Counterfeit Coins From China Land Recyclers In Hot Water

NEWARK, NJ -- Federal investigators in New Jersey have reportedly uncovered a $5.4 million plot to defraud the U.S. Mint through its mutilated coin redemption program. According to federal prosecutors, the scheme involved three recyclers that allegedly sought to import counterfeit coins from China and redeem them through the Mint's century-old program.

The Mint's Mutilated Coin Redemption Section, according to authorities, pays recyclers approximately $20 a pound for dimes, quarters and half dollars that are bent, broken, corroded or can no longer be read by a coin mechanism.

The investigation, which dates back to 2009, originated with U.S. Customs and Border Protection, and involved the Department of Homeland Security. The amount of coins returning to the U.S., which were said to be found in junked cars sent to China for recycling, far exceeded what could be reasonably be expected. This was particularly true of the number of half dollars sent through the Port of Los Angeles.

"Interestingly, United States Mint personnel also believe that more half dollars have been redeemed by China-sourced vendors in the last 10 years than the U.S. Mint has ever manufactured in its history," according to a forfeiture complaint filed in U.S. District Court on March 20 by assistant U.S. attorney Lakshmi Srinivasan Herman.

Prosecutors claim the coins were mutilated in a suspiciously similar fashion. The process, which was outlined in court documents, detailed how they were mechanically cut or deformed, then corroded by some type of unknown chemical before washing. Scientific testing also revealed many contained aluminum and silicon, elements not present in coins manufactured by the U.S. Mint.

Among those companies named in court documents was Guang Han Trading of New Brunswick, NJ. No arrests have yet been made in the case.