Friday, August 28, 2009

Ephraim Brasher’s gold doubloon

The Brasher Doubloon, the legendary early American coin, is the subject of a new lawsuit.

The Los Angeles Times reports:

Colonial-era coin at the center of lawsuit

The Brasher Doubloon is steeped in historic reverence and mystique. It dates to Colonial America and the dawning of the new federal government, when Spanish gold doubloons circulated alongside other foreign gold and silver as part of New World commerce.

The coin takes its name from Ephraim Brasher, a respected New York City gold- and silversmith who lived next door to George Washington. In 1787, Brasher began making gold coins, presumably to be used as currency for the soon-to-be-formed republic.

Seven of them remain and are sanctified as the first truly American gold coins. That fact, along with their distinctively American design and Brasher's friendship with Washington, attached a permanent legacy to the coins.

The coins are nearly identical, but one of them is first among equals. And it is that coin, worth $15 when Washington was president but most recently sold for nearly $3 million, that is at the heart of a lawsuit filed in Orange County Superior Court. Rare coin researcher William Swoger says he told the coin's owners that he had "specialized information" about the coin and that they reneged on finalizing a contract to pay him in exchange for the information.

Orange County coin dealer Steven Contursi and his Northern California partner, Donald Kagin, teamed up to buy the Brasher Doubloon in 2005 for $2.99 million, then the second-highest price ever paid for an American coin. Swoger's lawsuit alleges that he approached Kagin and Contursi several months ago and told them the coin was worth much more than they realized.

The key, he told them, is that the coin wasn't the first of the seven struck by Brasher beginning in 1787. Contrary to the prevailing view in numismatic circles, Swoger says it was the last, and probably not struck until 1793.

That later date is crucial, Swoger says, because this coin was fractionally heavier than the others and made to conform to a 1793 act of Congress that established weight standards for gold coins in the new republic. The other six coins are of identical weight and predate the formation of the new government, he says.

Kagin and Contursi "knew they had a unique coin," says Richard Herman, a Newport Beach attorney who is representing Swoger. "They knew it was very valuable, very rare. But they thought it was the first one [in the series] and not the last one. Turns out that makes all the difference in the world. One's a Colonial coin made by a jeweler, and it's a very nice coin, but the other is the first coin made for circulation under a law of the United States. That's heavy-duty."

One side of the coin shows an eagle with wings spread. Thirteen stars representing the original colonies surround its head, and its talons hold olive branches and the arrows of war. On six of the coins, Brasher's "EB" stamp appears on the eagle's wing. On Kagin and Contursi's coin, the "EB" stamp appears on a shield on the eagle's breast -- a unique design element that distinguishes it from the others and is part of the reason many numismatists call it America's most treasured coin.

One theory is that Brasher made the change for purely aesthetic reasons. But Swoger contends that, as the last coin in the series and made to conform to the congressional act, Brasher put it there to distinguish it from its predecessors.

According to the lawsuit, Swoger informed the owners that he had discovered information that would make their coin much more valuable and asked for a $500,000 fee. They countered with $250,000, the suit alleges, and then asked for a meeting at which Swoger would disclose the information.

Swoger met with Kagin, explained his thesis and was given a gold coin valued at $35,000 as a down payment, the suit alleges. Swoger alleges Kagin said he and Contursi would prepare a contract but never did. Swoger is suing for millions of dollars in damages.

On the advice of their attorney, Contursi and Kagin declined to discuss the matter. But Contursi, the president of Rare Coin Wholesalers in Dana Point and a two-thirds owner of the coin, wrote in an e-mail:

"I greatly regret that Mr. Swoger has chosen to sue me and my partner. We never sought anything from Mr. Swoger regarding the Brasher Doubloon and never benefited in any way from any information he volunteered to us. The lawsuit is utterly frivolous, and I urge him to withdraw it."

Armen Vartian, an attorney representing the coin's owners, said, "I don't think the complaint will survive a motion to dismiss."

In an interview, Swoger, who is 65 and lives in Lake Odessa, Mich., said he is confident he can prove the coin was the last in the series and not the first. He declined to provide details.

His attorney said an ad in a 1790s New York newspaper spurred Swoger's research about the sequencing of the doubloons. Swoger acknowledged that but said learning the exact weight of the historic doubloon -- that it was slightly heavier than the others in the set -- was what led him to conclude it was struck after the others and linked to the congressional act.

"Logic takes me right there," he said.

Asked if he'd been nervous about disclosing his information to Kagin without a contract, Swoger said, "Yes, I was, but how can they buy a pig in a poke? So, it was a necessary step."

Kagin subsequently said they weren't going to use his information and felt no need for further payment, Swoger said. "Whether they use it or not, I delivered it," he said. "They know it and now other people are going to know it. They can't give it back to me."

The lawsuit alleges that Swoger's theory would elevate the coin's value to $10 million.

"If I'm wrong and they can prove me wrong," Swoger said, "they owe me no money for the information. If my information is correct, it gives much more importance to Ephraim Brasher himself and his other gold coins, because it gives him a longevity that was not known before."

The lawsuit is an uncommon event in the world of rare-coin collecting, but there's no doubt that the Brasher Doubloon is fertile territory for intrigue.

"There's still quite a bit that's unknown about these coins," said Beth Deisher, editor of Coin World magazine, in a phone interview from her office in Sidney, Ohio.

The first "official" U.S. coin wasn't produced until 1793, she said. The country never authorized a $15 denomination, but that doesn't mean that a coin containing that precise gold value wouldn't be legal tender, she said.

Coin World will report on the lawsuit this week, but Deisher declined to express an opinion on it. Swoger has written for her magazine and is respected for his research in the coin-collecting world, she said. He has not published any documentation for his theory about the Brasher Doubloon.

And if Swoger's theory is correct?

"It would elevate the coin's historical importance," Deisher said. "Whether that translates to value is something that would have to be determined by the marketplace."

Copyright © 2009, The Los Angeles Times


Unknown said...

FYI, the "Brasher Doubloon" illustrations here are crude replicas, not the actual coins. (The unique specimen has the "EB" punchmark in the center, the other half dozen known specimens have the hallmark on the eagle's wing.) The photos used for this posting of the Los Angeles Times story are not real coins; the newspaper article did have photos of the actual, unique specimen.

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