| The PCGS Lawsuit Against Alleged Coin Doctors | Posted: 6/8/2010 |
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| - Coin Collecting News - http://www.coinlink.com/News - Coin Rarities & Related Topics: The PCGS Lawsuit Against Alleged Coin Doctors Posted By Greg Reynolds On June 2, 2010 @ 10:21 am In Coins and the Law, Column: Coin Rarities, Commentary and Opinion, Featured | 1 Comment News and Analysis regarding scarce coins, coin markets, and the coin collecting community #3 A Weekly Column by Greg Reynolds I. Today’s Theme Welcome to the third installment of my column. I had planned to write more about auctions and about current demand for rare Liberty Seated coins. I was pleasantly surprised, however, by the most important lawsuit in the history of coin collecting: The PCGS lawsuit against six named individuals and other not yet named individuals regarding coin doctoring is pathbreaking and earth shattering. Even if the PCGS does not prevail on all points or against all defendants, the educational value of this suit, and the impact that it will have on coin doctors, goes way beyond the fate of these defendants. For legal reasons, I will not comment on the defendants in this suit. I am asserting that a significant number of coin doctors who are not defendants will be discouraged by this lawsuit from doctoring coins. The PCGS SecurePlus™ program, which was inaugurated in March 2010, also discourages coin doctoring. For some discussion of the ‘plus’ aspect of the program and my idea as to how the NGC can discourage coin doctoring, please see last week’s column. Under the SecurePlus™ program, submitted coins are scanned, for purposes of identification, with CoinAnalyzer devices. The PCGS will be able to identify each scanned coin if it is submitted to the PCGS again in the future, and, when a match is found, the submitted coin will be closely compared to an image of the same coin that was taken when it was previously submitted. Changes in the appearance of each matched coin will be investigated. The positive effects of the SecurePlus program, though, will build very gradually over a period of many years. This lawsuit will be extremely effective at discouraging coin doctoring in the near future. Four years ago, when coin doctoring was rampant in the dealer community, had PCGS officials threatened a coin doctor with a lawsuit, the coin doctor probably would have figured that PCGS officials were bluffing. I am almost certain that this is the first time that a grading service has sued some of its dealer-members for submitting coins that are allegedly doctored and misrepresented. Now, if PCGS officials threaten a coin doctor with a lawsuit unless he stops submitting doctored coins to the PCGS, the threatened individual is likely to take the threat very seriously and believe that the PCGS might actually follow through with a suit. Yes, I realize that not every coin doctor will be deterred by the threat of a lawsuit. Most will be deterred, at least to an extent. The costs of coin doctoring in terms of the risks involved are now much greater than they were before this lawsuit, even if it is never proven in court that these six defendants are involved in coin doctoring conspiracies. It is very expensive and emotionally painful to defend oneself against such a lawsuit, which here includes allegations of breach of contract, fraud, unfair business practices, and racketeering. ‘Win, Lose, or Draw,’ this lawsuit will be tremendously beneficial to coin collectors and will result in much fewer coins being doctored than would have otherwise been doctored. This lawsuit “is about winning the hearts and minds of collectors,” John Albanese exclaims. Further, the “PCGS had to protect their shareholders, they had to protect collectors, and they had to protect themselves.” It cost “a lot of money” for the PCGS to “buy back doctored coins.” Consider “$90,000 for a 1918-S dime,” which is specifically itemized in the suit. Additionally, “PCGS has become embarrassed by doctored coins in PCGS holders,” Albanese suggests. “They have a right to protect their reputation.” How serious a problem is coin doctoring? Of the pre-1934 coins in PCGS or NGC holders that are submitted to the CAC, John Albanese states that “a significant percentage have been doctored.” At lot viewing sessions for major or semi-major auctions, and on the bourse floor of major conventions, I often see coins with waxes, films, gels, putties and sort of paint-like substances. Among pre-1934 absolute or condition rarities, I find far too many that have been ‘doctored,’ and, undoubtedly, Albanese catches doctored coins that I have missed or would miss. Dr. Steven Duckor, a prominent collector for decades, is a renowned expert in early 20th century gold coins and in Barber coins. He has attended many major auctions and privately viewed thousands of choice gold coins and Barber coins. Dr. Duckor learned a great deal from David Akers, who is frequently regarded as the nation’s foremost expert in U.S. gold coins. Duckor declares that, of “uncirculated better-date Saint Gaudens Double Eagles, in PCGS or NGC holders, 15% have been doctored.” For an explanation as to why natural toning is highly favored by sophisticated collectors and as to why ‘coin doctoring’ is so terrible, please see my three part series on this topic, Part 1, Part 2, Part 3. (As usual, throughout the text, clickable links are in blue.) It may suffice to say, at this moment, that doctored coins are often ruined. Rarities that have been ruined now cannot be effectively collected, appreciated and understood by collectors in the near or far future. It is a big disappointment for a collector to travel hundreds of miles to a coin show or an auction in order to find out that some of the coins in which he is