Your Liberty Dollar Raid Update
Jeff Taylor | November 16, 2007, 10:35am
Updating from the previous post on the topic, the FBI did indeed raid the Liberty Dollar office in Indiana on Wednesday. Documents filed in U.S. District Court in North Carolina indicate that the raid was the culmination of a two-year undercover investigation of Liberty Dollar and its officers.
According to an affidavit (PDF) filed by FBI agent Andrew Romagnuolo in support of a federal seizure warrant obtained from a U.S. Magistrate last week, the feds have been investigating Liberty Dollar not just for violating federal bans on circulating alternative currency, but also for mail fraud, wire fraud, and money laundering.
As for the mysterious connection to the Western District of North Carolina, the document names William Innes of Asheville as a Regional Currency Officer for Liberty Dollar and an executive committee member of the company. Undercover government agents made Asheville a focus of their investigation as a result, attending area meetings of Liberty Dollar prospective buyers and sellers.
The affidavit further details Liberty Dollar's structure and terms it a "multi-level marketing scheme." The FBI claims the company realizes a profit by selling the Liberty Dollars into circulation. The feds also went back to October 2002 for bank records of Liberty Dollar principals and cite large sums of cash moving between accounts said to be controlled by those individuals.
The document also mentions that the company continued to circulate Liberty Dollars after it had been warned by the US Mint not to do so. Part of the evidence cited for this is an FBI agent purchasing a "The US Mint Can Bite Me" t-shirt at a Liberty Dollar University event in October 2006.
The affidavit concludes that because the Liberty Dollar operation uses Federal Reserve Notes to conduct its business, it is fraudulent. "This reliance upon FRN's by a group opposed to FRN's demonstrates that the American Liberty Dollar Monetary system is simply a drain on the United State Government's monetary system for financial profit via fraudulent means," the feds claim. The document further claims there is probable cause that violations of federal law took place as a result of these activities.
At no point in the affidavit are Ron Paul Dollars mentioned, although many other coins are mentioned including a Hawaii dala offering. As such, accounts of the raid focused on the Ron Paul angle seem off-base, at least given the available facts.
James Anderson Merritt | November 16, 2007, 11:24am | #
The medallions (none dare call them "coins") ARE beautiful, including the two Ron Pauls that I was lucky enough to acquire before this whole mess went down.
There is no reason that a manufactured product cannot be sold at a profit, in order to recoup its cost of raw materials, production, and distribution. Does the government expect us to believe that federal "dollars" appear out of thin air, for free? The sales of T-bills that help to create the money supply involve interest, for one thing. For another, the people at the Mint get paid on a regular basis. The raw materials, labor, and capital equipment used to make the government's metal tokens and paper notes are not without real cost. Why is it wrong for the people who bring us the LD to expect fair recompense, and why does the government not speak openly about its "cost of goods sold"? What the Liberty Dollar does is allow the average person to realize the profit inherent in a monetary system, rather than giving it to the bankers and first-recipients of new, inflationary government dollars, as the government's system does now.
In view of the government's charges of fraud, here is the irony: People who held liberty dollars in paper note or electronic form are now unable to redeem them, because the government has seized all of the precious metal, which numerous audits confirmed was kept safely in a warehouse as BACKING for the LD. The government has made it impossible for the warehouse receipt contracts to be honored. How is this "protecting" the public? Nobody alleges that the metal was stolen. Anyone who has a paper or electronic LD has claim to that metal; must we now jump through government hoops to get our property, when just the day before, all that was necessary was to visit an LD representative or the mint warehouse in Idaho and present our certificates for redemption? Nobody has ever complained that they were unable to redeem their warehouse receipts for metal. Audits have consistently confirmed that there was enough metal to redeem all outstanding non-metal LDs. The government has, quite literally, stolen people's legitimate property at gunpoint, regardless of any malfeasance on the part of anyone in the LD organization. Speaking of the latter...
I would be interested to learn whether the charges of "money laundering" or misuse of funds hold up. It sounds to me as if the government has thrown as much of the book as it can at the LD organization, simply to shut it down. In any case, it is not the government's place to interfere with the honest fulfillment of honest contract in order to catch or punish bad actors in the system.
