PCGS, Homerun Hall and AT coins - Legal Implications
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What responsibility do you think PCGS has in regards to AT coins? Should they be responsible for your purchase price if you purchase a PCGS toned coin, which later proves to be AT?
Let's see what Mr. Hall thinks about PCGS and AT coins -- by the way these statements were copied from his responses from the Q&A forum.
<< <i>The best thing you can do to protect yourself from AT coins is to buy PCGS graded coins (OK, so I'm biased). We really take the issue seriously and our graders have lots of experoence in telling the difference between real toning and AT. >>
<< <i>I can assure you that the new PCGS President (me) takes a very dim view of coin doctoring and he's about to raise the misery level for the doctors. >>
<< <i>I can tell you that we grade 70,000 coins a month >>
One AT coin might slip by every now and then
<< <i>But note that my observation is that the so-called "monster toned" coins I see are usually OK. >>
<< <i>I believe that somewhere between 20% and 40% of all toned coins have been artificially enhanced in some way...David >>
<< <i>We use "current market value" in determing buy-back prices. When the mistake is ours, we will not bust your chops on the price. >>
<< <i>Remember, we have a grading guarantee and have to buy back coins that are grading mistakes. >>
<< <i>Now that I am once again more involved with PCGS we will be looking at ways to make it even tougher for coin doctors. I have always been a big militant on this issue. There are many things we can do, including possible legal action. >>
Based upon the sum of his statements, I would assume, that if you purchased a PCGS slabbed toned coin, cracked it out and it got BBed at one of the top tier services PCGS/NGC/ANACS, you would receive a refund of your purchase price from CU. As long as you can show that the price you paid was "market acceptable"
What do you think?
Michael
Let's see what Mr. Hall thinks about PCGS and AT coins -- by the way these statements were copied from his responses from the Q&A forum.
<< <i>The best thing you can do to protect yourself from AT coins is to buy PCGS graded coins (OK, so I'm biased). We really take the issue seriously and our graders have lots of experoence in telling the difference between real toning and AT. >>
<< <i>I can assure you that the new PCGS President (me) takes a very dim view of coin doctoring and he's about to raise the misery level for the doctors. >>
<< <i>I can tell you that we grade 70,000 coins a month >>
One AT coin might slip by every now and then
<< <i>But note that my observation is that the so-called "monster toned" coins I see are usually OK. >>
<< <i>I believe that somewhere between 20% and 40% of all toned coins have been artificially enhanced in some way...David >>
<< <i>We use "current market value" in determing buy-back prices. When the mistake is ours, we will not bust your chops on the price. >>
<< <i>Remember, we have a grading guarantee and have to buy back coins that are grading mistakes. >>
<< <i>Now that I am once again more involved with PCGS we will be looking at ways to make it even tougher for coin doctors. I have always been a big militant on this issue. There are many things we can do, including possible legal action. >>
Based upon the sum of his statements, I would assume, that if you purchased a PCGS slabbed toned coin, cracked it out and it got BBed at one of the top tier services PCGS/NGC/ANACS, you would receive a refund of your purchase price from CU. As long as you can show that the price you paid was "market acceptable"
What do you think?
Michael
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Comments
"Senorita HepKitty"
"I want a real cool Kitty from Hepcat City, to stay in step with me" - Bill Carter
Michael
I'm sure they are anti dr since they have the grade guarantee and it costs them $$.
Fair market value? does that mean if you have a common date & grade toned Morgan that you pay $1500 for and it turns bad you get $100 or do you get refund on the purchase price?
This statement isn't a contract, but when read in light of the PCGS submission form (contract), it states they don't grade artifically toned coins. It leads me, a reasonable man, to believe that there are no AT coins in PCGS holders. They are experts, they know what they are doing, hence I'm safe. (Warranty)
We know that PCGS offers grade guarentees, authenticity guarentees, I would assume that they also do the same for toning -- he did make those statements (warranty)
He says they use "current market value" in determing price for buyback purposes. A common date monster toned Morgan isn't a cheap coin, I should have atleast some price purchase protection there.
Why wouldn't PCGS offer refund for AT coins. It sounds like D Hall is serious about this situation, I'm sure he would stand behind his own position in regards to doing right by his customers, if PCGS screwed the pooch on a coin.