interested have been surgically altered or puttied. Besides, in almost all instances when a doctored coin, in a PCGS or NGC holder, is sold, the doctoring is not disclosed, and the buyer is often very hurt, emotionally and/or financially, when he or she finds out that the coin has been doctored. John Albanese asserts that “coin doctoring is [ultimately] defrauding the consumer. It is illegal to pass off a doctored coin as a high quality coin or as a coin with no serious problems. If you buy a house,” John explains, “then the problems with the house should be disclosed. Realtors are bound to tell you. It is fraud not to disclose serious problems that relate to the value of the item. Coin doctoring [typically] involves an intent to deceive,” Albanese declares. Coins that have been doctored often ‘turn’ over time; putties and other foreign substances chemically react or just ‘fall off’! Before citing two definitions of ‘coin doctoring’ in section three below, it makes sense to put forth some basic information for the benefit of beginning collectors. Knowledgeable collectors may wish to jump to the third section. II. The Filing of This Lawsuit and the Grading Services Although it became widely publicized when it was posted on CoinLink on Sat. May 29, this suit was filed a day or two earlier. Officially, the plaintiff is Collectors Universe, Inc., of which the Professional Coin Grading Service (PCGS) is a subsidiary. As the PCGS is the largest and most significant part of Collectors Universe, and is known to coin collectors throughout the world, I will here refer to the plaintiff as the PCGS, though this is not completely correct. The defendants in this suit are alleged to have conspired in efforts, many times successful, to get the PCGS to assign numerical grades to doctored coins that are higher than the grades that were previously assigned or would have been assigned had the coins in question not been doctored. In the suit, the PCGS provides a list of a dozen coins that are said to be just a “few examples” (Section 14). Each of the named defendants is alleged to be either a dealer-submitter of doctored coins and/or a coin doctor who acted in concert with at least one dealer-submitter. (Click here to read the complaint filed by Collectors Universe-PCGS, or here to read the brief announcement on CoinLink.) The PCGS and the NGC are the two leading grading services of U.S. coins. They each place coins in sealed, hard plastic holders and assign numerical grades to submitted coins that qualify for numerical grades. John Albanese was involved in the founding of the PCGS in 1986 and he was the sole founder of the NGC in 1987. He is no longer a shareholder of either. David Hall was the primary founder of the PCGS. Hall and relatively new PCGS President Don Willis are the driving forces behind the bold new policies that the PCGS has implemented in 2010. In 2007, Albanese founded the CAC. Coins that are already graded by the PCGS or the NGC are accepted by the CAC for examination. A coin receives a CAC sticker of approval if the CAC finds that its grade is in the middle to ‘high end’ of the respective grade range. One of the purposes of the CAC is to filter doctored coins that the PCGS or the NGC erroneously graded. Coin grading is very difficult and no one, not even Albanese, can ‘bat near one thousand.’ (For definitions of low end, mid range and high end, please see my article on The Widening Gap. For more discussion of the CAC, please see my articles on CoinFest, Jay Brahin’s Coins, the “MS-68+” 1901-S, and Dr. Duckor’s quarters.) Among pre-1934 U.S. coins, it is not unusual for one grade increment to reflect a tremendous difference in price, often many thousands of dollars. So, if a coin is PCGS certified as Proof or MS-65, the owner of the coin may try to get the PCGS to grade it as 66. Sometimes, if a coin is repeatedly submitted, it will eventually upgrade. In other instances, coin doctors tamper with a coin to deliberately hide imperfections and/or to give it false additional characteristics and thus try to ‘trick’ the PCGS or NGC graders into awarding it a higher grade as a consequence of deliberately falsified characteristics. III. What is ‘Coin Doctoring’? How is ‘coin doctoring’ different from ‘conservation’? I have never felt comfortable with the definition that most often floats about the coin collecting community. Nonetheless, it has some merit and is widely accepted: ‘Taking something off a coin is conservation; adding something to a coin is doctoring.’ So, removing dirt, grime, toning, organic matter, or even a layer of metal via dipping, is ‘conservation,’ according to this definition. Adding metal, plastics, auto body putty, colored substances, gels, films, and a variety of other things, constitutes doctoring. In my view, some so called conservation practices damage coins, sometimes irreparably. I admit, however, that a majority of influential dealers (though perhaps not most knowledgeable collectors) view a wide range of conservation practices as being legitimate. From my inquiries, however, I conclude that more than 95% of knowledgeable collectors and leading dealers, agree that coin doctoring, as defined above or below, is damaging and usually fraudulent. The following is the definition of ‘coin doctoring’ put forth by the PCGS in this lawsuit, in Section 9B, and seems to stem from the agreement that dealer-members sign in order to be dealer-submitters of coins for PCGS grading. I have here removed the phrase ‘among other things,’ which appears repeatedly and is distracting. The parentheses and the words inside them appear in the PCGS definition as stated in this lawsuit. According to the PCGS, coin doctoring “involves the alteration of the appearance of a coin to attempt to increase its value, and may