Treasury Agents Arrest Two Coin Dealers at the Long Beach Show --- A Story You Will Enjoy
fastcoin
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Two U.S. Treasury agents used entrapment, in my opinion, to arrest two coin dealers for currency violations at the Long Beach show some years ago. I believe it was in the early 1990s. But this end of the story!
Let me start at the beginning. Today the Long Beach coin show is owned by Coin Universe, but it was actually started in 1964 by two coin dealers: Trader Sam and Stan Lundgren. I remember it well…… I had a corner table in 1964 for $75 in the old auditorium. We won’t get into the details here, but some time later Sam LaPresto, who worked for Trader Sam, took over the Long Beach show with another dealer by the name of Gus. These two men ran the show for many years before selling it to Ron Gillio and Paul Koppenhaver. During the time that Gus owned the show he and I became friends and shared dinner a few times.
The incident with the Treasury agents occurred sometime when Sam and Gus still owned the show. One Friday afternoon Gus dropped by my table and said, “There are two undercover Treasury agents on the floor trying to induce currency violations by coin dealers and I am advising a few of my close friends to remember the law.” (As some of you may or may not know, it is a Federal violation to pay out or accept more than $10,000 in cash.) I replied, “Gus, that’s unbelievable. How can you be sure?” He laughed and informed me that when the two agents arrived at the registration desk, they were too cheap to pay the small admission fee, so the girl called him to handle the situation. The agents wanted free admission and Gus approved their free admission after showing him their badges.
I asked, “Gus, are they on the floor now?” He said that they were on the bourse with the purpose of finding dealers in violation of the currency law. I said, “Gus, let me walk around the floor with you. I will bet you a steak dinner than I identify the two agents.” He said, “Joel that would be nearly impossible. There are about 750 tables here with a public attendance in the thousands. I don’t think you can do it. You have yourself a bet.” Gus and I started down one aisle together and I started thinking that if I were a Treasury agent looking to catch a dealer in violation, how would I dress? Or, better yet, how would I not dress. So I started the process of elimination as we turned down aisle 3. I thought, “well, I wouldn’t wear shorts.” As we turned down the next aisle I concluded that they would not be dressed in a suit and tie—too obvious. Moving through the next aisle my thinking was that they would not likely be wearing bib overalls or dungarees. As I turned the corner I noticed two Middle Eastern sheiks donning full traditional robes and headdress. I turned to Gus and said, “These are your two Treasury agents,” to which he laughingly replied, “would you like your steak medium or rare?”
It is my understanding that two coin dealers were indeed arrested at that show for the $10,000 cash violation. The reason I am sharing this story with you today, after all these years, is that a customer recently asked me if he could make a large purchase in cash. That incident reminded me of my experience and the Long Beach show many years ago. I hope you enjoyed it.
Let me start at the beginning. Today the Long Beach coin show is owned by Coin Universe, but it was actually started in 1964 by two coin dealers: Trader Sam and Stan Lundgren. I remember it well…… I had a corner table in 1964 for $75 in the old auditorium. We won’t get into the details here, but some time later Sam LaPresto, who worked for Trader Sam, took over the Long Beach show with another dealer by the name of Gus. These two men ran the show for many years before selling it to Ron Gillio and Paul Koppenhaver. During the time that Gus owned the show he and I became friends and shared dinner a few times.
The incident with the Treasury agents occurred sometime when Sam and Gus still owned the show. One Friday afternoon Gus dropped by my table and said, “There are two undercover Treasury agents on the floor trying to induce currency violations by coin dealers and I am advising a few of my close friends to remember the law.” (As some of you may or may not know, it is a Federal violation to pay out or accept more than $10,000 in cash.) I replied, “Gus, that’s unbelievable. How can you be sure?” He laughed and informed me that when the two agents arrived at the registration desk, they were too cheap to pay the small admission fee, so the girl called him to handle the situation. The agents wanted free admission and Gus approved their free admission after showing him their badges.
