Attack on Liberty Dollar also seized metal dies in Idaho

Section:

FBI Raids Seize Dies, Records in Coeur d'Alene

By Bill Morlin
Spokane (Washington) Spokesman-Review
Friday, November 16, 2007

http://www.spokesmanreview.com/breaking/story.asp?ID=12398

As part of a nationwide investigation, FBI agents raided three Coeur d'Alene, Idaho, business locations on Thursday, seizing records and dies used to make the so-called silver "Liberty Dollar" sold throughout the United States by anti-government patriot groups.

The Coeur d'Alene raids coincided with similar raids by FBI and U.S. Secret Service agents on Thursday at the Evansville, Ind., headquarters of organization called NORFED -- the National Organization for the Repeal of the Federal Reserve Act & Internal Revenue Code.

For a decade the organization, led by a self-described "monetary architect" and harsh critic of the Federal Reserve System, has pumped out an estimated $20 million its own currency, reportedly backed by silver coins minted and stored in Coeur d'Alene. The raids Thursday are the first head-on federal challenge to that operation.

Since 1998 the NORFED silver coins were manufactured at Sunshine Minting, a private Coeur d'Alene business which makes a variety of precious metal products. The silver coins backed up paper currently in $1, $5, and $10 denominations marketed by NORFED.

The organization was about to begin selling and distributing "Ron Paul" dollars, supporting the candidacy of the Republican congressman from Texas who's seeking the GOP nomination for president. He previously ran for president as a Libertarian.

Dies used to produce the coins reportedly were seized at the Coeur d'Alene minting company and accounting records were seized with warrants served at two Coeur d'Alene accounting firms, according to law enforcement sources.

"They took a lot of stuff out of there," one source said of the serving of a federal search warrant at Sunshine Minting, located at 750 W. Canfield, not far from the Kootenai County Sheriff's Office.

Officials with the sheriff's office were unaware of the raids. Federal authorities in Idaho referred inquiries to the U.S. Attorney's Office in the Western District of North Carolina, where the federal investigation apparently is being spearheaded. Those officials couldn't be reached Thursday afternoon.

The raids were confirmed by three other sources who asked not to be identified.

Tom Power, the current owner of Sunshine Minting, did not return telephone calls Thursday, but other employees said he was at the company located at 750 W. Canfield, north of Coeur d'Alene, shortly after federal search warrants were used to confiscated various items.

The Coeur d'Alene company was producing the Liberty Dollars under a contract with Bernard von NotHaus, a self-described "monetary architect" and critic of the Federal Reserve System who started NORFED while he lived in Hawaii in the late 1990s. His organization had tax-exempt, nonprofit status.

"We never refer to the American Liberty as a coin," von NotHaus told The Spokesman-Review in 1999. "The word 'coin' is a government-controlled term. This is currency that is free from government control."

"When the people own the money, they control the government," he said. "When the government owns the money, it controls the people."

Since then his anti-government coin-producing operation reportedly has put $20 million of its "Liberty Dollars" in circulation. They can be used at merchants willing to accept them as legal tender or so-called "redemption centers" located in most states.

A man claiming to be von NotHaus posted notice of the federal raids Thursday on the Internet.

"I sincerely regret to inform you that about 8 this morning a dozen FBI and Secret Service agents raided the Liberty Dollar office in Evansville," the posting said.

"For approximately six hours they took all the gold, all the silver, all the platinum, and almost two tons of Ron Paul Dollars that were just delivered last Friday. They also took all the files and computers and froze our bank accounts," the statement said.

It asked purchasers with pending orders to be patient.

"We have no money. We have no products. We have no records to even know what was ordered or what you are owed. We have nothing but the will to push forward and overcome this massive assault on our liberty and our right to have real money as defined by the U.S. Constitution," it said.

"We should not be defrauded by the fake government money," according to the statement.

