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In this episode of the CoinWeek Podcast, Editor Charles Morgan speaks to Dana Samuelson, Former President of the Professional Numismatists Guild (PNG), and Doug Davis, Director of the Anti-Counterfeiting Educational Foundation (ACEF), about the work the coin industry is undertaking to assist the United States Federal Government in fighting counterfeit coins.
You can visit the ACEF’s website here.
The Coinweek Podcast is brought to you by PCGS. The PCGS Members Only Show will be held from Wednesday, February 22, to Friday, February 24, 2023, at Park MGM in Las Vegas, Nevada.
PCGS members can take advantage of this exclusive event to buy and sell coins, have their coins graded on-site, and talk directly with PCGS representatives who will be on hand to answer questions.
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The following is a transcript of Charles’ conversation with Doug and Dana:
Charles Morgan: So, I’d like to thank Doug Davis from the Anti-Counterfeit Education– what is it? “Foundation”, right? And Dana Samuelson from American Gold Exchange. Is that right?
Dana Samuelson: Yes, sir.
Charles: Okay. We’re going to talk today about the importance of the work that the ACEF is doing in regard to combating the scourge of counterfeit bullion and collectible coins, and how that fight has gone from just knowledgeable collectors educating each other about what to look for to involving the federal government’s law enforcement, the Secret Service, and other levels to try to put a stop to this. I think most collectors have an idea that there are fake coins out there, but I don’t think they realize the scope of the problem.
A few years ago, I talked with Beth Deisher, who was at the time heading the Anti-Counterfeiting Task Force, the precursor to the current organization. And she had some very eye-opening details about just the industrial scale of this issue. I’m sure in the years since, it’s just gotten worse. We may have– and I don’t know, we’ll find out if we took a breather during the COVID, a quarantine period, whether it was just still proliferating at that point. We had a national coin shortage. So, it seems like a perfect opportunity to try to pass some fake circulating coins.
So, we’re going to let these two gentlemen share their experience and expertise in this area and try to drill down on this topic so you’ll better informed and you’ll know who’s fighting this fight for you and how you might be able to contribute to the ultimate goal of succeeding against this. So, thank you, gentlemen.
Dana: It’s my pleasure to be here with you. Thank you for having us, Charles.
Doug Davis: My sentiments exactly. We appreciate the opportunity to provide some education in the area of these counterfeits, which is plaguing the market right now.
Charles: So, Dana, tell me how you got involved in this fight and why, as a coin dealer, you think that this is like an existential threat to not only the hobby but to the overall industry. We’re talking about bullion investors, we’re talking about coin collectors, we’re talking about even somebody going to spend money in the public space.
Dana: Well, thank you. I was fortunate to be on the Professional Numismatist Guild Board for 12 years, and I was president of PNG from 2015 to 2017. It was under my watch that we became aware that there was a small but growing proliferation of spurious bullion products coming into the US market, primarily from China. I’ve been in the business since 1980 and I had the good fortune of working for Jim Blanchard early in my career. And Jim Blanchard was the man who helped to found ICTA, the Industry Council for Tangible Assets, by calling 10 of his trading partners into a meeting in New Orleans and said, “You’re going to each give me $10,000 and we’re going to start this lobbying organization.”
So, when I was presented with the problem of this industrial-scale counterfeiting issue growing at the April 2016 Central States Coin Show, there are about five or six of us in the room. Kathy McFadden, who is the head of Victor, Beth Deisher was there, Bob Rugerman, the executive director of Victor was there. I just said, “Hey, we’ve got a problem here that’s bigger than just us coin dealers. We need to have Secret Service involved, Homeland Security involved.” We know some of the mints are already responding to the problem. The Canadian men had already started to put frosted little maple leaves on the back of their gold and silver bullion items. So, I said, “We need a task force.” It was just cloning Jim’s idea from back in the early 80s to create ICTA. I said, “We need a task force.”
