Japan: All That Glitters

Japan searches for the forger of $71 million in bogus coins

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Coin fanciers responded excitedly in 1986 when Japan began issuing its first gold coins since World War II. Minted by the Bank of Japan to commemorate the | 60th year of Emperor Hirohito's reign, the 24-karat pieces were coveted by collectors even though the Ministry of Finance set the price of the 20-gram coins at 100,000 yen (now $690) -- more than twice the value of their weight in gold. To meet heavy demand, Japan minted 11 million coins.

Collectors were dumb struck last week, after Japanese officials disclosed that the country had been flooded with at least 103,000 bogus Hirohito coins, worth an estimated $71 million. The fakes were also made of pure gold and were so well crafted that many of them had even been accepted by the Bank of Japan. Because the raw material of the coins costs less than half their face value, the potential for an easy 100% markup had apparently inspired a well-fixed free-lance minter to get in on the act.

Investigators believe the suspect coins began entering the country as early as March 1988, but the counterfeits were discovered only last month, when a Tokyo firm tried to deposit 1,000 coins with the Fuji Bank. Because the amount was large and the coins' protective plastic covers appeared slightly more purple than the standard issue, Fuji officials asked the Bank of Japan to check them out. By examining the coins under a microscope, the officials discovered tiny flaws that confirmed the coins were not genuine.

Japanese investigators have traced 42,000 of the fake coins to Paul Davis, 38, a well-respected British dealer. Davis voluntarily flew to Tokyo to try to sort things out. He has reportedly told police that he believed the coins were genuine when he bought them from a Zurich dealer, who claimed to be handling them for an undisclosed Middle Eastern government.

Despite the well-plotted scam, the Ministry of Finance plans to issue another series of 20-gram gold coins with a face value of 100,000 yen this fall to commemorate the enthronement of Japan's new Emperor, Akihito. Officials are studying ways to modify the coin's design or packaging to prevent new forgeries.