A Seattle bankruptcy judge put Northwest Territorial Mint’s finances in the hands of a trustee, rejecting the owner’s proposal to hire a restructuring expert instead. The company faces thousands of creditors as well as a large jury verdict in a defamation lawsuit.

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Johnny Sprada is on page 158, Robert White on page 261. They’re joined by some 3,000 others — from Sequim to Stroudsburg, Penn. — who ordered precious metals from Federal Way-based Northwest Territorial Mint and now find themselves in the “creditor matrix” of its voluminous Chapter 11 bankruptcy filing.

They are all pikers compared to the $37 million judgment entered last month in a defamation suit against the company and its owner, Ross B. Hansen, apparently prompting the mint’s April 1 bankruptcy filing.

But according to such customers, NW Mint was not delivering on its obligations in a timely manner well before that court case went against it.

In bankruptcy court Thursday, a Seattle judge put the company’s finances in the hands of a Chapter 11 trustee, rejecting Hansen’s proposal to hire a restructuring expert instead.

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Asked Friday for an interview about his company’s situation, Hansen said, “Your paper is shockingly bad … You guys would be the last one I’d talk to.” He declined further comment, and his bankruptcy attorney did not respond to repeated calls.

NW Mint has operations in Washington, Nevada, Texas, Wisconsin, Hawaii and Virginia, with 237 employees, its court documents say.

Sprada — a Maple Valley resident who hasn’t received nearly $2,000 worth of bullion and coins he ordered as Christmas presents for the 10 kids in his extended family — isn’t hopeful he’ll see his money or his metal.

“The only allure for doing this (with NW Mint) was they offered it for a much cheaper price, literally the lowest price around,” he says before recounting the company’s repeated messages that his shipment was being postponed.

White, from Sacramento, says he placed two orders and after months got a refund on one. He’s still out almost $8,000, and says the delays seemed like a systematic strategy. “They were taking in a decent amount of money and then retaining individuals’ money for six months … it’s like a bank with no interest, and a bunch of risk.”

KING 5 reported the week before the bankruptcy filing that customers were complaining about not receiving metal they’d paid for. Hansen acknowledged that up to 200 customers were owed money, but said a judge had ordered him not to ship anything, KING reported.

No such order is found in the defamation case in Las Vegas, however.

According to the defamation-suit judgment, NW Mint is on the hook for $12 million, while Hansen is personally liable for $25 million. They’ve filed a motion seeking a new trial on the amount of the damages awarded by the jury.

The hefty defamation verdict stems from an obsessive online smear campaign by Hansen against Los Angeles real-estate developer Bradley S. Cohen, and the developer’s equally determined counterstrike.

Papers filed in the suit detail how Hansen ordered NW Mint employees to help set up a series of anonymous websites targeting Cohen. The acrimony apparently started when Cohen sued the mint for polluting an Auburn warehouse it leased from him. Cohen won and collected a $3 million judgment.

The websites ordered up by Hansen portrayed the developer as “the next Madoff of real estate as Cohen’s investors lose tens of millions of dollars while Cohen lives a life of glamour and luxury,” according to the suit, and used the criminal history of a different Bradley Cohen to raise investors’ doubts about him.

According to Cohen’s suit, Hansen and NW Mint had previously used similar websites against two companies in disputes over business software, ultimately “not having to pay for the companies’ software and services.”

Cohen, in turn, used a variety of Internet sleuths and international investigators to pierce the anonymity of the websites. To persuade a jury the websites were defamatory, Cohen’s lawyers brought witnesses ranging from a linguistics expert to the former FBI agent who led the investigation of Bernie Madoff, the former investment adviser in prison for orchestrating a multimillion-dollar Ponzi scheme.

During depositions, one NW Mint employee “cried and expressed remorse for his involvement,” according to Cohen’s court filings, but Hansen “expressed his contempt and hatred” for the man suing him.

It’s hardly the first courtroom battle he’s been in. A Seattle Times story in 1995 noted that Hansen was restarting his mint after serving nearly three years in federal prison after pleading guilty to avoiding federal tax-reporting requirements.

In the current bankruptcy case, lawyers for Cohen bolstered their argument for a Chapter 11 trustee to take control by introducing other litigation: a $58,000 settlement with the state attorney general in 2008, agreeing not to surprise customers with delayed shipments; a sexual harassment case filed last year by the Equal Employment Opportunity Commission against Hansen and the mint; and of course their defamation case.

White, the Sacramento resident, says he’s been educating himself quickly in bankruptcy procedures. His conclusion: “I could be left in the wind for five to 10 years.”

 

This article has been updated to correct a reference to a Pennsylvania town, which is Stroudsburg, not Stroudsville.