Kathy McFadden, head of ICTA at the time, said, “Well, I’ll spearhead it.” We have the time and effort to do that. And Beth Deisher was actually formidable, incredible in helping to put the task force together. This was in April. We had our July meeting around the ANA in Los Angeles. That year, we had about 50 people in the room, including Homeland Security and Secret Service, who have stepped to the plate. Prior to that, Secret Service thought that a counterfeit $100 bill was not as big a problem as a counterfeit 1 oz gold eagle that has a $50 face value and a street value at the time of about $1,300. They’ve since come to the realization that this is a big problem.
Now it’s small, but it’s growing and it’s not going to stop, which is why it’s very important that the work of the task force continues to be supported, and people understand that there is a problem, and they do need to understand what they can do to sidestep it and prevent themselves from having a problem as ultimate consumers. Now as a dealer, we can pretty much, most of the time, easily tell that a bullion item or a vintage coin is spurious. But it’s not easy for the public that doesn’t see near the volume that we do. So, that’s probably the long part of the short story you want me to say, Charles. That’s how it was created.
Charles: And, Doug, what are you seeing now as far as the threat to the market and the type of material that’s coming in and the buy-in that you’re getting from the federal authorities?
Doug: Sure. Well, first of all, the mission of ACF and the work that was being done, first of all, was to educate really law enforcement, and legislators, and everything in regard to the big problem and then, providing them with resources to help them try to solve– not solve the problem, get the interest there and them realizing how big of a problem is, if it is. The key to it of it is, it’s gotten to the point where, in my opinion, it’s compromising the integrity of the numismatic and the precious metals industry. Not only that, but also the US monetary system because of the amount that’s being flooded in the US marketplace and everything.
But right now, we’re seeing just about everything that’s coming across in regard to the reports we get, dealers that are calling in and what they’re seeing coming across the corner. The third-party grading services have done an outstanding job coordinating with us and providing us with information to move forward and some of the investigations that we’re involved with. But it runs the gamut, not just numismatic coins, but the bullion coins. It’s not just the US products. It’s worldwide mints around the globe. So, it’s creating a twofold problem. Two-fold problem from law enforcement standpoint, and then the problem within our industry.
Like Dana pointed out, if you are a big dealer and you see this kind of stuff all the time coming across the counter, that’s great for the big dealer. But counterfeiters now and the people that have turned and seeing the opportunity to prey on individuals that are uneducated, they are using some unscrupulous means to use that opportunity. Even going out to the mom-and-pop shops or say that they’re in the suburbs of the major cities that don’t see this type of counterfeits coming across the counter like the other bigger dealerships do. So, it’s creating a problem for them. And then, it’s even creating a bigger problem for the normal investor or the numismatic collector.
But what created the biggest problem that we saw, and Dana pointed out when we really got started in 2017, is there was always a previous history of counterfeits on the market, but it’s just blown up exponentially in the last five years. But what really sparked it was when COVID hit, and people were uncertain of the US economy, and what was going to happen. They were uncertain about what was going to happen with the banking industry and everything.
I think a key to that was that when the bank started shutting down, you couldn’t go into the bank and get your money. The ATM machines weren’t being restocked and everything and they had nothing. I think that created a mental issue with them is that, “Hey, what am I going to do?” So, then you have the volatility of the metals market going crazy and people started looking at another means of investment in the normal conventional ways of doing things.
What that did was then that triggered the rush into the numismatics and into the precious metals market, because that provided them an avenue where they could have something in their hands. They could buy it. They could buy a roll of eagles, they could buy gold coins and everything. They could put it in their safe at the house or whatever. It was something tangible they could hold in their hands. At least, you could barter for a loaf of bread or something like that, where if your dollars were in the bank, you couldn’t get to, then there was issues.
So, then what we saw was then the internet blew up. Everybody started shopping and buying off of that. Well, the counterfeiters of coins and precious metals saw that as a big opportunity to start focusing in on the numismatic industry and the precious metals industry, and started doing all kinds of advertising. They went directly to the social media platforms, websites. The counterfeiters were buying hundreds and hundreds of domains.