Michael
Baseball -- I'm not singling PCGS out, I'm just looking at this issue based upon the statements made by D.Hall, especially the first quote I posted.
Dog - what if the coin was cracked and resubmitted to PCGS and came back BBed?
Michael
<< <i>If you crack it and resubmit it raw all bets are off!!
I'm sure they are anti dr since they have the grade guarantee and it costs them $$.
Fair market value? does that mean if you have a common date & grade toned Morgan that you pay $1500 for and it turns bad you get $100 or do you get refund on the purchase price? >>
Dog97- Seems you don't understand just how little that PCGS guarantee provides for toned coins. You better take a few moments to read this thread:
LINK
Seems a lot of Members here have very little understanding of how this works. If they plan on buying wildly toned coins, then they better begin to do some homework.
Michael
<< <i>All of you are really missing my point. >>
No we are not, isn't it right between your ears?
"Senorita HepKitty"
"I want a real cool Kitty from Hepcat City, to stay in step with me" - Bill Carter
So yes they should be responsible for you purchase price, within reason. If you pay $30K in a bidding war for a $500 coin that usually sells for $1500 with monster tone they would probably tell you they wouldn't cover your crazy prem.
and it sets us apart from practitioners and consultants. Gregor
ROUNDED OFF THE NEAREST MILLION:
CLCT MARKET CAP TODAY: $ 16
GE MARKET CAP TODAY : $229,073
Does that make the picture clearer? After your $450/hr fees are paid, what possible settlement could you extract from CU - 5 free modern submissions per customer? Heck, I bet anyone could simply ask David Hall and if they asked him nice enough probably get that
My point here is simply the same point I was trying to make yesterday in Mark Feld's thread on joining the doctoring task force - think before you leap.
<< <i>The best thing you can do to protect yourself from AT coins is to buy PCGS graded coins (OK, so I'm biased). We really take the issue seriously and our graders have lots of experoence in telling the difference between real toning and AT >>
once again, a nebulous answer from the horse's mouth - w/ absolutely no def'n whatsoever of what they consider "a-t". how can the conversation be meaningful w/out defining what is being discussed?
<< <i>I can assure you that the new PCGS President (me) takes a very dim view of coin doctoring and he's about to raise the misery level for the doctors >>
gee, what's the chance that this dim-visioned president considers "dipping" to be doctoring?
<< <i>Remember, we have a grading guarantee and have to buy back coins that are grading mistakes >>
(of course, undergraded coins are never a mistake)
yeah i know, i'm off the point, but i'm becoming more & more cynical each day. somebody save me!!!
K S
<< <i>Typetone -- where exactly do they say this? >>
I'll answer that for Greg! How about on their web site where they describe their guarantee: "The cash-back policy ensures the accuracy of the grade assigned to any PCGS coin as long as it remains in its tamper-evident holder. " (I added the emphasis). You can find this in the second sentence right here!! Their guarantee and offer seems eminently fair to me. Why do lawyers always want to extract something from people when it just isn't there to be extracted??
I appreciate David Hall's open and honest communications. I sure hope he doesn't have to worry about anything he says turning around to haunt him with some flippant lawsuit embarked on by some arrogant, greedy lawyer.
Pete
IMO
Rich
i think 70% to 80 % of the raw coins are At,
Liberty: Parent of Science & Industry
yes, yes it does. (blashpemy!)
Liberty: Parent of Science & Industry
and it sets us apart from practitioners and consultants. Gregor
In honor of the memory of Cpl. Michael E. Thompson
<< <i>The cash-back policy ensures the accuracy of the grade assigned to any PCGS coin as long as it remains in its tamper-evident holder. >>
Here's the second line, that is more on point with my thread
<< <i>PCGS has a policy prohibiting the encapsulation of coins with problems such as: artificial toning, excessive cleaning, environmental damage, PVC damage, major scratches, or planchet flaws. >>
If my coin was puttied and I wanted it checked and cracked it out, would you all say that all bets are off. What if the coin was counterfeit and was cracked out? What if I had the coin examined through the slab for AT and then presented the coin still slabbed to PCGS and I had unconvertable evidence of AT?
Wondercoin, actually the market cap has really nothing to do with whether the company is a target for class action suits. It's how they treat their customers, live up to their contractual relationships and whether they are in violation of consumer protection laws.
