Thursday, November 15, 2007

Ron Paul Dollars:
FBI, Secret Service Raid Liberty Dollar
--An Old Adversary

FBI, Secret Service Seize Thousands of Coins in Raid

Two Tons of Ron Paul Dollars Seized

How did a long-simmering philosophical and legal difference of opinion between a private coin organization and the United States Government spill over into the 2008 presidential elections?

FBI Raid Seizes 2 Tons of Ron Paul Dollars and the UPDATES

The joint FBI/Secret Service raid on Evansville, IN-based Liberty Dollars earlier caused a stir in the blogosphere today. The disturbance had to do with the fact that among the items seized by the Agents were nearly 2 tons of Ron Paul dollars.

The mere mention of Ron Paul fires most people up into a Ohio State-Michigan football-like frenzy. This news likely will cause two bitter rival cults, the Pro- and anti-Paul commentators to further furious action.

A number of views have already been presented at DBKP about this story and its connection to the Ron Paul presidential campaign. Some are for and some are against; trying to weave them into a single tapestry makes one dizzy.

It seems sensible to look at the background first. Then, we'll examine the other points one at a time, try to maintain an even balance and let the readers make up their own minds.

This is largely the tale of the fight between Liberty Dollar and the U.S. Government. As some of us feel that the Paul campaign's involvement was incidental at most, we'll leave that for a later article.


Liberty Dollar has been involved in an ongoing struggle with various divisions of the federal government for awhile now. The source of their dispute is whether Liberty Dollar (once named NORFED--National Organization for the Repeal of the Federal Reserve Act and the Internal Revenue Code) is creating its own currency system to compete with the government.

The man who signed the letters that went out from Liberty today was Bernard von NotHaus. Keep his name in mind.

From NORFED's Historical site:
Please be aware that this is the historic site for NORFED, that distributed the Liberty Dollar (1998 to 2006). Since its founding by Bernard von NotHaus, the Liberty Dollar has consistently gathered momentum by becoming more main stream.

The emphasis at Liberty seems to be on using the coins as a sort of "value preservative." That is, the coins would ensure that the holder had something of value in case of a collapse of federally-backed paper money.

They also argue that the coins can be exchanged for goods at certain merchants who willingly take them to support the idea as another way of having something of value in case of a crash.

There is a lot of stock market, money system collapse conversations among the fanciers of coins. Liberty talks this point up.
From NORFED's web page:
Andrew Williams, a spokesman for the Federal Reserve in Washington, D.C.:

"There is no law that says goods and services must be paid for with Federal Reserve notes. Parties entering into a transaction can establish any medium of exchange that is agreed upon."

Paul Harvey, well-known and respected news commentator, reported:

What's new? The Liberty Dollar! Fed Ex competes with the Post Office. So now there's the Liberty Dollar competing with the greenbacks printed by your government. The Liberty Dollar is backed by gold and silver. Yes, there's a competitive currency right here in the United States. In five years it has become the second most popular currency in America.

100,000 Liberty Dollar supporters:

REAL Money's got the look, the feel, and the real value. Because it is REAL Gold and Silver. I use it every day! And so can you!
So apparently, Liberty is selling something some people want. They also think it has value, especially if those people think the money system is in jeopardy.

Also from NORFED's web page:
Hi. My name is Bernard von NotHaus. I was so concerned about what is happening to our "money" that I designed and developed the Liberty Dollar. For 25 years, I was the Mintmaster at the Royal Hawaiian Mint and have devoted my life to the study of money, why it is valuable, and how we use it to fulfill our dreams. Like you, I am paying a lot higher gas prices, but I am also making a lot more money because I am using the Liberty Dollar. Here is what G. Edward Griffin, the noted author on the Federal Reserve said:

On page 573 of "The Creature from Jekyll Island", I wrote that before we could abandon Federal Reserve Notes, we first had to be able to convert them into real money. I said: "That means we must create an entirely new money supply which is 100% backed by precious metal; and we must do so in a reasonably short period of time." Well you have to be careful what you recommend, because Bernard von NotHaus did exactly that. And although I initially thought there were too many obstacles, to my surprise, the more I studied the details of his plan, the more convinced I was that by Jove, it just might work! My business, The Reality Zone, is a Liberty Associate, and I urge you to get in on the ground floor and join this growing group of concerned Americans as a Liberty Associate now!
This is all a little off the beaten path for most people, but doesn't sound scary enough for a full FBI/Secret Service raid. Wouldn't a couple agents have done the trick?

Perhaps not.

Where does Ron Paul fit into all of this?

Very peripherally, at the most. His likeness is on the Ron Paul Dollar, which has many admirers of the Libertarian stripe. Liberty is like any other business. They go with what is Hot. And in Libertarian circles, and all over the countr--because of the election campaign--Hot is Ron Paul.

So Dr. Paul gets his mug on a coin.

Which Liberty made.

