Fake mutilated US coins from China scam US Treasury
Frankcoins
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(More fake half dollars than the US Mint made in their entire history??? Off the top of my head, just the 1964 to 1980 Kennedys are some 3 billion coins.)
New Jersey federal prosecutors say they've uncovered a plot to defraud the U.S. Mint out of more than $5.4 million by metal recyclers trying to redeem counterfeit coins. (Getty Images File photo)
Thomas Zambito | NJ Advance Media for NJ.com By Thomas Zambito | NJ Advance Media for NJ.com
NEWARK — Federal investigators in New Jersey say they have uncovered a $5.4 million plot to defraud a U.S. Mint-run program that redeems unusable dimes, quarters and half dollars.
In court papers filed last week, federal prosecutors lay out a daring scheme led by several U.S.-based metal recyclers - one based in New Jersey -- to import counterfeit coins from China in an effort to take advantage of the U.S. Mint's century-old Mutilated Coin Program.
The program pays recyclers nearly $20 per pound for dimes, quarters and half dollars that have been bent, broken, corroded or no longer can be counted by machine.
The suspicions of investigators with U.S. Customs and Border Protection were raised in 2009 after they witnessed an uptick in shipments of mutilated coins coming through the Port of Los Angeles, prosecutors say. They reported their concerns to Homeland Security Investigations.
Most of the shipments were coming from China, with recyclers claiming the coins were discovered in cars exported to China as scrap metal, prosecutors say.
Among the tip-offs for investigators was the number of half dollars coming in from China for redemption outpaced the total the U.S. Mint has made, they say.
"Interestingly, United States Mint personnel also believe that more half dollars have been redeemed by China-sourced vendors in the last 10 years than the United States Mint has ever manufactured in its history," according to a forfeiture complaint filed in U.S. District Court on March 20 by Assistant U.S. Attorney Lakshmi Srinivasan Herman.
In late 2010, federal agents investigated three shipments of damaged coins in Los Angeles that were imported by Guang Han Trading of New Brunswick, court papers say.
A sampling of the coins, valued at nearly $400,000, showed that they contained aluminum and silicon, elements not present in coins manufactured by the U.S. Mint, they say.
And the coins were all "mutilated" in a similar fashion, prosecutors say. They were "mechanically cut or deformed and corroded by some type of unknown chemical before being washed," the court papers say.
Guang Han Trading is owned by Qianru "Amelie" Xu and imports mutilated coins from China into the U.S, according to court papers.
She could not immediately be reached for comment. No one has been arrested in the case, according to New Jersey federal prosecutors. And prosecutors declined to say whether they intend to bring criminal charges.
The court papers filed last week seek the forfeiture of some $5.4 million that the U.S. Mint was scheduled to pay three different companies for 2014 shipments of mutilated coins that have been found to be counterfeit, prosecutors say.
In June 2014, the coins were delivered to a foundry in Cedar Rapids, Iowa that melts coins for the U.S. Mint, they say. A sampling of the coins showed that they contained aluminum and silicon, prosecutors say.
The feds are also seeking a Dallas property that belongs to Kei Yi Loung, the owner of a company called American Naha that exports scrap metal to China and imports mutilated coins into the U.S., the court papers add.
Between 2012 and 2014, American Naha received approximately $6.4 million in reimbursements from the U.S. Mint for mutilated coins, the court papers say. Loung, who also goes by Kenny Loung, could not be reached for comment.
Prosecutors are trying to seize a 2014 Black Porsche Cayman Coupe that Loung paid $81,000 for in October 2013.
Prosecutors say Loung, along with other metal recyclers, have claimed that the coins they redeemed in the U.S. were found in cars exported to China for scrap metal.
But a 2009 analysis by Customs and the U.S. Treasury's Office of the Inspector General compared the numbers of cars exported to China against the number of damaged coins imported from China, court papers say.
"There would have to be approximately $900 in coins in every vehicle ever exported to China as scrap metal in order to account for the total amount of waste coins imported from China for redemption," Herman writes.
The second largest importer of scrap metal from the U.S. is India and, to date, the U.S. Mint has not received any mutilated coins from there, the complaint says.
Each year, according to the complaint, the U.S. Mint loses money with its mutilated coin program "because it only makes a profit on the metal it recovers, which is much less than the redeemed value."
The coins are melted and reused.
In 1999, the Mint began scheduling quarterly "melts" of mutilated coins at its foundries to keep up with an increased volume of "waste coins" coming in from China, the court papers say.
"Previously, the melts were scheduled much less frequently and the United States Mint was able to accept all mutilated coins at its facility in Philadelphia," the complaint adds.
Thomas Zambito may be reached at tzambito@njadvancemedia.com. Follow him on Twitter @TomZambito. Find NJ.com on Facebook.
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It took them 6 years to do this investigation? It sounds like the hard part was the realization that it was happening & the rest would be easy.....
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<< <i>"Interestingly, United States Mint personnel also believe that more half dollars have been redeemed by China-sourced vendors in the last 10 years than the United States Mint has ever manufactured in its history," according to a forfeiture complaint filed in U.S. District Court on March 20 by Assistant U.S. Attorney Lakshmi Srinivasan Herman. >>
That is a huge statement......
