Joan Langbord, daughter of Israel Switt, and her two adult sons, heard the verdict in Philadelphia federal courthouse July 20 after the coins had been on the lam for almost 80 years.
Actually, the coins had resided for years in a safe deposit box maintained by a jeweler’s row fixture, I. Switt & Co. Company principal, Izzie Switt, evidently gathered them in a scheme of sorts during the Great Depression, likely paying a substantial premium for them to one or more officials or officers at the Philadelphia Mint, then located at 16th & Spring Garden Streets.
Ironically, today’s federal courthouse is a tall skyscraper on Independence Mall, steps from the Liberty Bell and just across the street from the new Philadelphia Mint, which opened in 1969. Jeweler’s Row is a few blocks away.
Switt was a fixture on Jeweler’s Row, buying scrap gold and buying and selling gold coins, even after President Franklin D. Roosevelt issued executive orders banning the hoarding of gold coin and bullion, prohibiting private gold ownership except among collectors of “rare and unusual coin.”
The Philadelphia Inquirer wrote in 2009 that Switt “had been arrested in 1934 at the Philadelphia train station carrying a suspiciously heavy briefcase. City police officers seized the briefcase and found it filled with old gold coins. Switt was charged with, and eventually convicted of, illegal possession of gold. MacAllister, a more reputable dealer, called Switt ‘a gold coin bootlegger.’”
Several recent books, one by legal beat reporter Alyson Frankel, the other by numismatist David Tripp, each characterize Switt as walking a tight boundary line in the world of the post-1933 almost gold-free world. As events turned out, it is evident that Izzy Switt crossed a line several times.
Gold scrap was seized by the government from Switt on more than one occasion and while Izzie Switt never did get caught with a stockpile of 1933 double eagles, every customer that he had who could afford the 1933 double eagle – most of them dealers – had the ability to obtain one in mint-fresh, uncirculated condition.
When you look at the pedigree list of 1933 $20s, Switt was the ultimate source of about a dozen 1933 double eagles that were either turned into the government voluntarily (Louis Eliasberg mailed his $2,000 example by registered mail to the Treasury Department), or after tortured litigation. (L.G. Barnard lost his case in the 1947 U.S. district court case in the Western District of Tennessee; James A. Stack (no relation to the dealer) lost his in a battle that saw the U.S. contract become separate battles in the 2d Circuit Court of Appeals of the United States. And the Supreme Court of the State of New York for New York County.
The great dealers of their day merchandised the 1933 double eagle; MacAllister sold one or more, so did Kosoff. Other more famous buyers included F.C.C. Boyd and L.G. Barnard, who wanted the coin, not the fame.
In 1947, Barnard’s coin was seized by the government and litigated in U.S. District Court in Tennessee on a theory of replevin, or returning property that the claimant believes he has superior title to. The government had the coin, which it seized from the collector, who claimed he was an innocent purchaser for value.
That Court held that Uncle Sam could be Uncle Scrooge and keep the coin without compensating Barnard. (U.S. v Barnard, W.D. TN 1947).
It sounds like ancient history except that the case was the subject of a pre-trial ruling in 2011 by Judge Legrome Davis of the U.S. District Court for the eastern district of Pennsylvania, that allowed evidence of the Barnard case into evidence to demonstrate that Switt must have been aware that 1933 double eagles were illegal to own and that the government wanted back any that made it out of the Mint.
An article that I wrote in the late 1970s for the Cleveland State Law Review, an academic publication, suggested that the Barnard case might have a different result when private gold ownership restrictions changed. The article was later reprinted In The Numismatist. (In 1974, after 40 years of illegality, domestic private gold ownership was once again permitted).
There may have been something to that theory, for despite the Barnard case and several others, another coin was treated differently; its owner was King Farouk of Egypt, proving once again that coin collecting is the hobby of kings as well as the king of hobbies.