Pete -- sorry but greedy lawyers can actually make the world a better place for consumers. Next time you go and rent a car and return it with an empty gas tank, and find out what the "new" policy is. It used to be that you'd be charged $3-$4 per gallon for gas. You were paying a penalty on a contract, a long standing illegal practice. My firm protects consumers that have been taken for a ride by major corporations.
Okay, let me change this around a bit and see if we can all agree.
I own a home, and I bring in a contractor to replace my garage for $5000.00. And in his contract he states that he will only perform repairs/construction to code. I think great an honest contract that performs good quality work. He even states that he will secure all permits needed. So the work begins and ends. I never see the permits nor the building inspector, but he tells me everything is hunky-dory. Two years later I sell the house, an inspection is done by the new buyers and low and behold, the work wasn't done to code and he never got the permits. Now I have to remedy the situation, in order to complete the sale @ a cost to me of $15,000.00.
Do I have a right to seek redress from the contractor?
Michael
I don't think there's any question that you have a right, and should be rewarded some damages. The question is, at what price (which I think was the initial point of this thread?). Cracking out a slabbed coin, then sending it in to PCGS to be graded again could certainly be done (and if I were going to attempt it, a Lawyer and a Notary would be at the top of the list of "People invited to the crackout/send-off party
What does PCGS owe you? My guess is the market price of the coin in its previous holder (the one you cracked it out of). And I would suppose that the market price would probably be determined by some sort of composite of the industry price guides at the time the coin was BB'd.
Do you see it differently?
"France said this week they need more evidence to convince them Saddam is a threat. Yeah, last time France asked for more evidence it came rollin thru Paris with a German Flag on it." -Dave Letterman
In honor of the memory of Cpl. Michael E. Thompson
Herein lies the flaw in the analogy. In the opinion of the new buyer, the work wasn't done to code would be more appropriate, since a perfect determination probably cannot be made. Lastly, since in this case, the contractor is willing to guarantee their work at fair market value, would you have a claim?
and it sets us apart from practitioners and consultants. Gregor
I would suspect (I'm not a chemist, so go with me) that a Morgan that was toned while sitting inside a cotton/canvas bag will have a different chemical signature on spectronanlysis then a coin that was manufactured. Furthermore, there might even be risidual fibers on the surface of the coin from that material. Which wouldn't be found on an AT coin. While coin doctors might be very good at what they do, I doubt if they could bond microscopic fibers of a 100 yr old cotton bag onto the surface of a coin. This might be far fetched in the world of coin grading, but it isn't in the world of litigation, what about the microscopic evaluation of the coin's surface, even on the atom level.
Any chemists or those with the requesite scientific knowledge have any opinions?
As for my analogy, let's change it again,
Suppose you buy a used car, and your told by the salesman that their dealership does not sell "salvaged cars," all cars come with a clean title and it's even stated as part of the contract. The car you buy, has a clean titled, but only because the dealer knew someone at DMV that altered the docs. You find out later the car was totalled. Do you have recourse against the dealer? For what price, purchase, fair market value, Kelly Blue Book?
What if the dealer didn't know and didn't clean the title themselves through their DMV contact? The person they purchased the car from cleaned the salvage title. They merely inspected the car and certified it under their warranty. You relied on their representation and expertise in making your decision to purchase that car. Should the dealer say too bad, sorry we didn't catch it despite our 40 years certifying and selling used cars, but here's the name of the person we bought it from, go sue them.
Michael
PCGS can certainly establish the terms of its guaranty. They can require the coin to be left in the slab (not unreasonable) and can only guarantee the grade and authenticity. By course of dealing, they have interpreted the contract themselves to protect you from AT. I agree with that.
So, where do we get from a few incidents (roughly $10,000 a month) of buybacks to a class action. I don't think you'd EVER get a court to certify the class. There is not the required "numerosity" nor is there enough commonality among the potential class members. The coins will each be different as will the reason for the guaranty claim and the beef with PCGS. This scenerio is much different than, say, all people who bought hamburgers at Krusty Burger with rancid ketchup in 1999. Moreover, I have not heard that any major service is intentionally renouncing the guaranty or refusing valid claims. Could you explain what was done wrong? You can use legalese.
Those are quite valid points. I suppose however that my reasonable expectation is that PCGS will not employ spectography in their $15 analysis of my submission. I expect only their professional opinion. I think the leap in logic is the assumption you could expect anything else.
