Monday, August 22, 2016

Some of the ancient coins in dispute in U.S. v. 3 Knife-Shaped Coins.
Court decisions in 2014 and 2015 rejected the Ancient Coin Collectors Guild’s (ACCG) demand to revisit legal issues already quashed by the courts in the forfeiture case of U.S. v. Three Knife-Shaped Coins Et al. and the related case of Ancient Coin Collectors Guild v. U.S. Customs and Border Protection; U.S. Department of State; Assistant Secretary of State, Educational and Cultural Affairs. Nevertheless, the Guild continues to re-argue the same issues.

The litigation stems from the ACCG’s aim to strike down or erode customs regulations that regulate the import of specific types of ancient coins that have been determined to be in jeopardy of looting. The group minted a test case seven years ago when it intentionally imported undocumented and unprovenanced ancient Chinese and Cypriot coins to the United States. The Guild imported the archaeological materials from a London dealer and shipped them to Baltimore on a British Airways flight. The ancient coins had no accompanying documentation and offered no record of chain of custody or provenance.

Repeated losses suffered by the ACCG in the federal district courtthe court of appeals, and the U.S.Supreme Court have not deterred the Guild from continuing its blitz on the import controls, which were erected under authority of the Convention on Cultural Property Implementation Act (CPIA) and are designed to curb transnational trafficking of at-risk archaeological material.

The latest round of ACCG court filings is a motion for summary judgment that repeats many arguments that already have failed to win judicial support. In its July 2016 motion, the Guild insists that it “has either rebutted the government’s prima facie case and/or the government has failed to meet its own burden. Accordingly, the Court should grant the Guild Summary Judgment, order the return of the Guild’s coins, and require the Government to pay the Guild’s attorney’s fees and costs.”

While the ACCG litigates the Three Knife-Shaped Coins case in federal district court in Maryland, it is expected that the Missouri-based group simultaneously will press the matter when the Cultural Property Advisory Committee (CPAC) meets in Washington, DC on October 25. That is when CPAC will hear public testimony about whether the White House should renew import controls to protect pre-classical and classical archaeological objects and Byzantine and post-Byzantine ecclesiastical and ritual ethnological materials from Cyprus, Docket No.DOS-2016-0054.

So far the ACCG’s defeats in the federal courts have produced favorable case law that strengthens law enforcement efforts to disrupt cultural heritage trafficking. The Fourth Circuit Court of Appeals, for example, decided that federal authorities properly listed the kinds of ancient Chinese and Cypriot coin artifacts that may be subject to CPIA import controls.

The appeals court also ruled that U.S. Customs and Border Protection (CBP) properly detained the ACCG's undocumented coins. The court explained that the burden therefore shifts to the Guild to prove that its actions were lawful, plainly articulating the clear rule that "[t]he importer need not document every movement of its articles since ancient times. It need demonstrate only that the articles left the country that has requested import restrictions before those restrictions went into effect or more than ten years before the date of import.” “In short,” the court added, “CBP need not demonstrate that the articles are restricted; rather, the statute ‘expressly places the burden on importers to prove that they are importable.’”

The ACCG rejects this standard. Rather than offering information to show that the ancient archaeological materials qualify as a legal import, the ACCG instead filed motions for discovery and a motion for summary judgment attacking the validity of the import regulations themselves. Meanwhile, the Guild maintains that the government bears the high burden to prove that the restricted ancient coins were first discovered in and subject to the export controls of China and Cyprus.

At a motions hearing held earlier this year, Assistant U.S. Attorney Molissa Farber, representing the government, told the Maryland district court that the Guild's line of argument is “essentially an attack on the government's ability to classify the coins by type and category, which has already been well-settled that we can do.” “And I understand that Claimants [ACCG] disagree with that process,” the prosecutor said, “but that's already been litigated. That’s not at issue here. That part is done.”

AUSA Farber reminded the court that “the Fourth Circuit rejected the notion that the government was going to have to fight a case coin-by-coin. The Fourth Circuit said that the statutory structure allows us to list coins by type and category.”

