Coin importers expect some relief as shipments held for testing by the government appear to be en route to their rightful owners, but other recyclers are seeking alternative redemption methods while the U.S. Mint’s buyback program remains suspended.
Coin importers anticipate some relief as shipments held for testing by the government now appear to be en route to their rightful owners, but other recyclers are seeking alternative methods to redeem their coin stockpiles while the U.S. Mint’s buyback program remains suspended.
The U.S. Bureau of Customs and Border Protection (CBP) has apparently agreed to release more than $700,000 in coin shipments to a trio of importers, and deliver payment for more than $300,000 in melted coins that have allegedly been detained and withheld without due process since 2014 and 2015, parties involved with the situation said.
At least one company—Portland, Ore.-based Portland Mint LLC, which buys, sells and stores bulk quantities of coins—received confirmation of the release of a shipment that had been detained by the CBP for 507 days, according to documents obtained by AMM.
The CBP had no comment Sept. 13.
However, while the coins might be returned there is still no way to sell off the inventory while the Mint’s program remains halted. Melting them down independently isn't an option because it is illegal to destroy U.S. currency, and coin recyclers are awaiting an answer from the U.S. government regarding what they should do with the piles of coins building up at their facilities.
Coins vs. currency
Some recycler sources questioned the worth of these materials if they can't be redeemed.
“The suspension of shipments to the Mint has caused a severe business hardship, as we have been held up from shipping to the Mint for nearly 18 months. This includes almost six months prior to the formal suspension of the program in which we were unable to get an appointment to deliver coins,” according to a heavy media plant operator, who wished to remain anonymous.
“While we understand and can deal with the market risks associated with scrap metals, we could never have imagined the current scenario under which U.S. currency has essentially become worthless with no ability to monetize it. ... We are currently looking at various methods to clean and recirculate these coins, as we need to be able to recoup some of the costs already expended. On a much broader level, if the program stays on hold what impact will the continued suspension have on the monetary value of the coins and U.S. currency?” this source asked.
“We’re frustrated that the program is still offline due to the fact that we want to be able to capture the value of all these coins,” Luke Palen, president of Rosemount, Minn.-based Spectro Alloys Corp., agreed.
“We’re frustrated like the rest of the industry. This is currency and its value is being lost,” Steve Bossotti, senior vice president of Morristown, N.J.-based Covanta Holding Corp.’s metals management division, said.
Covanta also is considering sorting through its inventory of bulk coins to separate pieces that haven't been mutilated, which account for roughly one-third of the company’s coins, Bossotti said. “We are evaluating cleaning and sorting the coins and returning them into the U.S. banking system. We’d spend more time to process (them) and get less value but if the status quo continues, we have to look at doing something different because it’s value being lost.”
The Institute of Scrap Recycling Industries has said that it is committed to finding a path forward with the Mint despite the government's lack of willingness to come to a resolution.
ISRI has tried to work with the Mint to resolve the buyback program's current suspension, but attempts so far have met with limited success, Billy Johnson, director of political and public affairs at the Washington-based trade association, told AMM.
The program was initially suspended for six months in November 2015, under suspicion that Chinese counterfeiters were using the guise of mutilation to siphon millions of dollars in fake coins into the United States through the Mint (amm.com, March 22).
Meanwhile, recyclers remain stuck holding onto their coins due to “ongoing litigation,” Johnson said. “Until the litigation involving the coin program is resolved completely, the U.S Mint has told us (ISRI) that it will continue its suspension of the mutilated coin redemption program.”
This has further riled already outraged industry participants, who looked to the U.S government’s landmark decision to settle the federal lawsuit against two Chinese coin recyclers—Wealthy Max Ltd. and America Naha Inc. (amm.com, July 25), which had been accused of importing fake coins and redeeming them through the Mint—as a natural step to lifting the moratorium on the program.
“If there is anything we can do as an industry ... we’ll do it, but the Mint and Treasury haven’t even replied or taken us up on our offer,” Johnson said, referring to a letter from ISRI president Robin K. Wiener urging Treasury secretary Jacob J. Lew and Mint principal deputy director Rhett Jeppson to lift the freeze on the mutilated coin-redemption program (amm.com, July 15).
“I don’t know how they can make a valid choice to stop the program, but we also understand that they need to figure it out. ... This is U.S. currency and recyclers have a legal duty to redeem it. We need the Mint to lift the suspension as soon as possible,” Johnson added.
