Israel Discount Bank of New York won a judgment of more than $8.95 million from a Delaware precious-metals storage company that withheld access to a cache of rare gold and silver coins being held as collateral for loans.
First State Depository Co. must pay the damages, including interest and more than $1 million in legal fees, and turn over any of the bank’s remaining valuables, Delaware Chancery Court Judge Donald Parsons Jr. wrote in an order signed today.
“I find the depository breached the agreement by releasing collateral,” interfering with the bank’s rights, and that an affiliate disposed of collateral “as if it were its own,” Parsons wrote in an opinion.
The bank, a unit of Tel Aviv-based Israel Discount Bank Ltd., sued the Wilmington vault in February 2012, seeking to preserve the $17 million collection. The bank alleged the depository firm was transferring the coins for outside display without permission, “marketing for sale” some assets and withholding inspection rights.
The bank asked a judge to freeze the assets in Delaware, forbid coin transfers and enforce its right to inspect the deposits.
Included in the cache, the bank said, were more than 12,000 rare presidential or Sacagawea dollar coins with missing edge markings, other collector-quality gold and silver coins, and gold bullion, according to court papers.
During the effort to identify possible collateral, the Federal Bureau of Investigation became involved. FBI agents raided a First State Depositary booth at a Baltimore coin show in March 2012 and the Wilmington vault in May 2012, seizing an estimated $3.8 million in coins, according to Parsons.
As part of today’s order, Parsons gave First State the option of buying some of the rare coins for $1 million within 30 days.
Sarit Weiss, a bank spokeswoman in Israel, couldn’t immediately comment on the order.
“We intend to appeal,” based on legal advice, said Robert Higgins, a First State director, in a phone interview.
The case is Israel Discount Bank v. First State Depository, CA7237, Delaware Chancery Court (Wilmington).