ONLINE EXCLUSIVE Kagin exonerated; ANA board advises improved due diligence

The American Numismatic Association board of governors has decided to take no action on Dwight Manley?s ethics complaint against Don Kagin.
Manley had asked the board to determine what level of due diligence was required by the ANA in a potential transaction involving a rare and highly identifiable California Blake & Co. gold ingot that later turned out to be stolen.

The ANA board addressed that question May 29 in an all-day public hearing in Long Beach, Calif. The board?s decision, which advised Kagin to improve his due diligence, was released to the public May 31. The decision can be read at numismaticnews.net.

Christopher Pitet, attorney for Manley, who filed a written complaint with the ANA in March 2007, maintained that the fact Kagin did not talk to either Manley or to Adam Crum was a failure to meet the ANA ethical standards. Both men are the recognized experts in the California gold bar field. Pitet asked the ANA to judge in Manley?s favor and expel Kagin, who is a member of the board of governors, from membership.

Armen Vartian, representing Kagin, said that the absence of the critical piece of information, that the bar was stolen, makes what Kagin did understandable and not a violation of the code of ethics.

?Hindsight is a wonderful thing,? said Vartian. ?Once you accept that the bar was stolen, a lot of facts fall into place.? He then urged the board to remember ?that situation as it was? rather than how it looks once the theft was reported. Vartian told the board that Kagin ?would like nothing short of a complete exoneration.?

The two parties battled in a Westin Hotel ballroom arranged to resemble a courtroom from 9 a.m. until approximately 5:40 p.m.

Manley as the complaining party was first to be sworn in as a witness. All witnesses were under oath and a court reporter took down the proceedings.
Manley alleged that Kagin knew or should have known that the Blake & Co. bar, one of just 34 known and one of just three of the Mold 3 type, belonged to him because he bought it in 2000 at a Sotheby?s auction along with about 80 percent of the ingots put on the block at that sale.

When it was Kagin?s turn to testify, he said he did see the bar sold at the Sotheby?s auction, at which he was also a bidder, to bidder L106 and that he ?speculated? that the buyer could have been Manley, but he did not know that Manley was the buyer because he was not physically present in the auction room. Manley was in a skybox behind one-way glass overlooking the auction room and bidding by telephone using three bidder numbers.

Vartian pointed out that most of the bars Manley had purchased at that sale have since been sold by Manley to others. Some five and one-half years had passed from the time of the Sotheby?s sale to the time of the actions under dispute, which occurred for Kagin during the 2006 Florida United Numismatists convention Jan.6 and continued until Jan. 24.

Manley cited three things that should have been red flags to Kagin.

?He knew it was to be paid (for) in $20s, it needed to be put to sleep and it came from a runner who can?t write a check for $5,000.?

Kagin later countered that he has done perfectly legitimate transactions before that involved like kind trades for tax reasons, that the parties who used the term ?put to sleep,? a term he himself did not ever use, all understood it to mean that the transaction was to be kept confidential because more bars might be forthcoming from the same owner and that he had done other deals over 15 years with Joseph McCarron, who was called a runner by Manley, and not had problems.

The legal contest focused on whether Kagin knew who bidder 106 was. Manley said he told him in the auction room immediately after the sale, because he approached Kagin to buy a bar that Kagin had purchased.

Kagin sold it to him on the condition Manley would sell another bar he just had purchased to him. It was at this point Manley said that Kagin knew who bidder 106 was because he told him.

Kagin said he did not remember a conversation at which he was told that.
Kagin said he had written three bidder numbers onto the inside cover of his catalog, 106, 124 and 109. He circled them and wrote , ?Manly? (sic).?

The ANA board passed the catalog among its members to look at it and the notations in it.

Manley?s attorney alleged that Kagin?s behavior since the discovery of the theft and the commencement of an investigation by ANA Executive Director Christopher Cipoletti in the spring of 2006 looked like ?efforts after the fact to conceal what had gone on.?

The catalog had been altered. The original entries were in black ink. Blue ink notations were made, Kagin said, when he received the phone call from Manley. These included crossing out the question mark and writing ?Manley through Albanese.?

This altered catalog was the first example of three examples of this effort to conceal cited by Pitet. A second was an e-mail to Manley in which Kagin denied that he knew Manley was the bidder 106. The third example was how Kagin reacted to a request from Cipoletti to send Cipoletti the catalog. Kagin at first sent only faxed pages and omitted the page with the circled bidder numbers. Only when Cipoletti asked again for the catalog did Kagin reply. Kagin also wrote Cipoletti a description of the alterations made in blue ink and why they had been made.

?This is a board member who has to have the highest ethics. That?s not the case here,? Pitet said.

The board retired to deliberate at approximately 5:45 p.m. and finished by approximately 7:30 p.m.

Cipoletti said he would begin writing the decision the next morning, May 30, and circulate a draft to board members. Once the text was approved, Manley and Kagin would be notified and the decision released to the public