Regulations prohibit advertising and impose warrantless searches

Columbus, OH – The 1851 Center for Constitutional Law today moved in federal court to immediately enjoin the state from enforcing the “Ohio Precious Metals Dealers Act,” against Ohio coin dealers threatened with criminal sanction for advertising their businesses, and sweeping warrantless searches of their business records and properties without probable cause.

The legal action is filed on behalf of Liberty Coins, a Delaware, Ohio coin dealer ordered by the Ohio Department of Commerce to cease all advertising indicating that it purchases gold and silver and all actual purchases of gold and silver, and threatened with a $10,000 fine and jail time if it does not comply.

The Supreme Court has repeatedly confirmed that First Amendment applies to “commercial speech,” which includes advertising. Nevertheless, the Ohio Department of Commerce has begun vigorous enforcement of regulations prohibiting coin dealers from advertising without a license, and requiring a license if they do advertise (conditioned on a state finding of “good character and reputation”). Once licensed, state and local agents may search and seize any item or business record without a search warrant or finding of probable cause, and may do so on a daily basis.

The Department of Commerce enforcement policies, which exempt banks, jewelers, and other special interests, appear to be targeted at preventing theft and resale of gold and silver items. However, the policies punish any coin or precious metals dealer who advertises “we buy gold and silver,” even if that dealer, as Liberty Coins does, purchases gold and silver items exempted by the Act, such as certain collectibles, coins, hallmark bars, ingots, numismatics.

Further, the regulations apply only to coin dealer to advertise, entirely exempting those who do not. The state defines advertising to include business cards and signs in storefront windows making reference to gold and silver.

The lawsuit seeks to restore the right of Ohio retail gold and silver coin dealers to be free from a licensing regime that punishes them on the basis of their speech, and subject them to unconstitutionally sweeping searches and seizures.

“This Act and its aggressive enforcement treats the many Ohio small businesses who participate in gold and silver markets as public utilities at best, and criminals at worst, irrespective of whether they have done harm,” said Maurice Thompson, Executive Director of the 1851 Center.

“The state misguidedly seeks to advance its mission of ‘preventing theft and resale of precious metals’ through gag orders, warrantless searches, and criminalization of innocent small businesses. Fortunately, the First Amendment allows us to protect Ohioans’ rights to engage in truthful promotion of their businesses, and to run a business without constant subjection to unlimited warrantless searches of one’s property and records by state agents. And protect these rights we must: if these regulations are upheld, there is nothing stopping the state from imposing similarly on all business activity with the state.”

The state’s heightened enforcement tactics, which effectively put many coin dealers out of business, come at a time of rising precious metals prices, where despite an already burdensome state sales tax on the purchase of precious metals, an increasing number of Ohioans seek to use gold and silver to protect their savings against potential inflation due to federal government increases in the money supply.

Read Liberty Coins’ Complaint HERE.
Read Liberty Coins’ Motion for Preliminary Injunction HERE.

November 16, 2012:WBNS-10TV: Scrap Metal Fight: A coin dealer is suing the state over scrap metal license requirements [VIDEO]