The key to what they were trying to do was that their marketing plan was that, if I have thousand domains that I bought, each domain, I want to make $250,000 in a two-week period, and then I’ll shut that down and go to another one. They were using Facebook pop up ads as a way to entice and prey on individuals that are uneducated in precious metals in the numismatic marketplace. But these people were so scared of what was going on. They wanted to funnel their money into something else and that’s what was happening. But that targeted them as victims and that raised the red flags of the counterfeiters.
Organized groups and individuals have found a way to buy counterfeits through these black-market websites or not even black market. We’re talking about Alibaba and those type of websites where you can buy rolls of counterfeits, although they advertise them as shown being copy or fake counterfeit or whatever. But in actuality, and the ones that we have bought through these websites is 100% of the times, the one that we target have come back and have been counterfeit. And so, you can see.
What it did was, you might have had– The internet was a big part of buying power. But when COVID hit, it was 10 times you had the audience than you did previous to that. So, that gave them the opportunity to go in all kinds of directions. But the other problem with that was that not only hurt victims, just the normal individual, or the business investor, or whatever the case may be, but they took it a little farther. They actually violated the intellectual property rights of coin dealerships of organizations such as PNG, ANA because they used creative marketing techniques to prey on those individuals that are uneducated in these two areas.
So, when you look at one of their sites and see that, you see a video of them putting mint tubed eagles in a green monster box, and then putting the tape around it, and then it shows it rolling out the door into an armored car and everything, you think you’re getting it from the US mint. When you see in their ad, as it scrolls down that we are associated with the ANA, PNG, ICTA at that time, and now it’s changed. NCBA. What they were trying to do is to give credibility to their products. And even in the verbiage that they have in their ads, it sounded great.
They did great research in there and putting it all together, but we picked those apart when we see those and we can see that they’re using templates, basically the same thing, just using a different organization or a dealership and everything. But you have to realize that when they’re using a dealership logo or brand and everything, you’re not only hurting the reputation of that, but you’re losing a lot of money. When it turns around that now there’s some credibility. We’ve seen a lot of US mint products being counterfeited and everything. You don’t want people to be scared of buying US mint products. But they are counting everything within a mint product. That’s the outside packaging, that’s the holder that it’s in.
They’re even counterfeiting the certificate of authenticity in there. Unless you’ve looked at it and you really research it, you really pick it apart, or you realize that when you order stuff that you can’t get a refund, you can’t get in contact with them– When we investigate it and everything, we see that they’re using addresses that are ghost addresses. When you look and see where those locations are, it’s in an empty field or it’s in a warehouse district with nothing there. So, again, it’s creating major problems we see every day and we are attacking it from different forefront. So, that’s what we’re looking at.
Again, it’s become an amazing problem. I don’t think it’s going to get any better anytime soon, because the technology is getting so good that even some of the pros in the business are getting stumped on some of them, these things, because when we see a flaw or we see a mining area error or whatever, and it’s advertised, a week later, it’s corrected and new products been out, and so now you have to look at something else, whether it’s a different metal. You can’t just use the conventional ways of the pain test and so forth. You got to use all those different types of tests right now, because they’re just trying to pull the wool over everybody’s eyes and changing metals and so forth. So, that’s what we’re being faced with.
Charles: I point out that, Dana, you said that the bigger dealers have the in-house experience to be able to ascertain if coins are spurious. I think that’s actually getting much harder, because Jack Young writes a series of articles for us, where he describes families of counterfeit coins, where maybe the counterfeiters take a host coin that’s genuine, they replicate it, beat it up a little bit in their re-creations. They have been successful in getting these into third-party holders, like genuine third-party holders. They’re the minority of coins that get submitted that get through that.
But to what Doug was saying, I’ve seen the Facebook ads that he’s talking about. It looks like you’re going to an actual brick & mortar coin shop. When you click on it, there’s pictures of jewelry cases of coins, and books in the back, and it looks like they’re all about education. And then, they’ll have graded Morgan dollars or something for sale. We had a reader of our site about two weeks ago buy 10 of these coins, these PCGS-graded Morgan dollars, supposedly PCG-graded coins, they get them, and all of the serial numbers are the same. So, they didn’t even bother to print like a sequence of serial numbers for these fake coins. They just gave him 10 copies of the same counterfeit, and then he paid $25 a coin. That’s one thing that you have to be aware. Don’t let your own enthusiasm and this belief you’re getting a good deal color over the correct amount of suspicion you should have about a reputable third-party graded Morgan dollar in a nice uncirculated condition.
