(CN) - The U.S. Mint must return 10 rare gold Double Eagle coins valued at $80 million to the family of the man suspected of stealing them, the 3rd Circuit ruled.
Such relief is necessary, the Philadelphia-based federal appeals court found 2-1 Friday, because the government refused to initiate a timely forfeiture action.
"At the insistence of the Mint and against the wisdom of the Secret Service and multiple other agencies, the government opted to ignore CAFRA," Judge Marjorie Rendell wrote for the majority, abbreviating the Civil Asset Forfeiture Reform Act.
"Now, the Langbords are entitled to the return of the Double Eagles."
Augustus St. Gaudens, a sculptor and artist, designed the Double Eagle, which many collectors consider the most beautiful U.S. coin ever. In 1933, during the depths of the Great Depression, 445,500 such coins were struck at the Philadelphia Mint.
Before the coins entered into circulation, however, President Franklin D. Roosevelt ordered the nation's banks to abandon the Gold Standard and outlawed the use of gold coins as American currency.
While most of the 1933 Double Eagles were melted into gold bars, only two were supposed to have survived and were sent to the Smithsonian,.
A single Double Eagle sold for more than $7.5 million at a Sotheby's auction in the summer of 2002, making it at the time the most valuable coin ever auctioned. To this day, the buyer remains anonymous, known only as "Mr. Big."
The government later brought a forfeiture action when the daughter and grandsons of storied Philadelphia jeweler Israel Switt drilled open a safety-deposit box in 2003 and found 1933 Double Eagles wrapped in the gray paper of a Wanamaker's department store bag.
"The government simply wants its coins back," Assistant U.S. Attorney Jacqueline Romero told jurors in her opening statement for that case in 2011.
Secret Service had investigated Switt decades earlier on the suspicion that he smuggled Double Eagles out of the Philadelphia Mint, but it never proved anything.
Switt's relatives, the Langbords, complained with the way in which the U.S. Mint simply seized the coins that they had handed over for authentication.
They noted that the Civil Asset Forfeiture Reform Act required the government to file a complaint for judicial forfeiture within 90 days of receiving their claim to the property.
The Mint countered that "there is simply no basis for the government to initiate forfeiture proceedings on property to which the United States holds title," saying the 10 Double Eagles "already are, and always have been, property belonging to the United States."
Though a federal judge ultimately found that the 90-day limitations period did not apply, the court did side with the family on its claims that the Mint had violated their Fourth Amendment rights by seizing the coins.
After a trial on the government's ensuing civil forfeiture proceeding, a jury found that the coins had been stolen and belonged to the government.
Vacating that verdict Friday, the 3rd Circuit ordered the government to return the coins for its failure to follow civil procedure.
"The Langbords turned the Double Eagles over to the Government for the sole purpose of authenticating them, and they 'specifically reserve[d] all rights and remedies with respect to the Coins.' As the District Court found, the Langbords' 'letter communicated that [they] did not intend the transfer to be an unconditional, permanent surrender,'" Rendell said.
Even if the Double Eagles ultimately were stolen government property, the Mint's seizure was unconstitutional because the family preserved its claim to the coins, according to the ruling.
The government cannot avoid the 90-day CAFRA limitations period simply by refraining from sending notice of a forfeiture proceeding, the court found.
"If the government seizes property claimed by someone else - whether it be money, a car, or even a house - the government argues it can avoid the protections Congress sought to put in place simply by saying, 'we are not seeking forfeiture,'" Rendell wrote. "The Langbords are correct in urging that we reject these arguments. This is what the CAFRA envisions: the government cannot unilaterally ignore a seized asset claim."
Chief Judge Theodore McKee joined Rendell's opinion but Judge Dolores Sloviter dissented.
Although Sloviter acknowledged that the government "rather casually treated its obligation under CAFRA to proceed to a hearing," she said the Mint acted with good reason, as two fact finders later found that the Double Eagles were stolen.
Returning the coins to the family was certainly a step too far, Sloviter added.
"Although there is language in CAFRA that requires the government to return items it seized or proceed to have the issue of ownership decided by a forfeiture proceeding, this does not mean that the claimants are entitled to ownership of the property at issue, although the jury has determined that the property belongs to the government, which is the result the majority appears to reach," Sloviter wrote.
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