involve: adding substances to coins (such as putty, wax, facial oils, petroleum jelly or varnish); treating coins with chemicals (such as potash, sulfur, cyanide, iodine or bleach); heat treating coins in any way to alter their appearance; re-matting (“skinning”) Proof gold; ‘tapping’ and ’spooning’ (i.e. physically moving surface metal to hide marks); filing rim nicks; or repairing coins (re-tooling metal). Though there is no perfect definition of coin doctoring, and this PCGS lawsuit states that coin doctoring may also involve actions not listed above, this is a very good definition, not just in my opinion. It is strongly consistent with viewpoints expressed to me, over a period of years, by leading dealers and collectors. IV. Is Coin Doctoring A Crime? It is not clear whether coin doctoring is a crime. This is the first such civil suit. I am not aware of any criminal charges that are relevant to this case. Since the modifications of a doctored coin are rarely disclosed, coin doctoring is usually fraudulent, largely because the intent is to deceive and to ‘counterfeit’ not an entire coin, but some desirable characteristics of a coin. Coin doctors are ‘counterfeiting’ positive characteristics of a coin. For example, a doctored coin may appear to be free of contact marks and hairlines in the right obverse (front) field, yet these are really there but are masked by added substances. A choice quality right obverse field is being counterfeited. Likewise, attractive blue, purple and green toning is often counterfeited. “We as owners of rare coins are caretakers of history,” Dr. Duckor exclaims. “When you doctor a coin, you destroy history. If coin doctoring is not a crime now, it should be,” in Duckor’s view. The PCGS lawsuit does assert that doctoring U.S. or foreign “legal tender” coins “is a federal crime under 18 U.S.C §331,” which is abbreviated in the lawsuit as follows, “Whoever fraudulently alters, defaces, mutilates, impairs, diminishes, falsifies, scales or lightens any of the coins minted at the mints of the United States … [or] … Whoever fraudulently possesses, passes, utters, publishes, or sells, or attempts to pass, utter, publish or sell … any such coin, knowing the same to be altered, defaced, mutilated, impaired, diminished, falsified, scaled or lightened … Shall be fined under this title or imprisoned not more than five years or both.” It is thus argued in the lawsuit that someone who doctors a coin and/or someone who knowingly submits a doctored coin to the PCGS for grading is committing a crime, which is much more than a civil offense. It is not necessary for this argument to be accepted in order for the PCGS to win. Indeed, the PCGS does not have to prevail on all counts in order to win this civil suit. The strongest arguments by the plaintiff may relate to the ‘breach of contract’ accusation, as each dealer-submitter agreed, in a contract with the PCGS, not to submit any doctored coins for PCGS grading. “Dealer and PCGS agree that PCGS would suffer irreparable damages if Dealer were to engage in coin ‘doctoring’ and that PCGS shall be entitled to not only compensatory damage but also [other legal measures against the Dealer] for any breach of the Dealer’s obligation not to ‘doctor’ coins or knowingly submit doctored coins to PCGS.” Suppose, hypothetically, that an expert dealer submitted a substantial number of doctored coins to the PCGS for grading. Would much (if any) additional evidence be needed to prove that such an expert-submitter ‘knowingly’ submitted doctored coins? V. The Accusations in the Lawsuit So far, I have reported that the PCGS has claimed that the defendants have committed fraud and ‘breach of contract.’ The PCGS has made addition allegations, including “willfully, fraudulently, [and] maliciously” violating provisions in the California Business & Professions Code, and forming conspiracies, which I take to refer to allegations that the defendants worked in pairs or teams. As it is widely recognized in the coin collecting community that coin doctoring constitutes fraud (except perhaps in the very rare instances where such doctoring is fairly disclosed), the two most curious and potentially explosive allegations are the first two counts. The PCGS alleges that the defendants “acts constitute an actionable wrong” under the Lanham Act, and the PCGS alleges racketeering under RICO statutes. I will probably discuss these two allegations next week. VI. The Fight Against Coin Doctoring I strongly believe that the coin doctoring problem can be contained. It can never be entirely abolished. The number of choice and rare pre-1934 U.S. coins that are doctored can be limited to a very small number each year. Dr. Duckor “applaud[s] PCGS efforts and CAC efforts to control the coin doctoring problem. The hobby will be better off because of this lawsuit.” In Duckor’s view, the five most important advances in the history of coin collecting are: the founding of the PCGS in 1986, the founding of the CAC in 2007, the introduction of the PCGS SecurePlus™ program in March 2010, the filing of this lawsuit a few days ago, and the development of the PCGS CoinSniffer technology to detect some kinds of coin doctoring. “These five steps have revolutionized coin collecting,” Duckor exclaims. The influential collector Jay Brahin remarks that this lawsuit is “long overdue. You can’t stop coin doctoring unless you expose coin doctors and their associates. Their greatest tool is secrecy. Many coin doctors [and their supporters] are in cahoots with each other. They work together,” Brahin has learned. I hypothesize that there are fewer than seventy-five coin doctors who have the skills to often deceive graders at the PCGS and the NGC. As for coin doctors who can effectively laser the fields of Proof gold coins or build the heads on Standing Liberty Quarters, as mentioned in this lawsuit, Albanese estimates that “there are definitely less than ten, probably not even six who could do this.” I am glad to hear that there are so few. The PCGS should sue most or all of them now. There are more coin doctors who are able to add putty and other substances, to disguise imperfections, and then get such doctored coins in PCGS or NGC holders. Albanese suggests that there are “twenty to thirty,” which, honestly, was my estimate before all the words even came out of his mouth. I finished his sentence. I could guess the identities of ten to fifteen of them. With a few more lawsuits, similar to this one, the PCGS may be able to deliver many ‘knockout punches.’ Jay Brahin asserts that such lawsuits “would be great for the coin business. When you remove more doctored coins with counterfeit [characteristics], everyone will feel more comfortable.” Further, Brahin points out that, if “the cancer” of coin doctoring “spreads more” over the next several years, “it will become harder to cure.” It is best to “go after the coin doctors now and put them out of the coin doctoring business,” Brahin suggests. Even if the PCGS does not soon file any additional lawsuits, this one will accomplish a great deal. Regardless of the fate of these six defendants, others will be discouraged from doctoring coins. The mere filing of this suit will save many rare coins from being damaged and will enhance the credibility of the PCGS. Plus, it will greatly contribute to the education of collectors. ©2010 Greg Reynolds |
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| PNG Issues Statement on Coin Doctoring and PCGS Lawsuit | Posted: 6/7/2010 |
| Coin Update News: PNG Issues Statement on Coin Doctoring and PCGS Lawsuit By Coin Update Staff on June 3rd, 2010 Categories: Press Releases The Board of Directors of the Professional Numismatists Guild (PNG) issued the following statement following a meeting on June 2, 2010 in Long Beach, California. The Professional Numismatists Guild Board of Directors applauds the Professional Coin Grading Service (PCGS) in its efforts to battle the deceptive practice known as coin "doctoring." The deliberate, deceitful alteration of a coin can pose an egregious financial consequence to individual collectors, investors, dealers as well as the general public. PNG believes the unconscionable practice of "doctoring" is an enormous detriment to the numismatic marketplace. We congratulate and support both Numismatic Guaranty Corporation and Professional Coin Grading Service for their diligent work to detect 'doctored" coins, and encourage both organizations to continue to aggressively combat this assault on the hobby. "Doctoring" of coins is a definite violation of the PNG Code of Ethics, Section 7, that prohibits members from "knowingly dealing in counterfeit, altered or repaired numismatic items without fully disclosing their status to my customers." "Doctoring" is also a violation of Section 4 of the PNG Code of Ethics that prohibits "misrepresenting the quality of a coin." The PNG Board regrets that three of its member-dealers have been named among the defendants in a Federal Court Complaint filed May 28, 2010 by Collectors Universe, Inc., the parent company of PCGS. The PNG takes allegations such as the ones made by PCGS very seriously. The board will monitor the progress of the complaint and react promptly, appropriately and in accordance with the organization's bylaws. Furthermore, in response to the recent influx of fraud related hobby concerns, the PNG board has pledged to revisit, review and update each and every ethical standard adopted by the PNG over the past 55 years. In particular, the board acknowledges the need to clearly define the term "doctoring," in order to establish an enforceable criterion for its membership. The PNG board is unified in its resolve to nurture and maintain the PNG member-dealers' standards of excellence through a more proactive posture regarding egregious acts of fraud in the numismatic marketplace. Founded in 1955, the Professional Numismatists Guild is a nonprofit organization composed of many of the top rare coin and paper money dealers. For additional information, visit online at www.PNGdealers.com or call (760) 728-1300. X |
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| How Does CAC Fit Into Today's Coin Market? | Updated: 5/18/2010 |
| Many dealers thought PCGS and NGC solved the grading problem nearly 25 years ago. Others still want nothing to do with either and deal exclusively in raw coins. Still others have dealt in certified coins for many years, but have become concerned about "gradeflation." Then, in 2007, CAC was formed. CAC, which stands for Certified Acceptance Corporation, was founded by John Albanese, a seasoned coin dealer who was also involved in the start-ups of both Professional Coin Grading Service and Numismatic Guaranty Corporation in 1986 - unique qualifications, for sure. CAC is a private business that is owned by 20 to 25 numismatic shareholders. Its mission is to screen coins graded by PCGS and NGC to identify those that are, at a minimum, solid for the grade, in CAC's opinion. Albanese is no longer affiliated with either PCGS or NGC. He was a founding partner in the California Gold Marketing Group which purchased the SS Central America treasure for a price that exceeded $100 million. He was also chief marketing strategist for the coins recovered from the SS Republic shipwreck. Among other endeavors of note, he founded Numismatic Consumer Alliance in 2005 to assist consumers in getting refunds from unscrupulous coin dealers. The Founding Coin dealers of CAC are attempting to manage "gradeflation," which exists as the result of grading standards of PCGS and NGC having