I asked, “Gus, are they on the floor now?” He said that they were on the bourse with the purpose of finding dealers in violation of the currency law. I said, “Gus, let me walk around the floor with you. I will bet you a steak dinner than I identify the two agents.” He said, “Joel that would be nearly impossible. There are about 750 tables here with a public attendance in the thousands. I don’t think you can do it. You have yourself a bet.” Gus and I started down one aisle together and I started thinking that if I were a Treasury agent looking to catch a dealer in violation, how would I dress? Or, better yet, how would I not dress. So I started the process of elimination as we turned down aisle 3. I thought, “well, I wouldn’t wear shorts.” As we turned down the next aisle I concluded that they would not be dressed in a suit and tie—too obvious. Moving through the next aisle my thinking was that they would not likely be wearing bib overalls or dungarees. As I turned the corner I noticed two Middle Eastern sheiks donning full traditional robes and headdress. I turned to Gus and said, “These are your two Treasury agents,” to which he laughingly replied, “would you like your steak medium or rare?”
It is my understanding that two coin dealers were indeed arrested at that show for the $10,000 cash violation. The reason I am sharing this story with you today, after all these years, is that a customer recently asked me if he could make a large purchase in cash. That incident reminded me of my experience and the Long Beach show many years ago. I hope you enjoyed it.
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Doggedly collecting coins of the Central American Republic.
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Hoard the keys.
BTW - Joel, great story
<< <i>What if you sell half to them now for 6k and the other half in about 30 minutes for 6k. Would that work? >>
That's still a violation. The $10,000 is cumulative over a one year period, per customer. So....be careful when taking large sums of cash. Request a check, if possible.
You can accept as much cash as you want as long as you fill out the proper IRS forms. But to do this, you need a lot of information, such as drivers license, social security number, date of birth, etc., from the other party, which some people do not want to share. Most dealers do not want to do the extra paper work as required by law. In addition we are not allowed to buy more than 20 ounces of gold from the public without completing forms.
Here's the worst part: it is against the law to tell customers that transactions of 20 ounces of gold or more must be reported, yet transactions of less than 20 ounces are not reportable. If you tell this to the customer, you are guilty of structuring the transaction so as to avoid the reporting. Be careful out there.
Joel
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That doesn't sound like it would hold up in court. Has anyone ever been charged with informing a customer of the law? Convicted?
Along the same lines, is it illegal to tell a customer that 10K+ in cash must be reported?
Edited to ask one more question:
Joel, do you have any customers that read this forum? If so, have you just broken the law?
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Very cool........thank you
<< <i>... In addition we are not allowed to buy more than 20 ounces of gold from the public without completing forms... >>
What if you sell more than 20 oz of gold to a customer and they pay by means other than cash (such as a check), do you still need to fill out forms ?
What if you sell more than 20 oz of gold to a customer and they pay by means other than cash (such as a check), do you still need to fill out forms ?
There would be no need for a form, unless they give you more than $10000 of business in a one year period, per current AML laws.
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42/92
<< <i>What if you sell more than 20 oz of gold to a customer and they pay by means other than cash (such as a check), do you still need to fill out forms ?
There would be no need for a form, unless they give you more than $10000 of business in a one year period, per current AML laws. >>
Except that payment by personal check and credit cards are non-reportable...
42/92
myCCset
The $10K limit not being raised per inflation is an intrusion of the government. They are increasingly getting more information than the original law entitled them to in spirit. But doubt they will ever easily give up an inch of acquired power.
I do not know if it is illegal for the buyer to structure a deal. It may be that one could accumulate (for cash) sufficient in-kind numismatic property to trade. A buyer wants a coin for $18k in cash but does not want it reported. Buy $9K in equivalent from two other dealers on the bourse in cash each and negotiate a trade. Of course, the dealer must be involved at some point as the other transactions must satisfy him for the trade. Where the threshold is for the dealer not to be in trouble for structuring the deal? I don't know. Not something I lose slee over. Reporting is not somethign that bothers me. The government can know about the coins. If they want to try to take them though, they had better show up with some really big guns. Because I wouldn't just hand it over, as noone else should either. I doubt it would come to that again anyway.
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Show me your identification papers.
I'll bet every gun in the place would be locked loaded and ready for KAPOWWWW!!!
