Romano brothers coin scam

I'm sure many of you know about this, but I was watching an American Greed about it.

http://www.cnbc.com/id/

In a nutshell, these guys were telemarketing and cold calling folks and selling them way overgraded coins. When eventually convicted, one of the brothers from prison hired a hit man to "behead the judge and prosecutor and keep their heads in formaldehyde." Nice guys.

Anyway, here is the question I don't understand. The brothers were selling overgraded coins, but not counterfeit or anything like that. One fellow who bought "$140,000" of coins had them appraised at about $20,000, which makes sense (think buying a nice MS66 whatever that actually is a cleaned piece of junk. 1/7 of value seems about right.) So how is that different from any other basement slabber? Or is all basement slabbing illegal? I am confused by the whole thing.

 

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its not the slabbing thats illegal, its selling them and representing them as something that they are not that is fraud..

 

OK, but where is the distinction between me starting up GGS (Geoff's Grading Service) and trying to sell cleaned junk at MS66 prices since is GGS MS66 and what these guys did?

 

The judgement in the PCA/PCI case was filed this week. Same thing, with the twist being secret ownership of PCI (and sole grader) by the owner of PCA.

 

I watched the show many moons ago, but as I recall, the media spin focused on the predatory nature of their sales model, less so on the over-graded coins. I think they peddles a lot of Franklin halves.

 

What they did was sell rolls of Franklin halves at not complete ripoff prices, then when the people were hooked they would start selling more and more expensive coins that were way overgraded. They also would lie about having an investor that was going to buy their whole collection at a great price, if they just bought one more roll...then another...

I still don't see what makes them different than the other basement slabbers. Maybe the lying about the investor? For the record they were charged with mail fraud, which clears up just about nothing.

 

You are correct, that is what I was asking.

So what you are saying is probably largely the scale of the operation, along with other circumstances is why they were prosecuted? This makes sense.

Does that imply that any basement slabber who is selling "GGS MS66" is actually committing fraud, according to the law?

 

Anyone can grade coins anyway he wishes as long as he doesn't claim the coins are anything other than what they actually are...in your example, coins graded by GGS as MS66. Allowing a buyer to make a buying decision based on that particular claim is not illegal--nor should it be. Although lying by omission may be unethical, morality and legality are two totally separate issues.

On the other hand, if he claims, for example, that a GGS MS66 is valued in the general market as the same as a PCGS MS 66 that would be fraud. (unless, of course, GGS suddenly gains the same level of trust that PCGS has developed over the years)

 

That is what I thought. I know they did tell the guy who had bought $140,000 of coins from them that his portfolio was around $1.4 mil so maybe that's the type of thing that cooked them.

 

Goes to show that people who are buying coins really need to know how to grade. Taking the easy way out and trusting what the buyer says is an easy way to get burned. I generally agree on the grades my dealer has on his coins, but I have passed on some that I believed he over graded. It's one thing when you are buying a 1860-o half dime that is graded AU-55, and you believe should really grade AU-53, and someone selling a vastly overgraded common Morgan such as a 21, as MS-66, when in fact it is a polished VF. If you don't know how to grade the coin, it's best not to buy untill you can grade the series. Good example of how someone who knows a series well, can laugh to the bank while a casual investor buying a number on plastic will have his a** handed to him when it's time to sell.

 

I think it's like all investments. It's illegal to guarantee that it will go up a certain amount of value. That's where I think the criminal problem is. I could be wrong.

 

The biggest difference is that you'd not be "cold calling" folks and pushing your coins off as high grade, investment quality coins.

 

All true.

 

To me, it all goes back to a differentiation that should be made. If I walk into a coin store or coin show, the assumption should be made I am a "coin collector" and should be responsible for knowing how to grade, market prices, etc. In that instance, the dealer should have much less responsibility for my purchase decision. However, anyone cold calling should be held to a much higher degree of professionalism, in that they are the acknowledged experts and we can assume the cold called clients lack any coin specific knowledge.

If we made such a differentiation, then dealers who sell cleaned AU morgans as basement slabbed MS66's to cold call victims would be committing a felony of theft. That same coin, sold to a collector walking into a shop would be fine since we would presume the collector should know better.

This is the best solution I can think of, to protect "little old ladies" from these thieving fraudsters everyone in the hobby hate, while leaving the rest of the hobby alone. It makes sense, and is implementable, and will solve a lot of problems, which are all reasons I am sure it will never be implemented by our politicians.

 

I believe all of these protections and theoretical rules of engagement are dumbing down society, and leading people to believe that some mythical "nanny government" idea should protect them from themselves.

I believe in recourse and justice. If someone intentionally defrauds (fake slabs, etc) then you should seek justice. But I also believe in personal responsibility and due diligence.

When you have every opportunity to review, grade, test and validate a coin - there really should be no excuse. If it's too good to be true, it probably is. So many of the bad deals start out with excessive greed on one - or both sides. Someone thinking they're getting a steal, and the other knowing he's going to cash in.

If the same guy bought "junk cull coins" for melt price and ended up with a giant lot of 1889-CC's - would he be required to give them back to the poor ignorant seller? Would you?

I dunno, maybe I'm just old fashioned. Where men were men, and criminals were dealt with permanently.

 

I don’t know if I’d completely agree with this. Sure, many coin grades could be argued one grade, one way or the other, but over grading by many grades is not acceptable under any circumstance and may be illegal. To accept such would be to condone taking advantage of the newbee that walks into the shop.

 

But that is the slippery slope we cannot go down. We all agree, I would think, that those sleezy cold calling shysters give our beloved hobby a major black eye. So, if we can get rid of them we would all benefit. However, if we start saying over graded coins is theft, then we get into territory where the arguments are endless. Heck, there are a ton of PCGS coins I would say are overgraded, and almost all NGC ancients are the wrong grade. So, due to this extending the argument to collectors would simply lead to endless arguments and only serve to enrich the lawyers.

So, I hear what you are saying in spirit, but in practice believe it's not practical.

 

All I get is Bruce Jenners' goofy face. In the eighties the guy was on a box of Wheaties. In the here and now he could be on a box of Fruit Loops.......