loosened over the years, in their opinion. They believe that gradeflation has been dragging down the market prices of solid to high-end coins for the grade. This is consistent with what Albanese explained to me in an hour long conversation at the Baltimore ANA convention in 2003, long before CAC was actually formed. It had been in the works for several years. How CAC is attempting to accomplish its mission is illustrated by a simple process the company uses. They say there are at least three quality levels of coins graded by PCGS and NGC: 1) Those that are high end, commonly known as a premium quality for the grade, called "A" quality coins; 2) those that are average, or solid, for the grade, called "B" quality coins; and 3) those that are below average, called "C" quality coins. CAC stickers just the "A" and "B" quality coins, even though it considers all three levels to be properly graded. Those coins that meet CAC's standards are then given a green, tamper-evident, oval-shaped sticker with a CAC hologram placed on the front of each coin's PCGS or NGC holder. CAC refers to this sticker as a "green bean," and a few others refer to it as a "green football". Importantly, CAC is also making a market in coins they have verified by purchasing them sight-unseen. To date, CAC has bought and sold, on a wholesale basis, nearly $150,000,000 in CAC-stickered coins. CAC is also developing a coin dealer trading exchange called Coin-Plex, which is expected to be launched this summer. With this background in mind, there is no up-front agenda for this article. I was asked to write this in a fair and unbiased manner. It's just a read on the pulse of how today's coin market perceives and accepts CAC. Some like it. Others think CAC is "unnecessary." Some even feel threatened by CAC and go as far as saying it's "disingenuous." In order to get broad-based comments, I spoke with dealers, collectors, investors, and auction houses to get their feedback. I also called Mark Salzberg, chairman of NGC, and David Hall, president of Collectors Universe, PCGS's parent company. Additionally, I have never been a shareholder in any of these grading services, but my business is a submission center for all three grading services, PCGS, NGC, and CAC, just like hundreds of other dealers' businesses are. I also graded coins for PCGS in its early days, just like many other dealers did. The intent of this article is to be fair to all parties concerned. This was written prior to the announcement of "The Big One" by PCGS on March 25, 2010, and updated after the announcement. CAC is only about three years old, while PCGS and NGC have both been operating for nearly 25 years. PCGS and NGC have each graded about 18 to 19 million coins, worth about 18 to 19 billion dollars, while CAC has evaluated about 144,000 coins so far, with a declared insurance value of about $800 million. Of this total, CAC has stickered more than 68,000 PCGS and NGC graded coins. These are vintage coins, not modern or world coins which are included in the PCGS and NGC totals. CAC does not evaluate modern or world coins. Its market share is tiny compared to PCGS and NGC, as pointed out by both Q. David Bowers, a minority shareholder in CAC, and David Hall, founder of PCGS. Hall estimated that CAC has evaluated only about 3 percent of the coins his firm has graded during the past three years, the total time CAC has been in operation. Hall said, "John Albanese is a very good coin grader, and he does a good job with CAC. They are a small boutique, and as their published numbers indicate, they are only looking at a very small percentage of the coins that have been graded by PCGS and NGC. I think people should buy CAC coins if they like the concept, but for me, I don't need the service, and I don't pay extra for CAC coins." And that's where the real impact of CAC is felt - in pricing. Presently, large premiums are often paid for CAC verified coins. By submitting coins to CAC, owners can often raise the market values of those coins by getting them stickered. The flip side is that dealers, collectors and investors who own coins slabbed by PCGS and NGC that are not CAC-stickered see the market values of those coins suffering. Some buyers may be skeptical of non-CAC coins because they may not make the grade, just as they may be skeptical of many raw coins which might not be "slab-worthy." That's why CAC doesn't release PCGS and NGC serial numbers of coins that have been submitted to them but did not sticker. CAC wants to help protect owner's interests. Dealer John Feigenbaum believes CAC has developed good brand awareness. Similarly, collectors spoken to for this article were generally aware of CAC. But many people, including quite a few dealers, don't seem to understand the background of why CAC was formed. I've heard several people say CAC is "political." It's really a private, competitive business. Feigenbaum, who retails coins to collectors, said, "CAC has been a net positive for the coin collecting community. CAC helps me (and my customers) feel more comfortable about the coins they are buying. I see an increasing number of collectors who are buying or bidding for CAC verified coins every month through our website. Simply stated, I prefer to buy coins with CAC stickers." And that expresses what collectors have said as well. Most, who know of CAC, agree that owning PCGS and NGC graded coins with CAC stickers helps them feel more reassured they won't have problems reselling their coins back into the market in the future. Most collectors also believe their coins are worth more money with CAC stickers than without. However, that leaves collectors just as nervous as dealers regarding the values of their other coins, especially if those coins fail to get stickered. That may be more reason to