The United States Mint recently issued a statement saying "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 who are considering the purchase or use of these items should be aware that they are not genuine United States Mint bullion coins and they are not legal tender," the U.S. Mint statement said.

In a 1999 interview with The Spokesman-Review, von NotHaus claimed his money was not only legal, but much-needed competition for the government. At the time, Federal Reserve and House Banking Committee officials collectively scratched their heads when asked if von NotHaus' coin business was illegal.

"We're going to be to the Federal Reserve System what Federal Express was to the Postal Service,'" the "monetary architect" told the newspaper.

At the time, von NotHaus owned the Royal Hawaiian Mint, which had contracts with Sunshine Minting Co. in Coeur d'Alene to manufacture the American Liberty silver coins.

Von NotHaus said his paper currency -- in $1, $5, and $10 denominations -- was backed with equal amounts of the $10 coins, stored in a vault in Coeur d'Alene.

Audits of the silver in the vault were done by an unidentified Coeur d'Alene accounting firm and are posted on NORFED's extensive Web site ( www.norfed.org), according to a 1999 news story published in The Spokesman-Review.

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U.S. Raids Issuer of Ron Paul Coins

By Joseph Goldstein
New York Sun
Friday, November 16, 2007

http://www.nysun.com/article/66542

Federal agents, in a move that could have an impact on the presidential race, raided the Indiana office of the issuer of a private currency known as the Liberty Dollar -- and seized tens of thousands of coins bearing the likeness of a presidential candidate, Rep. Ron Paul.

Overall, agents on Wednesday hauled away more than 2 tons of copper coins and 500 pounds of silver coins, as well as records and computers, the founder of the currency system, Bernard von NotHaus, told The Sun by phone from Miami. Although not present in Evansville, Ind., for the raid, Mr. von NotHaus said he has been told that the government agents left business cards from the FBI and Secret Service. Neither agency would confirm or deny the raid when contacted by the Sun.

The raid has the potential to alter the campaign of Mr. Paul, the Republican candidate of Texas whose visage appears on the more than 50,000 seized copper coins, as well as on lesser amounts of gold and silver coins. Mr. Paul is basing his presidential campaign in part on the argument that the federal government has been debasing the dollar.

Mr. von NotHaus, a supporter of the presidential candidate, said he put Mr. Paul's image on the dollars to raise attention for the candidate. An eclectic nationwide crew of libertarians and coin enthusiasts exchange the coins.

"I thought, 'What can I do for him?'" Mr. von NotHaus said. "I'll do a dollar. It's 1 ounce of pure copper."

Yesterday, at the strip mall where Mr. von NotHaus's operation is housed, nearly a dozen Paul supporters carried campaign signs in an apparent protest, a television reporter for the local NBC affiliate, Brandon Bartlett, told The Sun. A spokesman for Mr. Paul's campaign, Jesse Benton, said the campaign wasn't "really paying that much attention" to the raid. "We don't have any official association" to the currency, he added.

The reason behind the raid is unclear. The Justice Department's position, according to a year-old consumer alert on the Web site of the U.S. Mint, is that using Liberty Dollars "as circulating money is a federal crime." Mint officials said the Liberty Dollar looks similar to legal tender, with inscriptions that say, "Trust in God" and "USA."

It's not clear, however, what the Justice Department's view is on the legality of possessing the coins for novelty or as protection against the declining value of government notes.

Mr. von NotHaus said he suspects the raid is in response to "the competition" his currency poses to the U.S. Mint. His Liberty Dollars, whose value is the price of the coin's metal, have proven a better investment in recent years than government-issued notes, whose value has plummeted in relation to the price of gold.

"This is an example of Bernanke trying to protect his own nest because he knows it's got holes in it," Mr. von NotHaus said, referring to Ben Bernanke, the chairman of the Federal Reserve. "He can't have something like the Liberty Dollar running around competing with his currency. It points out the fallacy of the fiat monetary system. They had to do something. Their currency is losing and we're going to the moon."

