PCGS
Announces Next Steps to Improve and Protect Hobby May 28, 2010
(Santa Ana,
California) - Professional Coin Grading Service (PCGS) today
revealed additional steps it is taking to improve its ability
to detect altered coins. PCGS announced that it has a process
in development which will detect any foreign substance on a
coin's surface, and also announced a major lawsuit filed against
alleged coin doctors.
According to PCGS officials, in conjunction with the development
of coin recognition technology launched in March of this year,
PCGS has been developing a process to detect foreign materials
and other enhancements to a coin's surfaces. Using energy
dispersive X-ray spectrometry (EDX), Fournier Transform Infra-Red
Spectral analysis (FT-IR), Raman Spectroscopy and other similar
analytical techniques, this detection process (code-named
by PCGS the PCGS Coin Sniffer™) will analyze the surfaces
of a coin in a matter of seconds to detect foreign substances
and provide quantitative information about the coin. "Coin
doctors" often apply numerous materials to the surfaces
of coins to conceal problems with the coin, and/or alter the
surfaces to improve its appearance in an attempt to artificially
increase its value. The simultaneous alloy determination will
further aid in the detection of counterfeits as an additional
benefit.
David Hall, cofounder of PCGS and President of its parent
company Collectors Universe, Inc. said, "when we launched
PCGS Secure Plus featuring coin recognition technology we
stated that it was just a first step in improving grading
and battling coin doctoring. The PCGS Coin Sniffer™
is the next significant development in our ongoing efforts.
When combined with our existing PCGS Secure Plus service,
this new process will make it extremely difficult for altered
coins to go undetected."
"This new process is somewhat similar to what we often
see as we are going through security at an airport" said
Don Willis, PCGS President. "We have already filed a
patent which covers the methodology and unique techniques
we are using for processing coins. The new PCGS Coin Sniffer™
process will be integrated with the help of our partner CoinSecure
Inc into the PCGS Secure Plus service and will be available
at no additional cost. Our targeted production implementation
is by this year end, although we will be conducting live testing
much before then."
Additionally, Collectors Universe, Inc. (NASDAQ: CLCT), the
parent company of the PCGS, has filed a Federal Court suit
in United States District Court, Central District of California,
against several individuals claiming they engaged in a pattern
of racketeering activity, breach of contract, conspiracy,
unfair competition and fraud for allegedly submitting 'doctored'
coins to PCGS for grading on multiple occasions for a period
of years.
The suit claims the dealers violated federal laws, including
the Lanham Act involving interstate commerce and RICO racketeering
statutes, and also alleges "unlawful, unfair and fraudulent
business practices" for submitting coins that were deceptively
altered in an attempt to increase their value. The Complaint
states: "Defendants knew that these coins had been 'doctored,'
by themselves and/or other persons engaged by them for that
purpose. Their methods included lasering the surfaces of extremely
rare proof gold coins to remove surface imperfections, building
up commonly-worn or weakly-struck portions of coins, and other
physical and chemical processes. Defendants represented to
PCGS that these coins had natural surfaces, intending to deceive
PCGS's graders so that the 'doctored' coins would be certified
by PCGS and then sold in the rare coin marketplace."
The suit claims the "Defendants have caused, and are
continuing to cause, substantial and irreparable damage and
injury to Collectors Universe and to the public and Defendants
have benefited from such unlawful conduct and will continue
to carry out such unlawful conduct and to be unjustly enriched
thereby unless enjoined by this Court."
As many as 10 other defendants could be added to the Complaint.
Collectors Universe is suing for triple damages as well as
all profits made through these deceptive submissions.
"Every owner of a PCGS coin should be confident in the
fact that PCGS stands behind its product guarantee 100%. Over
the past 24 years PCGS has paid over $7 million under its
guarantee program for coins which have developed some type
of problem due to coin doctoring or some other issue,"
said David Hall. "Occasionally our graders have been
deceived by the very clever application of foreign substances
only to have these substances eventually spoil the coin and
necessitate our buying it back. We believe we have compelling
evidence against several individuals who, working together
and separately, have made a business out of this practice.
And we hope to develop evidence against others whom we believe
either engaged in doctoring or conspired to profit by it.
We hope the courts will provide a suitable remedy to this
problem."
"We firmly believe coin doctoring to alter a coin's
appearance is clearly illegal under the law", Hall continued,
"and we know that it often ruins coins long term and
certainly deceives grading services and future coin buyers.
Today's announcements of the development of scientific doctoring
detection and also the lawsuit filed against alleged coin
doctors is another big step in the anti-coin doctoring process,
but we will not be finished until we eliminate this unsavory
practice once and for all."