PCGS vs Coin Doctors Lawsuit

Hello

I spent some time yesterday Googling and researching the 2010 PCGS (CU) lawsuit against various alleged coin doctors. Couldnt really find much about a conclusion or any info after about 2014. Was wondering if anyone had any info relating to it. Very curious to see how it all panned out. It looks like it was initially thrown out of federal court or something because coin doctors werent served. Ive read PCGS could have then followed through at state level. Ive read they settled out of court. I read something about coin doctors countersuing. Ive read this was all just for publicity, that they never intended to go to court, and that the timing had something to do with publicizing new coin sniffer technology. Ive read a lot of things. Anybody actually know? I know it was a long time ago but I am more or less just getting back into the hobby and was on "hiatus" around 2010...Seems pretty scary that TPGs could be fooled so easily. Seems crazy they would advertise the fact that they cant tell that the full head of a SLQ has been retooled (or whatever you call it) when this is a specific attribute that will be listed on the slab. How can you send something to them to confirm authenticity after this admission?

Ideally this wouldnt be a thread about how coin doctors are bad and how much you despise them. I am trying to decide whether to send some coins in for grading and I wonder if I am throwing money away going this route. I imagine Ill get a lot of: TPG's arent perfect but you are much safer using them than not. I see the logic in this but would be nice to be a bit more confident...Thanks

 

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They really aren’t easily fooled and it definitely wouldn’t be a waste of money. They didn’t become a dominate force in the market by being incompetent.

As far as going after coin doctors they have been known to do it but their options legally in most cases are really just to get buyers made whole assuming it’s not a counterfeiting situation. For the language in the lawsuit remember that lawsuits are written by lawyers not graders and that things will always be overstated in them expressing their position. Do they get fooled once in a blue moon yes as nothing is perfect but it usually doesn’t take too long for it to be found out and the situation corrected.

 

There is absolutely no evidence they are or ever have been in cahoots with submitter(s). Suggesting that it wouldn't be a surprise implies that there is evidence or common knowledge which none exists. This is how all the false internet rumors about grading that are largely believed only by those with no direct experience with the TPGs gain legitimacy with some.

It would absolutely be surprising if that were the case which it wasn't. You don't risk multi-million dollar international businesses for a couple bucks on a few submissions. They used their extensive knowledge to get a minuscule fraction of coins past them and it worked at the time and PCGS responded.

Implying that it wouldn't be surprising if they had a secret agreement is honestly irresponsible to be telling people that who will read it that don't know any better. You don't sue people that have inside dirt on you.

 

There is such a thing as the "INSIDE JOB." Not that I can believe or reason to believe there is such going on. But people will steal anything.

 

https://www.pacer.gov


@mrjason71, If you go to this website, you can register and browse around and read all sorts of case documents to try to find out what happened. I believe it is free or practically free. The Federal Government makes this website available to the public.

 

Seen it done. Not in these precise circumstances, but I have seen it done plenty. You just make sure there's NOT a level field in terms of resources with which to handle a protracted battle.

 

Printouts/downloads cost and you need to have an account.

 

The really weird thing about this suit was that one of the Coin Doctors was a founding member of PCGS. Silvano DiGenova

 

Yes, @V. Kurt Bellman, you are correct. He will need to register in order to use the site and I believe registering is absolutely free. Nothing invasive as I recall. And if it works as it did years ago when I used it, one can print or download and save a certain amount of free pages each month. @mrjason71 may just want to read and make notes.

 

That's true you can sue someone into submission, in this case though the playing field would have probably been an advantage to the defends giving the nature of grading and their deniability among other things. Most importantly though they would have the information that could destroy that business entirely. Not to mention those guys weren't exactly poor.

Really it was kind of a shot across the bow, almost an unwinnable case for PCGS but it did out some people.

 

If anyone wants to read the actual complaint it's here.

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

 

Thanks so much guys. It's interesting to "re-live" the whole thing via old forums. It seems the general opinion amongst posters at the various coin forums at the time was that of sheer elation. Everyone was initially so psyched to hear the announcement...then there's a ton of speculation about who will win and the various punishments are considered and drooled over. Many believed it was an open and shut case of fraud--that the doctors agreed not to send doctored coins and then did so. All I can think at this point is: If you need me--the submitter--to tell you it hasn't been doctored, what good are you?

Then the thing is dismissed at the federal level and the whole thing is reshaped into "oh, well it's still great...they never intended to follow through with it in the first place...was just a warning shot...This will make the doctors think twice next time..."

So they admit they are unable to tell if a coin has been doctored at the exact time they announce a new technology that can sniff out the fakes, etc. That timing is really suspect. They knew about the doctoring for years it seems and said nothing. Everyone's first thought upon hearing of such a lawsuit had to be--"What? This stuff can get by you?" So they counter that thought with "Oh well there's a new technology that can do the job so no big deal..." That seems really shady, no? It's like they only went public because they had this new sniffer.

 

And who's to say that anything in a pre-sniffer era slab is not altered/genuine? Really surprised there wasn't greater backlash once they fessed up and said that they are not the authority they claimed to be, that all kinds of techniques were being used that they had no defense against. How does a sniffer detect if hairlines have been lasered btw? Many/most coins have had multiple owners. Who's to say that some innocent person didn't buy a layered or built-up coin somewhere and then had it sent in to be graded. I would think there would be a pretty great likelihood that there's a lot of these floating around. Or you would have to believe that the only ones that were doctored are the ones that these guys sent in to be graded...perhaps they made a ton others they sold as raw that then got submitted by subsequent owners. Just playing Devils advocate a little. I know they are better than nothing but I wonder if there isn't a bit too much a sense of security.