get their coins examined sooner rather than later to decide whether to keep them or sell them, based on CAC verification or lack thereof. Dealers can generate more business for themselves by assisting customers with submitting and upgrading or trading coins that don't get verified. CAC reports that more than 40 percent of the PCGS and NGC graded coins submitted are given CAC stickers. However, that percentage has been shrinking a little recently, according to John Albanese. But there are many submitters who fare significantly better, such as Kevin Stratten, a collector I recently helped with a CAC submission. He said, "I guess at this point the long-term will tell on the benefit of CAC, although already it looks like they've had a significant impact on the market; otherwise, I wouldn't have gone through with our venture. I was pleasantly surprised that I got a higher ratio than I was expecting stickered, and I was very pleased with their turnaround." But, regardless of the ratio of coins a submitter gets stickered by CAC, dealer Gary Adkins said, "We are a service business. Collectors and investors should develop relationships with dealers who provide great service and quality! A little green placebo is not the ultimate guarantee. You want dealers who know quality and will be there whether you are buying or selling!" On the other hand, many collectors want the assurance of buying only CAC verified coins these days. They realize that owning CAC stickered coins is insurance if the CAC concept becomes a generally accepted requirement in the market, just as it predominantly has for PCGS and NGC graded coins. Some dealers are anticipating this and deal only in CAC coins. Similarly, Teletrade is featuring specialty auctions that offer CAC coins exclusively. Mark Salzberg, Chairman of NGC, has a different take on CAC. He said, "CAC is a trading network that makes markets in coins that it stickers. A grading service, by contrast, renders a determination of grade and authenticity, and leaves the market to determine the value of the coins that it certifies. NGC, of course, takes this further by offering a money-back guarantee of grade and authenticity. We do not trade in coins or own a marketplace. Because of the potential for conflicts of interest, grading and market-making are separate functions." In the March 25, 2010 unveiling of its new "Secure Plus" service, PCGS said on its website, "It is a fact of life that high-end coins exist within each grade. Collectors and dealers alike will seek these coins out and pay more for them. The PCGS Secure Plus system is designed to help single out the more desirable high-end coins within a grade. Coins meriting the "+" designation could command a significant premium." Prior to that announcement, CAC distributed the following statements as part of a larger press release: "Change may be in the air at one or more coin grading services, but dealers, collectors and investors will find business as usual at Certified Acceptance Corporation. CAC will continue to evaluate submissions, and determine whether to award stickers to those coins, strictly in the context of the basic numerical grades assigned by either PCGS or NGC." Further, John Albanese stated that CAC will disregard any additional descriptive words or symbols. "We don't want buyers and sellers to get the impression that by stickering a coin, CAC is confirming someone else's 'PQ' designation. CAC makes a market in coins that it has stickered, and its disregard of PQ-type designations will be reflected in its buying and selling prices." The press release goes on describing its bid price for an MS65 1892O Barber Quarter at $1,150, "And if it came with an asterisk or a rainbow or a halo, we'd still pay $1,150 - as long as it had a sticker." The general experience of dealers in today's market is that prices for CAC verified coins are trading at roughly 20 percent more than PCGS and NGC coins in the same grades that have not been verified by CAC. This has been the experience of dealer Laura Sperber, a minority owner of CAC. She said that, in her experience, the general price differences between CAC coins and non-CAC coins has grown during the past couple of years to the 20 percent level from about 15 percent. She also told me that her company, Legend Numismatics, which deals exclusively in CAC verified coins, sold fully 60 percent of its purchases from the most recent Baltimore coin show within 24 hours after posting those new purchases online. In other words, demand is very strong for CAC verified coins, and buyers are willing to pay extra for them. The start-up years of CAC have been similar to what PCGS and NGC experienced during their establishment. Some people liked the idea, others didn't. Those who did often paid premiums to be able to buy PCGS or NGC coins early on. There was also a learning curve in grading as PCGS and NGC evolved. I know. I was one of the dealer/graders during the first few years, who sat shoulder to shoulder with the other graders at a table in David Hall's offices. In the beginning, PCGS introduced the grading scale of commercially using all the numbers between 60 and 70 for Mint State and Proof coins. It was a big adjustment for the grades to begin using those numbers. Previous to that, the market predominantly used MS60 and MS65, and later, MS63. Grades MS61 and MS62 were unheard of! As prices continued to rise, some of us began using "MS63+" or "MS65/70" to indicate a really "gemmy" coin. This evolution of numerical grading can be witnessed by looking through back issues of the Greysheet during the 1970s and '80s. It also took people in the market time to adjust to using MS61 and 62, and MS66 through 70. And it was an adjustment for PCGS to begin grading coins with those numbers. For example, MS66 had not been regularly used in day-to-day trading. The market was hung up on using MS65 to designate a "Choice" or "Gem" coin, depending on who used either term. In the beginning, it was a real push for graders to break through the MS65 barrier. So during the formative years of PCGS and NGC, the technique of coin grading evolved, and the market's perception of those grading services changed, sometimes full circle, as time went on. Similarly, people are still making their minds up of what they think of CAC. The fact is, CAC's acceptance is growing, and it is most likely a financially strong company, given the reputations of the principal stakeholders. CAC is likely to be with us for a long time. Countless dealers and their customers have accepted CAC for what it is and are finding ways to use it for profit. Mark Ferguson Reliance Numismatic Services, LLC |
