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Newspaper report: Noe was cozy with coin-rating company (NGC)
RGL
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<DIV class=hed>I believe the numismatic community needs to see this story. I am the author. For professional reasons, I will offer no comments, neither will I respond to questions. It appears in today's edition of The Columbus (Ohio) Dispatch.
Noe was cozy with coin-rating company
By Randy Ludlow
The Columbus Dispatch
Ohioans could lose out when it comes time to sell thousands of high-grade rare coins that Thomas W. Noe bought with state money.
Noe had such a cozy relationship with the Florida firm that evaluated many of the coins that their grades — which determine value — could be seen as inflated and compromised.
In the world of coin dealers and collectors, the process of grading the quality of coins is beyond the influence of the coins’ owner, ideally.
But Noe’s distance from Numismatic Guaranty Corp., better known as NGC, was anything but arm’s length.
NGC, while banking big fees to grade tens of thousands of coins bought with state cash, portrayed Noe as a passive investor in the company.
However, documents examined by The Dispatch show that the Maumee coin dealer’s numerous interactions with NGC and its top executives qualify him as the ultimate insider.
Noe had repeated personal dealings with NGC President Mark Salzberg — selling him a painting for six figures and buying millions of dollars worth of coins — while company graders essentially determined the value of Noe’s coins.
NGC’s vaults held one of Noe’s coin collections and collateral for his loans to dealers. Noe once wired $300,000 in state funds to Chief Executive Officer Steven Eichenbaum.
Noe’s use of Workers’ Compensation investment cash to buy NGC stock, and the transactions uncovered by The Dispatch, bother the coin fund’s manager and liquidator.
"I’m terribly troubled by the NGC relationship," said Bill Brandt, a Chicagoan appointed to manage and sell Noe’s failed investments. "I’m going to take a long, hard look at these boys . . . (and) turn their shorts inside out."
Brandt said it could be difficult to sell the cache of Noe coins sight unseen because of perceptions that they could be overgraded — and overpriced — in light of the Noe-NGC relationship.
But, he said, he has no evidence that coins were consciously overgraded.
"If there’s questions to the contrary, many of these people better be talking to criminal counsel faster than they imagine," Brandt said.
An NGC representative who spoke on condition of anonymity denied wrongdoing by the Sarasota, Fla., company. Noe had no say over daily operations, and a review found he did not receive preferential grades on coins he and his partners submitted, the representative said. Salzberg and Eichenbaum did not return calls.
Ohio Attorney General Jim Petro has accused Noe of stealing $4 million from the $50 million in Workers’ Compensation cash he was given to invest.
Petro’s office and Noe are fighting over who owns the NGC stock and who should profit from its sale.
Records show Noe loaned himself and partner Frank Greenburg $1.4 million each in state funds in July 2003 to buy a combined 7 percent stake in the privately held company.
Noe attorney William C. Wilkinson has said that Noe and Greenburg borrowed the money because NGC’s tax structure allowed only individuals to invest.
Eichenbaum has said that NGC assumed Noe bought nonvoting shares with his own money and "did not know what to think" about the accusations against Noe.
Business records seized from Noe’s Vintage Coins & Collectibles reveal:
Eichenbaum received $300,000 from the coin fund on March 30, 2004. Timothy H. LaPointe, Noe’s business partner, signed the wire transfer to Eichenbaum’s bank account. A handwritten notation states: "Vintage 6%."
An NGC representative said the transaction was not a loan, but rather Eichenbaum’s sale of additional stock to Noe.
NGC forbids its graders from selling and buying coins to ensure impartiality, but the prohibition apparently does not extend to the company’s president, Salzberg. In a 2001 deal, Salzberg sold $2 million in coins to Noe and Greenburg, with the state coin fund obligated to pay $1.55 million of the total.
Salzberg bought a painting by the impressionist Birger Sandzen from Noe for $126,000. Noe handled the May 12 sale, with records indicating a $6,000 profit. "This was an arm’s-length transaction in which Mr. Noe made a profit for the coin fund," the NGC spokesman said.
An invoice from coin dealer Anthony Terranova, of New York, lists Salzberg as receiving a $65,000 coin on March 1, 2003. A $65,000 check from the coin fund was sent to Terranova within days. Salzberg never owned the coin; Noe later sold it for a profit, the NGC spokesman said. He declined to elaborate.
Loan documents show NGC regularly acted as "custodian" for Noe by taking possession of coins pledged by dealers as collateral for millions in coin-fund loans granted by Noe. On one loan alone, NGC received 500 gold $20 Double Eagle coins and other rare coins as collateral.