BTW - As for the auto title analogy, in my state, each seller in the chain is required to sign a statement of fact indicating whether the vehicle has ever been damaged in excess of 25% of its value, and should fraud be uncovered later, legal recourse follows the chain back to the fraudulent party (customer included). Pretty interesting approach, huh. Maybe we can do the same with submissions. LOL
and it sets us apart from practitioners and consultants. Gregor
Michael, I came late to this party. What is your proposal and what is the motivation for this thread? I get the impression it is motivated by a class action suit? And that the damages you suggest should be the actual purchase price of the coin? Is this correct?
"France said this week they need more evidence to convince them Saddam is a threat. Yeah, last time France asked for more evidence it came rollin thru Paris with a German Flag on it." -Dave Letterman
However, pratically speaking (and Mitch would likely be more informative on this point) I'd be willing to bet that if it was shown they let an AT coin through the system and the toning premium paid was reasonable, they'd do the right thing and make the innocent buyer whole. One might have to throw a fit to get it but I bet they'd do it.
Anyway, before any class action can happen there has to be plaintiffs with damages. Has anyone spoken up with an AT coin that PCGS did not take care of under the guarantee? I've been reading these boards for awhile and PCGS always (sometimes eventually) seems to make their mistakes right with the owner.
WH
So put yourself in PCGS's position. Suppose someone has a legitimate gripe regarding an AT coin in a PCGS holder. PCGS (assuming it honors its warranty) has to pay fair market value for the coin. What's to stop PCGS from putting the coin up for grabs on eBay, where, almost by definition, every coin sold goes for fair market value? PCGS sells the coin and gives the disgruntled griper the proceeds. PCGS is out only a marginal amount for listing and final value fees. Disgruntled griper gets his/her fair market value. Remember that PCGS's warranty applies to grade, not authenticiy. Is PCGS required to pay the disgruntled griper the fair market value of the coin had it been naturally, rather than artificially, toned?
--csw
Tiger trout, Deerfield River, c. 2001.
1. Coins in PCGS holders usually sell for more money than uncertified coins.
2. PCGS would have to break out the coin if it is AT to sell it on Ebay.
3. Coin wouldn't get near the money as a toned coin inside the holder.
So that value would be way out of whack.
1) PCGS has in their contract that they will not grade artifically toned coins. It's their responsibility to assure that this doesn't happen. How they do it is up to them. What I pay for grading is immaterial. Is not you and I that PCGS has to worry about its the common man, the guy that sees a PCGS coin thats toned and sees that their warranty for authenticity. Does that mean to a "reasonable man" the coin is real, natural toning and authentic, probably so. Or does it just mean the coin was miinted by the US Government?
2) D. Hall has made statements stating that PCGS is vigilant in keeping AT coins out of their holders, but @ 70,000 coin per month, I'll bet my sister Sue, there are a good amount that make it past their graders. Why, because they haven't done anything to insure this will not happen. Sorry but if you say it, and put it in your contract, you better be able do it. Conservatively speaking, lets say they slab 20,000 toned coins per month, would it be safe to assume that 1-2% of that are AT coins that get past them. At 10 seconds per coin, no one's perfect even a 99% success rate is excellent. That's 100-200 coins per month. That's approximately 1200-2400 per year. In a couple of years, there maybe 10,000 PCGS slabbed AT coins. Change the numbers as you see fit, but it's still alot of AT coins in PCGS slabs.
3) If that were my business and I thought up to 40% of all coins were AT, I would do something to protect my business from the onslaught of potential problems, especially now with the Coin Doctor Police coming. Any chemists on staff @ PCGS? What preventative measures have they put into place to curb this problem other then to spend 20 seconds looking at a coin instead of 10. Does this potential for fraud require PCGS to take action to protect their customers. And if they don't are they in breach of their contract? Are they negligent? Are they part of the fraud? Remember, more people like toned coins in PCGS slabs based upon the perceived notion that they are better then the other services with catching problems. Hence, more submissions, more revenue. Would they really want to catch this problem now and open up a panadora's box of panic. Would any of the grading services?
Thoughts?
Michael
I expect if someone is willing to really push this, no warranty with respect to AT, or a modification of the current warranties (rendering them worthless), is what the rest of us will have to suffer.