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| PCGS adds PCGS Secure Plus Service for Increased Consumer Protection and Plus Grades for Added Value | Posted: 4/6/2010 |
| - March 25, 2010 (Fort Worth, Texas) - The Professional Coin Grading Service (www.PCGS.com) has launched PCGS Secure Plus™, a revolutionary new process with high-tech security and scrutiny to increase the confidence of collectors and dealers, and a new certification designation that potentially can increase the value of coins. The PCGS Secure Plus process uses laser scanning to help detect coins that have been artificially enhanced since their last certification, combat "gradeflation" and excessive resubmissions of the same coins, and can also be used to help identify recovered stolen coins. Additionally, PCGS expert graders can now designate deserving, superior-quality coins as "Plus" within their respective grades, an important distinction when there are big differences in value between one grade point and the next. Announcement of the unprecedented breakthrough was made by PCGS executives on the opening day at the American Numismatic Association National Money Show™ in Fort Worth, Texas. They explained how the new process of digitally scanning each coin to capture its distinctive characteristics is being integrated into the PCGS grading system and how it helps resolve important issues in the rare coin marketplace by offering: * Increased precision and consistency in grading * Improved detection of altered coins * Less chance of "gradeflation" * More likely recovery if a PCGS Secure Plus coin is stolen * Increased value of high-end coins within each grade Developed after years of extensive software and hardware development and testing in partnership with Coinsecure, Inc. of Palo Alto, California, the PCGS Secure Plus service digitally captures a unique "fingerprint" of each coin that is then entered into a permanent data base. PCGS Secure Plus will introduce a new level of confidence and security in the coin collecting market" said PCGS President Don Willis. "We believe that PCGS Secure Plus addresses several of the leading issues affecting the industry today. PCGS Secure Plus is a patent-pending process wherein a coin is laser scanned, imaged and registered in a permanent data base. Every coin has its own identifying characteristics. Coins are like snowflakes at the micron level; they are very different from each other. If a coin has been previously registered in our system it will be identified whenever it's again scanned by us, so duplication of coin information will be eliminated. As a result, population reports, condition census and other potentially distorted information will be much more accurate for PCGS Secure Plus coins." "The process also can help detect if a previously registered coin has been artificially toned, dipped or processed in some other way in an effort to get a higher grade. Not since PCGS introduced encapsulated third-party grading in 1986 has such an important step been taken to protect the consumer. We believe PCGS Secure Plus will totally revolutionize the coin grading business," said Willis. "Thousands of tests of the current PCGS Secure Plus system now have been performed, and not once did a previously registered coin go unmatched and not once did we get a false-positive match. Extensive testing was done by many individuals in an attempt to break this system, including all the gimmicks and coin altering processes PCGS has seen over the years, such as foreign material applied to a coin's surface. We even tested coins that had been scratched and marked up. All of them were recognized and matched with the PCGS Secure Plus system. No one has been able to beat this system," Willis stated. "PCGS Secure Plus is an innovative service that also addresses the significant price gaps between one grade point and the next by formally recognizing high-end specimens within respective grades," said David Hall, Co-Founder of PCGS and President of its parent company, Collectors Universe, Inc. (NASDAQ: CLCT). "The reality of the marketplace is that coins considered high end for the grade are recognized by sophisticated dealers and collectors and such coins are worth a premium in the marketplace. The term 'plus' has been a part of the everyday trading and grading lingo for years. The high end for any particular grade represents the top 30 percent of the scale within a grade and I estimate that the plus designation would apply to approximately 15 percent to 20 percent of the coins within a grade. Those technically superior coins in the high end for their grade will now have a plus sign (+) on their PCGS insert label." "The evolution of the rare coin marketplace has produced significant price gaps between some coins that are only one grade point apart. For example, the PCGS Price Guide lists 1880-O Morgan dollars as $2,000 graded PCGS MS64 and $25,000 in MS65. PCGS Secure Plus will