So, what we’re seeing on our end is a lot of brand confusion because Facebook ads can lend a ton of credibility to a counterfeiting operation, because people are seeing their family members and their friends and all of these people they already trust and interface with. So, when they’re given a spurious ad, they’re not on guard. They just take it for granted that a big company like Facebook wouldn’t allow a bunch of criminals to sell scams on their site. And apparently, there is no check for that. They just allow this to happen.
Then, when it comes to the material that’s out there and circulation, it’s not just collector coins. I think, Danny, you were telling me when were on the phone last that, you saw pallets of circulating quarters in a warehouse before that they were all fake. You don’t just run the risk of buying a coin that’s not real and losing money on that, but we’re actually running the risk of having fake coins just in the regular channels of commerce probably the first time since the colonial period.
Dana: Right. A cottage industry that is becoming more than cottages. It’s becoming a house, and maybe even bigger than that. They’re knocking off modern bullion products, they’re knocking off vintage coins. It used to be just a minor problem with vintage coins, and now they’re adapting in real-time, as Doug mentioned, and they’re becoming more unsophisticated as time passes because as knowledge is imparted on them, why it’s bad, they react to that to fix the errors that they’ve had. It’s a growing problem and it is not just vintage coins. They’re knocking off US quarters for one thing.
Beth Deisher showed me at a FUN show a couple of years ago, a couple of coins she picked up and changed– a couple of quarters she picked up and changed from the Beeline, which is the toll road from the Orlando airport to the convention center, and I looked at them, I said, “Well, they’re pretty bad beat up, but what about them, Beth?” And she had a whole bag of them behind the table that she’d picked up when this problem was just discovered and said, “These are all Chinese counterfeits.” What they were doing was, the design was a little off, so they would damage them, pummel them, make them look like they were horribly circulated to hide the design flaws.
There were thousands of them hitting the market because they were jamming up high, sophisticated counting machines that purely in brinks had because some of them were a little out of around through the aging process that they used. One of my PNG colleagues went to a warehouse. Not me, but one of my PNG colleagues went to a warehouse in Manhattan a couple of years ago to look at product that he was asked to do by Homeland Security. It was 22 crates of quarters, £2,000 each, all Chinese knockoffs of US quarters. They were pretty close to the actual metal composition, but they had a flaw in them that I’m not going to discuss now, but a flaw that we know about.
So, they’re knocking off everything. The public needs to be aware of this, so they can do what they need to do. Their due diligence. It’s important that the public understands that there is a problem and that they do need to drill down. If I had a nickel for every time I reported on Facebook spam, “This is spam,” then a monster box that was getting advertised for a couple of $1,000 less than it should have been trading for was a spurious product and like Doug said, you go to the website that’s advertising the product, and it looks good, but there’s nothing behind it. So, it’s highly important that people on the street that want to buy good that’s too good to be true is too good to be true.
Number one, use your common sense. And more importantly, deal with professionals in the industry who, at least, have the wherewithal to be the first gatekeeper to make sure that the product that they’re delivering is legitimately correct product, authentic for what it’s supposed to be, whether it’s vintage or not. They are now trying to the counterfeits are now trying to knock off PCGS holders. Doug Davis, you had some of those very same Morgan dollars at the FUN show in January. You showed me at your table. Doug has done an incredible job, but he’s a small operation compared to what we’re facing, which is why it’s imperative that Doug and the ACEF get as much support from the community at large and even past that as possible.
We’re grateful that we have Homeland Security and Secret Service involved and the dealer community PNG members have volunteered to be authenticators, if they’re called upon. We’re grateful for that. But it’s a big problem and we need to have as much support as possible, which is why I’m grateful that you’re having us on today, Charles, so we can discuss it and try and help get the word out there of what you can do to make sure that you’re protected, if you’re an individual customer and how you could help to support the ACEF and the fight that it’s up against in protecting the integrity of the product.
