Efforts to recycle trash are rarely controversial today, but the U.S. Treasury Department has found itself in this uncommon situation over the past few years. The problem centered around the United States Mint’s mutilated coin redemption program.
The mint program would compensate people roughly the melt value for returning mutilated (bent or fragmented) U.S. legal tender coins, taking these problem coins out of circulation and recycling the metal. This was how it worked until November of 2015 when the mint was forced to temporarily suspend the entire program.
This action was taken with good reason: There were increasingly suspicious shipments of mutilated coins coming from China that simply defied logic. As a matter of course, the mint promptly paid for the mounds of metal mishmash without inspecting them closely enough.
The high volume of redemptions was the first red flag that prompted the department to take a closer look. Once it began looking into the situation, however, Treasury realized something was amiss.
For starters, the composition of the coins was often incorrect. The ratios of copper to nickel in the alloy did not always conform to the standard 75%-25% mix (or 3:1 ratio) used by the U.S. Mint. Moreover, metallurgical tests even turned up non-negligible amounts of aluminum and silicon—two metals that never are found in U.S. coins!
The size of the mutilated coin shipments was also conspicuously off. Over the course of ten years, more damaged half dollars were submitted for redemption from China than the total number of half dollars the United States has ever produced in its history! This was a blatant case of international fraud.
There were three firms operating in China that were under the most scrutiny for potentially defrauding the U.S. government through the redemption program. One of them, Wealthy Max Ltd., did end up cooperating with the authorities. In total, more than a dozen companies were licensed to ship bulk amounts of mutilated coins to the mint.
During the investigation that took place in the interim, the mint decided to suspend the mutilated coin redemption program while the situation was sorted out. The Treasury Department also drew up new regulations and procedures in order to prevent future cases of fraud. The mint will no longer accept coins that are fused together or coins that are excessively worn from circulation, as these features can make it much more difficult to determine if the coins are authentic or not.
In all likelihood, the problematic shipments contained fake coins that were then manually mutilated in the hopes this would conceal their counterfeit nature. Both Coin World and CoinWeek have reported that, with its new rules and stricter licensing procedures in place, the U.S. Mint will soon relaunch its mutilated coin redemption program.
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