What seems most egregious is the government's foot-dragging and delaying tactics, which they have used to impede the progress of the LD's own lawsuit against the government, all the while pursuing the investigation that culminated in this raid. Forget about the LD being on the up-and-up. I want the government to be on the up-and-up, operating honestly and in good faith. The LD raid is yet another piece of evidence that our government does not operate in an honest and respectable fashion.
James Anderson Merritt | November 16, 2007, 2:57pm | #
# James Anderson Merritt | November 16, 2007, 1:55pm | #
# Does anyone have access to a copy of the
# warrant? I tried to find one at the LD
# site and affiliated sites, but no luck.
I see that the link in the blog posting above to the "affadavit" includes the appplication for warrant and the signed warrant itself. Thanks for posting that, Jeff.
Taking a lunchtime break to skim through the affadavit, I cannot believe how flimsy the government's case appears to be, but that's just on the basis of the common sense of someone of the same class of people who might serve on a jury. I'm not a lawyer. Do any of you lawyer types see this as a strong case, or is it just a case of harrassment under color of authority?
I was amazed to see that the government seemed to fault the LD organization for daring to make a profit on the thing they had created and distributed. I hope that the "profit" inherent in the federal currency scheme -- and who collects it -- comes out in court. I also hope that the value of the US dollar at the time the LD was introduced, vs. its value today, becomes an issue in the court case. The government makes a big deal about the "shortfall" between the dollar face value of a LD medallion or paper note, and the dollar value of precious metal it contains or represents. But over time, that "shortfall" has tended to be erased by the government's own inflation and other fiscal mismanagement, whereas the value of the government's currency has been shrinking visibly, due to the same forces.
If the LD has steadily increased in value and the USD has steadily decreased in value, who is perpetrating the fraud here?
Somebody needs to hire Al Pacino to picket the trial in dark glasses, shoutin, "You're out of order. You're out of order. This whole trial is out of order! Hoo hah!" (Hey, that's practically a mini Pacino film festival, newsworthy in its own right!)
Bill Woolsey | November 16, 2007, 3:47pm | #
I don't know whether the U.S. government could copyright the word "dollar," under current laws, but it certainly does claim the right to regulate dollar denominated financial instruments. And, for that matter, financial instruments of any other sort too.
Banks offering checkable deposits are very much regulated in the U.S. Checkable deposits are generally denominated in dollars, and regulated.
I would say that if you ran a bank that allowed
people to write checks in dollars, and then didn't pay them off with Federal Reserve notes (one way or another,) and especially if you tried to pay them off with silver at 70 cents
on the dollar, you might run into charges of
criminal fraud.
Try operating a bank that doesn't follow government regulations and see what happens.
Banks aren't allowed to issue dollar denominated paper currency. (I don't know
that anyone has tried to issue paper currency
denominated in other units.)
Dollar denominated bank issue currency was outlawed in the thirties. Before that, it was
highly regulated. It to be paid off in legal tender dollars and backed 100% by U.S. government bonds.
And, of course, in the past, the government has prohibited people from owning gold. Presumably they could do the same with silver.
I think the legal problem is issuing dollar denominated coins.
I am not making some kind of claim that the Liberty Dollar people were violating natural law or something.
I am making the obvious point that lots of people make coin looking things and people are free to barter them if they want.
It is the dollar denomination that is causing the legal problem for these people.
LibertyDollarUSA | November 16, 2007, 5:28pm | #
Kenny--
You get a couple of facts wrong.
First off, the part you should have bolded was not "original design" but "makes or utters or passes, or attempts to utter or pass". The Liberty Dollar is not in violation of that because Liberty Dollars have never been passed or attempted to be passed as US Government Dollars. By your reading, every silver round, wooden nickel and lollipop in the world is violation of that statute.
Secondly you say: "Both the $20 ALD and the $10 ALD have about 1 oz silver, which puts their FRN value at approx $15 for both."
This is incorrect. When Silver was below $10, there was a $10 Silver Piece. Now the $20 and $10 pieces are one ounce and one half ounce respectively. You say their value is $15, but in doing so you quote the commodity price of silver-- which is silver in 1,000 ounce bars. Sure, when you buy in volume in raw form, you do get a better deal. (This is the same asinine statement the Feebs made.) The reality is, manufacturing and distribution have costs, and the "value" of something is very much based on what purpose they serve to the buyer.
Or are you going to demand a refund on your car because the raw material value when quoted on the commodity market for it is 1/100th of the price you paid?