Which federal agents raided today.

And took almost 2 tons of coins with Ron Paul's likeness on them.

The trouble between Liberty and the U.S. Government's been brewing for awhile (NORFED started in 1998), but it really got warmer last year. An article from USA Today entitled "Feds Lower the Boom on Alternative Money":
The government Thursday warned consumers and businesses that it is illegal to use alternative money known as "Liberty Dollar" coins, which organizers promote as a competitor to the almighty dollar.

"We don't want consumers to be fooled," U.S. Mint spokeswoman Becky Bailey says, noting U.S. Attorneys offices across the USA have noticed a marked increase in inquiries about the coins.
The article went on to say that Liberty wouldn't roll over and play dead. Philosophical principles were at stake.

It also goes on to detail a few of the government's objections.
The coins' producers vowed to fight the government's decision.

Evansville, Ind.-based National Organization for the Repeal of the Federal Reserve Act and the Internal Revenue Code, otherwise known as NORFED, has been making the Liberty Dollar coins for eight years and claims $20 million is in circulation. The group says the money, unlike official U.S. cash, has a hedge against inflation because it is made almost entirely of silver and is backed by stocks of silver and gold in a vault in Idaho.

The coins are then spent by the group's 2,500 Liberty Associates in stores run by fellow supporters or are accepted unknowingly by clerks who are unaware they are not receiving real money.

The Justice Department has determined that use of Liberty Dollars, which come in varying denominations, "is a crime," according to the Mint, which issued a rare public warning Thursday.

"The United States Mint is the only entity that can produce coins," Bailey says.

The Mint notes the coins share some resemblances to real money, such as the term "Trust in God" instead of "In God We Trust" and use of a torch in the design. Such similarities may confuse people into thinking the money is real, the Mint says.

But NORFED says it will challenge the government, arguing it has never claimed Liberty Dollars were official money and that it has a right to offer an alternative.

"The designs and verbiage ... are original and are not copies of any U.S. Mint currency," NORFED Executive Director Michael Johnson said in a statement.

It's unclear how many people or businesses are unknowingly holding Liberty Dollars, which cannot be exchanged for real money at banks.

In a case in Buffalo, a man and his son are set to go on trial next month after they knowingly tried to buy beer at a Buffalo Sabres hockey game with Liberty Dollars.

The Mint did not say if government officials will seek to prosecute individuals or NORFED after its warning.

Reed Runk, part-owner of Kendall Funk & Bismark Jewelers in Chambersburg, Pa., says the store has been accepting Liberty Dollars for about a year and has sold a few as well. Runk says the store will continue to accept and sell the coins.

"We just feel that they are something that educates people as to what the monetary systems are like in the world, that they are a fiat system, that if people lose faith in them, they will collapse," he says. Besides, "They are a good-looking coin."
So the battle lines are forming: Liberty and the people who distrust big government on one side; big government on the other.

Earlier this year, things got hotter still for Liberty. From Hot Items at the U.S. Mint's website:
The National Organization for the Repeal of the Federal Reserve Act and the Internal Revenue Code (NORFED) is producing and marketing gold and silver medallions that NORFED calls "Liberty Dollars." The United States Mint and the United States Department of Justice have received inquiries regarding the legality of these so-called "Liberty Dollar" medallions. The United States Mint urges consumers who are considering the purchase or use of these items to be aware that they are not genuine United States Mint bullion coins and they are not legal tender. These medallions are privately produced products and are not backed by, nor affiliated in any way with, the United States Government. Moreover, prosecutors with the Department of Justice have determined that the use of these gold and silver NORFED "Liberty Dollar" medallions as circulating money is a Federal crime.

Consumers may find advertisements for these medallions confusing and should take note of several issues related to them.

First, the advertisements refer to the product as "real money" and "currency." These medallions might look like real money because they—

* Bear the inscriptions, "Liberty," "Dollars," "Trust in God" (similar to "In God We Trust"), and "USA" (similar to "United States of America"), and an inscription purporting to denote the year of production; and

* Depict images that are similar to United States coins, such as the torch on the reverses of the current dime coin, 1986 Statute of Liberty commemorative silver dollar and 1993 Bill of Rights commemorative half-dollar, and the Liberty Head designs on the obverses of United States gold coins from the mid-1800s to the early 1900s.

However, despite their misleading appearance, NORFED "Liberty Dollar" medallions are not genuine United States Mint coins and they are not legal tender.

Second, the advertisements confusingly refer to NORFED "Liberty Dollar" medallions as "legal" and "constitutional." However, under the Constitution ( Article I, section 8, clause 5 ), Congress has the exclusive power to coin money of the United States and to regulate its value. By statute ( 31 U.S.C. § 5112(a) ), Congress specifies the coins that the Secretary of the Treasury is authorized to mint and issue and requires the Secretary to carry out these duties at the United States Mint (31 U.S.C. § 5131). Accordingly, the United States Mint is the only entity in the United States with the lawful authority to mint and issue legal tender United States coins.

