U.S. MINT RESUMES MUTILATED COIN PROGRAM

Each year, millions of American cars, washing machines, vending machines, and other coin-operated devices are torn to bits and recycled, mostly in China and India. This process also results in the recovery of millions of dollars in coins that were hidden in these machines and mutilated during the recycling process.

Until 2015, recyclers could collect these mutilated coins and sell them back to the US Mint at a rate that equals their unmutilated value ($20 per pound for quarters and dimes, $1.81 for a pound of pennies, $4.53 for a pound of nickels). This redemption program provided an important source of income for the scrap-metal recycling industry, which was suddenly cut off in 2015 when the Mint abruptly halted the program. At the time, the Mint said it noticed a significant uptick in the number of coins being processed by its Mutilated Coin Redemption Program that had been sent from abroad, stoking fears that foreign recycling programs were defrauding the US Mint with counterfeit coins.

“Much of the volume in coins was coming from China as a result of the natural global trade of scrap materials,” Billy Johnson, the chief lobbyist for the Institute of Scrap Recycling Industries, told me in an email. “However, for those not as familiar with the workings of the recycling industry this created questions. The U.S. government sought to do their due diligence in making sure the coins recovered were legitimate.”

After a two-year hiatus, the US Mint’s mutilated coin program resumed its activities in late December 2017...

The coins are usually in pretty rough shape after being shredded, which can make telling counterfeits from real coins a difficult process. When I contacted the US Mint, it declined to comment on how it identifies counterfeit mutilated coins.

In 2008, the US Mint noted an increase in the number of mutilated coins being shipped to it from China and other foreign countries and expressed concern that they may be counterfeit. An investigation later that year at a contracted processing facility revealed that none of the coins at the facility appeared to be counterfeit, but doubts at the Mint lingered.

As it turned out, however, the government just didn’t understand how the global scrap recycling industry worked. As part of its lawsuit to recover the $3.2 million it was owed for its seized mutilated coins, Wealthy Max flew two executives from China to the US to explain how the Chinese recycling industry worked and to demonstrate its massive scope (China is the number one importer of US scrap metals). It even went so far as to open up 13 tons of mutilated coins for inspection by the public, but no government officials bothered to attend the event. Neither Wealthy Max, nor its legal representation, could be reached for comment.

The problem with the claim that more half dollars were redeemed than ever produced is that the government had no record of the number of half dollars redeemed through the coin mutilation program, making this allegation impossible to prove. Moreover, the reason why more coins were redeemed in 2007 than could possibly have been shipped in scrapped cars was that many of those coins were from previous scrap that had been stored in China for years before being shipped and were also recovered from other scrap sources (such as washing and vending machines), not just cars.

So barring any evidence that Chinese recyclers were engaged in a massive scam to counterfeit mutilated US coins, the government quietly resumed its coin redemption plan in December. It made a few changes to its mutilated coin redemption process, including a certification process for recyclers depending on how many coins the recycler submits per year.

“The U.S. Mint gets a lot of value from the redemption of damaged coins,” Johnson, said referring to the Mint’s decision to reinstate the program. “It gets precious metals back so they may be used in new coins and protects the integrity of the U.S. coinage system by taking older coins out of circulation. Once the U.S. Mint had a better understanding of the process in which the coins are recovered, it was really a no-brainer.”

To read the complete article, see:
Lost Coins Help Prop Up the Multibillion-Dollar Car Recycling Industry (motherboard.vice.com/en_us/article/xw4e5j/coin-recycling-damaged-mint-china-fraud)

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