$80 Million in Gold Coins Seized from Estate

 

Philadelphia coin dealer Israel Switt died in 1990. In 2003, 13 years after Switt died, his daughter and grandsons drilled open a safe deposit box in Switt’s name and found 10 rare gold coins.

The coins were 1933 Saint-Gaudens double eagle $20 gold coins and were valued at approximately $80 million. The coin is named after its designer, the sculptor Augustus Saint-Gaudens. The Philadelphia Mint struck 445,500 double eagles at the height of the Great Depression, but it pulled them back weeks later as President Franklin D. Roosevelt ordered U.S. banks to abandon the gold standard. Not only were no more gold coins to be issued for circulation, people had to turn in the ones they had.

It became illegal for private citizens to own gold coins unless they clearly had a collectible value. This law was enacted during desperate times to prevent the hoarding of gold currency. Since there would be no more gold currency issued in the U.S., the Mint melted down the 1933 run of Gold Double Eagles and converted them to gold bullion bars by 1937.

Numismatic historians speculate that Philadelphia Mint cashier George McCann somehow sold or gave the coins to local coin dealer Israel Switt, our decedent. We may never know for certain how these coins left the Mint, but there is a general consensus among scholars that George McCann exchanged about 20 of the 1933 Double Eagles headed for melt down and replaced them with earlier dated Double Eagles.

Apparently Switt had 19 of the coins at one time, and one of them found its way to the collection of King Farouk of Egypt. King Farouk had legally exported his coin before the theft was discovered, and the Secret Service was unable to recover his specimen through diplomatic channels.

After King Farouk was deposed in 1952, his 1933 Double Eagle briefly appeared on the market, but when it became clear that U.S. authorities still wanted to confiscate it, it vanished again! More than 40 years later, British coin dealer Stephen Fenton showed up with it in New York, and the Secret Service finally seized it during a sting operation during which they purportedly negotiated to purchase the coin. Fenton fought a long legal battle during which the coin was stored in the Treasury Vaults at the World Trade Center. Only 2 months before the terrorist attacks of September 11, 2001, the litigation was settled and the famous coin was moved to Fort Knox. Fenton and the U.S. Mint compromised: the coin would be sold at auction, the proceeds to be split 50/50 between the Fenton and the Mint.

When Israel Switt’s children drilled open the safe deposit box, they found the coins in a gray paper Wanamaker’s department store bag. Switt’s daughter, Joan Langbord, gave the coins to the Philadelphia Mint to be authenticated and identified. What happened? The government seized the coins with no compensation to the estate.


The government said it was government property stolen in the 1930s from the U.S. Mint; and, therefore, they had a right to take it.

According to Adam Klasfeld writing for Courthouse News Service, in July 2011, the Langbords tried to convince a federal jury that the coins could have escaped the Mint legitimately through a "window of opportunity" between March 15 and April 5, 1933. The government's star expert, David Tripp, acknowledged gold coins could have left the Mint during that window, but he added that there were no records that 1933 Double Eagles did.

Last week, Judge Legrome Davis of the Eastern District Court of Pennsylvania, stated that, "the coins in question were not lawfully removed from the United States Mint." He wrote further in his decision: "The Mint meticulously tracked the ’33 Double Eagles, and the records show that no (legal) transaction occurred… What’s more, this absence of a paper trail speaks to criminal intent. If whoever took or exchanged the coins thought he was doing no wrong, we would expect to see some sort of documentation reflecting the transaction, especially considering how carefully and methodically the Mint accounted for the ’33 Double Eagles."

The Langbord family will be filing an appeal to address the issue in the 3rd Circuit.

The decedent’s estate held contraband coins valued at $80 million. They were seized by the government. Sound familiar? It recalls the Rauschenberg "combine" work, "Canyon" valued at $65 million by the IRS for estate tax purposes even though it is illegal to possess or sell it.

To be consistent, shouldn’t the IRS be claiming estate tax on Israel Switt’s coins? And if they don’t, why should the Rauschenberg estate have to pay tax on artwork that is illegal to own or sell?

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