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In January 1989, George Funkhouser and Brian Schwartz, doing business as Channel Trading Company, Inc. (CTCI) in Langhorne, Pennsylvania, conducted a scheme to defraud 150 coin dealers of $1 million in coins. Funkhouser and Schwartz deposited two counterfeit Swiss bank checks totaling $1 million into a checking account they opened in the name of CTCI and used the fictitious funds to purchase gold coins from the dealers while attending a numismatist show in Florida.

Counterfeit checks totaling $1 million used to purchase gold coins

Upon their return from the coin show, Funkhouser and Schwartz decided to stage a phony robbery in the parking lot of the Philadelphia Airport. After Funkhouser’s girlfriend and ex-wife met them to take the coins, Funkhouser and Schwartz threw their suitcases on the ground, handcuffed themselves to each other, and called 9-1-1 from their car phone. When the police questioned their story about being robbed, Funkhouser and Schwartz refused to undergo a polygraph examination. A lengthy Interstate Transportation of Stolen Property investigation was initiated by the FBI, but it wasn’t until 1993 that agents, working with the IRS, located a former employee of Funkhouser’s who told them that on the night of the alleged robbery he had helped Funkhouser melt down bags of gold coins.

Recovered coins found buried in Funkhouser’s backyard.

The employee agreed to make several consensual calls to Funkhouser and a conversation in which they discussed the melt down of the coins was recorded. Later, $175,000 worth of the stolen coins which had not been melted but instead buried behind Funkhouser’s house, were recovered.

Funkhouser’s mug shot and four of the adulterated silver bars.
When cut in half, the bars were shown to be filled with lead.

During the investigation, agents discovered a second Funkhouser scheme that was potentially more damaging to the precious metals industry. He and two accomplices had created an almost undetectable way of hollowing out bars of silver and refilling them with lead. Visually inspecting and weighing the bars provided no indication of adulteration. However, when the bars were x-rayed, they were determined to contain a substance of different density. The agents had the bars cut in half and chemically tested. The allegations were confirmed; the silver bars were filled with lead. When confronted, Funkhouser admitted that he had aborted this scheme when the FBI began investigating his coin theft scam. Only 16 of the 200 altered silver bars were recovered. Funkhouser was sentenced to 10 years in prison and Schwartz received four years.

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