By the way, its amazing for the Feebs to make the "fraud" allegation because spot price is $15... when the US Mint sells a non-proof, butt-ugly, one ounce silver piece for ... wait for it... $21.95 plus shipping. Here's a direct link:
http://catalog.usmint.gov/webapp/wcs/stores/servlet/CategoryDisplay?catalogId=10001&storeId=10001&categoryId=13738&langId=-1&parent_category_rn=10191&top_category=10191
But if that link doesn't work, go to usmint.gov click on "shop online" and then select the "Uncirculated silver eagle".
Finally, if the LD is a scam, what is the US Dollar? ITs not backed by any silver at all... a $20 bill won't get you even an ounce of silver at your local federal reserve branch.... and the markup on that is a whole lot more than the $4 alleged for the Liberty Dollar.
The whole argument for the LD being in the wrong is non-sensical, and only be sniffing the government glue can people fall for it. Unfortunately, the government is full of glue sniffers.
James Anderson Merritt | November 16, 2007, 6:20pm | #
# Kenny | November 16, 2007, 5:19pm | #
# Ok looking at the pdf during my lunch
# break, it loooks like the government has a
# case.
...
# There is definitely evidence that they
# are violating title 18 sect 489:
# Whoever, except as authorized by law,
# makes or utters or passes, or attempts
# to utter or pass, any coins of gold or
# silver or other metal, or alloys of metals,
# intended for use as current money, whether
# in the resemblance of coins of the United
# States or of foreign countries, or of
# original design...
I hope the LD case will allow the above provision to be challenged on constitutional grounds. It is one thing to tell people that they cannot commit fraud by passing counterfeit coin or bills as genuine government issue. I'm completely OK with that. But to tell people that the only "lawful money" is that which is issued or approved by the government is a repudiation of the people's liberty. If Disney wants to issue Disney Dollars, one-to-one with US dollars, which are good in "The Magic Kingdom," even when US money may not be accepted, and if people then want to trade those notes around outside of the Magic Kingdom as well, who is Uncle Sam to tell them no?
As long as there are no claims that 1) the Liberty Dollar comes from the government or 2) the Liberty Dollar is legal tender; and as long as the amount and purity of precious metal are accurately advertised on the medallions, or the exchange quantity of precious metal is accurately indicated on the note, no fraud or counterfeiting has been committed, and people are (or at least should be) free to use those pieces of paper or medallions in commerce however they please.
I mean, really, does the government serve the people or do the people serve the government? The implicit statement of the government in this instance appears to be the latter, and if we put up with that, we might as well have remained subjects of (the first) King George.
Kenny | November 16, 2007, 6:23pm | #
LDUSA-
(preface: IANAL)
First, what I meant for evidence, is that there is evidence, not conclusive proof. It will take a trial, lawyers, judges, jury of peers, et al to 'prove'.
The Liberty Dollar is not in violation of that because Liberty Dollars have never been passed or attempted to be passed as US Government Dollars
and the government asserts that there has been attempts to do this. I do not have enough info yet to tell which is correct.
Your right in that "attempts to pass" is the important element and the finding of facts on which this case will revolve around (mens rea and all that, right you lawyers outt there?)
Thank you for the clarification of the 10 vs 20 dollar coins, the indictment just mentioned there were both without any context.
While I do not have the aversion to fiat money as some around here (and I am actually a Paul supporter), I am not opposed to exchanges in other than cash, if that's what both parties want. However, it's hard to give the irs a hamburger if you get a cow in exchange for some electrical work.
What I do not understand, and if you can explain in three sentences or less, it would be appreciated, is what you are trying to accomplish with the liberty dollar program, if you are not trying to pass them off as
current money (a term which legally does not seem to be equivalent to *US dollars* but does seem to be euivalent of *legal tender*)
Again, not trying to troll, trying to understand.
James Anderson Merritt | November 16, 2007, 6:43pm | #
# Market Money | November 16, 2007, 6:04pm | #
# All along, Liberty Dollar enthusiasts could
# have purchased silver -- paying with FRNs !
# -- at a reasonably modest premium over spot
# at any coin/metals dealer
True. But why should they have to, anymore than baseball card enthusiasts should have to buy blank squares of cardboard instead of printed player cards? If people want to trade baseball cards instead of money, will the feds come after Topps and the other card vendors next? You're just rationalizing arbitrarily asserted authority, an authority that I don't find in the Constitution, do you?