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<< <i>Among the tip-offs for investigators was the number of half dollars coming in from China for redemption outpaced the total the U.S. Mint has made, they say. >>
Not much gets by these people.
Can we get a copy of the criminal complaint? There's a lot of amazing claims in it. I find it hard to believe that the amount of halves really exceeded the number ever minted. In fact it's hard to believe that contemporary scammers even counterfeited these in the first place, given that they have vanished from circulation and wouldn't be found in cars. (Why not just stop at quarters, but increase the volume?) Also, what did this counterfeit material look like?
Any thoughts on how those oddball metallic elements were present in the material?
They noticed in 2009 and it sounds like they continued buying them by the boatload for 5 more years.
I wonder if the "exceeded total" means total of clad halves not total of all halves. The total of all is a huge number.
<< <i>Amazing.
They noticed in 2009 and it sounds like they continued buying them by the boatload for 5 more years. >>
Gotta build a case, you know. Why bust someone for $500k in fraud when you can bust them for $5 million?
Anyway, that's another thing that might be addressed in court documents.
I, too, would like to see the full complaint.
<< <i>Wow, just wow.
<< <i>This wouldn't be an issue if circulation coins were still made of gold/silver
Ok, let me get out my microscope and count out my circulating gold dollars... :-)
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<< <i>
<< <i>This wouldn't be an issue if circulation coins were still made of gold/silver
Ok, let me get out my microscope and count out my circulating gold dollars... :-) >>
Silver or silver alloy
In consideration of this statement, the scam has been going on for an absolute minimum of 15 years, likely much longer. They just went exclusively to half dollars and bumped up the amount of submissions to save costs as it was apparently so unbelievably easy to continue cashing in.
I imagine the aluminum and silicon either came from the chemical wash to disfigure the coins or the crap...er, scrap metal being used to cast the forgeries.
Doing some quick and conservative math, this netted over one billion of your tax dollars, probably multiples of that. Not the measly $5.4 million quoted at top of the article. That was likely the net claim for the submission of damaged coins prosecutors are staking their case on.
I would love to see the records of how long this has been going on, and how much of the fake clad coins got recycled into new cladding material that ended up in our coinage?
Makes sense that if they thought it was legitimate cu-ni clad stuff they would just add nickel to it to bring it up to 25% nickel, and use it for either five cent strip or cladding strip.
If it happens to contail some silicon, aluminum, lead, arsenic, plutonium, etc., etc. who would ever know?
Eventually China is going to feel invested in the establishment and preservation of international law when the worm turns on them. Right now, they're like teenagers who just got ahold of their first fast car doing wheelies in the church parking lot.
Here's a warning parable for coin collectors...
Steve
1. US Recyclers export junked cars to China.
2. China then begins the process of separating the various metals used in these junk cars.
3. Xuan, a Chinese worker in the scrap yards, finds US Coins in the cars he's disassembling and reports the find to his boss.
4. His boss instructs Xuan to put the money in that barrel over there!
5. When enough barrels are accumulated, they ship them back to the US recyclers they received them from.
6. The US Recyclers then ship these off to the US Mint smelters in Who-da-hoe, Idaho.
7. The US Mint reimburses the recyclers for the coins.
1st off, if the junked cars are sold as junk to the Chinese, why are the Chinese returning part of what they bought? Wouldn't it behoove them to just melt this stuff down along with the copper wiring pulled out of the cars?
2nd, exactly how many half dollars have been produced since 1971? (Presuming that they are not returning Silver Coins)
A quick estimate shows that 2,946,611,101 CnClad Halves have been produced since 1971. This includes Proofs. Loosely translated at .4 of an ounce each, this comes to approximately 36,833 tons of Clad Half Dollars.
What does this mean? Nothing other than whomever said that the totals "represent more Half Dollars than what has ever been produced"............doesn't have his figures right.
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<< <i>So, let me get this straight. >>
As far as I understand it. China has been receiving scrap metal made up of unsuable/corroded/mutilated US Mint coins. These coins have been demonetized and are being sold as scrap metal. The Chinese went through the effort of cleaning them up, and then using them as money again.
<< <i>
<< <i>So, let me get this straight. >>
As far as I understand it. China has been receiving scrap metal made up of unsuable/corroded/mutilated US Mint coins. These coins have been demonetized and are being sold as scrap metal. The Chinese went through the effort of cleaning them up, and then using them as money again. >>
Actually, they were getting full face value:
$20 worth of half-dollars = 40 x 11.340g = 453.6 g = 1 lb
There has to be corruption here. No way even the most incompetent government workers would have allowed this to go on.
<< <i> As far as I understand it. China has been receiving scrap metal made up of unsuable/corroded/mutilated US Mint coins. These coins have been demonetized and are being sold as scrap metal. The Chinese went through the effort of cleaning them up, and then using them as money again. >>
I think there were 3 stories.
If the stories are correct, the US coins were fake coins made there then they claimed they found them in cars sold for scrap and redeemed them as defaced coins to the US.
The other stories sound like Euro coins or other coins.
In one of them they bought bi-metal Euro coins that had the centers punched out then put them back together and cashed them or mixed them with fakes and sold them online. See story:
Link on Euro coins put together
The other story doesn't say which countries but the coins don't look like US coins to me, they bought as scrap and cleaned them then exchanged them to the original countries:
Cleaned coins mixed countries