Egypt’s King Farouk had a 1933 double eagle in his collection. Its history also was wrapped around Izzy Switt. Those who knew Farouk knew that he did everything to excess. Fast cars, fast women, a fabulous coin collection, stamp collection, antiquities, palaces and other objects worthy of an Ottoman sultan, of which he was the last. (As late as 2001, his three daughters were still litigating with the Egyptian government over a palace that had been seized a half century earlier).
In 1952, Egypt’s army, led by Col. Abdul Gamal Nasser, overthrew Farouk, formed a provisional government and then seized all of the assets that it could find and ordered that they be sold for the benefit of the people of Egypt. Included in the items seized: about 8,500 coins (comprising 2,798 lots) which were offered for sale as “The Palace Collections of Egypt Catalogue of the Highly Important and Extremely Valuable Collection of Coins and Medals.”
One lot offered a complete set of double eagles, 1850-1933. John Jay Pittman, later a president of the American Numismatic Association, went to Egypt for the sale together with Abe Kosoff, Hans M.F. Schulman, and many others. (Kosoff and Schulman had an unusual credit arrangement, since they had sold Farouk many coins, still unpaid for, that were being auctioned off; Pittman had to pay pure cash).
Pittman reflected years later how astonishing it was to see a complete collection of double eagles with dates and mintmark runs from 1850 to 1933.
According to Polly Pittman, his daughter, the 1933 coin was removed from the lot at Pittman’s suggestion because of the problematic history that was apparent by 1954 – the government had, after all seized nine coins from private collectors and destroyed them. Pittman wanted to buy some of the coins, but not the problems associated with the 1933 $20.
(What many of the Americans did after they bought these larger lots was buy, sell and trade among themselves so that each got some portion of what they wanted in the first place – a task made easier by the removal of the 1933 $20).
The Farouk coin was different from the other coins seized, however. This was a coin whose pedigree had an impact on American-Egyptian international relations and whose export from the United States was documented – though in difficult-to-access documents. Those facts, however. would not come out for another generation, and still remain largely hidden.
The hazards of holding gold were learned by millions of Americans in 1933 when they awoke to find that President Franklin D. Roosevelt had essentially ordered gold nationalized and the Treasury secretary had prohibited private gold ownership of all but “rare and unusual coin.”
By the time that the Gold Reserve Act of 1934 was passed, title to all gold bullion, gold coin and gold notes (including Federal Reserve Notes) was taken from the American people, not to be in their hands again for two generations until 1974. (The effective date was Dec. 31, 1974, though most associate it with the coming of the new year, 1975).
In an undated letter from the secretary of the Treasury to the secretary of State, the Treasury chief represented the coin to be “the only one of its kind in the hands of the general public.”
Evidently, King Farouk’s agents located the coin for him in the 1940s, and he made application for it, through diplomatic channels, to be exported from the United States to his palace collection in Egypt.
This request went to Nellie Tayloe Ross, director of the Mint during the entire Roosevelt and Truman Administrations, a period of some 20 years. Mrs. Ross, the former governor of Wyoming, was an FDR appointee who ran one of the government’s largest facilities. She received the coin along with a request that it be authorized for export as a “rare and unusual” coin.
Coming in wartime, when Egypt was a badly needed ally in North Africa, it was the request of a young king (Farouk was just 23 in 1943) and it was well-known that he pursued all of his collections diligently. This appears to be the reason that an export license for the coin was granted and the coin was authorized for delivery and export.
Eventually, the 1933 double eagle was delivered to Farouk; this coin, in the early 1990s, found its way into the hands of Stephen Fenton who made the offer to sell to Jasper “Jay” Parrino, a well-known Kansas City dealer. They met to consummate the sale in a New York hotel room, the FBI wired it and made arrests and eventually tried to bring a criminal complaint.
Fenton’s counsel, Barry Berke, a partner in the New York law firm of Kramer Levin Naftalis & Frankel, proved this when he made civil discovery demands on the U.S. government in the litigation. (The government had both criminal and civil charges pending against Fenton and they went on for years at great expense to at least one side).
