before not knowing that the person he had purchased it from had doctored it. Is he therefore, under PCGS terms and conditions, open to be sued if he submits it for grading?

 

2) A collector might unwittingly purchase a Chinese replica coin through an auction. Through his ignorance he submits it to PCGS. When they see that it is a fake - is he liable to be sued?

 

3) Through PCGS unique coin identifying system the original individual who submitted the coin can be traced. Years after grading he might find himself at the centre of a legal case if the coin has subsequently been found to be tampered with. What is to say that the casing has not been opened and the coin replaced with a doctored coin?

 

In effect PCGS are placing the onus on us, the collector, to ensure a coin is authentic and not doctored BEFORE they even grade it. To me, that defeats the purpose of their grading service and the expertise they purport to have - and why collectors pay the big bucks for this service.

In my view the major auction houses like Heritage and Spink should have their experts carefully look at all coins submitted (including slabbed pieces) if they have a value of say over US$5,000. They make enough money in commissions from sales to cover these extra costs.

 

I should make it clear that I believe that doctoring or making replica coins should be a criminal (not civil) offence because it all too often catches innocent collectors out.

 

Kind regards

 

Scott Balson

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RISadler

ndoa18, to answer some of your questions... the basis for the current case is the intention to defraud.

 

If you acted in good faith (i.e. not knowing the coin was fake when submitting it), then PCGS won't be able to sue.

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lilythepink

But in the USA everyone sues anyone for anything! I'm not sure that "good faith" forms part of the legal system there ... ;)

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RISadler
But in the USA everyone sues anyone for anything! I'm not sure that "good faith" forms part of the legal system there ... ;)

 

Correct, but then we're not USA'ers and over here "good faith" still carries considerable weight. So PCGS will have a tough time winning the suit against an SA citizen/company.

 

And even if you did forge those coins, you can always claim it was bought from a Nigerian over the Internet!

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lilythepink

Right again, RISadler! I have absolutely no idea where I acquired all the childhood coins which I seem to have! I even have a few Albanian coins from more recent times and wonder if anyone even collects them! :confused:

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4kids

It is clear from the filed documents that PCGS are taking on specific idividuals which they identified through time as fraudsters in the coin market. The documents in basic terms describe how these individuals and coin dealers knowingly submitted through what seems a network "doctored" coins for grading and that they made use of very sophisticated methods to deceive graders in their tooling of the coins mentioned.

 

It probably had taken PCGS a number of years to built this case before they could take this issue to the next level and perhaps even employed outside specialists "investigators"to help built the case.

 

It is also worth mentioning that most these coins were rebuilt on high points and marks such as bagmarks and small scratches was removed with lazer to deliberately deceive the graders and ultimately the buyer/collector of the coins. The twelve or so pieces mentioned are obviously a small handfull of many.

 

It is nice to know that my graded coins are protected by the PCGS and NGC guaratee's and collectors should take note of this.

 

The question would then be "are preserved or cleaned coins regarded as doctored coins?"

 

Now there is a debate for you...lol..

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EishGK

Grading Scruples

 

I find this all very interesting indeed. I feel a little more secure knowing that PCGS will defend themselves even if they have made a 'mistake' in grading a doctored/'cleaned' coin, once they have become aware of what they did. Surely NGC must have the same systems, checks, and policies in place to protect there name and image from wanton fraudsters. But again, 4kids has a very point. I dont know if PCGS 'restores' coins but I certainly know that NCS, a sister company of NGC does 'restore' / 'conserve' coins which NGC will grade and slab after such 'restoration'/ 'consevation'. Where in this equation of 'doctoring', 'restoring' or cleaning of coins does these coins stand? Are such cleaned/restored coins; once slabed, only be condoned if the restoration is done by these well established grading companies? Some valid points to ponder!:cool:

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jwither
For someone who has never submitted a coin for slabbing this PCGS policy seems to open up a real can of worms - for the collector submitting the coins.

 

This is why I feel this way...

 

1) A collector might have innocently purchased a coin some time before not knowing that the person he had purchased it from had doctored it. Is he therefore, under PCGS terms and conditions, open to be sued if he submits it for grading?

