Although rare coins and gold bullion were not part of the June 8th raid by Beaumont, Texas police on a “boutique” storefront, the problem with Chinese counterfeits continues to hit close to home and impacts legitimate businesses as well as potential buyers unaware of how unsafe some of these fake goods can be.
In the most recent Beaumont case, more than $100,000 in name-brand merchandise was seized. The items included knockoffs from Gucci, Louis Vuitton, Hermes, Ives St. Laurent, Christian Dior and Versace to name just a few. In recent investigations of counterfeit coins, currency and precious metals it was discovered that some phony products contain hazardous chemicals and are made with zero oversight or concern for safety.
Over the past two years, my associate Jerry Jordan has ordered numerous rare coins and bullion bars for educational purposes from the Wish platform, as well as other online shopping sites. These coins and bars, professing to be extremely rare and valuable finds, were all obvious fakes from Chinese vendors.
With social media platforms growing in popularity, peddling counterfeit products is only becoming more pervasive. Facebook and Instagram have overtaken eBay and Amazon as the key marketplaces for selling counterfeit goods to the public.
According to Forbes, counterfeiting is the largest criminal enterprise in the world, greater than illicit drugs or human trafficking. It was expected to grow to $2.8 trillion by 2022, costing 5.4 million American jobs.
For our part, Jerry and I have forwarded these fake items to the National Anti-Counterfeiting Task Force and its leader, Doug Davis, to get the help of law enforcement.
There was a “Credit Suisse 1-ounce Gold Bar” costing $2, plus $3 shipping. It would have been worth $1,500 when he ordered it and nearly $1,900 today, but it’s essentially worthless because it was fake. Jerry also ordered an 1899 “Queen Morgan Silver Dolar” (sic)—that would have graded XF (Extra Fine) and been worth $140—for just $3.89 shipping. The counterfeit coin was listed at no charge.
A $10 Million Coin for $1.83
He then ordered a gold coin that would be worth $10 million or more if it were genuine: a 1933 Saint-Gaudens Double Eagle—but it sold for $1.83, plus $2 shipping. You can’t fault them for greed.
They chose some extremely valuable coins and sold the knockoffs for a ridiculously low price. But none of these fake coins had the word “COPY” stamped on them, as is required by the updated 2014 U.S. Hobby Protection Law for counterfeits.
Despite assurances that it would crack down on counterfeit goods and intellectual property flowing from its country, the Chinese communist regime continues to reap billions from the sale of fake merchandise, and it’s now affecting an area of the U.S. economy that many wouldn’t suspect. One of those items would be impressive-looking fake driver’s licenses that come in from China by the thousands and are easily available from multiple sites online. The ease of access allows young people not old enough to drink an opportunity to acquire alcohol or access other activities reserved for adults.
Counterfeit precious metal items rob many Americans of their life savings, which is an indirect health risk. Counterfeit parts can also cause machinery to malfunction at high speed, which can cause serious injury or death. The Federal Aviation Administration (FAA) estimated that 520,000 counterfeit or unapproved parts are installed in aircraft each year, and U.S. military aircraft are reportedly “riddled with counterfeit parts,” of which around 70% come from China.
Some of the health dangers posed by counterfeit products include alarming amounts of heavy metals in health and beauty products. One lipstick had 751 times the amount of lead that Health Canada considered acceptable for cosmetics. As scientists have shown, lead affects a person’s cognitive ability, and it’s especially dangerous for children.
Experts interviewed by the Canadian Broadcasting Company (CBC) were concerned not just about the health issues related to counterfeiting—but about the funds being used for nefarious activity. Interpol states on its website that there is a clear link between illicit trade, human trafficking, drug trafficking, corruption, bribery, money laundering, and counterfeit goods.
In the past few years, I’ve reviewed several customers’ coin collections and, sadly, detected one or more counterfeit coins. In one instance, the majority of one person’s collection consisted of “counterfeit proof” Buffalo one-ounce gold coins, with all coins appearing in what looked like genuine NGC holders. The holders themselves were fraudulent.
In April 2021, U.S. Customs and Border Protection (CBP) officials seized $685,000 counterfeit U.S. notes that all originated from China. The fake U.S. currency included $5, $10, $20, $50, $100 bills that were all turned over to the U.S. Department of Homeland Security and the U.S. Secret Service. Included in the overall total number of bills were 976 $100 bills headed to New York, according to the CBP.
Even more egregious, during the first three months of 2021, officials seized over 100 shipments of counterfeit bills totaling $1.64 million from a single international mail sorting facility in Chicago. There are nine such sorting facilities across the United States.
“From Jan 1 to March 31, (2021), officers seized 80 shipments of counterfeit currency, 24 shipments containing fake silver dollars and five shipments containing counterfeit foreign currency,” states a press release from the CBP.
The addition of collectible coins and silver dollars is not new, as our own investigations have revealed similar results.
Millions of normal circulating U.S. coins, such as quarters and half dollars, as well as bullion and rare collectible coins, have now been counterfeited by Chinese interests. More recently, U.S. law enforcement seized over $1 million dollars’ worth of counterfeit circulated George Washington quarters believed to have been made in China.
NBA Promotes ‘Wish’
It’s well known that the online sales platform “Wish,” which sources most products from China, was rife with counterfeits, yet the NBA’s Los Angeles Lakers accepted $36 million, less than LeBron James’s annual salary, to adorn the Lakers uniform with a large “Wish” logo for a three-year period. This comes from a league that seemingly discourages players or executives from criticizing Chinese humanitarian and labor practices or taking a stand against China’s authoritarian acts to usurp a democratic Hong Kong. Then there’s China’s alleged mistreatment of the Uyghur community.
On March 2, 2020, H.R.6058 (dubbed the “Shop Safe Act of 2020”) was introduced in the House of Representatives. It would amend the “Trademark Act of 1946” to give certain e-commerce platforms contributory liability when counterfeits are sold that pose a health risk to consumers. The key phrase is “health risk,” which seems to shut coins and some other important products out of the equation, even though some fake coins and precious metals coming from China contain traces of cyanide, which could pose a significant health risk.
For our purposes, leaders in the numismatic community will work hard to see that this bill, or one like it, is modified and reintroduced in the future so that it would cover counterfeit coins, most of which are made and delivered from China. Specifically, we would like to see it contain a reference to the Hobby Protection Act, as amended in 2014, to cover counterfeit coins.
The recent Beaumont raid is just further proof that the proliferation of counterfeits, mostly from China, continues to be a problem that has far greater reach and impact than many realize. It also highlights the need for law enforcement and government agencies to get tougher on China because of this proliferation of counterfeit goods.
Recently, I spoke with former U.S. Secretary of State, Mike Pompeo, about the surge of counterfeits coming from China. He said during his tenure there was an increased emphasis on improving security at ports of entry, which helped with the problem. However, he and others I spoke with in law enforcement, agreed that, unfortunately, the current administration doesn’t seem to have the same priorities, which has resulted in the increase of fake goods we are seeing in the United States.
Dr. Mike Fuljenz is a former authenticator/grader with the American Numismatic Association (ANA) Certification Service and a member of the Professional Numismatists Guild (PNG) Anti-Counterfeiting Task Force.
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