The latest chapter in the nearly 15-year-long legal fight over some of the rarest gold coins in the world has closed, as a 12-judge panel in the 3rd US Circuit Court of Appeals ruled 9-3 in favor of the US government's claim of ownership over ten 1933 Saint-Gaudens Double Eagle gold coins. Plaintiffs Joan Langbord and her sons Roy and David immediately moved to take the case to the US Supreme Court.
To understand the willingness of the Langbords to go to the trouble and expense of fighting the federal government in court since 2004, one must understand the unique place the 1933 gold double eagle holds in history.
Last Of Their Kind
The double eagle gold coin was the largest denomination circulating coin in the United States. Born from the California Gold Rush, the double eagle, also known as the $20 gold piece, was introduced in 1849. The coin's popularity reached its zenith in 1907, when a new design by famous sculptor Augustus Saint-Gaudens debuted. His double eagle design was met with rave reviews, and is still considered by many to be the most beautiful circulating coin in US history.
If the double eagle was born in one of the greatest booms in US history, it died in one of its worst crashes. As the nation suffered under the Great Depression, newly-elected President Franklin Roosevelt quickly moved to increase the government's gold reserves, and to restrict the public's ownership of gold.
On March 6, 1933, two days after taking office, Roosevelt declared a national emergency and closed the nation's banks until March 13, ordering them to cease redemption of gold certificates for actual gold. Then on April 5, 1933, he enacted Executive Order 6102. The public was ordered to render all circulating gold coins and bullion in excess of $100 to the government in return for paper money at the rate of $20.67 per ounce. This, in effect, demonetized all US gold coins. (Rare and collectible coins were exempt.)
As all gold coins were being pulled from circulation and melted, the US Mint was ordered to also melt any gold coins it held in inventory. This included the 455,500 1933 Saint-Gaudens Double Eagles that had been struck but never released into circulation. The last of the 1933 double eagles were finally melted down in 1937. Therefore, the government naturally believed that the only surviving samples of this coin were the two given to the Smithsonian for the national coin collection.
The government was wrong.
The Mystery of the 1933 Saint-Gaudens Double Eagles
For several years, the US government totally missed the fact that several 1933 double eagle gold coins had mysteriously entered the public realm. The coins were publicly bought and sold on the open market until 1944, when Ernest Kehr, a reporter writing about a 1933 double eagle featured in an upcoming Stack's Bowers auction, wrote to the Treasury Department to get more information.
The US Secret Service quickly opened an investigation into the stolen coins, starting with the two sold in the Stack's Bowers auction. One was recovered, but the other had left the country the month before. Secret Service agents enthusiastically went after any others that surfaced. In the first year of the investigation, the government recovered and destroyed seven more 1933 double eagles. In 1945, another coin was bagged, bringing the total to nine.
The same year, the Secret Service determined that all the illegal 1933 double eagles had been stolen by US Mint cashier George McCann, abetted by his acquaintance, Philadelphia jeweler Israel Switt. According to Alison Frankel, author of Double Eagle: The Epic Story of the World's Most Valuable Coin, the process of melting down the 1933 double eagles began on February 6, 1937. McCann supervised the hauling of the 1,780 canvas bags full of the coins from Philadelphia Mint Vault F to the melting room. Nine days later, on February 15, Israel Switt sold a 1933 double eagle to a local coin dealer for $500. On March 18, 1937, the Philadelphia Mint announced that the last of the 1933 Saint-Gaudens double eagles had been destroyed. It had taken 41 days to melt the nearly 15 tons of gold coins.
When questioned by Secret Service agents in 1945 about the 1933 double eagles circulating among coin collectors, Switt, who had twice previously come under investigation regarding his coin transactions, admitted to selling the nine double eagles discovered by the government. When pressed regarding their provenance, he claimed that he couldn't remember where he had obtained them. The Justice Department could not prosecute Switt or McCann, as the statute of limitations had expired.
Switt was also rumored to be the seller of a tenth coin, which would become the world's most famous gold coin before the Langbords came forward: The King Farouk 1933 Double Eagle.
King Farouk's Double Eagle
The government accidentally authorized the ownership of one of the errant double eagles when the Egyptian government requested an export license (as required by US law) for a 1933 double eagle purchased by their king, Farouk. The license was granted and the coin taken to Egypt mere weeks before the Secret Service realized that there were 1933 double eagles in the wild. The US government requested that the coin be returned, but Farouk refused. Since keeping Egypt in Allied hands was vital to the war, US officials dropped the matter.
Farouk was deposed in the 1952 Egyptian coup led by General Abdel Nasser. The king's lavish belongings were auctioned off by the new government. Among Farouk's riches was the 1933 Saint-Gaudens double eagle, the only one in the world known to be in private hands. The United States government caught wind of the coin's appearance on the open market, and demanded that Sotheby's, the auctioneer handling the Farouk treasures, turn it over. Before that could be done, the coin vanished.
US President Franklin D Roosevelt
The lost coin emerged from the shadows more than 40 years later, when British coin dealer Stephen Fenton was lured to the US by a Secret Service sting operation. Instead of a buyer with $1 million, Fenton found federal agents who seized the coin and arrested him. Claiming that his coin was the Farouk 1933 Saint-Gaudens double eagle, and therefore legal to own, Fenton fought the US government in court from 1996 to 2001.