more accurately reflect the quality and market value of coins designated as 'Plus' and meeting our strict requirements," said Hall. The Plus designation will be available only in conjunction with PCGS Secure Plus service and in grades XF45 to MS68, except for MS60 and MS61. Another benefit for the hobby is that if a PCGS Secure Plus-certified coin is ever lost or stolen and subsequently resubmitted to PCGS, it can be automatically identified and the recovery process will begin for the rightful owner. PCGS Secure Plus is being offered as a separate, new service. All existing PCGS services will continue to be offered without change except for Rarities and Ultra Rarities which now will only be offered with the PCGS Secure Plus service. Initially, PCGS Secure Plus will be offered for Walkthru, Express and Gold Express services only for raw coins, re-grades and re-holders. "When PCGS opened in February 1986, we 'flicked a switch' and changed the rare coin market. We've just flicked another switch, and this changes everything. Imagine a world without coin doctoring. Imagine a world without 'gradeflation.' This is the right thing to do," said Hall. "This is an exceptional development," declared well-known numismatic consumer advocate Scott Travers, author of the award-winning Coin Collectors Survival Manual and a paid consultant to PCGS. "PCGS is going to be acknowledging what most of us have been trying to increase awareness of for years by recognizing coins that are at the high end of the spectrum. Consumers are now going to have this singularly valuable piece of information available to guide them in buying and selling coins." For additional information, contact PCGS Customer Service at (800) 447-8848, or visit at www.PCGS.com. |
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| NGC Accounes New Plus Desigination for PQ Coins | Updated: 4/6/2010 |
| LEADING GRADING SERVICES ACCOUNCE PLUS DESIGNATION New grade discriminator will be used to indicate premium quality; NGC welcomes dealer and collector feedback on the new service line. For Immediate Release Thursday, March 25, 2010 Contact: Scott Schechter Vice President, Sales & Marketing (941) 360-3990 ext. 154 sschechter@ngccoin.com [Florida] The plus designation, a notation of premium quality, has been announced by NGC and PCGS. The service will be available from NGC beginning in approximately 60-days and launched formally by PCGS on March 25, 2010. Denoted by a + symbol appearing after the grade, the plus designation indicates that a coin is of superior quality for the grade and that it approaches the next technical grade level. In numismatics, in addition to plus, several terms are used interchangeably to indicate this including premium quality, PQ, and high-end. Aspects of the service offered by NGC and PCGS are similar. The plus designation applies only to US coins from select classic series, and it is not currently planned to be applied to modern coinage issues. Additionally, it will be used on eligible coins grading from the XF-range up to MS 68. For coins to be evaluated for the plus designation, submitters will have to opt-in to a plus designation review service in addition to the standard grading tier. After the service launch, in approximately 60-days, coins with the plus designation will receive a point premium in the NGC Registry and be reported in a forthcoming enhancement of the NGC Census. Additionally, price guides and coin trading networks including the Certified Coin Exchange will be supporting the plus designation. "The coin marketplace has evolved in the nearly 25 years since NGC and PCGS began certifying coins, and this is a very logical progression. We have always been conscious of the variation within grades. By providing this information on the label in the plus format, it is communicated in a simple and direct way that allows these distinctions to be readily understood," comments NGC Chairman, Mark Salzberg. PCGS founder David Hall stated, “The reality of the market place is that coins considered high end for the grade are recognized by sophisticated dealers and collectors and such coins are worth a premium in the marketplace. The term plus has been part of the everyday trading and grading lingo for years. For the market’s two leading grading services to recognize this reality and designate these premium coins as part of their grading services is a huge benefit to all participants in the rare coin market.” During the next two months, NGC will be finalizing and announcing service details. Comments from dealers and collectors are welcome on any aspect of this new service. Correspondence should be directed to plus@ngccoin.com, and all messages received will be thoughtfully considered. Additional information about the service will be reported on NGC’s website, www.NGCcoin.com, and can be requested by e-mail. |
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| NGC & PCGS ADD PQ DESIGNATION TO COINS. | Updated: 4/6/2010 |
| At the ANA National Money Show in Fort Worth on March 25th Mark Salzberg of NGC and David Hall of PCGS announced their new Premium Quality (PQ) designation for high end coins within a grade. This will be shown by adding a + to the grade on the holder. The "+" grade will apply to approximately the top 20% of coins submitted (it is estimated) and will cover grades from XF45 through MS68 with the exception of MS60 and MS61 coins. This is slightly different from CAC in which the "green bean" sticker designates solid for the grade but not necessarily PQ. For coins to be considered for the "+" designation they must be submitted through a new level of service which will cost 25%-30% more. For more details, see the press releases below from the individual grading services. |
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