Michael, what exactly is it that you're proposing?
"France said this week they need more evidence to convince them Saddam is a threat. Yeah, last time France asked for more evidence it came rollin thru Paris with a German Flag on it." -Dave Letterman
Sorry, but Laura also mentioned litigation in her plan. Like it or not the lawyers are coming.
Michael
I've been asking that all afternoon. Perhaps Michael will answer his colleague, as opposed to a potential client?
"France said this week they need more evidence to convince them Saddam is a threat. Yeah, last time France asked for more evidence it came rollin thru Paris with a German Flag on it." -Dave Letterman
Do I then have something? What if I could then show you that the test has been available for the past 15 years, but none of the grading companies have employed it based upon cost factors, and risk analysis.
Then I set up shop checking the toning on any coin you want to send me for $1. Would you pay it? If it proved to be AT, are you now a litigant willing to join a class of similarily situated individuals all owing AT coins in PCGS holders, in order to recoup some of your lost money. (Granted certifying the class is quite difficult)
What do you think Laura's group is going to do. Go after coin doctors, good luck. Lawyers start and stop with deep pockets that have tangible, identifiable assets, ie major corporations. There's no way to stop the fraud as long as there is a market for toned coins, however, there might be a way to installed safe guards at the grading level.
Most lawsuits begin only when someone learns that they been damaged, it's not always readily apparent to most.
Dwood -- sometimes lawyers start with questions and not answers. We often have to brainstorm and look to the advice of others to help formulate the answers. I'm sorry I don't have the answers you seek, because I don't always have them. Obviously, further research scientifically, legally and numismatically must be done on this issue.
Michael
i disagree with your house scenerio, it is not the same as cracking out a coin,
i do the warranty work for all the manufacturers on refrigerators, they come with a 5 year sealed system warranty.
if i go out and the system fails i replace the compressor .NO charge
if i go out and the system failed and there is a TAP valve on the line or it has been tampered with the customer has no warranty they must pay.
If you crack it you are on your own
As long as the system has not been cracked open there is a warranty, the same as PCGS, not cracked they will warrant the coin.
Crack it and you are on your own
I do the warranty work for M-------- ,you know the lonley guy,they advertise a perfect machine
well 1% does sometimes fail, i hear it all the time it is suppose to be perfect i am going to sue
nothing in life is 100% perfect BUT that is where the warranty come's in ME a factory authorized repairman,and they Back that warranty 110% AS LONG AS IT IS NOT TAMPERED WITH
Frattlaw: You did not respond to my comment concerning my $25 off the next cruise voucher (or something as rediculously small as that) that I received as being a member of the Royal Carribean class (they charged some extra port fees or something like that led to the suit which I was included in). MY POINT WAS AND IS... market cap is important to the overall recovery, if any, in such a case - isn't it? For example, would a good case against Enron right now result in much for plaintiffs, if you had a case right now to bring against them?
My interest in this is quite simple. IMHO, PCGS is distracted enough right now with myriad situations. They simply don't need to be bogged down with addition litigation aimed at testing the concept of market grading of toned coins. Moreover, I have never even heard of PCGS not correcting a problem coin presented to them - they have fixed the problem on each and every one of mine over the past 5+ years which I have presented to them. So, on this issue, I am not sure your firm needs to "teach PCGS a lesson", as I do not believe they have dealt with the public unfairly.
Now, I have great respect for class action attorneys and I loved the Erin Brokowitz (sp) movie. But, hey - no one is dying here of dangerous drinking water. I admit I am slowly dying a bit from the tough grades I have been receiving lately, but nothing like the folks in that film
Let's get PCGS focused on fine tuning the grading and preventing fraudulent/doctored coins from slipping through. I can't get too exicted about redirecting all of their energy to fighting a (never before) court case on market grading. Like I said before, even if the case was settled by PCGS, I don't need the voucher for 5 free modern submissions that badly (I threw out my Royal Carribean "victory" voucher)
Wondercoin
Fratt,
Gee I wonder why you feel it is necessary to keep writing up the few things your profession has even done good. Maybe because of all the harm it has caused. Maybe because some people in America don't think McDonalds is responsible for some kids being fat, or even for some old lady spilling hot coffee all over herself. You talk about $3 gas; I could bring up lawyers who basically blackmail car repair dealers (that are honest) by threatening them with lawsuits because of a minor loophole. Then they take their $25K blood money and go out on the town for the night. If I wanted to, I could go on and on about the damage bad lawyers have done to this country.