She emphasized that the evidence that the Guild seeks to introduce is not evidence pertaining to the specific defendant property here. They’re not seeking to introduce any kind of evidence that relates to these 22 defendant coins as far as when these specific 22 coins left China and Cyprus. What they want to introduce is general evidence that coins of this type of category circulated broadly and may have left China and Cyprus outside of the regulated period.”

Peter Tompa, attorney for the ACCG and the organization's current president, countered, “The coins at issue here are typical in the market. So we don't know where they were found or too much about them. And there’s nothing nefarious about that, Your Honor. It’s a situation where there’s just low value items, and it was not important until recently that such things would be -- that such things should have a documentary history. But we do know something about the coins, we know something at least. We know that they were exported from the UK by Spink, a well-regarded firm that's been around since the 1600s, and in compliance with both UK and EU law in April, 19 2009.”

Attorney Tompa continued, “Well, assuming the government has established first discovery just by listening, we’re entitled to rebut that. And how we’re trying to do that here with regard [to] these specific coins is by offering the opinions of two experts, Mr. [Douglas] Mudd, who is the Curator at the American Numismatic Association in Colorado, and Mr. [Michael] McCullough, who’s an expert in the international exchange of cultural artifacts.”

Declaring that “scholarly evidence” can be used by the ACCG to show that the coins left their countries of origin before the enactment of U.S. import restrictions, Attorney Tompa offered that “Mr. Mudd's opinion is that the ancient coins at issue here are of a sort that circulated in significant numbers outside of China or Cyprus for thousands of years[,] first as currency and then as collectibles. So it’s unlikely and cannot be assumed that they left Cyprus or China after the date restrictions were imposed.”

“So because these things circulated for thousands of years first as collectibles -- first as currency, then as collectibles," Attorney Tompa reasoned that "it’s unlikely that they exited Cyprus or China after the date of the restrictions, just given the numbers outside of those two countries.”

“Mr. McCullough's report is that UK and EU law did not require expert [sic] certificates for the coins at issue in this case, or the Cypriot -- well, any of the coins at issue in this case. And such with respect to the Cypriot coins, that would satisfy Cypriot law, because, after all, Cyprus is a member the EU as well. Mr. McCullough also opines that the Chinese coins here could have exited Hong Kong legally without documentation in that export would satisfy Chinese law under both the laws of China and Hong Kong.”

AUSA Farber countered this argument by rejoining, “The most salient point I think to take away from this particular dispute over the scholarly evidence at least is the distinction between specific and general. And I believe what we just heard from Claimant [ACCG] was a lot of purported evidence regarding general coin circulation. The coins are of the sort that circulated broadly. I mean, Your Honor raised the point, what’s the ultimate implication here? And the implication is that if that argument is allowed, it undermines the CPIA, undermines the statutory structure, because it essentially holds the coins shouldn't have been listed in the first place based on their type of category. And that’s not permitted.”

U.S. District Judge Catherine Blake agreed. In a ruling dated February 11, 2016, Judge Blake pronounced “that the Ancient Coin Collector’s Guild (“the Guild”) seeks discovery not relevant to the issues the court will have to decide in this forfeiture action.” In particular, she highlighted that the ACCG “apparently will seek to prove that the export of these coins from Cyprus or China to England was lawful under EU law. It is unlikely that the export control status of the coins under foreign law will be a proper defense in this forfeiture action.” The judge added pointedly, “Further, to the extent the Guild argues that the government must prove ‘first discovery,’ beyond demonstrating that the coins at issue appear on the designated list, that argument is foreclosed by the CPIA and the Fourth Circuit opinion in Ancient Coin Collectors Guild v. U.S. Customs and Border Protection, 698 F.3d 171 (4th Cir. 2012). Listing by type and category is proper under the CPIA.”