A settlement was reached whereby the government would officially monetize and issue this particular coin, making it the only legal tender 1933 double eagle in the world. After that, the coin was legal to own. It was sold at auction in 2002. The final price of $7.5 million was double the record for the world's most expensive coin at that time. The US government and Fenton split the proceeds 50/50.
And here is how this all ties together with our story.
The Langbord 1933 Double Eagle Hoard
Joan Langbord is the only child of Israel Switt. She spent most of her life working at her father's jewelry store in Philadelphia, a block from Independence Hall. When Switt died in 1990 at the age of 95, Joan took over the business, keeping her father's name on the front door.
In 2002, the news was filled with the story of the recently-auctioned Farouk 1933 double eagle and Israel Switt's connection to the coin. Joan's son Roy Langbord, a lawyer in New York City, called his mom. Perhaps there were more of these 1933 double eagles stashed somewhere by Grandpa Switt? There was. Ten, in fact, were hidden away in one of his safe deposit boxes.
The Langbords decided to offer them to the US government, instead of fighting a lengthy court battle. In return, they wanted the same arrangement that Stephen Fenton had just received for the Farouk 1933 double eagle — a 50/50 split.
With the Fenton's battle with the federal government fresh in their minds, the Langbords knew that they would need help in using the Farouk sale as precedent. They contacted Barry Berke, the lawyer who had negotiated the settlement between Fenton and the government, for help.
So, in 2004, Berke and the Langbords embarked on a high-stakes gamble. They would take the ten 1933 Saint-Gaudens double eagles to the US Mint in Philadelphia, and ask for them to be authenticated. When the Mint refused to return the coins to the Langbords, they would sue the government, claiming that the coins had been seized illegally. This would place the onus on the US government to prove that the coins were stolen, instead of the Langbords having to prove that they weren't.
Berke believed that the government could not present to the court a preponderance of evidence proving the coins were stolen, as everyone involved in the original case was long since dead. The jury would then have to find in favor of the Langbords. This would give the family clear ownership of ten 1933 Saint-Gaudens double eagles that had been officially authenticated by the US Mint itself.
Sure enough, in 2005, the government declared the ten 1933 double eagles stolen property and refused to return them. The Langbords asked the government to either return the coins, compensate them $40 million (half of the estimated market value), or begin forfeiture proceeding in the courts.
The government asserted that the ten 1933 Saint-Gaudens double eagles were stolen property, and not legal tender coins, since they had never been monetized. This meant that, in the government's eyes, there was no need to pursue forfeiture in the courts. In December 2006, the Langbords filed suit for the return of the coins. And that was where things stopped going according to plan.
Langbords v. United States
In July 2009, the Federal District Court in Philadelphia found that the US government had violated the Langbord's Constitutional rights, clearing the path for the suit to go to trial.
In July 2011, the case went to trial. The Langbords' lawyer asserted that there was a "window of opportunity" between March 15, 1933 (when FDR's orders for a nationwide bank holiday expired) and April 5, 1933 (when Executive Order 6102 passed) where Switt could have legally exchanged gold for the double eagles at the Philadelphia Mint's cashiers window. The government contended that there were no records at the Mint showing any such disbursement of 1933 double eagles, supporting the government's claims that the coins found by the Langbords had been stolen. The jury found in favor of the government.
The Langbords appealed, but in a September 2012 bench trial, US District Judge Legrome Davis Jr. upheld the jury's verdict. The Langbord's then asked the 3rd District Court of Appeals to hear their case.
In that April 2015 trial, a three-judge panel ruled in favor of the Langbords by 2 -1. The majority opinion cited the government's failure to initiate civil forfeiture proceedings within 90 days of confiscating the coins, as required by law, and dismissed the government's claims that Israel Switt was involved in the initial removal of the 1933 double eagles from the Philadelphia Mint.
The government claimed that civil forfeiture law did not apply to the confiscation of the gold coins. Rather, it was their position that title to the 1933 double eagles has always rested with the government, and that the coins were stolen property. It then invoked its right to appeal to an en banc trial by all 12 Appeals Court judges.
That trial ended last week, with the panel ruling 9-3 to overturn the previous appeal, and reinstating the original verdict in favor of the government. The majority opinion agreed with the government the situation was a case of reclaiming stolen property, and that the 1945 Secret Service investigation tied Switt to the sale of every 1933 Saint-Gaudens double eagle ever found in private hands.
This is not the end of the story, however. The Langbords plan to appeal to the US Supreme Court, claiming government overreach and a violation of their Constitutional rights against unlawful seizure. They contend that the government has failed to prove their case that the only way Israel Switt could have gained possession of the 1933 double eagles was through George McCann's theft of the coins, in essence, being a fence for stolen goods. Circuit Judge Marjorie Rendell, who wrote the majority opinion in the previous appeal, sides with the Langbords that the US government is running roughshod over the protections provided to the public in civil forfeiture.
For now, there is no indication if, or when, the Supreme Court will decide to hear arguments in the case. It seems there is one final chapter to write in this 83-year saga. In the meantime, the ten 1933 Saint-Gaudens double eagles remain in the government's gold vaults at Ft. Knox...
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