And NGC had custody of Noe’s "Errors & Oddities" collection, bought with state funds, consisting of misstruck coins and other valuable mint mistakes. NGC periodically keeps coins in its vaults for dealers, collectors and shareholders at no charge, its spokesman said.
Noe partner Michael Storiem, of Numismatic Professionals Ltd., in Evergreen, Colo., wrote a $4,000 check to Salzberg on Dec. 27, 2001. Storiem could not be reached. The NGC spokesman did not return messages seeking an explanation.
NGC’s spokesman said: "These were all normal and above-board transactions, as the documents clearly demonstrate."
Along with Professional Coin Grading Service of Newport Beach, Calif., NGC is considered one of the nation’s top two grading services.
Major money — thousands to hundreds of thousands of dollars — can be at stake when experts evaluate and grade rare coins.
A high mint-state grade for a raw coin or an upward tick in the grade of a coin already graded and slabbed in plastic can yield big profits for dealers.
Noe and his coin buyers sent tens of thousands of rare coins to NGC for grading. In one 2003 transaction, a manager of one of Noe’s trading arms sent 261 coins worth $8 million to NGC. The conservation and grading fees totaled $200,000.
NGC and PCGS profess to be objective, saying graders do not know whose coins they are examining and that they buy back any they agree are overgraded.
Noe also bought and sold more than $250,000 in stock in publicly traded Collectors Universe, the parent company of PCGS, and sent coins to that company for grading. However, documents released thus far have not shown personal dealings with that company’s top executives.
"You need both the appearance of impartiality and fairness and the actual condition," said Scott A. Travers, a former NGC grader who bills himself as a consumer-protection advocate for the coin-buying public.
Travers said the dealings between Noe and NGC executives pose a potential problem.
"If there’s any appearance of bias or actual bias, I’m disturbed by it. It has the potential to hurt the product and the marketplace."
rludlow@dispatch.com</DIV>
Noe was cozy with coin-rating company
By Randy Ludlow
The Columbus Dispatch
Ohioans could lose out when it comes time to sell thousands of high-grade rare coins that Thomas W. Noe bought with state money.
Noe had such a cozy relationship with the Florida firm that evaluated many of the coins that their grades — which determine value — could be seen as inflated and compromised.
In the world of coin dealers and collectors, the process of grading the quality of coins is beyond the influence of the coins’ owner, ideally.
But Noe’s distance from Numismatic Guaranty Corp., better known as NGC, was anything but arm’s length.
NGC, while banking big fees to grade tens of thousands of coins bought with state cash, portrayed Noe as a passive investor in the company.
However, documents examined by The Dispatch show that the Maumee coin dealer’s numerous interactions with NGC and its top executives qualify him as the ultimate insider.
Noe had repeated personal dealings with NGC President Mark Salzberg — selling him a painting for six figures and buying millions of dollars worth of coins — while company graders essentially determined the value of Noe’s coins.
NGC’s vaults held one of Noe’s coin collections and collateral for his loans to dealers. Noe once wired $300,000 in state funds to Chief Executive Officer Steven Eichenbaum.
Noe’s use of Workers’ Compensation investment cash to buy NGC stock, and the transactions uncovered by The Dispatch, bother the coin fund’s manager and liquidator.
"I’m terribly troubled by the NGC relationship," said Bill Brandt, a Chicagoan appointed to manage and sell Noe’s failed investments. "I’m going to take a long, hard look at these boys . . . (and) turn their shorts inside out."
Brandt said it could be difficult to sell the cache of Noe coins sight unseen because of perceptions that they could be overgraded — and overpriced — in light of the Noe-NGC relationship.
But, he said, he has no evidence that coins were consciously overgraded.
"If there’s questions to the contrary, many of these people better be talking to criminal counsel faster than they imagine," Brandt said.
An NGC representative who spoke on condition of anonymity denied wrongdoing by the Sarasota, Fla., company. Noe had no say over daily operations, and a review found he did not receive preferential grades on coins he and his partners submitted, the representative said. Salzberg and Eichenbaum did not return calls.
Ohio Attorney General Jim Petro has accused Noe of stealing $4 million from the $50 million in Workers’ Compensation cash he was given to invest.
Petro’s office and Noe are fighting over who owns the NGC stock and who should profit from its sale.
Records show Noe loaned himself and partner Frank Greenburg $1.4 million each in state funds in July 2003 to buy a combined 7 percent stake in the privately held company.