 

2) A collector might unwittingly purchase a Chinese replica coin through an auction. Through his ignorance he submits it to PCGS. When they see that it is a fake - is he liable to be sued?

 

3) Through PCGS unique coin identifying system the original individual who submitted the coin can be traced. Years after grading he might find himself at the centre of a legal case if the coin has subsequently been found to be tampered with. What is to say that the casing has not been opened and the coin replaced with a doctored coin?

 

In effect PCGS are placing the onus on us, the collector, to ensure a coin is authentic and not doctored BEFORE they even grade it. To me, that defeats the purpose of their grading service and the expertise they purport to have - and why collectors pay the big bucks for this service.

 

In my view the major auction houses like Heritage and Spink should have their experts carefully look at all coins submitted (including slabbed pieces) if they have a value of say over US$5,000. They make enough money in commissions from sales to cover these extra costs.

 

I should make it clear that I believe that doctoring or making replica coins should be a criminal (not civil) offence because it all too often catches innocent collectors out.

 

Kind regards

 

Scott Balson

 

The answer in every one of your examples is NO. The standard is one of INTENT which the examples you gave do not indicate.

 

I would also completely disagree that "doctoring" should be a criminal offense. As someone who lives in the United States, I can tell you that there are already enough inappropriate crimes under the US legal system without adding another one.

 

The simple reason for this is that its a matter of opinion on what "doctoring" is or is not. NCS conserves coins. Is that doctoring? To some it is and to others no. Making a criminal offense out of "doctoring" based upon the standards of a TPG such as PCGS is completely wrong because the standards they use are arbitrary and may change over time. If someone buys a "doctored" coin and later loses money on it, the existing civil remedies are sufficient without adding a prison sentence to it.

 

As for replicas, failing to follow the requirements of the US Hobby Protection Act to my knowledge is already a crime.

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jwither
Correct, but then we're not USA'ers and over here "good faith" still carries considerable weight. So PCGS will have a tough time winning the suit against an SA citizen/company.

 

And even if you did forge those coins, you can always claim it was bought from a Nigerian over the Internet!

 

The South Africa coin submisison volume to PCGS is irrelevent. Its a miniscule fraction of the volumes NGC grades which are also financially irrelevant to them. Under a worst case scenario with South Africa coins, I would expect PCGS to simply discontinue grading them altogether.

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Guest Guest
The answer in every one of your examples is NO. The standard is one of INTENT which the examples you gave do not indicate.

 

I would also completely disagree that "doctoring" should be a criminal offense. As someone who lives in the United States, I can tell you that there are already enough inappropriate crimes under the US legal system without adding another one.

 

The simple reason for this is that its a matter of opinion on what "doctoring" is or is not. NCS conserves coins. Is that doctoring? To some it is and to others no. Making a criminal offense out of "doctoring" based upon the standards of a TPG such as PCGS is completely wrong because the standards they use are arbitrary and may change over time. If someone buys a "doctored" coin and later loses money on it, the existing civil remedies are sufficient without adding a prison sentence to it.

Technically you might be correct but let me give you some scenarios which concern me.

 

What about PCGS suing a collector who is innocent - their reputation will always be in question, through association, even if the courts find in their favour. Regardless, the cost of their defence could financially drain many collectors.

 

Doctoring a coin, like in the examples shown in the PCGS case, is clearly a form of fraud - regardless of how you dress it up. You can go to jail if you commit a fraud against the bank. By doctoring a coin you commit a fraud against the person buying the coin. There is a clear association in fact.

 

The problem with civil actions, in the US especially, is the associated costs. An average collector would think twice before suing another individual over a doctored coin; it might be different for a high wealth individual or an organisation like PCGS. In a criminal action the government carries the cost of taking action against the fraudster - a much better outcome for all.

 

I know that is not how the "system works" but I personally think it would be FAIRER that way.

 

PS I know the judicial system is NOT fair!

 

Kind regards

 

Scott Balson

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lilythepink

PS I know the judicial system is NOT fair!

Kind regards

Scott Balson

 

And I thought it was only unfair in SA! ;)

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