 

Read page '9' in the complaint. Sounds to me like the defendants were out to scam PCGS. They submit a coin for grading, and then 'cash' in on the guarantee, full well knowing that there was something wrong with the piece in the first place.

 

It is only the current numismatic morality which dictates that deliberately altering a coin's appearance is anathema, and accepted variances to that theme exist even so.

A century and a half ago, the discerning collector lacquered his copper so it didn't turn brown, and scrubbed his silver regularly to keep it shiny. Half a century ago, most silver which displayed tarnish was chemically stripped because that was the accepted practice; to this day we carefully discuss when dipping a coin might and might not be appropriate. If you remove the ugly brown color on a Morgan, or the haze on a Proof, and come up with blinding mirrors, you are a hero.

So the question I put forth is not, "Is it wrong now?" The question is, "Was it wrong then?" The answer is, in my opinion, ambivalent at best. Was expert modification of the surfaces of a coin in order to make it more closely and accurately resemble its' condition at the moment it was minted considered reprehensible fifty years ago? Thirty? Or was it relatively widespread practice, considered no worse than maybe a bit "greasy?" And considering that the practice, when the lawsuit was filed, was engaged in by a varied cadre of high-level dealers with long experience, are we to somehow believe that a TPG founded by high-level dealers with long experience did not know about it? PCGS did not sue their customers, they sued their peers.

It's silly to think they were in any way "surprised" by coin doctoring. Just as silly as to think it appeared "suddenly."

It is only the advent of TPG's and the microscopic delineations of the Sheldon Scale which have made doctoring a coin advantageous. Many of us are old enough to remember a time when tiny differences did not make for a fourfold increase in the value of a coin. And even worse, in many cases those massive differences are the result of a very incomplete knowledge of the rarity of a given coin.

It prompts me to ask which is the greater obscenity: carefully restoring a coin to improved appearance - a topic regarding which we share knowledge and procedure on a daily basis, or manipulating grading standard and practice over the course of decades to make more money for the shareholders and gain greater control over the hobby as a whole, such that a coin I can afford in MS63 becomes beyond my means without a second mortgage in MS64, when you could give it either grade at random if I submit it a dozen times?

If doctoring is a problem, it's only because TPG's made it a worthwhile endeavor.

 

And now you know why the lawsuit was filed. It wasn't about doctoring, it was about interrupting PCGS' cash flow.

 

Of course they knew the practices existed but doctoring is like weapons and body armor, the weapon has to be invented before you can make a vest that can withstand it or the vest has to be out before you can figure out how to beat it. With doctoring the method has to come to be before you can fully know how to detect it or figure out what tips someone off before you can try and sneak it past someone. There's always some back and forth for who has the edge and given that technology advanced greatly during the period laid out in the complaint they filed there were new more advanced methods that were appearing.

One of the ones specifically mentioned was lasering surfaces along with other methods that would have likely been greatly advanced during that period which were a clear step up if not several steps up from what would be by comparison more crude methods of the past. They weren't the only ones who missed what has been figured out worked in some instances for a time given that some were submitted by third parties unknowingly.

The claims are clearly laid out in the complaint linked above. There is nothing in it about carefully restoring a coin to improved appearances or even anything that would be considered restoration by most collectors. It certainly wasn't something PCGS took lightly as it did mean a loss of business for them from those submitters and they don't go around suing everyone who misses something or submitts a fake they thought was real here and there. Their filing clearly shows they felt there was a pattern of behavior over an extended period of time that led them to believe it was intentional.

As for your other question, its a hypothetical that just simply doesn't exist. They hold hard lines around huge price jumps in grade which pretty much anyone who submits will tell you. If a 63 is affordable and a 64 is a huge price jump it will not randomly bounce between the two on a dozen submissions. It wouldn't hit the 64 unless it was actually a 64 that was getting penalized for something the times it got a 63 or a 63+. I've said it many times and I'll say it again here, only the internet makes the crack-out upgrade process sound easy or random with big price jumps and anyone who thinks that it is random should give it a shot as it would be eye opening to them. Coins don't simply bounce between between grades with four figure and bigger jumps, the ones that bounce back and forth are the ones that are basically the same value in either grade.

As for the answer to the question the bigger obscenity would be actual coin doctoring (putty, lasering ect) by far.

It didn't start with the formation of the TPGs nor would it stop if they all closed shop. They aren't to blame for the practice and are actually the strongest force in the hobby against it. Far more collectors would fall victim to it if they weren't around. Given the technology of today collecting very likely would be a ghost town as it would be to much of a minefield for most people to want to enter on their own.

 

Here's some fun links:

https://www.pcgs.com/Dealers/Detail.aspx?d=1215&s=FL&rn=33&mn=1&cc=US&log=True

https://www.pcgs.com/Dealers/Detail.aspx?d=2764&zip=95482&rad=100&log=True

https://coinweek.com/us-coins/us-go...ek-silvano-digenova-talks-rare-20-proof-gold/

oh and this one:

https://www.bbb.org/sdoc/business-r...-investments-inc-in-laguna-beach-ca-100081709