Noe attorney William C. Wilkinson has said that Noe and Greenburg borrowed the money because NGC’s tax structure allowed only individuals to invest.
Eichenbaum has said that NGC assumed Noe bought nonvoting shares with his own money and "did not know what to think" about the accusations against Noe.
Business records seized from Noe’s Vintage Coins & Collectibles reveal:
Eichenbaum received $300,000 from the coin fund on March 30, 2004. Timothy H. LaPointe, Noe’s business partner, signed the wire transfer to Eichenbaum’s bank account. A handwritten notation states: "Vintage 6%."
An NGC representative said the transaction was not a loan, but rather Eichenbaum’s sale of additional stock to Noe.
NGC forbids its graders from selling and buying coins to ensure impartiality, but the prohibition apparently does not extend to the company’s president, Salzberg. In a 2001 deal, Salzberg sold $2 million in coins to Noe and Greenburg, with the state coin fund obligated to pay $1.55 million of the total.
Salzberg bought a painting by the impressionist Birger Sandzen from Noe for $126,000. Noe handled the May 12 sale, with records indicating a $6,000 profit. "This was an arm’s-length transaction in which Mr. Noe made a profit for the coin fund," the NGC spokesman said.
An invoice from coin dealer Anthony Terranova, of New York, lists Salzberg as receiving a $65,000 coin on March 1, 2003. A $65,000 check from the coin fund was sent to Terranova within days. Salzberg never owned the coin; Noe later sold it for a profit, the NGC spokesman said. He declined to elaborate.
Loan documents show NGC regularly acted as "custodian" for Noe by taking possession of coins pledged by dealers as collateral for millions in coin-fund loans granted by Noe. On one loan alone, NGC received 500 gold $20 Double Eagle coins and other rare coins as collateral.
And NGC had custody of Noe’s "Errors & Oddities" collection, bought with state funds, consisting of misstruck coins and other valuable mint mistakes. NGC periodically keeps coins in its vaults for dealers, collectors and shareholders at no charge, its spokesman said.
Noe partner Michael Storiem, of Numismatic Professionals Ltd., in Evergreen, Colo., wrote a $4,000 check to Salzberg on Dec. 27, 2001. Storiem could not be reached. The NGC spokesman did not return messages seeking an explanation.
NGC’s spokesman said: "These were all normal and above-board transactions, as the documents clearly demonstrate."
Along with Professional Coin Grading Service of Newport Beach, Calif., NGC is considered one of the nation’s top two grading services.
Major money — thousands to hundreds of thousands of dollars — can be at stake when experts evaluate and grade rare coins.
A high mint-state grade for a raw coin or an upward tick in the grade of a coin already graded and slabbed in plastic can yield big profits for dealers.
Noe and his coin buyers sent tens of thousands of rare coins to NGC for grading. In one 2003 transaction, a manager of one of Noe’s trading arms sent 261 coins worth $8 million to NGC. The conservation and grading fees totaled $200,000.
NGC and PCGS profess to be objective, saying graders do not know whose coins they are examining and that they buy back any they agree are overgraded.
Noe also bought and sold more than $250,000 in stock in publicly traded Collectors Universe, the parent company of PCGS, and sent coins to that company for grading. However, documents released thus far have not shown personal dealings with that company’s top executives.
"You need both the appearance of impartiality and fairness and the actual condition," said Scott A. Travers, a former NGC grader who bills himself as a consumer-protection advocate for the coin-buying public.
Travers said the dealings between Noe and NGC executives pose a potential problem.
"If there’s any appearance of bias or actual bias, I’m disturbed by it. It has the potential to hurt the product and the marketplace."
rludlow@dispatch.com</DIV>
0
Comments
<< <i>But, he said, he has no evidence that coins were consciously overgraded.
"If there’s questions to the contrary, many of these people better be talking to criminal counsel faster than they imagine," Brandt said. >>
Let's wait and see.
But certainly, as the author states, sight-unseen trading of these coins will suffer.
and they're cold.
I don't want nobody to shoot me in the foxhole."
Mary
Best Franklin Website
<< <i>Brandt said it could be difficult to sell the cache of Noe coins sight unseen because of perceptions that they could be overgraded — and overpriced — in light of the Noe-NGC relationship. >>
The type of coins the fund typically handled would not be sold on a sight-unseen basis anyway (due to their high value and/or quality) - that comment strikes me as uninformed, at a minimum. I think/hope Mr. Brandt knows better than that.
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
why don't you strongly consider trying to stick your head up your butt? Your journalism is weak and your personal Constitution is pathetic.
