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Buried Treasure

Sometimes a family fortune gets tangled in the sweep of history.

It is the rarest and most valuable coin in the world, designed by a famed sculptor at the request of President Theodore Roosevelt in 1905. It should never have been minted. And, for decades, the U.S. government has fought to keep a surviving few out of private hands.

Joan Langbord, daughter of jeweler Israel “Izzy” Switt, knew all this when in 2003—13 years after her father’s death—she claims that she opened the contents of her dad’s safe deposit box for the first time and found 10 gold 1933 Double Eagle $20 coins.

Switt, who’d had a business near the Philadelphia Mint, is something of a legend among numismatists: He went in and out of the Mint to sell scrap gold and silver—and is believed to be the ultimate source for the only Double Eagles known to exist outside the Smithsonian Museum. About half a million of these coins were minted in error after President Franklin D. Roosevelt took the U.S. currency from the gold standard. Two were sent to the Smithsonian. The rest were supposed to have been melted down.

In 2002, one Double Eagle broke all records by selling at an auction for $7.5 million. The event capped a five-year court battle that began when Secret Service agents at the Waldorf-Astoria Hotel in New York City arrested Stephen Fenton, a London coin dealer, as he was trying to sell the Double Eagle.

Fenton’s coin had left the United States in 1944, when King Farouk of Egypt, known as the Playboy King, obtained an export license authorizing his ownership of it. In the intervening years, the Secret Service seized nine other Double Eagles, and after the U.S. Treasury won a 1947 case by one collector who’d fought back, melted those nine down. When Farouk’s treasures were auctioned by Sotheby’s in 1954, the U.S. government demanded that the coin be removed from the sale and it disappeared—until Fenton’s trip to the Waldorf.

The Justice Department dropped criminal charges against Fenton, but brought a civil forfeiture action to seize the coin. Numismatists were aching for a trial to establish the right of hobbyists to own these treasures. But the government settled a week before the jury was to be picked for the trial, agreeing to split the auction proceeds with Fenton.

For help in this latest tussle over Double Eagles, Langbord has turned to Barry H. Berke of New York’s Kramer, Levin Naftalis & Frankel, LLP. He’s the lawyer who represented Fenton. Berke, a trial lawyer who’s handled high-profile securities fraud cases, has become a hero among coin collectors. COINage Magazine dubbed him “The Saints’ Biggest Advocate,” referring to Augustus Saint-Gaudens, the sculptor commissioned to render the Double Eagle design.

Berke counseled the Langbords to let the U.S. Mint know that they had the coins in 2004, as a first step toward reaching a resolution on what could be done with the 10 wayward Double Eagles. The Mint asked to test the coins to confirm their authenticity, and told the Langbords to be patient, according to a lawsuit Berke has filed on the family’s behalf. After nearly a year, the Mint announced in August 2005 that the coins had been taken “in an unlawful manner” in the mid-1930s, and were now “recovered.” At that time, Berke announced that the Langbords planned to sue to get the coins back.

The Langbords filed that suit in federal court in Philadelphia on Dec. 5, 2006—just in time to put coal in the federal government’s Christmas stocking. The complaint makes what one forfeiture law expert calls a very creative use of a relatively new federal statute: the Civil Asset Forfeiture Reform Act of 2000 (CAFRA), which was passed in the midst of the Fenton case. Under the old law, the government had to prove very little to make a claim for Fenton’s Double Eagle. “They only had to establish probable cause to seize the coins, and the burden fell on Fenton to prove that he had the right to keep the coins by a preponderance of the evidence,” says Berke.

The 2000 reforms shift the burden of proof to the government to establish by a preponderance of the evidence that the property is subject to forfeiture. But the Mint’s position on the Double Eagle has changed. It now asserts that no forfeiture action is required: In a Nov. 6 letter to Berke, David Shaver, chief counsel of the Mint, wrote, “[T]he position of the United States government is that…all ten of the 1933 Double Eagles in question are and always have been property of the United States Mint.”

The government asserts that the coins were stolen. In fact, just how Switt got the coins remains a mystery. Berke’s complaint, written in the passive voice, merely states that Switt “came into possession of specimens of the 1933 Double Eagles.” According to the coin’s official history on the U.S. Mint’s website, Switt admitted to possessing nine Double Eagles in interviews with Secret Service agents in 1944.

Still, lawyers who represent defendants in forfeiture cases say that the government will be hard pressed to meet its new burdens under CAFRA. “Where is the crime?” asks Steven Kessler, a New York sole practitioner and adjunct professor at New York Law School. “The government hasn’t stated any wrongdoing by the Langbord family. They’re not saying, ‘You took it from me;’ they are saying, ‘It’s always been ours.’”

Kessler reviewed Berke’s 33-page complaint on the Langbord’s behalf for Trusts & Estates magazine “I love this!” he said. “It effectively has a citizen using CAFRA against the government in a way that the government uses it against them. All too frequently, we look at statutes and we see them to be used in one direction only.”

Joel M. Sweet, assistant U.S. attorney in Philadelphia, has filed an appearance for the government defendants. The government has 60 days to file a response to the lawsuit, and Sweet declined to comment. Jane Levine, the lead prosecutor on the Fenton case, moved to the private sector in September, becoming director of compliance at Sotheby’s. She declined to comment on the Fenton settlement.

When the hammer went down on Fenton’s Double Eagle auction, which, as it happens, was held by Sotheby’s and the rare coin auction service called Stack’s, the Treasury’s associate director made a grand proclamation: “The United States will be ’issuing‘ one Double Eagle for the first (and only) time at this historic sale.” The purchaser and current holder of that Double Eagle, who remains anonymous, was given an official certificate of transfer that made the coin legal to own. As legal tender of the United States, the $7.5 million purchase price for the Double Eagle was increased by the coin’s $20 face value—and the $20 went into the United States Treasury Fund.

Now, though, there are 10 more of these rarities. And the coin world is counting on Berke once again. The Fenton settlement, to coin enthusiasts, put a crack in the government’s relentless quest to seize and melt down pieces of history. In the Fenton case, “the government gave up $ 3.5 million; that’s not, as they say, pocket change,” says David L. Ganz, a New York lawyer who pens a regular column for COINage Magazine. Ganz wrote a 1977 law review article on the government’s seizures of the Double Eagle. But today, because prosecutors must contend with their burdens under CAFRA, he said, “the ballgame is completely changed.”

For now, the 10 Double Eagles at the center of the Langbord suit remain hidden in a vault at the U.S. Bullion Depository in Fort Knox, Ky. They were displayed briefly last summer at the American Numismatic Association’s convention in Denver.

Karen Donovan is a freelance writer living in New York City.

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