Coin-minting deal turns sour for NMI

In efforts to explore new opportunities, the CNMI government tried its hand this year on commemorative coin minting but it got burned, prompting it to withdraw and is now mulling of terminating the plan altogether.

“We just don’t want to have anything to do with it. We’re working toward the termination of the agreement,” said governor legal counsel Steve Newman in an interview yesterday.

He said the money collected from the coin sale, totaling $160,000 would be disposed of accordingly.

The money had been remitted to the CNMI Treasury.

Controversies in the release of certain commemorative coins in the U.S. mainland this year compelled the CNMI government to disclose that it actually authorized a Wyoming-based company to mint coins using the CNMI emblem.

In July this year, the Governor’s Office revealed that it struck a deal with Softsky Inc. to mint coins showing CNMI the insignia.

Gov. Juan N. Babauta said a $25,000-check had initially been remitted to the CNMI as royalty fee. Another $25,000 came in and was presented in person by Softsky president Joseph Hartman to Babauta last summer. Last October, $110,000 in additional royalty fees arrived out of the sales of the coins.

The commemorative coins and silver coins, which bear the CNMI emblem, later turned out to be controversial due to allegations of “false and fraudulent advertising claims.”

The National Collectors Mint Inc., which sells Softsky coins, reportedly marketed the “2004 ‘Freedom Tower’ Silver Dollar,” as being made of silver from vaults taken from Ground Zero, the site where the World Trade Center towers fell on Sept. 11, 2001.

In its website, the National Collectors Mint was advertising the coins as if they were minted by the CNMI. It claimed that the coins were created using .999 pure silver.

One side of the coin shows the Freedom Tower planned for the site and bears the phrase “In God We Trust.” The other side shows the former Manhattan skyline, with the World Trade Center still standing, and the phrase “One dollar.”

The U.S. Mint, the only government entity in the United States with the authority to coin money, said the silver coins were not genuine. The U.S. Mint further said the Commonwealth, as a U.S. insular possession, does not have the authority to coin its own money.

The U.S. Mint said that consumers may find the advertisements for this product confusing because the company uses phrases such as “legally authorized government issue,” “U.S. territorial minting,” and “silver dollar.” The product itself also may be confusing because it bears the inscription, “In God We Trust,” which Congress requires on all United States coins, and the inscription, “One Dollar.”

Under the U.S. Constitution, it said, Congress has the exclusive power to coin money of the United States, including the striking of commemorative coins.

Congress has delegated its authority to mint and issue coins to the Secretary of Treasury, and Congress requires the Secretary to carry out these duties at the U.S. Mint.

This alleged fraud resulted in a New York court imposing an injunction against National Collectors Mint.

A New York state judge reportedly found that National Collector’s Mint Inc. engaged in civil fraud, false advertising and deceptive business practices when it marketed its “2004 Freedom Tower Silver Dollar” for $19.95 in television and print ads.

New York attorney general Eliot Spitzer said that, contrary to the claim, the coins were made of inexpensive metal alloy plated with about one-ten-thousandth of an inch of silver. Spitzer had filed an $8-million lawsuit against the Port Chester-based company.

The litigation prompted Babauta in November to suspend the CNMI contract with Softsky.

“We are not happy taking these actions but the events surrounding this agreement warrants this suspension,” said Babauta.

While the governor said that the agreement, which was originally signed with Softsky in November 2003, was only suspended, attorney general Pam Brown said the administration was now moving toward terminating the agreement.

“That contract is being terminated now. That’s the way to go,” said Brown.

Likewise, Brown said that the money received from Softsky would be disposed of properly, noting that it would be unacceptable to profit from the Sept. 11 tragedy.

The agreement with Softsky was executed with Softsky while Brown was the governor’s legal counsel.