Is your alternate ID, Michigan?
Tom Pilitowski
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>
<< <i>Brandt said it could be difficult to sell the cache of Noe coins sight unseen because of perceptions that they could be overgraded — and overpriced — in light of the Noe-NGC relationship. >>
The type of coins the fund typically handled would not be sold on a sight-unseen basis anyway (due to their high value and/or quality) - that comment strikes me as uninformed, at a minimum. I think/hope Mr. Brandt knows better than that. >>
This echo's my first thought as well. But then I recalled seeing mention in another news story of large quantities of generic stuff like MS64 &65 Morgans and Walkers, in addition to the high powered stuff.
and they're cold.
I don't want nobody to shoot me in the foxhole."
Mary
Best Franklin Website
Unless I'm reading something wrong, that works out to $766 per coin. Seems a little steep.
Sounds like this story has a way to go.
Joe
I wouldn't be so quick to knock the author. If what he is stating is fact, PCGS+ANACS rule!
Still, it raises eyebrows about the appearance of impropriety. A respected TPG needs to be careful to avoid getting cozy with certain heavy-hitting submitters if it wants to keep its reputation unsullied. NGC may not have intentionally overgraded coins for Noe, but if these allegations are true, then they need to be more careful in the future about the relationships their executives have with some of their "better customers."
<< <i>I doubt this article will show up on the NGC Chatrooms. >>
Posted in this thread, 7th down. Wonder how long it will last?
Its not that I am anti-NGC, its the little bit I have seen at shows. I have seen Noes minions gloat about sending coins to be NCS'd and then get them back-totally stripped graded higher. What Noe and his crew have done to physically harm coins is disgusting and they deserve to be punished. I've also followed many coins and watched them go into higher holders after the "fund" purchased them. If anyone is to blame for grade flation, these guys
If someone gave me $25 million, I know I could make money-especially when its one of the best markets ever. Noe was just stupid or too greedy. I have no sympathy for anyone invloved.
Hey, in the end these guys are going to cost ALL of us money!
But, he said, he has no evidence that coins were consciously overgraded.
Is Mr.Brandt fueling the public perception the coins might have been overgraded, and is that good for the fund?
and it sets us apart from practitioners and consultants. Gregor
<< <i> I have seen Noes minions gloat about sending coins to be NCS'd and then get them back-totally stripped graded higher. What Noe and his crew have done to physically harm coins is disgusting and they deserve to be punished. >>
The submitters didn't harm the coins. If the coins were in fact harmed, it was at the hands of the "conservation" service.
<< <i> I've also followed many coins a watched them go into higher holders after the "fund" purchased them. If anyone is to blame for grade flation, these guys >>
Again, you place blame in the wrong place. The grading service was (far more) responsible for the higher grades than was the entity that re-submitted the coins.
Why bother grading coins at $100 per pop when you can start a conservation service and make 9 times that amount? Is all that gold shiny because there were customers for it or because that's how both sides could make tons of money at the buyer's expense???? Grrrr.
It's a damn slippery slope when you start accepting a percentage of a coins value as your fee.
I'll wait to hear the real intentions from someone that knows why they did what they did, i.e. the parties involved, and not from someone humpin' around the edges.
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Finish like a professional!
Hmmmm.
I'm not an expert, but I know enough to know our investments are threathened. If this stuff is proven, things will get ugly for everyone.
And don't worry about your investment. Sleep content knowing that you have nothing to worry about. The amount of coins and cash involved here are but a small percent of a percent of the total numismatic world of value.
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Finish like a professional!
<< <i>Wow, 25 million? Whats that, a tenth of one percent of the entire coin market? I promise, I'm not on your case, its just not a major factor for the coin market. Its only a major factor for the few parties involved >>
BuffQuarter, it's not just the amount of $ involved that concerns some hobbyists - it's also about the implications of many of the allegations, which, if true (and I'd like to think they aren't), make for a much larger/widespread problem.
<< <i> "I’m going to take a long, hard look at these boys . . . (and) turn their shorts inside out. >>
interesting....................
3 "DAMMIT BOYS"
4 "YOU SUCKS"
Numerous POTD (But NONE officially recognized)
Seated Halves are my specialty !
Seated Half set by date/mm COMPLETE !
Seated Half set by WB# - 289 down / 31 to go !!!!!
(1) "Smoebody smack him" from CornCobWipe !