Sneer all you want at how silly or stupid commerce in LDs might be -- many will disagree with you, of course -- but can we agree that the government has no business telling peaceful people how to conduct their affairs in cases like this? The fact of the matter is that the value of the amount of silver purchased by the LD has continued to rise, even as the value of the US Dollar has tanked. So even at the "absurd premium" asked by NORFED, purchasers of the $10 original LD who held onto the silver have seen their investment grow, and it seems probable that purchasers of the $20 LD will enjoy growth as well. How is this any different from putting your money in a low yield passbook account and contenting yourself with the modest gains you accrue, as millions of people have done for years? Should passbook accounts be outlawed as frauds, too, just because there are higher yield investments? On the other hand, if you actually DID put your US dollars in a passbook account, you would have seen its purchasing power shrink precipitously in the past decade. Your extremely modest "gains" on paper would have translated into actual losses in purchasing ability.
I am amazed to see the power of the government being trained upon people who have actually delivered measurable net value over time, in defense of people who have actually delivered measurable net loss over time, with the former being called "frauds" and the latter being called "protectors of society" and "servants of the people." This side of the mirror is curiouser and curiouser. I think I should like to return to the other side and be back in my own drawing room. :-)
Glen Pearc | November 16, 2007, 7:52pm | #
The main problem I see with the Liberty Dollar
is how it looks too similar to something that
would be issued by the U.S. government. The
whole process of "doing the drop" as they
advocate really relies on people not knowing
the difference.
As for myself I'd accept them, but not at any
higher value than any other one ounce silver
round. Which would vary with the free market
exchange rate at the time.
"Doing the drop" only fuels further future
mistrust of any unfamiliar coins with the
public.
Between advocating "doing the drop" and the
de-basement move from $10 to $20 per ounce
to keep Liberty Dollars profitable at the
new silver price makes the motives behind
the Liberty Dollar look questionable to me.
As for cost, it is overpriced. In quantities
of 100 I can buy Canadian Maple Leaf coins
or U.S. Mint Eagles for a few bucks less
than $20, thus getting a better "exchange
rate" into silver. These are both containing
the same 1 ounce of silver the Liberty Dollar
has.
Both the Maple Leaf ($5 CDN) and the Eagle
($1 U.S.) silver one ounce coins have a
face value in the respective national
currencies so if I'm totally wrong about
my inflationary expectations I can in the
worst case of a deflationary depression
spend them if I get desperate enough.
Though it may be hard to find someone
willing to accept them if they aren't
familiar with them. Especially if they
got "burned" with a Liberty Dollar before.
Jason Hommel of Silver Stock Report had a
far better and much more honest proposal
for a co-circulating silver coin:
http://silverstockreport.com/silvercoinproposal.htm
The only limitation to his plan is that
it would have to be implimented by a large
enough organization that already has
dealings with a large number of people
such as a state government or a major
retailer.
A Wal-Mart or Safeway one ounce round that
could be spent for the current value of silver
if needed at it's respective issuing store
upon demand would reduce the number of dollars
I'd need to hold onto as a float. That is
something I'd be very happy with. The catch
is it has to be a bussiness I would normally deal with for this to work.
His plan would be a truely voluntary and
open free market way of doing it that would
be based upon people understanding how it
works rather than being based upon people
mis-understanding what they are recieving.
As for the people that asked if CDN$, AUS$,
NZ$, etc. are fraudulent. They are not
because people understand what they are and
that those currencies are typically recognized
as such and people know the value is different
from each other and that the value changes
relative to each other in the open market.
What was fraudulent about the Liberty Dollar
was that the makers tried too much to make
it look like U.S. government currency and
encouraged people to pass it as the same
rather than an alternative.
Every Canadain over the age of 10 (excluding
some with disabilities) will recognize U.S.
currency for what it is, something different
than the local currency but still of current
market value. Americans in bordering states
will recognize Canadain currency is the same
way. If you get far enough from the border
people in the U.S. might not recognize
Canadian banknotes or coins but they look
different enough and are marked clearly
enough as to their origin that nobody who
even slightly looks at it is not going
to mistake it for U.S. currency so they
can make a fair judgement as to whether they
want to reject them or accept them and
if so at what rate.