Coin recyclers have said that the nearly yearlong hiatus has been a serious impediment on their businesses (amm.com, May 4), as they are left with no choice but to store the growing piles of coins and bank on the suspension being lifted.
For now, the Treasury isn't set to provide an update for the program until at least Nov. 2 (amm.com, April 29).
“The coins aren’t going anywhere until the program is resumed. It’s encouraging to see that the U.S. government is releasing our coins, but until the program comes out of a suspension there will continue to be far-reaching impacts through the industry,” John J. Coughlin, a Moorestown, N.J.-based attorney representing three importers who are suing the government for illegally detaining their coins, said.
In addition to embargoing shipments, the nearly two-year-old coin saga has resulted in some parties not receiving payment for sales to the government.
Kent Bramlett, a resident of Riverside, Calif., engaged in the redemption of mutilated coins to the Mint, filed a lawsuit against the government in U.S. District Court in eastern Pennsylvania concerning the redemption program Jan. 21; and Ronnie Shahar, an individual operating through his business, Israel Currency Exchange, in a similar lawsuit filed Jan. 22 partnered with Portland Mint.
Coughlin represents the three parties, who in their two cases are targeting the U.S. Treasury Department, U.S. Mint and Department of Homeland Security as well as the Bureau of Customs and Border Protection, alongside Jacob J. Lew, Rhett Jeppson, Jeh Charles Johnson and R. Gil Kerlikowske. Both suits seek to recover or be paid for detained coin shipments, to compel action for refused coins and to be awarded monetary damages caused by unlawful seizure of coin shipments, as well as attorney fees and costs related to the cases.
While the U.S. Mint and U.S. Attorney’s Office declined to comment and the CBP didn't respond to AMM’s requests, the coin importers have said that they have been in discussions with the government and that coins have been released.
“My client (Adam Youngs, managing member and cofounder of Portland Mint) received a call from his shipping agent to notify him that the coins have been released by U.S. Customs. It is my understanding from speaking with the U.S. Attorney (Gregory B. David) that a similar release will occur with respect to Kent Bramlett’s coins if it hasn’t already,” Coughlin said. “The U.S. Attorney is telling me that U.S. Customs is going to release all the coins of my clients’ that have been detained, and I believe that they intend to make the payment that was withheld (from) melted coin shipments.”
Coughlin has reason to believe that Bramlett will be paid for the $306,003 coin shipment that the U.S Mint had accepted and melted, but for which it withheld payment in November 2014. Another shipment valued at $88,183 was detained in May 2015. Those coins will be released by Customs, but they will not be accepted by the Mint while the program is suspended.
“We’re very happy to hear that the coins will be released from Customs and we think it’s another example of the government’s acknowledgment that my client’s coins are not counterfeit,” Coughlin said, noting that the litigation will continue until his clients have been compensated for the seizure and the sudden suspension of the program.
“This case represents both an unlawful seizure of property and a complete denial of due process with respect to the seizure and the decision to suspend the program on alleged counterfeit coins,” he said, adding that he has renewed optimism for his clients but is refraining from celebrating as the buyback program remains on hold.
The lawsuits by the trio come on the heels of mirror litigation filed by Wealthy Max last October, seeking to recover or be paid for $3.25-million worth of coins delivered to the U.S Mint under the mutilated coin redemption program between 2014 and 2015.
In these three ongoing cases against the U.S. government, all parties allege that the government confiscated the shipments in violation of the Civil Asset Forfeiture Reform Act, as well as the Fourth and Fifth Amendments of the U.S. Constitution.
Robert E. Connolly, a partner at Washington-based GeyerGorey LLP and the attorney representing Wealthy Max, said he couldn’t comment on the status of the company's coins with the government.
Tip of the iceberg
Meanwhile, attorneys representing America Naha and Wealthy Max are currently working with the government to finalize settlement agreements following the dismissal of their case July 21.
“We’re in the process of finalizing written settlement agreements with the government,” Lee Vartan, America Naha’s attorney and a partner at New York-based law firm Holland & Knight LLP, told AMM.
“We are gratified that all the government stakeholders seem to recognize now that there never were any counterfeit coins and that the Mint's mutilated coins program prior to the suspension was competently, capably and professionally administered,” according to Bradford L. Geyer, a partner at GeyerGorey LLP and counsel for Wealthy Max.
Still, the nearing resolution of the government's litigation is only the tip of the iceberg, as Wealthy Max, Portland Mint, Shahar and Bramlett continue to forge ahead with their lawsuits against the U.S. government.