Charles: Doug, let me ask you a question. You have a background in law enforcement. What is the profile of these criminals? Are these domestic opportunists, organized criminal syndicates? Is this foreign criminal syndicates? Is this state economic warfare? What really at the heart of this is behind this problem that we’re facing?
Doug: Well, number one is you got the counterfeits. Number one is they’re after the dollar. They’re after the profit. They see a way to make some money pulling the wool over people’s eyes. Again, the uneducated and everything. We’re seeing it in some different avenues from the standpoint of the manufacturers, but the manufacturers have to have a way of distributing this product. And I’ll give you an example. Last year, we seized 5,000 US Silver Eagles coming into the DFW Airport. We worked with customs, border protection and the local secret service office. We had an PNG expert go out there with us. We authenticated and was being counterfeited and everything.
Then, what we saw was that it was coming in from China, but it was coming into a business located five miles from my office, which was great at that particular time. Based on the address of that location, it was in an industrial district and everything. So, when we saw where that address was and at the time that we had the product arrived at DFW, we actually went and set up surveillance at that location at the same time that we were out at the airport and seizing that, and found out in front as we looked is that there were just boxes of stuff coming into that location. And so, once we found out what kind of an operation it was, it was a distribution point for a lot of different other products.
But across the street, the highway, there was a large Asian population strip center, huge malls and stuff like that. And so, we figured out based on some of the packaging that we had people go in and see where they were being sent to from that distribution point, it was going to those type facilities. So, that particular distribution point or distributor there then was distributed to other places, going to flea markets, or going to these Asian bazaars, or whatever. So, again, you’re seeing it’s going from the manufacturer to a distributor that has an organized group or– It may not be organized group, but you have buyers that are looking for that. They can see the opportunity to make that.
For example, if they bought off of Alibaba or AliExpress or whatever, the ad on Alibaba or Express, it shows copy on those coins. But when you buy them, we’ve never seen it where there’s been a copy or fake or whatever. So, they take those rolls that they’re buying and take them to set up at flea market and put them for $5 or $10 under cost and getting rid of them.
Then, the other thing that we’re seeing is that we are actually making the good, honest person turn into a potential criminal, because they ordered three rolls for investment of these eagles, put them in their safe and thinking that’s an investment tool for them at a later date. But then in a couple of weeks, there’s a problem with the family, a car problem, they need the money, so they take them out, they take them to the local dealers and he says, “Well, these are counterfeit.” Well, okay, it’s counterfeit. So, he goes, “Well, heck, I’m out of money. I still need to get my car fixed. What are the cases of these?” So, what does he do? He takes them to another dealer, tries to sell it, and then he goes to another one until he finds somebody that is not educated, even from a professional standpoint and sells them.
Then right there from a law enforcement standpoint, what he has done is he has developed a sequence of events that he’s knowingly, intentionally going in there to commit fraud. Because he knows after the third time that they tell him that they’re no good and he finds a fourth person that will buy them, then that’s enough probable cause to have him arrested for fraud and type. So, we’re seeing that it’s different areas. You can have organized groups, you can have organized, just single individuals and everything. They’re taking the opportunity of what’s going on.
Again, it’s blowing up. It’s getting to the point where I think everybody needs to be concerned. Like Dana was saying, we encourage everybody to make sure that they’re using credible dealers such as PNG dealers, or ANA dealers, or your local dealer. It doesn’t matter. You have to vet the people that you’re buying from. You can’t buy off a Craigslist. You can’t buy off of Facebook pop up ads or websites that are advertising these types of things, unless you do your homework, unless you do the research, and you know and feel comfortable with who you’re dealing with. That’s what we encourage.
But from the standpoint of ACF and the Anti-Counterfeiting Task Force, there’s a lot of things that we’re doing to help enhance investigations and enhance education within law enforcement, the legislators and everything. We, on a daily basis, are averaging and monitoring over 200 websites and social media platforms that are selling counterfeits. We buy off of these platforms, websites, and everything to ensure that what they’re selling is legitimate products.
