My 1st instinct says "yes" it is a fake due to color. But, my eyes are old & need larger, properly oriented photos. Weight is one way to tell. A real one would weigh very close to 26.73 grams. Then there are the magnet tests.
There was only one set of dies used for the business strike on the 1894. The date position on your coin is wrong. The dealer is correct it is a counterfeit. On OP coin from the neck point the 1 sits square over the forth denticle. On Genuine example the 1 sits between the 3rd and 4th dentile. There are other die markers on the 94, but not necessary because the date position is incorrect on OP coin.
The OP coin looks like a Chinese counterfeit. Some 94 counterfeits have the date position correct and the die markings have to be used to determin if it is a fake. It is also common for the 94 to have a mint mark removed from a genuine 94S or 94O when the mint mark is removed there is often tool marks left behind. On key date Morgans it is best to buy in a TPG holder unless you know what to look for in counterfeits.
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