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Sovereign Bank may seize coins from Tampa's National Gold Exchange, judge says

A bankruptcy judge on Monday allowed Sovereign Bank to continue to seize valuable coins from Tampa's National Gold Exchange, effectively shutting down what has been one of the world's largest coin wholesalers.

NGE filed for Chapter 11 bankruptcy on Friday and Sovereign, as its largest creditor, sought permission to seize collateral for the $35 million it loaned NGE. Sovereign started trucking away the coins last week but the bankruptcy filing interrupted the process.

After hearing allegations that NGE employees had been smuggling boxes of coins out the back door of the business to evade creditors, Judge Michael Williamson allowed Sovereign back into the business. Williamson called the case potentially "serious and troublesome."

Sovereign had been acting on a tip that NGE co-owner Mark Yaffe used $12 million to $15 million in coins, pledged in collateral for the $35 million loan, to build a $25 million mansion in Tampa's Avila neighborhood.

While taking inventory of NGE's coins last week, Sovereign said it discovered misleading accounting that masked a shortfall of at least $5 million.

"Sovereign has no idea how great its losses are," said Robert Soriano, a Tampa attorney representing the bank.

NGE attorney Paul Thanasides argued that allowing Sovereign to confiscate the coins would cost NGE $1 million a day and hinder its bankruptcy reorganization.

As for the charge that NGE has been smuggling coins out the back of its North Dale Mabry Highway office, Thanasides labeled the allegation "innuendo."

"We're losing all the goodwill or our customers and vendors," Thanasides told Williamson.

The judge asked both sides to reconvene in court on Monday. NGE would like access to the seized coins so that it can restart operations.

James Thorner can be reached at jthorner@sptimes.com or (813) 226-3313.

Sovereign Bank may seize coins from Tampa's National Gold Exchange, judge says 07/28/09 [Last modified: Tuesday, July 28, 2009 8:19pm]
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