Under 18 U.S.C. § 486, it is a Federal crime to utter or pass, or attempt to utter or pass, any coins of gold or silver intended for use as current money except as authorized by law. According to the NORFED website, "Liberty merchants" are encouraged to accept NORFED "Liberty Dollar" medallions and offer them as change in sales transactions of merchandise or services. Further, NORFED tells "Liberty associates" that they can earn money by obtaining NORFED "Liberty Dollar" medallions at a discount and then can "spend [them] into circulation." Therefore, NORFED’s "Liberty Dollar" medallions are specifically intended to be used as current money in order to limit reliance on, and to compete with the circulating coinage of the United States. Consequently, prosecutors with the United States Department of Justice have concluded that the use of NORFED’s ";Liberty Dollar" medallions violates 18 U.S.C. § 486.

Liberty isn't the only alternative currency in the U.S. From Wikpedia's entry on Liberty Dollar:
The Liberty Dollar is a private currency embodied in minted metal pieces and gold & silver certificates (ALD), and electronic currency (eLD). It is distributed by Liberty Services (formerly NORFED), based in Evansville, Indiana. The company that mints and warehouses Liberty Dollars is [1] in Coeur d'Alene, Idaho. The Liberty Dollar was created by Bernard von NotHaus, the co-founder of the Royal Hawaiian Mint Company.[
A number of alternative currencies exist in the United States, including the Liberty Dollar, Phoenix Dollars, Ithaca Hours, and digital gold currency. Unlike most other alternative currencies, both Liberty Dollars and Phoenix Dollars are denominated by weight and backed by a commodity. Phoenix Dollars are backed exclusively by silver, while there are both gold and silver backed Liberty Dollars. Liberty Dollars differ from other alternative currencies in that they carry a suggested US dollar face value.
Things got real hot for Liberty today and that's where we stand at the moment.

Liberty struck a coin with the image of Ron Paul, lots of people bought it and then the raid came down. It says on the Liberty website that $2300 of the proceeds from the sale of the Ron Paul dollars will be donated to the Ron Paul campaign.

That seems to be the lone tie-in with the Ron Paul campaign.

If the 2008 campaign season has focused on anything, it's focused on guilt by association. With the campaigning starting so abnormally early, there is scarce to write about of real news value.

That leaves pundits with a couple things with which to fill their space: polls, fund-raising and "scandals".

The polls are issued seemingly every day, with Rasmussen, CNN, and a host of others filling up space with what people think they will do a year from now.

The fund-raising is treated as if it's the score in a basketball game. Little can be gleaned from early fund-raising except which campaign is better organized. Four years ago, the writers today proclaiming Hillary Clinton as "unstoppable" are the same ones who then confidently predicted that Howard Dean was the Next Big Thing.

Dean's early success at fund-raising was their proof. Dean was one of the first to tap into the Internet to reach fund-raisers and got a head start. But by February, he was winded and John Kerry cruised to the Democrat nomination.

The third item is scandal and it usually involves a procedure that goes something like this:
1- Someone is discovered to have something "bad" in their past--crime, drugs, corruption, bad breath--that taints them.
2- The "bad" person is tied to a candidate's campaign in some way. Rudy Guiliani and Fred Thompson are the latest to feel that sting.
3- Calls ring out for the candidate to denounce the offender. It's a form of political "shunning".
4- Everyone forgets about it and looks for another scandal target. Repeat and rinse.

So now look for calls to the Paul campaign to denounce a small coin dealer who's run afoul of the federal government. There has been no convictions in this case--no one except the government even knows the charges. If there are any convictions, it may be because federal agents seized almost everything of worth at Liberty Dollar today: computers, files, money, gold and silver.

It's hard enough fighting a federal charge, but it's even harder when the federal government seizes all your assets.

Makes one wish they had put back some Liberty Dollars for a rainy day.

[There is much more information and background on this battle between Government and Liberty. This story will have the gaps filled in as more information about the specific charges and Liberty's response to them becomes known. It will be updated over the next several weeks until it is more or less a complete narrative.--Ed.]

[NOTE: We will also proofread more carefully later; we will claim deadlines and all that. Truth is: we're tired.]

by Mondoreb

An in-depth look at the exact terms the government is using to define this issue and a good look at the raid overall is presented by Wake Up America in Spree's piece, "Federal Raid on Liberty Dollar Seizes Illegal Ron Paul Currency"

trackback to Wake Up America.

ALSO, Chucky at Policitco has an article, "Ron Paul's Supporters Get Busted for Illegal Money". It's a pretty good look at what promises to be a zealous anti-government Liberty against the federal government showdown. At the end of the piece is a round-up of links that could serve as a nice primer for anyone interested in cramming on the upcoming David vs. Goliath court battle.


Death by 1000 Papercuts Front Page.

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