IN MEMORY OF THE CUOF
<< <i>Anyway you cut the mustard, this is a dang mess. You who think this is sensationalism or should be swept under the rug must be involved or woudn't mind being on the short end of this. >>
It sounds like the author is *trying* to steer readers toward a conclusion which the known facts don't yet corroborate, instead of just reporting the known facts.
That's what makes it sensationalism.
the NGC connection can't be good no matter what the outcome, even the perception of impropriety is damaging and will require some sort of PR as the curious and prying eyes of the media are sure to pick up on it if their are $$$$$$$ to be generated. hopefully this Sloop won't cut across the hobby and steal our wind.
For all I know, NGC may have stolen the Lindberg baby. My only thought regarding this story is that there are plenty of reasons to question the relationship/practices of Noe and NGC, just as there were years ago when one of the state attorney generals parked an officer at PCGS trying to make sure there were no preferential dealings, but when a firm's reputation IS their business, public speculation about grading impropriety without supporting factual evidence is not useful. If they're guilty, present the evidence and convict them, but don't ruin their reputation first and then uncover the facts.
and it sets us apart from practitioners and consultants. Gregor
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Finish like a professional!
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
Russ, NCNE
Kind of amusing in light of current events....
Right or wrong it taints whole concept of independent grading. Just the open discussion of upgrades, 'conservation' and crossovers has likely surprised some with less knowledge of the field.
Some who read article and who hold NGC slabs are likely feeling a little less secure about their holdings.
Less sucure in accuracy of grade...........insecure that even if grade is correct that a proven taint on NGC will taint ALL NGC slabbed coins.
Some will attempt crossovers and while many/most will be successful those who aren't will feel betrayed. Even if successful they won't feel quite as comfortable the next time they go to buy any coin.
Errosion of the field will start at the bottom not at the top.
I know all of the purists will say "Buy the coin not the slab" but the simple fact is that a significant % of retail customers depend on the slab for accurate grading! Just look at 'slabbed vs. nonslabbed' sales and prices on Ebay.
Anything that hurts the perception of an independent and accurate third party grading system hurts the field. You can't have it both ways. You can't enjoy the run up in prices that has occured in part because of TPG then snear to masses....."Buy the coin not the slab". If confidence in the 'slab' falls so will interest in the field.
I have a more accurate observation, kill the messengers.
Sorry, these are all wishful phrases to help ignore a problem that has been pervasive throughout the hobby the last several years. The truth is, whether you want to ackowledge it or not, is that thousands upon thousands of original coins have felt victim to the conservation/comercialization/crack out and up game. The OHIO coin scandal is now exposing this to the larger numismatic and investor community. I trust my eyes and what is available today in the market place is significantly different than what was available 15, 10 or even 5 years ago. Go on to certain (not all) dealers websites or look at some recent auction catalogues and note how many dipped and stripped silver and gold coins are available in ga ga grades. Get your hands on a 10 year hard copy population report and do the math. Better yet, get a Buddy Ebsen auction catalogue (sale was in 87 I believe) and note the 16 full color plates or original untampered with coins. Try to find that today. Finally, please spare me the usual response that stripped, dipped, and optimistically graded goins are "market acceptable" in today's market.
Collectors - trust your eyes, experience, and instinct.
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
<< <i>I'm a little out of my league with this question, but I always hear that sometimes a "local" story is "picked up" by the AP and thereafter gets distributed nationally. Does anyone know if this story has made headlines anywhere other than Ohio? What can cause this story to be distributed and discussed nationally? >>
I recall seeing one of the Noe stories in the local paper with AP credit about 3 weeks ago (must have been a slow news day). Also saw one or two on yahoo or CNN.com, and those are wire service stories.
Your question reminds me of when the Falklands War broke out. I was in England at the time and wondered if this was a big deal or just something carried in the English newspapers...
<< <i>Regardless of the hoopla here, over all, its a small story. In a year, we'll all be saying "remember that story about the buckeye state scandal, whatever happened to that." NGC, PCGS, ANACS, etc, etc, will be trucking along like nothing happened. To think that the small number of coins compared to the market that NGC supposedly upgraded is going to have a huge impact on the market is naive. Of course, you can count the number of people who really care about this by counting the number of different members who post in this thread. This will give you a good percentage of how much of the market it will affect and even then the effect will be minimal. I have NGC, PCGS, and ANACS slabs so I have no favortism, but I don't look at my NGC slabs now and wonder. >>
Tempest in a teapot!!!
Worry is the interest you pay on a debt you may not owe.
Voltaire: Paper money eventually returns to its intrinsic value---zero.
This article is a serious wake up call.
I disagree. It is indeed a wake up call for the industry.