Hall of Shame

1799 $1 Purchased as Lot 1134 from the June 15, 1993 Stacks's Auction Sale for $25,300. and described as "Gem Brilliant Uncirculated" According to the Grading Chart in the Catalog Gem Brilliant Circulated should grade a minimum of MS-65 NGC and subsequently PCGS graded this coin MS-62

1848 $1 Purchased as Lot 892 from the May 5-6 1993 Stack's Auction Sale for $5060. and described as "Brilliant Uncirculated with Claims to Choice" According to the Grading Chart in the Catalog Brilliant Uncirculated should grade a minimum of MS-60 Choice Brilliant Uncirculated should grade an minimum of MS-63 NGC and subsequently PCGS graded this coin AU-58!

In the early 90’s I decided to try my hand at coin dealing. Regrettably I had some very bad dealings with the numismatic auction firm of Stack’s. I purchased two coins that were badly overgraded in back to back auctions and were worth only a fraction of what I paid. This experience was very shattering and causes me much distress and anguish to this day.

The fatal error on my part was to examine each coin prior to bidding in each sale. Having examined each coin, when I subsequently placed bids, I was legally agreeing with actual grades in spite of these grades being substantially lower than the grades represented in the catalogues. The first issue I have is the real value of the coins. At the time, the 1799 $1 was worth $10,000. I paid $25,300. for it. Some years later I sold this coin for $10,000. In January of 1994, I paid $1045. for an 1848 $1 Graded AU-58 in a Bowers and Merena auction. This is the same grade that the 1848 $1 I purchased from Stack’s for $5060. was.

The day after the June 15 auction, I received the 1848 $1 that I purchased the previous month and submitted to NGC for grading. The coin came back as AU-58. It was not even uncirculated! I knew I had a serious problem. Upon receipt of the 1799 $1 from Stack’s, I submitted it to NGC for express service. On July 1, I received the coin back from NGC. It was graded MS-62. It, like the 1848 $1 was worth only a fraction of what I paid this allegedly reputable firm. I immediately sent the coin back to Stack’s by registered mail and suggested it be returned to the consignor or re offered with an accurate description. They sent me a letter from Lawrence Stack dated July 7, 1993 refusing to rescind the sale. I filed a complaint with Coin World. Coin World’s letter of August 30, 1993 framed this a “dispute over the value of a coin…”. They refused to take action. I had also contacted the Professional Numismatists Guild. Although the Terms of Sale from Stack’s required arbitration either through the American Arbitration Association or the Professional Numismatists Guild, I nevertheless felt that the Professional Numismatists Guild should have intervened given that the issue was serious overgrading by its member.

Indeed, on an almost weekly basis the PNG took out an ad in Coin World entitled “Look For The PNG Symbol” Next to the title was the logo with the motto “Knowledge Integrity Responsibility” The ad goes on to state:

“Each and every Professional Numismatists Guild member pledges to grade coins carefully and accurately. If for any reason you are not completely satisfied with any coin purchased from a PNG member, it can be returned within the specified time for a full refund without question or explanation. Further, should any dispute arise or should you find any grading to be unfair, your report of this to the Executive Director will bring immediate action. Each and every PNG member not only must have years of full-time professional experience and substantial financial assets to qualify for membership, he must subscribe to a strict Code of Ethics. If a dealer cannot meet the requirements, they are denied membership in the Guild. If a member cannot continue to fulfill the requirements, stringent and swift measures are taken. PNG members have long prided themselves on providing properly and accurately graded coins to their customers. It is simply good business for them to continue to do so.

PROFESSIONALISM IS THE BOTTOM LINE(sm)”

I feel that the Professional Numismatists Guild should have intervened. They could have launched an investigation to determine whether the coins were indeed overgraded. The coins could have been submitted to NGC and or PCGS. We could have agreed that after a certain number of tries to either or both major grading services, if the coins ultimately made the represented grades, the dispute would be resolved, if not, rescission of the sale would occur.

The Professional Numismatists Guild refused to investigate whether the coins were overgraded. I admit, that Stack’s terms of sale essentially said that their merchandise was sold as is and that persons who examined it prior to placing a bid could not return it without their permission. Nevertheless, Harvey and Lawrence Stack were members of the Professional Numismatists Guild and presumably, required to agree to subscribe to the PNG’s Code of Ethics. Indeed, according literature from the PNG, Harvey Stack was the president of the Professional Numismatists Guild from 1989-91. According the terms of the auctions, Stack’s had the right to demand arbitration. They made this demand. Contrary to the PNGs ad promising immediate action by the Executive Director and that PNG members were required to grade coins accurately, they cited my agreement with Stack’s to go to arbitration as a reason to not take action,

On December 10, 1993, the arbitration proceedings commenced in New York City. Just prior to the proceedings, Stack’s offered to settle the dispute by auctioning the 1799 $1 in an upcoming sale with the same description as the original sale, i.e. Gem Brilliant Uncirculated. No mention was made of the 1848 $1 that I purchased for $5060. and was worth approximately $1000. Of course Stack’s would get their full commission and would have tremendous control over how the coin was presented,

The arbitration proceedings also severely limited how much discovery would be allowed. I wanted very much to find out who the consignors were and whether Stack’s had an ownership interest in either of these coins. I was denied this opportunity.