As for my favorite form of silver to hold,
old dimes and quarters. I tend to lean more
towards U.S. (90% silver) than Canadian (80%
silver) because the market for the U.S. ones
is more liquid with a smaller spread.
LibertyDollarUSA | November 16, 2007, 8:33pm | #
"Doing the drop" was an idea that was promulgated in the 1990s and maybe in the early part of the century, but as of 2003, at least, the whole "program" of the liberty dollar was based around getting merchants to offer them instead of change-- egl an upsell when the customer made a purchase. They were pitched as gift certificates because they could be used to buy things at the very same merchant, and the merchants incentive was not a markup, but building loyalty among their customers.
"The drop" was dropped because some confusion resulted.
Y'all are taking the governments word, which uses information out of context and misrepresents the situation....
Further the Liberty dollar wasn't "Devalued" when the face went from $10 to $20-- it was the US dollar that was devalued.
The reason there is a spread between the spot price and the face value is because you can't remint the silver every day--- and the spot price changes every day. This leads to the argument that you shouldn't have a face value at all-- and the Pheonix dollar is attempting to do this-- with a phone number that merchants can call to find out the daily exchange rate. The pheonix dollar is not as popular, partly as a result.
The Liberty Dollar is no more a criminal conspiracy than Disney Dollars. As to the repeated claims about "fraud" due to the "markup" I point out that the US mint is selling one ounce pieces with a $1 face value for $22. I also point out that Disney Dollars contain only a few cents worth of paper, as does the US Dollar, while the Liberty Dollar contains as much silver as it purports. Fruther, like the Disney Dollars the liberty dollar is a gift certificate /barter item- its not cash, just as disney dollars are not government cash-- and thus they require an easily discernable exchange rate-- eg: face value. If you want silver to speculate on teh price of silver, then bullion is a better choice.
This rampant confusion on the part of the posters here (not all of you, of course) just goes to point out how the liberty dollar is a failure-- not because it does anything wrong but because people have an ingrained trust of the (rapidly depreciating) US dollar and cast a suspicious eye at anyone who would suggest silver has more intrinsic value than paper.
Its a cultural thing to a great extent... and really something like %99 of the people who have Liberty Dollars do so because they are pretty- they are a really fine piece of art.
The idea of a private barter system is nice, and they can work as gift certificates, but to claim that they are counterfeit or being passed as government money is beyond the pale-- not one instance of this actually happening was cited in the affidavit that claims to show probable cause.
Glen Pearce | November 16, 2007, 9:39pm | #
LibertyDollarUSA wrote on November 16, 2007, 8:33pm :
>"The drop" was dropped because some confusion resulted.
Even as of today the makers of the Liberty Dollars are encouraging
people to "do the drop" on their web site:
http://www.libertydollar.org/ld/spend-liberty-dollars/howtospend.htm
>Y'all are taking the governments word,
Nope, my comments about "doing the drop" were based on what I read
myself right off the Liberty Dollar web site. I am all for precious
metals being used as money but think it has to be done in a better
way, the proposal Jason Hommel put forth if implimented by a large
enough organization would make the idea acceptable to a larger group
of people without anyone being fooled. You understand what the
Liberty Dollar is, I understand what it is and pretty much everyone
reading this web site understands what it is but most clerks faced
with one won't understand what it is and if they accept it, will
typically be doing so under a false assumption.
I've loked at your site, and you sell them honestly saying exactly what
they are, in fact you had a rather good deal on the 1/4 ounce size as
I understand why a bigger premium is justified on the smaller rounds
due to manufacturing costs. (Thus the reason you sold out of those
quickly.) My issue is with how the makers designed them to look too
much like a U.S. government coin and how they promoted their
use/mis-use.
>Further the Liberty dollar wasn't "Devalued" when the face went from
>$10 to $20-- it was the US dollar that was devalued.
My point was that by re-defining the Liberty Dollar to match the
declining U.S. Dollar in face value rather than just letting the
rate float and keeping the ratio fized at 10 Liberty Dollar=1 ounce
of silver they were making it obvious that they were more interested
in keeping "the drop" profitable than in offereing an alternative
currency as Jason Hommel's proposal would have done.
Yes, the Phoenix Dollar hs an uphill battle, but at least nobody can
mis-use it. As I've said the proposal Jason Hommel put forth was the
best I've seen.