Fenton suspected that the coin was Farouk’s and the information must have been from more than a catalog description, since Sotheby’s 1954 Palace Collection sale. Pursuant to the Freedom of Information Act and Rule 26 of the Federal Rules of Civil Procedure, Fenton’s lawyers were entitled to all of the information that the government had, pro and con on the case – in order to prevent a trial by ambush or surprise.
They demanded documents that had been in dead storage for decades and one of the surprising results is that they found official Treasury Department documents dating back to the tenure of Nellie Tayloe Ross which referred to the 1933 $20 gold piece and an export license issued for Farouk of Egypt.
One can only imagine the diplomatic intrigue that was going on; Farouk was a playboy, but an ally in the struggle too keep the Nazis out of the Middle East. The original export license itself has never been found, Berke confirmed in a Jan. 30, 2001, interview.
But the documentary evidence refers to it and shows that the Treasury Department issued it – Export License No. TGL-11-1709 – thus acknowledging that the government’s position, then, was that the coin could be sold and exported to Farouk.
Earlier, Mrs. Ross, the Mint director, sent the coin to Theodore Belote of the Smithsonian National Collection, to examine it and determine if it was “rare and unusual,” the criteria for permitted ownership. He nodded in the affirmative and Mrs. Ross authorized the issuance of the export license in March 1944.
Dr. Leland Howard, acting director of the Mint, later tried to gloss over this action, but the fact remains that an export license was issued to Farouk, the coin traveled to Egypt, was curated into his collection and eventually was seized by the junta that kicked Farouk out of office in a coup d’etat.
Farouk’s collection was then sold by Sotheby’s on behalf of the provisional government and the U.S. government formally asked for the coin’s return. Sotheby’s withdrew the coin (but not the lot – for the other double eagles, 1850-1932 sold intact). Its fate remained unknown until it surfaced in Fenton’s hands, though rumors of its existence pervaded Europe in the 1970s.
More than 35 years ago, in 1975, I first wrote extensively about the 1933 double eagle, then commenting “there is still hope that the 1933 coin may once again be owned – legally. Congress, when it passed the legislation authorizing private gold ownership at year’s end, specifically included language that would negate all of the legal impediments and restrictions of the 40-year-old prohibition. Quite possibly, this could be interpreted as including the ban on coinage and hence ownership of the rare double eagle.”
What was involved in legalizing private gold ownership anew was Public Law 93-373 which provided: “(b) No provision of any law in effect on the date of enactment of this Act, and no rule, regulation or order in effect on the date subsections (a) and (b) become effective may be construed to prohibit any person from purchasing, holding, selling or otherwise dealing with gold in the United States or abroad.”
If interpreted literally, its meaning is clear: all of the executive orders banning gold are tossed out the window, assuming that they were legally issued in the first place. (Professor Henry Mark Holzer wrote compellingly in the Brooklyn Law Review almost 40 years ago that the ban on gold ownership itself was an illegal action by FDR).
In the early 1970s, I remember asking Hugo Ranta, then assistant general counsel of the Treasury Department, if he believed that the government’s theory behind the 1933 $20 extended to these other coins, and that the government could seize them. He answered in the affirmative.
What I did not know then (but which I learned recently is that Ranta was also involved with some of the early litigation involving the 1933 double eagle – and had an opinion about the legality of some coins that emerged from the Mint in what hindsight can only term a “casual” manner.
The Langbord coins had been in Izzy Switt’s safety deposit box for years. Ten U.S. $20 gold pieces, all dated 1933, lay inside. Joan Langbord hired Berke (who had such success with the Farouk specimen); he sent the coins to the Treasury Department to authenticate them, and once they agreed that the coins were genuine, asked for them back. Uncle Sam kept the coins and made them sue.
A jury trial is different than a trial before the court. For one thing, the jury can ask questions and decides what are the facts, but not the law (which is the province of the judge). For another, playing to a group of men and women is different than having a judge decide the facts and the law.
