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Fake Bullion Bars Top New Scam
By Patrick A. Heller
March 19, 2013



Keeping an eye out for scams is part of what a dealer does for a living. Here are four to beware of.

Number 1: A continuing problem for coin dealers has been the detection of counterfeit and altered coins and precious metals ingots. Last year, the online internet auction company eBay made a splash in the numismatic press claiming that they were prohibiting the listing of counterfeit and altered merchandise, including the elimination of a category for numismatic replicas.

Well, eBay has a “Plated & Clad Bars” category. Although the eBay sellers freely admit that their products are not solid silver, the photos of the products show that they state on their surface they are made of solid .999 fine silver. These fakes use relatively well known brand names – without paying licensing fees. The appearance and the physical dimensions are so close to the real products that even coin dealers have been fooled and bought them as genuine.

The reason I bring up such products now is that one woman in Michigan has been purchasing these fakes and taking them to dealers across a large geographical area of Michigan to try to pass them off as genuine. My company is aware of at least nine dealers thus far who have fallen victim to buying these fakes from this particular woman in quantities up to 100 pieces.

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The police have been called in several times as dealers have obtained the seller’s information, but she has not yet been arrested. Part of the difficulty is that the police officers questioning her are not able, from their own knowledge, to state that they know these are counterfeit and that she knows this yet is trying to pass them off as real. We are trying to work with one area police department to educate their detectives so that an arrest may yet be made.

The existence of these fakes is going to be a plague on the precious metals industry from now on.

For an investor in physical silver, it could get so bad that they should avoid owning any brand of silver bars or rounds and only purchase coins such as U.S. 90 percent silver dimes, quarters and half dollars. These coins have far less than an ounce of silver, which makes them difficult to profitably counterfeit in nice enough quality to pass. The other advantage is that counterfeiting U.S. coins could bring down the Secret Service on a manufacturer of such fakes, making it riskier for those who produce the counterfeits.

Number 2: There have been recent reports of persons visiting coin dealers in the Northwest states who tempt dealers with a proposition. The persons claim that they need to provide a source of funds from a source other than the bank account from which they have a cashiers’ check, such as having to do with estates. The crooks propose to use the cashier’s check to purchase bullion, which they then immediately sell back to the dealer in return for the dealer’s check for about $300 less than the amount of the cashier’s check.

The bullion products never leave the dealer’s possession. The dealer can call the issuing bank and be told that the cashier’s check is a legitimate instrument. However, the problem is that the cashier’s check presented is a copy instead of the genuine item. So, the bank will confirm that cashier’s check because it really does exist, but it will return the copy unpaid if it is deposited. In the meantime, the dealer’s check has long since been cashed and the funds are gone.

Unfortunately, with the capabilities of scanners and computers today, payments such as money orders and cashier’s checks can no longer be considered “good funds.” Fakes and copies are too easy to produce. The only protection that dealers would have is to stop delivering merchandise immediately on receipt of such payments. Of course, it would probably be a good policy to avoid the transactions such as those used in these scams.

Number 3: At last week’s Baltimore show, I heard of a brand new scam. Last year, a crook was arrested at a major coin show with many thousands of dollars of stolen paper money in his possession. When the police arrived to take him away, he explained that he was a foreigner with diplomatic immunity. The police checked with that crook’s embassy and with the US State Department, who both told the police to immediately release the crook and to not release the identity or picture of this person to any outside party. The police did so. Unfortunately, nine months later, the police are still holding onto the paper money as “evidence.”

Number 4: At Baltimore, I also talked with a dealer who had been visited by representatives of a foreign government seeking to confiscate the valuable ancient coins issued by that nation if the dealer could not provide a chain of custody proving that the coins were legally owned before that nation banned the export of “national treasures.” This matter is not yet closed, so I will not reveal the dealer or the nation involved. However, the dealer told me that the representatives were only interested in pieces of high value, ignoring other ancient coins from the same country of negligible worth. There are several nations that have established bans on the export of national treasures. The signs are that the U.S. State Department may well cooperate with these nations in helping confiscate coins for which owners cannot prove their legal provenance. This will doubtless be a problem in the coming years for both dealers and collectors.

I wish I could say that there are simple solutions. Sadly, I don’t think there are. I expect to see more scams in the future.



Patrick A. Heller is the American Numismatic Association 2012 Harry Forman Numismatic Dealer of the Year Award winner. He owns Liberty Coin Service in Lansing, Mich., and writes “Liberty’s Outlook,” a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at http://www.libertycoinservice.com. Other commentaries are available at Coin Week (http://www.coinweek.com and http://www.coininfo.com). He also writes a bi-monthly column on collectibles for “The Greater Lansing Business Monthly” (http://www.lansingbusinessmonthly.com/articles/department-columns).His radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at http://www.1320wils.com.



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Comments
On March 19, 2013 Brian said
Next time someone claims diplomatic immunity every person in attendance should take his picture and post it online before the State Department is even called.  That will be his last scam.
On March 20, 2013 Martin said
Number 4 seems a little strange.

1. The "foreign nation" has no jurisdiction in the US and therefore cannot simply "confiscate" some coins. That is not a confiscation at all, it is called theft and if someone tries it the dealer should call the police and report them for attempted robbery.

2. The dealer does not have to provide a chain of custody - it is called innocent until proven guilty. The other party has to prove that it is a stolen coin or that the coin somehow was received illegitimately, not the other way around.

The other scams I can understand but this one should be dealt with by the dealer calling the police and accusing the other party of attempted robbery. I bet they would run a mile.

Regards, Martin.

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