But you are right, there is probably more abuse among the fools on the Hill who actually draft the legislation that builds the tax code.
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Are cash sales reportable?
Only for large purchases done with more than one check or via more than one account. You can buy any amount with cash BUT if you buy more than $10,000 in cash, with two separate checks or cashiers checks, you must fill out I.R.S. Form 8300. The gold purchase itself does not trigger the reporting requirement, the cash transaction via two separate checks over 10k in total triggers the requirement. Large cash transactions are tracked by the government. If you cashed a check at the bank for 10k, this transaction is also reportable by the bank via their logs of Cash Transaction Reports, Currency Transaction Reports (IRS form 4789), Monetary Instrument Reports, or Money Instrument Logs. Dividing up one large transaction into two smaller ones is considered fraudulent buy the government. They say tax avoidance, you say tax minimization. These requirements were instituted when Congress decided to begin tracking citizen financial transactions in their effort to criminalize normal and ordinary American lives via, amongst other abominations, the Tax Reform Act of 1984 and the Anti-Drug Abuse Act of 1988, and the Bank Secrecy Act.
The Broker Reporting Act of 1982 provided that certain commodities contract purchase (cotton, sugar, precious metals, etc.) are subject to reporting by the broker/dealer to the IRS on form 1099-B only on the sale by a US citizen when the bullion was held for investment purposes and resulted in a capital loss or gain.
Some rules apply to bullion only when you sell and do not apply to numismatics.
Kilo bars (32.15 troy ounces Au) are subject to 1099-B reporting.
Any sale of multiple unit smaller bars over 32.15 ounces in total are reportable.
Rules provide that 1 troy oz. gold bullion coin transactions (Krugerrand, Maple Leaf or Mexican Gold Onza) are not reportable
Sales over 25 ounces are reportable to the I.R.S. via Form 1099B. However, the U.S. Gold Eagle the Australian Kangaroo or the Austrian Philharmonics do not require this reporting (Generally, Philharmonics are the only European gold coin that an American should ever buy).
Small gold bullion coins do not need reporting. So, buy many of these!
Silver transactions of $1000 face 90% silver bags and 1000 ounce silver bar transactions are reportable only on the sell side. This report is for any size bars that total over 1,000 ounces in total. Smaller size silver bars are not reportable.
Silver sells of 40% bags or less than $1000 face in 90% silver coin are not reportable.
However, many instances of moving cash or bullion out of or into the country may require U.S. Customs Form 4790 and the corresponding Currency and Monetary Instrument Report.
And yes, it does get worse. Though not pertaining exclusively to bullion, if you withdraw $5,000 or more, and your nosy entry level banker driving a leased car and losing her ass in mutual funds decides she doesn't like you, she may decide to invoke that portion of the Banking Secrecy Act passed while you were asleep which requires that she file a Suspicious Activity Report (OTS SAR Form 1601) if she unilaterally determines, typically out of her own ignorance and pettiness, that your transaction "Has no business or apparent lawful purpose or is not of the type that the particular customer would normally be expected to undertake." Further, she is then mandated to send this report to the Financial Crimes Enforcement Network (FinCEN) at the Treasury Department so that they can put it in your 'permanent file'.
Another example of regulatory creep. The alternative minimum tax was never intended to catch the middle class. Or so the middle class was told. Oops, now it does apply to you - so sorry. Same with the income tax. Same with reporting levels. Eventually, 5k or 10K will buy so little gold that a couple ounces of gold transaction will put you on the 'list'. Though if you are reading this, it may already be too late...(winkies)
and what would you think TODAY of you saw two men dressed in full Arab garb walking through a coin show?
I would think that they are either rich Middle Easterners spending some of the oil money or they are Treasury agents.
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It's $10K in a 24 hour period, not a year. For amounts > 10K, you need to file a CTR (currency transaction report) and it's perfectly legal. It has nothing to do with the IRS or taxes. It's required by Homeland Security with their concerns about money laundering, drugs, and terrorism.
Thanks for sharing this info...
Except that payment by personal check and credit cards are non-reportable...
True. Thanks for the info.
