By Joshua McMorrow-Hernandez for Coinweek …….
Recycling firm Wealthy Max Ltd is hoping to save face with a transparency program following a controversy that spelled massive fines and civil proceedings for the company, which has links to China. The firm, which submitted tons of coins to the United States Mint’s Mutilated Coin Redemption Program, has been embroiled in controversy for years after the U.S. government claimed that hundreds of thousands of coins tendered by Wealthy Max were counterfeit.
Suspicions grew among U.S. Customs and Border Protection officials in 2009 when they saw a sudden increase in shipments of damaged coins coming from China through the Port of Los Angeles. An investigation into some of these coins resulted in findings that the coins contained silicon and aluminum; neither element is found in authentic U.S. coins. Each of these coins appeared to have similar forces of mutilation, including mechanical deformation and chemically-induced corrosion. This led to a suspension of the United States Mint’s Mutilated Coin Redemption Program as officials investigated the alleged coin trafficking and abuses against the Mint’s century-old program.
On February 23, Wealthy Max officials invited members of the media and U.S. public officials from the Department of Homeland Security, United States Treasury, Department of Justice, and House Financial Services Subcommittee on Domestic Monetary Policy to inspect samples from 13 metric tons of mutilated coins. None of the invited U.S. officials attended the public audit at a facility in Foshan, China. However, several journalists showed up with cameras rolling and pens poised on pads as Wealthy Max stated their case before the press.
“We want to ensure that there’s a full and comprehensive review of the movement of the coins, the origin of the coins, and to show that Wealthy Max has been in compliance with the standards and requirements of the U.S. Mint,” said FormerFedsGroup Director Steve Gomez at the press event. “Those procedures include how Wealthy Max acquired the coins, inspected the coins, and packaged the coins for submission to the United States Mint.”
Media swarmed around piles of coins on the ground, sorted by date, that were taken as random samples from some of the 13 crates intended for shipment to the United States Mint. Each crate contains 1,000 kilograms of mutilated dimes and quarters, which were to be exchanged through the redemption program at the rate of about $20 per pound, the scrap metal value of the coins.
“We noticed 1975 wasn’t reflected on the coins and we asked ourselves ‘why is that?’” Gomez noted. He tied the findings of the company’s investigative procedures to a numismatically well-known fact that the U.S. Mint did not strike 1975-dated quarters due to the Bicentennial design program and 1776-1976 dual dating that began on quarters.
“It’s very interesting going into this history. As we conduct our research, you start to see trends,” he said. “That is actually what occurred in the U.S. when they were minting the coins, and that’s what we’re seeing in out compliance review,” he announced.
The findings may help Wealthy Max in the public eye at large. Still, some U.S. officials aren’t convinced that the mutilated coin scrap recycling industry in China entirely rings true. Assistant U.S. Attorney Lakshmi Srinivasan Herman compared the number of cars shipped to China to the amount of U.S. coins coming in from the Asian nation.
According to his complaint file, Herman wrote “There would have to be approximately $900 in coins in every vehicle ever exported to China as scrap metal in order to account for the total amount of waste coins imported from China for redemption.” He also expressed doubts about the number of half dollars shipped in as scrap from China. “Interestingly, United States Mint personnel also believe that more half dollars have been redeemed by China-sourced vendors in the last 10 years than the United States Mint ever manufactured in its history.”
Speaking on behalf of Wealthy Max, Gomez notes that the company’s 13 metric tons of scrap coins contain only dimes and quarters dated between 1965 and 2013.
While Wealthy Max continues to clear its name in the public arena, the company wages a legal battle to claim more than $2.3 million it says the U.S. government owes for a shipment of purportedly mutilated coins that the U.S. Mint accepted in June 2014; the funds were seized by the Department of Homeland Security. Two other shipments from October 2014 and March 2015 were also confiscated by Federal officials; Wealthy Max claims those shipments had a total value of more than $3.2 million.