Regrettably, the dispute was decided in favor of Stack’s, although they were not awarded their attorney’s fees. The arbitrator was interested in whether I had examined the coins prior to bidding. I admitted that I did, She was not concerned about the true grades or diminished values of the coins. As a matter of law, I lost. Presumably, had I not examined the coins, the sales may well have been rescinded.

I feel it is unconscionable that a supposedly reputable firm like Stack’s resorts to such blatant misrepresentations about the grades of the coins and implicitly, the value of the merchandise. When confronted with these misrepresentations, Stack’s refused to rescind the sales of its mis-described merchandise. To describe a 1799 Dollar as “Gem Brilliant Uncirculated…An Incredible Strike, fully detailed and well centered joining with pristine glowing silver surfaces to make this a Dollar nearly as perfect as when it was removed from the coining press of the first U.S. Mint…a true aristocrat among early Silver Dollars.”, having it grade as MS-62 by NGC and refuse to rescind the sale is an outrage.

To have purchased the 1848 $1 in the sale just prior to the June 1993 sale and found it to be overgraded and worth a fraction of what I’d paid speaks volumes about the business practices of this firm. Two entities that should have intervened but didn’t were Coin World, published by Amos Press, and the Professional Numismatists Guild. While as a matter of law, they may not have been required to intervene, morally and ethically they should have. I must embrace the motto of my alma mater, the University of Pennsylvania. “Laws Without Morals are Bad.”

Since 1993, Stack’s has been able to advertise in Coin World without consequences. Harvey and Lawrence Stack have continued to be members of the Professional Numismatists Guild, apparently without consequences. If you look at their auctions on their website, it is not unusual for many and oftentimes most of the better coins to be offered “raw” i.e. without the third party grading that is standard within the coin industry. If you look at their competitors auctions, the majority of the better coins offered are third party graded, usually by NGC and PCGS.

In 1997, I filed a lawsuit against the Professional Numismatists Guild. Initially, I acted as my own attorney. About a year later, I retained an attorney to take over the case as I am not a lawyer. In March of 1998, I was deposed by an attorney for the PNG. During the deposition, my attorney was nodding off to sleep. He was in bad health and apparently suffering from narcolepsy. Some time later I learned that a mediation hearing had been scheduled for sometime in 1998. My attorney failed to inform me of this. Since we did not show up for the scheduled proceeding, the case was dismissed. By the time I learned of this, the case could not be re-opened and the one year statute of limitations for malpractice against my attorney had expired. I was screwed, Although the case was dismissed, there was no finding of fact. Who knows what might have been decided.

In 1994 I submitted both of the overgraded coins to PCGS. They assigned the same grades. In 1995, I removed the 1799 $1 from the PCGS holder and sent it to a reputable auction firm and requested they grade it as MS-64. They returned it and said they could only grade it as MS-62.

I subsequently sold the 1799 $1 for $10,000. In today’s white hot coin market the coin would probably be worth close to the $25,000. I paid for it. If I had received a Gem Brilliant Uncirculated 1799 $1 as represented by Stack’s it would probably be worth $125,000. to $150,000. I still have the 1848 $1. It is still worth around $1000., maybe a little more or a little less.

I recently saw an ad in the May 29, 2006 Coin World on page 17 taken out by the PNG. It is entitled “Have you met Aequitas?” The ad depicts an ancient coin with the caption “Goddess of Fair Trade and Honest Merchants” It goes on to state:

“Ancient Romans understood that a medium of exchange serves not only as a society’s monetary unit, but as an embodiment of its citizens’ values. That’s why the image of Aequitas shone prominently on Ancient Roman coins holding scales and a cornucopia representing justice and abundance.

Like Aquitas, the member dealers of the Professional Numismatists Guild (PNG) exemplify the idea that in business, you deserve to be treated fairly in all your dealings. A PNG member dealer is a reputable and experienced rare coin dealer guided by the highest ethical standards…”

When I see this organization using terms like “reputable”, “highest ethical standards” and their logo with the motto “Knowledge Integrity Responsibility” I just want to retch.