99.9% of the time, the ones that we’re investigating are not. Once we find out that those sites are selling counterfeit products, then we turn it over to the agencies that we feel like they’re going to go after those individuals. That’s Secret Service. We built great relationships with Secret Service and the different levels of customs and border protection and everything, and we funnel information to them. We funnel information to the US mint in regards to the US mint products that are being counterfeited.
Then like Dana was saying, we have a group of experts within ACTF and ACF that we are able across the country, wherever law enforcement agency needs assistance out on the scene or whatever the case may be, we will get them that expert out there to authenticate those products. We get calls for that all the time. We will fly there to make sure that we can assist those agencies. But I want to give you a good example of how bad this problem of it is customs and border protection did a project. It was about an eight-week deal of screening for just coins in one of the international mail facilities.
At that point, they called us and asked us, if we could provide an expert and come and help them evaluate what they had seized in one of the ports. Well, it turned out, we went out to the facility and everything. There were over 1,500 packages that came in from and 99.9% of them came from China. Each package contained anywhere from $50 to $100 and something coins. The average package, we valued at about $1,000, $1,200. When you think about it– So, if that’s the case, then you have 1,500 victims that have been taken by counterfeits. You multiply that, and a lot of these packages contain two and a half Indian gold pieces. They 1 oz Silver Eagles, and others and everything.
So, then that alone, just in that short period of time, the amount there was a little over, I think, $3.5 million in just that short period. Now, you’ve got these types of facilities all across the country and you multiply that on a daily basis and everything, you can see that the numbers of victims are huge, the amount of money is huge. ACEF and ACTF is playing an important role in supporting law enforcement that really doesn’t have the experience of education in the numismatic industry or the precious metal industry. With our assistance, they are gaining momentum in trying to attack this issue.
Secret Service does a great job. Custom and border protection does a great job. But they cannot do it alone, because they don’t have the expertise or the knowledge. That’s where we come into play in helping them educate them. Recently, in October, we presented a class over 50 different agencies in Kansas. We’ve done it in Florida, we’ve done it in Long Beach, where we had about 75 agencies from across the country. Most of those were Customs, Border Protection, Secret Service, and Postal Inspection Treasury Department. We have one treasury agent that works very closely with me that helps teach these classes across the country. But our efforts in this is that we not only do those kinds of things, but we’re gathering data. We’re developing trends and patterns. We’re trying to identify those counterfeiters. We’re trying to locate those factories in China. We’re trying to identify the organized groups that are buying these in large numbers and getting them out on the street.
You have to remember that, like you were talking earlier, this is organized groups, small groups, individuals that have taken it on themselves to find a way to make easy money in doing it. We’re even targeting those individuals, because when we see those websites and we see packages and reports that come in, then we do a background. We go where it’s located and try to find who’s sending it, who’s buying it, and then we’ll flag those addresses and try to find those locations in the middle, so they’re trying to sell them. But the victims, where we play an important part with the victims, we’re advocates for those individuals.
When they have problems with Facebook or they have problems with– These guys are really good, when they do their webpages and everything, because the number one method of payment they like to use is PayPal. We’ve been very successful in several cases and everything is when people could not get their money back. We have given letters of support showing that the products they did were counterfeit. We give them a history of what’s going on within the market and give them a number of other websites and everything that are doing the same thing. That provides them some proof that individual, they’re not trying to scam PayPal. They’re trying to get their money back from somebody that’s fraudulently selling a counterfeit product.
So, with that letter, a lot of times we can get that reversed into their favor and get their money refunded. But the information that we get and receive off of those reports and everything, that information we gather together, we send it to the agencies that we feel like they’re just going to take it and run with the ball. But we have to remember, we’re doing a huge amount of work to support Secret Service and Customs and Border Protection, those agencies that should be investigating, but there’s not enough manpower for them to do that. It’s too much. So, the work we do supplements them.
