US Coins

CU sues dealer over fake coins, PCGS slabs

Collectors Universe has initiated a lawsuit in federal court that accuses a Minnesota rare coin firm and a Minnesota dealer of selling to customers counterfeit coins in counterfeit Professional Coin Grading Service holders that were made to order from Chinese manufacturers.

The lawsuit was filed in United States District Court, Central District of California, on Dec. 7, against Burnsville, Minn., rare coin firm Burnsville Coin Co., dealer Barry Skog, whose LinkedIn professional profile lists him as the firm’s chief executive officer, and up to 25 unnamed John Does.

The complaint alleges violations of the Hobby Protection Act, the Lanham Act, violation of RICO, common law fraud, conspiracy and violation of California’s unfair competition law.

Collectors Universe is the parent company of PCGS.

The addition of unnamed John Doe defendants allows the litigation to expand to include more individuals as the discovery process reveals more about the alleged import and sale of counterfeit coins.

The complaint alleges that during the past four years the Burnsville Coin Co. and Skog have sold – and continue to sell – counterfeit rare coins not marked COPY, in violation of the Hobby Protection Act.

The lawsuit alleges that the defendants ordered counterfeit coins directly from manufacturers in
China, and that “Defendants request counterfeits of specific denominations and dates of coins from their supplier after receiving orders from customers …”

In CU’s first count for violations of the Hobby Protection Act, the filing cites the example of Robert Webber of Goldsboro, N.C., who purchased two coins from the defendants in April 2010 for $12,400. The coins – Seated Liberty dollars dated 1851 and 1858 – were counterfeits made to order in China.

The second count is for infringement of PCGS’s federally registered trademarks as the counterfeit coins were sold in false PCGS holders purporting to be genuine “with the purpose of passing off counterfeit Chinese-made coins in said holders to other dealers and the public as PCGS authenticated and graded coins.”

The third count is for violations of the Lanham Act, which protects trademarks.

The fourth count is for RICO racketeering violations resulting in the trafficking in counterfeit goods and services.

The fifth count in the suit alleges that the defendants violated California’s Unfair Competition law.

The sixth count is for conspiracy in that the defendants – including yet-unnamed John Does – agreed to manufacture and import counterfeit coins in counterfeit PCGS holders to sell to other dealers and the public.

Collectors Universe has requested that the court stop the defendants from manufacturing, importing and selling counterfeit coins in counterfeit PCGS holders and that they deliver for destruction all counterfeit coins in their possession, including those in counterfeit PCGS holders.

Collectors Universe also asks that the defendants pay CU “all gains, profits and advantages derived by them from their sale of counterfeit coins in counterfeit PCGS holders,” pay damages and restitution, and pay CU a sum equal to three times the amount of damages, in addition to exemplary damages and attorney’s fees.

The complaint requests a jury trial. ¦

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