I agree with baseball that we don't need any more lawyers involved in coin collecting. I am not some idiot, and I can take care of myself. The only thing I can't control is if some bloodthirsty lawyers go and destroy an entire industry just to get some quick cash out of it.
As far as the issue goes, when a company makes a "guarantee", they usually don't really mean that the product is "guaranteed". What it means is that you can get your money back, right? For example, if you go into a pizza place that has a guarantee if you don't like it, and you don't like it, all they can reasonably be expected to do is give your money back, right? They won't pay for your transportation over - and they can't simply make pizzas over and over until you like it! P.C.G.S. is kind of unique in that they will pay the difference from the market and what you paid if it is graded wrong. I don't have a PCGS form here to look at however, but I would imagine there is some wording on the form that would protect PCGS from unlimited liabilities (i.e. "At PCGS's descrection" or something).
Don't lawyers claim to "fight for your rights" and to "win your case". That doesn't mean they will win all the time, right? Does that mean they are not experts when they lose? Have you ever lost a case? Do you consider yourself a legal expert? Case Closed. I think PCGS could make a pretty good case showing that their experts catch a strong majority of AT coins and no one could "reasonably" expect any organization to be perfect.
So, I wish your profession would leave alone the good guys and if you really want to do some good, you can go after the people out there who are really causing harm (i.e. coin doctors, crappy third party graders, etc.)
Sorry if I offended you, but then again, many lawyers offend me!
JJacks
My point is that the I'm not here to test PCGS or teach it a lesson. While some may not like my concept of a potential lawsuit, I have a feeling its coming. It might not be my firm though, but it'll be someone. It might be John Albanese's group. But if the problem of doctored coins is going to be fixed, it's going to be done through litigation. You can't force the coin doctors out of business, you have to force the grading companies to place into effect fail-proof measures to catch AT/doctored coins. I haven't heard specific statements by Hall detailing what they are doing to correct this problem. Yeah, that might mean higher grading fees, longer time spent evaluating a coin, new technical equipment to analyze toning/coin surfaces, but if that's what has to be done to insure that there are no AT/doctored coins in slabs, why are you against it.
Do you honestly think that PCGS will do it themselves? Why haven't they done it already? Hall even said coin doctoring has been a problem for decades. Do you just think it can't be done? I find that scenario difficult to swallow.
Michael
Do you honestly think that PCGS will do it themselves? Why haven't they done it already? Hall even said coin doctoring has been a problem for decades. Do you just think it can't be done? I find that scenario difficult to swallow."
Michael: I do not know exactly what J. Albanese group is working up, but, I suspect it may likely focus heavily on preventing additional doctored coins from getting into holders from here. And, I also believe such an approach would be consistent and in line with what the grading companies themselves are working on as well. There are many possibilities for solving this problem. For example, PCGS can hire a guy like John Butler (who has been dropping in here a bit and is well qualified for this idea) to be a true "finalizer". That is, once the coin completes the entire grading process, a guy like JB can then review each coin under a microscope to detect doctoring. This would be an easy way to combat doctoring and there are several other methods that would work equally as well IMHO.
Honestly, with all due respect (and if you can convince me here with your rebuttal, I am sure you will be able to convince a whole bunch of other people as well), I fail to see how punishing PCGS in the courtroom, testing the novel issue of "market grading" solves the coin doctoring detection problem BETTER than, for example, hiring a guy like JB to simply screen the coins (or whatever better idea PCGS drums up), now that it has been shown that coin doctoring has been taken to a new level due to technology such as lasers. Please tell me why litigation is the answer to this problem and not what I have suggested?
In honor of the memory of Cpl. Michael E. Thompson
Litigation is the answer to everything, if you're a lawyer. (And I say that with all sincerity, and no sarcasm whatsoever, if that is possible).
Fratt, I have to agree with the majority here. This wreaks of self-serving, with no regard for the hobby. Maybe you need to keep asking questions?
"France said this week they need more evidence to convince them Saddam is a threat. Yeah, last time France asked for more evidence it came rollin thru Paris with a German Flag on it." -Dave Letterman