Leading rare coin dealers lose control of Tampa business

Mark and Alan Yaffe, brothers who built National Gold Exchange into one of the world's leading rare coin sellers, lost control of the business in bankruptcy court Monday.

In a court hearing Monday, U.S. Bankruptcy Judge Michael Wlliamson placed National Gold Exchange in the hands of a Chapter 11 bankruptcy trustee. The trustee will oversee the Carrollwood-based business as it works its way through bankruptcy. In Chapter 11, a company is allowed to reorganize its finances and potentially emerge from bankruptcy intact.

The judge's action is a mixed bag for the Yaffes. They had hoped to keep control of their company without a trustee's appointment. However, Richard McIntyre, National Gold Exchange's bankruptcy lawyer, said it's a better result than if the judge had appointed a Chapter 7 bankruptcy trustee to liquidate the company.

"It comes down to Yaffe lives to fight another day," McIntyre said.

National Gold Exchange is not well known in the Tampa Bay area, but it's a big player in gold and rare coins and antique music boxes, which are large automatic music machines. The company keeps a low profile in Carrollwood, where it's tucked into a brick strip mall on North Dale Mabry Highway. Its only sign reads a vague "NGE."

Sales in 2008 hit $285 million, according to court testimony.

In court motions Monday, an attorney for Sovereign Bank of Pennsylvania asked U.S. Bankruptcy Judge Michael Williamson to force the company into liquidation to pay off creditors. At the least, the bank hoped the judge would appoint a trustee to oversee its assets and take control away from the Yaffe brothers.

In testimony Monday, Sovereign Bank executive Elizabeth Sousa said bank examiners found a host of accounting errors and possible fraud at National Gold Exchange, which led them to declare the company in default of its loans last month. The bank is worried about the $35 million in loans it has extended to National Gold Exchange, which are secured by the rare coins and music boxes.

Among other things, the bank alleges the company may have sold up to $15 million in coins - which were collateral for its loans - to help pay for Mark Yaffe's $25 million home in Tampa's Avila community. McIntyre said Mark Yaffe has offered to use his equity in the home as collateral for the Sovereign Bank loans.

Sousa also testified that National Gold Exchange had "loosey-goosey" accounting and inventory controls. When the bank inspected its office last month, it appeared National Gold Exchange had intermingled its coins with those of a related company called Gainesville Coins. The bank couldn't tell which were the coins that secured the loans and which weren't, she said.