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PENNSYLVANIA RECORD

Wednesday, April 24, 2024

Federal judge: Coin collector's criminal record mentions will not be stricken from ownership complaint

Lawsuits
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PHILADELPHIA – A federal judge has ruled that the mention of a defendant’s prior criminal record will not be stricken from a complaint filed earlier this year, detailing the dispute over ownership and sale of a valuable coin collection.

On July 19, U.S. District Court for the Eastern District of Pennsylvania Judge Harvey Bartle III denied a motion to strike “immaterial, impertinent, and scandalous” material from defendant Martin Armstrong, in regards to a lawsuit filed by plaintiffs John Doe, Richard Roe and ABC Company.

In March, plaintiffs John Doe, Richard Roe, and ABC Company brought a diversity action against defendant Martin Armstrong, seeking a declaratory judgment. Specifically, the plaintiffs wanted to obtain a declaration that a coin collection belongs to them as bona fide purchasers. At the present time, the Court was considering Armstrong’s motion to strike certain allegations from the plaintiffs’ complaint.

Per the complaint, the plaintiffs are engaged in the business of purchasing and selling coins and precious stones. On March 5, 2014, the plaintiffs entered into a transaction with an unnamed third-party to purchase a group of supposedly-ancient gold and silver coins. The third-party in question was said to be in the business of cleaning out old or abandoned properties and as part of his compensation, was entitled to retain ownership of anything he found therein.

Afterwards, the plaintiffs entered into a consignment agreement with Heritage Numismatic Auctions, Inc. to sell the coins at an auction in New York City on Jan. 7-8 of this year. Beginning in December 2017, Armstrong’s attorney contacted Heritage and asserted that Armstrong was the true owner of the coin collection. As a result, Heritage removed the coins from the auction, further agreeing to retain and not sell the coins until the dispute regarding ownership is resolved.

“In the complaint, plaintiffs refer to defendant’s Aug. 17, 2006 guilty plea before the United States District Court for the Southern District of New York to one count of conspiracy to commit securities fraud, wire fraud, and commodities fraud. Defendant was thereafter sentenced to 60 months’ imprisonment and was released on or about March 2011,” Bartle said.

“Plaintiffs also refer to a civil contempt sanction imposed on defendant for failure to comply with a court order to produce certain assets, including gold coins. Finally, plaintiffs refer to civil lawsuits involving defendant, including an order entered by the Securities and Exchange Commission barring defendant from associating with any investment advisors.”

Bartle explained that Armstrong asserted these allegations were “immaterial, impertinent, and scandalous, as they are merely designed to vilify Mr. Armstrong’s character and foster prejudice, have no possible relation to the controversy, and serve only to muddy the issues in this case” – but that Armstrong did not, however, contend any of those allegations were untrue.

“After reviewing the motion, we find that defendant has not met his burden to establish that the allegations at issue have no possible relation to the action and will simply cause prejudice. Under Rule 609 of the Federal Rules of Evidence, evidence of defendant’s prior criminal conviction may be admitted, subject to Rule 403, to impeach defendant’s character for truthfulness if he chooses to testify in this matter,” Bartle said.

“Similarly, statements made by defendant in connection with the civil contempt order and other lawsuits may be relevant to defendant’s credibility concerning his claim of ownership to the coin collection at issue here. Simply put, we see no reason to employ the ‘drastic remedy’ of striking these allegations from the complaint at this early stage of the action.”

Bartle concluded, “Nonetheless, our decision here on the pending motion should not be constructed as a ruling at this time on the ultimate admissibility or discoverability of evidence related to these allegations. The motion to strike will be denied.”

U.S. District Court for the Eastern District of Pennsylvania case 2:18-cv-01263

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com

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