Court Assesses Penalties In "freedom Tower" Coin Scam
Attorney General Spitzer today hailed a state court ruling assessing penalties against a company that profited from misleading promotions of a September 11th coin.
Supreme Court Justice Thomas McNamara has ordered Port Chester-based National Collectors Mint (NCM) to pay civil penalties totaling $369,510 in connection with its marketing and sale of its "Freedom Tower Silver Dollar."
I'm pleased that the court agreed with our contention that this firm impermissably exploited public sentiments concerning the tragic events of September 11 and defrauded the public," Spitzer said. "The significant penalty ordered by the judge should deter such unlawful conduct in the future."
In September 2004, NCM began an extensive advertising campaign for the "Freedom Tower" coin on television, in magazines and on its website. The ads depicted the coin as a "legally authorized government issue silver dollar" and as a "U.S. territorial minting" from the Commonwealth of the Northern Mariana Islands. In fact, the coin is not a government-issued silver dollar at all, but was manufactured and issued by a private company. The Commonwealth of the Northern Mariana Islands uses U.S. currency and is not authorized to mint legal tender.
The ads also claimed that the coin was made of pure silver from silver bars recovered at Ground Zero during recovery operations. Spitzer's lawsuit showed, however, that the medallion is not made of pure or solid silver, but is an inexpensive metal alloy plated with approximately one ten-thousandth of an inch of silver valued at approximately 1.4 cents. The question of whether the silver used in the medallion is actually from Ground Zero was not involved in the lawsuit.
Soon after the advertising campaign began, Spitzer obtained an order from the late Justice Joseph Cannizzaro in State Supreme Court in Albany halting the scam. In a subsequent decision, Justice Cannizzaro ordered the company to send corrective letters offering refunds to all consumers who had purchased or ordered the coin. Consumers received $2.2 million as a result of refunds and cancellations pursuant to that order.
The decision assessing penalties against NCM brings to a conclusion Attorney General Spitzers case against NCM for fraudulent and deceptive practices.
This case is being handled by Assistant Attorney General Matthew Barbaro of the Consumer Frauds and Protection Bureau.