Judge Blake also granted a protective order shielding two State Department employees from ACCG depositions, explaining that they “do not appear to have relevant personal knowledge.” Over the objections of Attorney Tompa, AUSA Farber attributed “ulterior motives” to the Guild's attempt to depose the purported witnesses, presenting the court with, what the federal lawyer called, an “Internet post written by a former director of the Coin Collectors Guild" criticizing one of the witnesses. Judge Blake remarked, “I'm more interested in probably the relevance than in motive.”

In June, Judge Blake issued a further order rebuking the ACCG's discovery requests, stating, “I will not at this time direct the government to provide any additional 30(b)(6) deposition testimony.”

Soon afterward, the ACCG filed its motion for summary judgment and, on July 29, the court adopted a schedule that allows the parties to fully brief their positions. Once completed in mid-October, CHL expects to review the parties’arguments.

Text and original photos copyrighted by Cultural Heritage Lawyer, a blog commenting on matters of cultural property law, art law, cultural heritage policy, antiquities trafficking, and museum risk management. Blog url: Any unauthorized reproduction or retransmission of any blog post without the express written consent of CHL is prohibited. CHL works in cooperation with Red Arch Cultural Heritage Law & Policy Research, Inc.

Tuesday, August 9, 2016

Banks, casinos, and high value asset sellers are subject to federal laws that flush out terrorist financiers and money launderers. So why aren't art and antiquities sellers subject to the same statutes?

Terrorists and criminals launder money by hiding dirty cash under the covers of seemingly legitimate business transactions. Money raised from illegal drug or weapons sales, for example, can be washed by purchasing luxury cars, yachts, mansions, or jewels. These newly bought assets either can be sold for cash or used as collateral to secure bank loans, thereby cleaning the cash of its sinful stains.

Dealers and auction houses sell art and antiquities that include high value works worth thousands or millions of dollars. At least one auction house issues loans, according to a report by Bloomberg titled An Auction House Learns the Art of Shadow Banking.

But while art and antiquities sellers are required to file Form 8300 like any other business that accepts a $10,000+ cash payment from a client or customer, they are not subject to the same rigid requirements of anti-money laundering/counter-terrorist financing laws like the Bank Secrecy Act, the Foreign Assets Control Regulations, the Financial Record Keeping and Reporting of Currency and Foreign Transactions law, and the USA PATRIOT Act.

Yet dealers in precious metals, stones, or jewels; sellers of automobile, planes, and boats; real estate professionals; pawnbrokers; travel agencies; and casinos are all regulated the same way that banks, credit unions, securities and commodities brokers, and credit card systems are. Federal law classifies these industries as “financial institutions” under 31 U.S.C. § 5312 and 31 CFR 1010.100(t). Noticeably absent from this list, however, are businesses operating in the cultural property marketplace.

Dealers and auction houses in this marketplace clearly have what the Bank Secrecy Act is looking for, namely “certain reports or records where they have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings, or in the conduct of intelligence or counterintelligence activities, including analysis, to protect against international terrorism.” 31 U.S. Code § 5311. That is why federal law should require art and antiquities sellers to file Suspicious Activity Reports with the Financial Crimes Enforcement Network (FinCEN).

It's time for the Secretary of the Treasury, under authority of 31 U.S.C. § 5312(a)(2)(Z), to designate art and antiquities dealers and auction houses as businesses “whose cash transactions have a high degree of usefulness in criminal, tax, or regulatory matters,” and therefore subject to the anti-money laundering/ counter-terrorist financing requirements of federal law. This is one of six law enforcement recommendations CHL has proposed to combat transnational cultural heritage trafficking.

Photo credit: Manuel De La Pena /

Text and original photos copyrighted by Cultural Heritage Lawyer, a blog commenting on matters of cultural property law, art law, cultural heritage policy, antiquities trafficking, and museum risk management. Blog url: Any unauthorized reproduction or retransmission of any blog post without the express written consent of CHL is prohibited. CHL is a service of Red Arch Cultural Heritage Law & Policy Research, Inc.