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Judge rules in Langbord

In round one of the David vs. Goliath litigation classic, Langbord family vs. Uncle Sam, over the rights associated with 10 1933 double eagles found in what the court termed a “family” safe deposit box, the United States of America came up the decided loser in the results of cross-motions for summary judgment decided July 28 by U.S. District Court Judge Legrome D. Davis.

The U.S. government improperly seized the double eagles and must win a forfeiture case to keep them, Davis ruled.

The collection could be worth $80 million or more. The family had previously asked for the coins’ return or a settlement of up to $40 million.

Joan Langbord, the daughter of former Philadelphia jeweler’s row part-time coin dealer Israel Switt, discovered the 10 numismatic rarities several years ago, more than a decade after her father died. As Allison Frankel wrote in her book Double Eagle (2006), every known specimen of the 1933 $20 gold piece has a pedigree that eventually runs back to Izzy Switt.

In all, the Mint seized at least nine specimens of the 1933 $20 – making the only “legal” coins in the government’s view the two specimens held in the Smithsonian Institution national coin collection in Washington, where they were on display, and the King Farouk specimen, which the Mint licensed for export in 1943.

What makes the 2009 litigation story so remarkable is that James A. Stack, a well-known collector, litigated the seizure in federal and state court in New York in the early 1950s; L.G. Barnard, a Tennessee banker, lost his fight in U.S. District Court in 1947. The Farouk specimen made the news when dealer Jay Parrino attempted to buy it from British dealer Stephen Fenton, only to have an FBI sting grab the coin.

Parallel tracks were then pursued – civil forfeiture and a criminal complaint. The government eventually withdrew criminal charges and reached a compromise to sell at auction the King Farouk specimen of the 1933 $20 – and split the proceeds between the government and Fenton. A whopping $7.2 million was achieved in the 2002 New York auction sale at Sotheby’s (with a catalog jointly done by Stack’s and the vendor) to an anonymous buyer.

Flash forward to August 2004, when the Langbord family sent a cool 10 double eagles, all dated 1933, to the U.S. Mint for authentication. The Mint laboratories took their time in authenticating them as genuine, and in an astonishing move declared that they didn’t have to return them because they were government property.

The government argues that none of the coins were removed legally from the Mint when President Franklin D. Roosevelt abandoned the gold standard in 1933. The stockpiled double eagles minted that year and waiting to go into circulation were instead melted down, although a few apparently survived.

Langbord and her attorney, Barry Berke, took the position that the government had to initiate forfeiture proceedings in order to not return the coins to the persons seeking authentication. As it repeatedly has, the Mint stayed on message that the coin could never have lawfully left the Mint.

Sounds like a winning argument for the government – one that had worked before in several different courts, particularly the 1947 Barnard case. In any event, both sides sought to have the judge decide summarily, without need of a trial.

But it really annoyed Judge Davis, who thought it more important to look to the law of the Commonwealth of Pennsylvania, whose approach to the topic of unexplained ownership can be summarized by some version of possession being nine-tenths of the law. In a 29-page, 9,000 word opinion, he demolished the government’s theory.

The “Government’s possession became a seizure once it refused to comply with Plaintiffs’ request to return the coins,” Davis wrote, adding that a “person’s ‘right against unreasonable seizures is not vitiated’ merely because the Government believes that it is the rightful owner of the property in question.”

The nub of the government’s case, Davis wrote, indeed the legal philosophy that it has advocated for more than 60 years, is that “In asserting the reasonableness of its actions, the Government relies heavily on the 1947 decision in United States v. Barnard, 72 F. Supp. 531 (D. Tenn. 1947), which found that a 1933 Double Eagle had not left the mint through legal means.”

They claimed it then, they claim it now. But, Davis wrote, the court in Barnard was not “authorization for future warrantless seizures of 1933 double eagles. Furthermore, the Government in Barnard simply ruling on the evidence that it had before it at the time. The decision did not serve as a blanket authorization for future warrantless seizures of 1933 double eagles.”

His conclusion: that the Langbord family’s “possession of the coins” is the keystone … although it may turn out that the original family member who obtained the coins never had good title.” Even then, he found, “in light of Pennsylvania law ‘which attaches a presumption of entitlement to one in possession’”.

So in granting summary judgment to the Langbord family, the Court found that they are entitled to a hearing on the deprivation of their property – the 1933 double eagle.

Kramer, Levin of New York, the law firm where Berke is a partner, spoke by press release July 30 of Langbord’s “landmark victory against the United States government,” on the claims that “the United States Mint violated [the family’s] Fourth and Fifth Amendment rights by confiscating ten 1933 double eagle gold coins without due process of law.”

Judge Davis ordered the government to promptly file a judicial forfeiture proceeding, which it had refused to do when it decided to confiscate the Coins. “In that proceeding the government will bear the burden of proving how the Coins left the Mint over 75 years ago,” Kramer, Levin said. That changes the dynamics of the litigation.

Changing its tenor to making the government prove how the coins left the Mint is a significant procedural change; documents on file with the court clerk, and depositions taken, suggest that he Mint has no idea at all how the coins made it to the street.They are going to have to acknowledge this soon since the court directed direct the Government to initiate a judicial forfeiture proceeding before Sept. 28.
It’s fair to expect that this matter will be in the courts for a long time.

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