A lot of times, we can build a case for them that keeps them from having to do all the background and do all that. When we can go out, and the good thing about ACF and our members and the dealers that help us go out and authenticate them, they’re doing it on their own time. It’s great when I can make a call and Secret Service needs somebody to authenticate, and I’m able to get on the phone, and I have somebody within about 45 minutes, I have yet to not provide them with an expert to go out on a case or to one of their field offices in less than 24 hours. So, that’s critical in those type of incidents and everything. What that does is that lends credibility in the work that we’re doing from the law enforcement standpoint.
The thing of it is when they find a resource that can help put a case together without them doing a lot of work, that’s what investigators want to do. I’ve been a cop and police chief for 40 years and believe me, I want to go to somebody that knows what they’re doing. They can help me put that case together real quick, educate me to where I can help that victim feel comfortable. Then, I know what I’m doing. It’s like, if you had a burglary and somebody came out and you were a regular investigator and said, “Oh, I had a burglary and I just lost my Seated dollar collection in PCGS AU58 or whatever,” and the guy is going to look at you like, “I don’t have any idea what you’re talking about. Well, you can see the look on that.” Victim’s face saying, “Well, nothing’s going to happen.”
Well, we’re providing them resources that we can also help the victim feel comfortable. At least we’re going to give them enough information to do a credible investigation and take it as far as they can. So, that’s where we’re at with it. But we can’t do it without the support of the precious metal industry, and the numismatic industry, and all those that are involved with what’s taking place. But the key to it of it is that people out there, they need to be educated and they need to go to reputable dealers when they’re buying. Unless you bet, unless you know and feel comfortable with that, you could be a victim of a counterfeit crime.
Charles: For collectors looking for some good news on this horizon, beyond the fact that the law enforcement is getting educated that the industry is mobilized, Doug, we have your incredible talent being put into this operation. Are there any success stories about criminal prosecutions, or businesses being shut down, or targets of investigations being brought up on very serious charges, which I think is what the collecting community wants to see? They want to start seeing some of these thieves being put away.
Doug: Well, I think what’s hurt us in the last three years because of COVID is a lot of those investigations is slow and everything. We’re not going to see that. I can tell you without a reasonable doubt that we have major investigations ongoing right now with indictments in the future. But the other thing of it is when we send this individual reports out to these agencies and everything, we’re not getting any information back that they’re going out and investigating them, but I know that they are. That’s one of the things that’s hard is not seeing these arrests made and everything, but knowing that there’s ACF and ACTF that’s going after and providing them with information.
Then, the key thing that we’re beginning to do this year, which is one of our strategic initiatives, is that we’ve got to take the load off of the feds. We’ve got to give them some other resources that they can use and utilize. That goes to the individual states being given the ability to take these cases from the state level. That’s going to require every state have counterfeit statute that they can use to deal with the counterfeit issues. That means that any local, state, county law enforcement officer can make an arrest on somebody that selling a counterfeit coin and they can take it within with the state.
What’s good about that is the one that goes in with that one roll of silver eagles. He may just do it once, but then he may be one of those guys that’s going to get out and do it again and again. But it gives the local agencies the ability to attack it from the local side and then we can really push the big cases to the feds. We can still keep these guys in our intelligence files. We can see these businesses that are selling it and then when you get all the elements for the case and everything, you can get a warrant form and then go arrest them and everything. But that’s where we need to take it.
The other aspect of it is that continuing education. We need to get more out there and that’s what again we’re going to be doing starting this year. Right now in the last couple of years, it’s been developing law enforcement and have them recognize how big the problem of it is and what their role is, even though it’s just never been brought to the forefront like it has now. Secret Services, and they’ll tell you that they really are not into the coins. It’s at paper money. But now, it’s becoming such a big problem that they’re beginning to work with us, and they’re wanting to know more about it, and educate it in that respect. So, that’s what our goal and again, our strategic initiatives are going to be.
We got a great group, our workgroups that we have people involved. Dana has been extremely helpful. Anytime phone calls. But that’s the way all the PNG members have been. The experts that we have outside of PNG have all been very cooperative and it’s going to take us all working together to make sure that it’s not compromising our industries to the point that people are afraid to buy. We don’t want that to happen. We want them to be educated and making sure that they’re, again, vetting who they’re buying from credibility and then hopefully that will solve some of the issues.