Evidentiary rulings that the judge made in the Langbord case showed that the judge saw flaws in the claims of both sides. He ruled, for example, that it was fair game to cite to the estate tax forms of Israel Switt, owner of the safe deposit box holding the 10 double eagles and Lord knows what else.
The problem: the estate did not disclose the 1933 double eagles as an asset. Even though no one might have predicted that the Farouk specimen might bring upwards of $7 million (suggesting a multiple of that for 10 of them), the coins were known to have value of (say) a quarter million dollars (times a factor of 10).
Oops. Highly prejudicial to Switt, but probably not so much to his descendants, Judge Davis ruled. (That might be grounds for appeal),But the safety deposit box (which had to have been known, or should have been) wasn’t examined or considered at all in the estate valuation.
Then Judge Davis ruled that the convictions in the 1930s and 1940s of the late Israel Switt for violation of the executive orders prohibiting gold hoarding – or purchasing– were fair game.
Here were some of the other key rulings:
• Judge Davis ruled that Secret Service reports from the 1930s and 1940s, which concluded that the 1933 double eagles had been stolen from the Mint not by Switt, but by a Mint officer, could be admitted in evidence.
Langbord’s attorneys claimed it was hearsay (which technically it is – an out of court statement not personally heard but offered for the truth of what was said); not so said the court, which found an exception to the hearsay rule.
• The government could use copies of documents and didn’t have the originals without having to prove that they were the same as the originals. This is another hearsay issue and to rule otherwise would have seriously handicapped the Mint.
• Rumors from the 1930s were admitted into evidence, despite the fact that they were faceless and could not effectively be denied.
• Government’s request to prevent the Langbords’ expert Roger Burdette from testifying to his former membership in the Citizens Coinage Advisory Committee or circumstances of his resignation was granted in part and denied in part.
• Burdette couldn’t say that he resigned because the government wouldn’t let him testify if he remained a CCAC member.
• The court deems the Barnard (1947 case) and factual findings prima facie authentic under Federal Rule of Evidence 901(b)(8), hereinafter, the “ancient document rule.” The documents themselves and any level of hearsay therein are admissible, even for the truth of the matter, based on ancient document exception. Based on the potential prejudice and jury confusion, these documents are not admissible as stand-alone substantive evidence. But the government may introduce them to show that Israel Switt had notice that the 1933 double eagles did not lawfully leave the Mint and the government’s experts may discuss the documents as bases for their opinions.
The ancient document exception proved to be a key in this case. It provides “Ancient documents or data compilation. Evidence that a document or data compilation, in any form, (A) is in such condition as to create no suspicion concerning its authenticity, (B) was in a place where it, if authentic, would likely be, and (C) has been in existence 20 years or more at the time it is offered.”
In essence, as Robert Boyd wrote in a compelling 1998 essay, the ancient document rule as interpreted by Judge Davis makes the biblical story of the great flood with Noah and the ark admissible into evidence, even as to the truth of what was written in that most ancient of documents, the Bible.
Admitting hearsay portions of these probably is appealable error, but it remains to be seen if the Langbords or Berke will proceed further.
• The court concluded that the proposed exhibits related to the 1934 case involving Israel Switt’s possession of gold in violation of the Gold Reserve Act have a proper evidentiary purpose since they speak directly to motive, knowledge, intent and the absence of mistake or accident and are therefore admissible.
• Numerous exhibits which relate to other thefts from the Mint, are relevant because they make the theft of the 10 1933 double eagles relevant here at least slightly more probable.
There were also some evidentiary rulings adverse to the Mint:
• a 2007 printout from the Mint’s website listing the 1933 double eagle as a circulating coin is admissible as a statement of a party opponent, no matter what the Mint intended by posting the information.
There’s still some fancy motion work to come and maybe even an appeal. But for some, this jury verdict is only the opening salvo of a national battle that now is going into its ninth decade.