• seperator

Court says no to depositions

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Litigation between the government and the Langbord family over 10 1933 double eagles continues in Philadelphia in United States District Court.
The latest skirmish was an attempt to depose a number of former government officials on the issue of what they were thinking  at the time that they agreed to allow the King Farouk specimen of the 1933 $20 to be sold at public auction.

In a 2002 sale, the Farouk 1933 double eagle was sold by Sotheby?s and Stack?s for $7.59 million. No doubt this was a motivating factor in Joan Langbord?s decision to try and legalize 1933 $20s that were found in a bank?s safety deposit box thanks to the decision made long ago by Israel Switt, a jeweler and sometimes coin dealer in Philadelphia, who was Langbord?s father.

1933court1.jpgSwitt?s metaphorical fingerprints are on all of the known 1933 double eagles that previously circulated and were seized by the government. This includes the Barnard specimen seized in 1947; J.F.  Bell?s coin offered by Stack?s in 1944, the Flanigan specimen of 1943, the James A. Stack specimen seized in 1951 and others.

The suit alleges that Mrs. Langbord, now 76, the daughter of Switt (who himself had died in 1985), discovered the coins in a safety deposit box that had belonged to her parents. Langbord, acting through her lawyer, voluntarily notified the Mint of the extraordinary discovery of the 10 pieces and asked that they be authenticated.

Mint officials took possession and then spent about nine months resolving jurisdictional issues with the Secret Service and examining the coins before concluding that they were genuine ? and then claimed that since they were always government property, they had no intention of returning them to the family.

1933court.jpgClaiming that the government stole the 10 uncirculated pieces from them, Switt?s heirs filed suit Dec. 5, 2006, in U.S. District Court for the Eastern District of Pennsylvania, demanding their return or, in the alternative, unspecified damages.

Handling the lawsuit is Barry Berke, whose Kramer, Levin law firm in New York City also successfully represented dealer Stephen Fenton in an epic six-year battle with the Feds over ownership of the Farouk coin.

Like a case of deja vu ? some would say a bad ?penny? ? the cast of characters that litigated the other 1933 double eagle case over a period of six years is back again. Leading the seizure charge is the U.S. Mint general counsel Daniel Shaver; representing the Langbord family is Berke.

When the coins went in to the U.S. Mint for authentication with a lawyer?s letter asking for assistance, it took Dr. George Hunter, the Mint?s technological guru, months to examine them, but on Aug. 11, 2005, he reached his conclusion and the Mint reached theirs: the coins were genuine, but would not be returned. The Mint claim: that they are illegal to own.

1933court4.jpgThe Mint announced the hoard, and the seizure on its Web site, where only a short time before they had trumpeted how the 1933 $20 was a unique coin that they ?legalized? in time to sell through a Sotheby-Stack?s auction sale into the mega-millions, fame, glory and a record price for a rare coin.
A series of legal maneuvers transpired in the coming months, as the Mint and the Langbord family jockeyed for position in the court of public opinion, which may weigh heavily on other determinations.

Presently, the coins are in Fort Knox, Ky., where they are in the secure gold depository facility along with the remnants of millions of gold coins struck prior to 1933, and then melted after a presidential order by FDR that essentially recalled all but numismatic pieces, then termed ?rare and unusual? coins.

With the coins in custody, the Langbord family?s remedy was either to acquiesce or to sue the government. Berke claims his clients did the right thing in notifying the government of the hoard and is equally adamant that they are entitled to keep the coins. Hence the lawsuit.

Actually, there could have been two lawsuits. The government, which seized the coins, could have sought a declaratory judgment to justify its actions. They?ve done that before ? several times, in fact ? ironically involving the same described 1933 $20 coins. Berke?s legal papers make that point.

 All of the prior seized coins were acquired by the government and litigated on a legal theory of replevin. The government had the coin, which it seized from the collector, who claimed he was an innocent purchaser for value. The Court held that Uncle Sam could be Uncle Scrooge and keep the coin without compensating Barnard. (U.S. v Barnard, W.D. TN 1947). Berke cited this case, too.

In the 1950s, James A. Stack, a well-known collector who is completely unrelated to the New York rare coin dealer firm, also was involved in a governmental seizure. He sued, in state court and federal court in New York, and lost (Stack v Strang, 2d Cir. 1951; Sup.  Ct. NY 1953).  Berke didn?t cite this example, perhaps because Stack turned the coin in voluntarily, but same result from the suit.

Berke?s clients brought several different counts, including a federal tort claim for the value of the goods seized. That sets off numerous battles, not the least of which is how much the 1933 Saint is worth.

Since the case began in December 2006 the parties have been involved in procedural dogfights that ultimately will determine how the trial is fought. The latest was a motion made several months ago and decided March 17, 2008, that involved in the attempt Langbords to learn why the government let one go and decided to take a stand against 10. 

The court decision said that they seek ?To preclude plaintiffs from inquiring into the government?s pre-decisional deliberations during eight forthcoming depositions that plaintiffs have scheduled with various current and former government officials.?

Very specifically, the Mint ?seek[s] to preclude plaintiffs from asking the deponents about the process by which the government reached its decision not to commence a forfeiture action against 10 1933 double eagle coins, which were purportedly discovered by plaintiffs but are currently in the government?s possession.?

Questioning of the eight individuals is poised to take on an ugly tone as the underlying basis of the Civil Asset Forfeiture Reform Act (CAFRA) is litigated in novel fashion. Under CAFRA, no later than 90 days after a person files a claim for property allegedly seized in a nonjudicial civil forfeiture  ? as plaintiffs did on Sept. 9, 2005 ? the government must either file a complaint for forfeiture or return the property pending the filing of a complaint.

At the heart of Berke?s case is his belief the Treasury Department and others simply forgot to proceed as the statute requires and hence their rights to use and possession should be denied.

They therefore contend, the Court  found, ?that the internal deliberations leading up to the government?s decision not to commence a forfeiture action are irrelevant to the issues in this case, and that plaintiffs should not be permitted to pierce the veil of governmental deliberative process privilege?.

Here, the government isn?t saying that there wasn?t a deliberative process ? it admits there was.  Instead, they argue procedural nicety of the privilege against producing documents designed to reveal government secrets that should be left unsaid, policy makers said.

That doesn?t end the argument, however. In some instances, the government is required to provide the internal deliberations that led to the conclusion ? even though highly detrimental to the litigation.

What a court has to do in this instance is balance ?the competing interests of the parties, a court typically considers at least five factors: 1) relevance of the evidence; 2) availability of other evidence; 3) ?seriousness? of the litigation; 4) the government?s role in the litigation; and 5) the possibility of ?future timidity? by government employees who will be forced to recognize that their secrets are violable.

For now, the depositions go on but the Langbord family can?t depose the decision-making process itself. Obviously, they have the right to ask other questions which may focus on the Farouk transaction or on historic incidents ? when the focus may change to reflect the amount of work done on other seizures, as well as what went into the Langbord seizure and action.

More than 40 separate motions and responses have been filed by one side, or the other since litigation began. No doubt there?s a lot to still discover and some pondering time to reflect on the possibility of legalization of 10 more 1933 $20 gold pieces.

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