Charles: So, Dana, as a dealer and a leader in the PNG, for collectors, what are some telltale signs that you’re dealing with a reputable business selling you authentic products? And then, speaking to your dealer community, what are some best practices that you recommend other dealers employ when they’re dealing with this issue to make sure that they protect themselves and their customers?
Dana: Well, from a client standpoint, you just need to know who you’re dealing with. And that’s long-term dealers, this is our industry, this is our livelihood. So, it’s in our best interest to make sure that the products that we’re buying, because it’s valuable, inventory are correct. So, with my business, I look at almost everything that comes in our door that’s not from a mint distributor or from another trusted trading partner. Anything that comes in our door that we haven’t sold, we vet it and we use sophisticated testing to make sure the merchandise is correct.
From a dealer-to-dealer transaction standpoint, you just need to know who you’re dealing with. We get hung up on price and making profits, especially when the market is tighter, like we’re going into a tighter market now. COVID gave us a really good market where we could earn a little bit better margins and the appetite from the public was really good. But when the market gets tight, dealers that aren’t established or new dealers, they attempted to push things a little bit. So, you need to know who you’re dealing with. It’s always best to make sure that you’re on cutting edge for what the information is, where the products are coming from. It’s mostly China, but what the problems are and what to look for.
I’ve literally taken a drill to kilogram gold bars in the past when I’ve had to, because they didn’t test right or they looked a little funny as from a dealer standpoint, we have to protect ourselves first, so we can protect our clients. From a client standpoint, it’s becoming educated that there is a problem. A low price isn’t always a good deal and it’s best to deal with a long-term dealer and it’s easy to drill down. As Doug said, some of these places, they don’t have addresses or the addresses in empty field, or if they want to get paid by PayPal. That’s not really a traditional method of payment for most dealers.
Now, there are younger dealers coming up. There’s groups on Facebook where there’s a lot of younger dealers and that’s great. It’s new blood for our industry, but they don’t have the experience that we have, some of the older dealers too. That doesn’t mean they’re unethical or they’re going to be challenged, but they just have to be careful. So, it’s just an awareness issue and it’s an issue of making sure that you have the right tools to make sure the integrity of the product is correct and helping to support the community that is trying to defend these issues, which is, we need everybody to help as much as they can.
Charles: So, Doug, what is the website for the ACEF, so that the people listening to this podcast can check it out and see how they might be able?
Doug: Well, that’s at acefonline.org. There’s a lot of good information on the website. There’s going to be a lot more coming in the next couple of months, we’re going to be pushing a lot more. The key to it is evaluating exactly what you want to put on that website to make sure that we’re not giving too much information out to the bad guys and everything, but still educating people of some of the things that are taking place.
The other key thing of it is they can contact me at any time through the website and we’re going to get back in touch with them or one of our investigators are going to get back with them and everything. It may take a little time because right now we’re inundated with offenses coming in all the time. What we’re trying to do is to work with those individuals and trying to give them a strategic plan of what they can do from step one, so forth and so on to help them out. That’s the key component.
We can’t keep up the work that we’re doing again without the support. ACEF and ACF, live strictly on donations from the numismatic community and the precious metals industries and collectors and investors and everything, because they have a vested interest in this and to make sure that, if we don’t take care of the problem, then again, it compromises the integrity of the whole situation and that’s what we’re trying to do our best at doing.
Charles: All right. Well, gentlemen, thank you for all the hard work that you put into this. And thank you for coming on and joining us and informing the community about the work that’s going on. I appreciate it.
Doug: We appreciate you. Thank you.
Dana: Yeah. Thank you, Charles, for the ability to help get some of this information out. And Doug is doing an incredible, incredible job. He is really the spearhead here and he needs as much support and help us he can get. He’s done an amazing job and he’s got a lot of work to do, and any support we can give him in particular is what we need to do. So, thank you.
Charles: All right, thank you. You guys have a wonderful weekend.
Doug: All right, thank you. Take care.
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