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1851
Center for Constitutional Law
Legal Center
moves to prevent state from enforcing precious metals law
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, and 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.
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