"Because of the possibility of unlawful activity" in the federal Coin Exchange program, which buys worn old coins from recyclers and hoarders and melts them into new coins, "the United States Mint is suspending its redemption of bent and partial coins for a period of six months to assess the security of the program," Richard A. Peterson, director for manufacturing and qulaity at the U.S. Mint, said here in the Federal Register on Oct. 29. 

That was a week after I reported some of the China-based companies that had been among the busiest sellers of recycled coins to the U.S. government filed a lawsuit to get back "$5.5 million in cash, a Porsche Cayman Coupe, and a Texas warehouse" seized by Homeland Security agents last winter.

Federal border control agents acted illegally when they decided the worn coins were fakes and seized the mint's payments to Wealthy Max Ltd., America Naha Inc., and XRacer Sports Co. Ltd., along with the car and warehouse, Wealthy Max's lawyer, Bradford L. Geyer alleged. He asked a federal judge in Newark to dismiss the government's civil forfeiture complaint, on grounds Homeland Security violated federal rules on seizing property alleged to be connected to crimes. Wealth Max's petition has been transferred to federal court in Philadelphia. Still pending.
Wealthy Max, in a statement today, said it agrees with the Mint's decision to temporarily suspend the buybacks. Geyer said the freeze shows senior Treasury Deparmtent officials are "very much in line with Wealthy Max's interest of assuring that only legitimate U.S. coins are redeemed under the program," he added. 

In justifing the seizure, Homeland Security officials said they were skeptical the high volume of coins sold by China-based recyclers, and suspected many were fakes. Geyer insists the companies collect and hand-sort whole container-loads of coins from junked U.S. cars and appliances that end up in south China scrapyards for recycling, and that Wealthy Max's "time-tested quality assurance system" has worked smoothly since it sold its first loads to the Mint in 2002.

Homeland Security also complained of finding silicon (not used in U.S. coins), and metal that looked as if it may have been doctored to simulate coin aging, in sample recycling loads. Wealthy Max's U.S.-based expert testified silicon is commonly found in dirt, and that coined copper is readily discolored.  

"We have invited representatives of the Government to tour one or more scrap reclamation facilities in China as well as to examine Wealthy Max's quality assurance," Geyer added. A Mint spokesman said he'd get back to me, but hasn't.