Federal authorities question two dealers at Baltimore Expo

FBI, U.S. Marshals detain dealers before releasing them at show
Published : 03/30/12
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Two dealers were detained and their inventories seized for several hours after search warrants were executed by federal agents on the bourse floor of the Whitman Coin and Collectibles Expo at the Baltimore Convention Center on March 22.

The two dealers — Robert Higgins, president of Certified Assets Management Inc. in Wilmington, Del., and Don Ketterling from DH Ketterling Consulting in Westlake Village, Calif. — returned to their tables, along with their inventory, after talking with FBI agents from the New York Field Office from Manhattan.

Higgins is also director of First State Depository LLC in Wilmington and a partner in Certified Assets Management International LLC, a company headquartered  in Stamford, Conn., that buys and sells numismatic items and precious metals, identifies investment opportunities in the market, and manages numismatic investment funds.

Federal authorities are being tight-lipped about specifics associated with the dealers’ detainment and the temporary seizure of their inventories.

Dealer response

Ketterling could not be reached for comment. However, Higgins issued a statement March 23 concerning the bourse floor incident.

“First State Depository is cooperating with the investigation into the false allegations that were made by IDB Bank when several of FSDC’s clients entered into a legal dispute with them,” Higgins said.

“We believe that the facts in this case will show that FSDC is not only innocent of these charges, but that the charges were made without merit and contrary to what all the evidence will bring out. FSDC has been put in the middle of this agreement as the custodian of record for the parties involved. We are confident of the outcome.”

“IDB Bank” refers to Israel Discount Bank of New York.

Higgins said March 23 by email that Ketterling is not an official of First State, but that Ketterling and CAMI are clients of First State.

A civil complaint is being litigated in the Court of Chancery of the State of Delaware in Wilmington in the case of Israel Discount Bank of New York v. First State Depository Company LLC.

The court’s vice chancellor, Donald F. Parsons, issued an opinion and order March 19 in Israel Discount Bank’s bid to preserve $17 million in certified numismatic coins, and bullion, as well as 12,956 Sacagawea dollar errors with missing edge lettering, held by First State as collateral for loan obligations between IDB and Republic National Business Credit LLC, according to the Delaware court documents.

While most documents in the civil case have been filed under seal, Parson’s March 19 opinion and order were not.

Israel Discount Bank alleges First State is attempting to sell some of IDB’s assets without its permission, which violates the collateral agreement.

Parsons ruled March 19 that First State and CAMI failed to comply with his Feb. 29 stipulation and preliminary injunction order giving Israel Discount Bank rights to have the coins in question returned to Delaware for proper examination, appraisal and safe-keeping.

In his March 19 order, Parsons found First State and CAMI in contempt and imposed a $5,000 fine each day until IDB’s assets in question are returned to Delaware.

“I consider the $5,000 daily fine sufficient to motivate First State and CAMI promptly to cure any future failure to comply with this Court’s orders,” Parsons wrote in his March 19 ruling.

The property that IDB intended to be with First State is currently in CAMI’s possession, Parsons noted that First State argued in court documents.

Parsons ruled March 19 that he found First State and CAMI “jointly and severally liable” because Robert Higgins owns a controlling interest in both CAMI and First State; and noted that Eric Higgins is the head of customer service for First State. Although not identified as such in Delaware court documents not under seal, Eric Higgins is Robert Higgins’ son.

“Thus, the record suggests that First State and CAMI are closely interrelated and likely to be acting in concert,” Parsons said.

Parsons concluded the defendants “acted in bad faith and vexatiously in negotiating and stipulating” to the preliminary injunction (PI) order.

“Indeed, Defendants apparently were never committed to complying with the PI Order,” Parsons wrote in his March 19 ruling.

Parsons rejected First State’s argument that it shouldn’t be held in contempt because Israel Discount Bank already has access to sufficient collateral to protect any loans it made, according to the March 19 court documents. First State claims in court documents that IDB representatives visited the depository on March 5 and removed some loan collateral.

First State also believes if the assets are returned, “the collateral will be dissipated unlawfully by IDB. ...”

Search warrants

FBI agents from New York, accompanied by U.S. Marshals, executed on the bourse floor of the expo one or more search warrants March 22 obtained through the federal district court in Baltimore, according to Special Agent Jim Margolin, a media coordinator for the FBI’s New York Field Office.

Margolin said March 22 that the actions by federal authorities was tied to an on-going federal investigation out of New York. All court documents filed in connection with the case are currently filed under seal in federal court in New York, Margolin said.

The search warrants obtained from the federal court in Baltimore are also filed under seal, Margolin said.

Federal agents with the search warrants reportedly entered the bourse floor of the coin show around 10 a.m., took the dealers and their inventories to separate rooms in the convention center, and then released the dealers and their inventories less than three hours later without any of the inventory being retained nor arrests made.

Two of the U.S. Marshals involved in helping to execute the warrants remained at the show buying coins as both were identified by show personnel as collectors. ■

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