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More offshoring of US jobs
<< <i>That's still a violation. The $10,000 is cumulative over a one year period, per customer.
It's $10K in a 24 hour period, not a year. For amounts > 10K, you need to file a CTR (currency transaction report) and it's perfectly legal. It has nothing to do with the IRS or taxes. It's required by Homeland Security with their concerns about money laundering, drugs, and terrorism. >>
It predates DHS. And it does apply to cumulative transactions if they are "related".
http://www.irs.gov/businesses/small/article/0,,id=148821,00.html
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http://www.law.cornell.edu/uscode/18/1956.html
http://www.law.cornell.edu/uscode/18/1957.html
http://www.law.cornell.edu/uscode/18/1957.html
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<< <i>]http://www4.law.cornell.edu/uscode/html/uscode31/usc_sup_01_31_08_IV_10_53_20_II.html
http://www.law.cornell.edu/uscode/18/1956.html
http://www.law.cornell.edu/uscode/18/1957.html
http://www.law.cornell.edu/uscode/18/1957.html >>
Thanks for the links, coxe.
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<< <i>
Here's the worst part: it is against the law to tell customers that transactions of 20 ounces of gold or more must be reported, yet transactions of less than 20 ounces are not reportable. If you tell this to the customer, you are guilty of structuring the transaction so as to avoid the reporting. Be careful out there.
Joel >>
You can't tell them what the law is if you are doing so to encourage them to circumvent the rules. Of couse, the
gov't makes that decision. I put latest Treasury Dept rules on the wall at my B&M store, and anyone asking questions
was told to read the rules themselves.
The law is easy enough to comply with, but it's the structuring part of it that is really diabolical. Treasury agents have also had a whole lot of fun targeting car dealerships, they often make it impossible not to get caught.
A lot of people pay cash for cars because they think it gives them greater privacy, in almost all states you do NOT need a customer's SS# to register a car (NJ is one of the exceptions). So what usually happens is, dealer asks customer for SS# after customer dumps $20k in cash on the finance manager's desk. Customer asks what the SS# is needed for, dealer explains, customer frequently changes method of payment. Here's the kicker, if I recall correctly, the Graham-Leach-Bliley (At least the "spirit" of it anyhow)act requires that you disclose why you need a customer's personally identifiable information and what it will be used for.
So which law do you wish to be in violation of? Take your pick please!
The $10,000 amount can also be changed (lowered) at any time in a specified jurisdiction as well. I recall in my banking days it being reduced on 2 separate occasions to $3,000 purportedly because structuring in the area was going on by drug rings.
After 9/11 the CTR and AML programs got a lot more serious and aggressively enforced with the focus shifting more to anti-terrorist efforts and less on drug money laundering, although that is still a focus.
Of course privacy takes a back seat in all of this. Fun story to read but a lot of serious parts to it as well.
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Since the Patriot Act, there have many new changes regarding coin dealers. Thanks to all who posted to this thread.
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<< <i>
I recently sold gold to a local dealer; they cut me a cashiers check for $12K, no paperwork involved. I went to the bank it was drawn on to cash it for a new vehicle purchase. What a nightmare. I was 2 hours getting it cashed with all of the paperwork. Next time I will make a couple of trips to make sure I dont have a cashiers check larger than $9K.
"And yes, it does get worse. Though not pertaining exclusively to bullion, if you withdraw $5,000 or more, and your nosy entry level banker driving a leased car and losing her ass in mutual funds decides she doesn't like you, she may decide to invoke that portion of the Banking Secrecy Act passed while you were asleep which requires that she file a Suspicious Activity Report (OTS SAR Form 1601) if she unilaterally determines, typically out of her own ignorance and pettiness, that your transaction "Has no business or apparent lawful purpose or is not of the type that the particular customer would normally be expected to undertake." Further, she is then mandated to send this report to the Financial Crimes Enforcement Network (FinCEN) at the Treasury Department so that they can put it in your 'permanent file."
No wonder my bank got pissy with me when I withdrew $3k in cash for a double eagle purchase. I really got the "evil eye" from the teller with the "blue hair". She called a manager over and all sorts of crap.