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Court orders return of seized $20 gold pieces

A federal appeals court tossed out a jury verdict and a U.S. District court judgment that confiscated 10 rare 1933 $20 gold pieces from decendants of Israel Switt, a Philadelphia jeweler and coin dealer who is believed to have acquired them shortly after they left the U.S. Mint under questionable circumstances.

Ten 1933 $20 gold pieces should go back to the descendants of Philadelphia jeweler Israel Switt, an appeals court ruled.

Ten 1933 $20 gold pieces should go back to the descendants of Philadelphia jeweler Israel Switt, an appeals court ruled.

Questionable or not, on April 17, the U.S. Court of Appeals for the Third Circuit voted 2-1 to overturn a July 2011 jury verdict and a corresponding judgment entered by trial judge Legrome Davis of Philadelphia.

Judge Davis had found that the hoard of 10 rare 1933 double eagle gold coins had been stored in a bank safety deposit box since the 1930s, but were rightfully owned by the Mint.

The judge said at the time that the only way that the Mint or Treasury could regain possession was if they if they won a forfeiture hearing, made a deal with the Mint, or won a courtroom battle on narrow, but specific legal principals. The appellate court said the Mint’s failure to hold a forfeiture hearing was a costly mistake.

The 2-to-1 vote, which interprets federal law, and technically sends the case back to Judge Legrome to implement the panel’s instructions. A further appeal to the U.S. Supreme Court by the Treasury is possible, but not only is the result uncertain, so is the question of whether the Supreme Court will entertain such question. It would take four of nine justices to vote affirmatively to hear the claim. It is not unusual to deny the hearing without explanation.

Underlying facts are largely in agreement according to a joint appendix filed with the circuit court. The Mint made around 500,000 double eagle coins in 1933, none of which were placed in circulation. When President Franklin D. Roosevelt issued an executive order to nationalize gold, including coinage, the Mint sent its supply to the melting cauldrons.

Between 1934 and Dec. 31, 1974, when private gold ownership resumed with congressional approval, the Mint brought a number of legal proceedings against private collectors, all seeking return of 1933 double eagles. In the chain of title of each of them lay the fingerprints of Israel Switt.

Among famous collectors, dealers and collections that had 1933 double eagles seized were J.F. Bell (Stack’s, 1944), Col. Flannagan (Stack’s, 1943), and James A. Stack (1945). Louis Eliasberg simply mailed his specimen back to the Mint. King Farouk of Egypt bought his from B. Max Mehl (1944) had one in his collection, and after the 1952 coup removing him from power, the U.S. government tried to retrieve it. Others seized included examples from F.C.C. Boyd, James MacAllister, Ira Reed, Charles Williams, and T. James Clarke, among others.

Records later determined that Mint Director Nellie Tayloe Ross signed an export license for Farouk’s coin; after the U.S. Mint litigated, it was sold for the benefit of the Mint and dealer Stephen Fenton in New York for $7.59 million in July 2002. That event precipitated the Langbord family’s decision to take a hoard of 10 of the 1933s and try to legalize them. The mathematics of it suggest a sale could be worth in the tens of millions of dollars.

When their attorney Barry H. Berke sent the coins to the Mint in 2005 for authentication, he most likely intended to take the authentication and then use it to sue the Mint in a declaratory judgment action. That meant a long battle trying to prove that his clients had a right to own the coins, which were authentic.

Instead, the Mint authenticated the coin and then did nothing – in particular, the Third Circuit Court of Appeals said, it failed to follow the requisite procedure that is required before the government can confiscate private property. It said the Mint’s actions were unconstitutional, an unusually harsh judgment.

The government failed to follow established procedures mandated by the Civil Asset Forfeiture Reform Act of 2000, the circuit court said. “CAFRA’s procedure, which requires it to file a complaint for judicial forfeiture within 90 days of the filing of a seized asset claim. Accordingly, we will reverse... and remand” and “instruct [the District Court] to grant ... relief required by this Opinion.”

Recognizing that “a number of 1933 double eagles left the Mint; some were unlawfully smuggled out and at least two left the Mint lawfully,” the Third Circuit, which is just below the Supreme Court in terms of authority, held that “a seized asset claim starts the process whereby the government must either institute a judicial civil forfeiture proceeding or return the seized property.”

The Mint and the Treasury Department took the position that “[t]here is simply no basis for the government to initiate forfeiture proceedings on property to which the United States holds title,” a view decisively rejected by the appellate court.

“This is what CAFRA envisions: the government cannot unilaterally ignore a seized asset claim. Instead, the government must either return the seized property, or file a complaint in court to seek forfeiture of the seized property within 90 days of receipt of the seized asset claim.”

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The third circuit called the government’s views baffling, and in remanding it to the district court, is merely giving the job of day-to-day interpretation to the trial court, which routinely handles such things.

The court’s final paragraph in a 23- page opinion sets forth the disposition of the case:

“At the insistence of the Mint and against the wisdom of the Secret Service and multiple other agencies, the Government opted to ignore CAFRA. Now, the Langbords are entitled to the return of the double eagles.”

Unusually, the court also “vacate[d] all orders at issue on appeal that postdate the July 29, 2009, order, including the jury verdict and the District Court’s order entering judgment. We will remand for the District Court to order the Government to return the double eagles to the Langbords.”

This article was originally printed in Numismatic News.
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