Even into this century, long after government notes replaced the private notes of banks, private currency has long been a cause of certain influential figures, such as the economist Friedrich Hayek, a Nobel laureate who died in 1992.

So far, about $20 million worth of gold, silver, and copper Liberty Dollars and the accompanying certificates are circulating, Mr. von NotHaus said. Residents of Evansville say Liberty Dollars aren't often seen locally.

But there is a national following, which includes some members of the Manhattan Libertarian Party. One member who had a hand in founding the currency, Nicolas Leobold, told The Sun last year that he's spent the Liberty Dollar at several New York locations, including a Gray's Papaya, a bodega near Grand Central Terminal, and a Dunkin' Donuts outlet.

With the Liberty Dollar, Mr. von NotHaus seeks to reintroduce the kind of economic debate that Mr. Paul has been nursing for years. When Mr. Paul was a member of the United States Gold Commission, he wrote, with Lewis Lehrman, a famous dissenting opinion in favor of the restoration of a role for gold in the U.S. monetary system. The bearer certificates issued with silver Liberty Dollars say that using the coinage is an exercise of "the bearer's First Amendment right to petition the government for a silver-based currency," Mr. von NotHaus said.

Mr. von NotHaus said the raid lasted six hours beginning at 8 a.m. and involved about a dozen agents from the Secret Service and FBI. The local U.S. attorney's office referred all calls to the U.S. attorney for the western district of North Carolina. A spokeswoman there said she could not confirm or deny any raid.

An employee at the gun store at the same strip mall as the Liberty Dollar office confirmed that officers had been present Wednesday.

"There were guys in uniform and some in suits, and they hauled a bunch of stuff out of there," the employee of Strictly Shooting, who asked not to be identified, said.

The Liberty Dollars are but one example of private currencies that have been used in American history. In the 1930s "wooden nickels" circulated out West. In Michigan there were so-called wildcat banks in the 1830s that printed paper money without backing by gold or silver reserve.

In addition to silver and copper coins, agents seized more than 3 pounds of gold and several ounces of platinum, Mr. von NotHaus said. All that coinage, as well as bearer certificates held at the Evansville office, belonged to purchasers of the currency. In an e-mail message Mr. von NotHaus urged the owners of the seized currency and seized bearer certificates to file suit against the government. Mr. von NotHaus has already sued government officials for issuing the "consumer alert" against his currency last year.

The impact, if any, on Mr. Paul's presidential campaign is difficult to predict. On the one hand, he could be criticized for permitting, if he did permit, his face to be used on a coin whose circulation the U.S. Mint contends is illegal. On the other, the raid could throw into even sharper relief the argument he has been making for sound currency. Videos of Mr. Paul cross-examining Mr. Bernanke in recent congressional hearings have been widely viewed on the Internet.

...Libertarians React to the Raid

Libertarian reaction was negative to news of the law enforcement activity in Evansville.

Blay Tarnoff, a former chairman of the Libertarian Party of New York, a statewide organization, said he could not think of any good rationale for the raid as long as the company issuing Liberty Dollars was not misrepresenting their coins as government currency. "People can trade anything they want of value," he said. "It wouldn't surprise me if the government would want to seize Liberty Dollars if they believed that people were actually beginning to use them."

An East Village resident who was co-creator of the Ron Paul dollar, Nicolas Leobold, said the raid was like "the behavior of a schoolyard bully."

A regional currency officer for the Liberty Dollar in south-central Pennsylvania, Pete Hallock, said he had ordered silver dollars in various denominations and would probably never get his money back. He said, "I don't like it when my money is stolen whether it is the federal government or anyone else." He added, "Why should I be penalized?"

Not surprisingly, independent-minded libertarians have varying opinions on the Liberty Dollars themselves. The chair of the Libertarian Party of New York, Jeff Russell of Saratoga County, said the Liberty coinage should bear descriptions such as "one ounce of silver" and not bear the term "dollar" at all.

-- Gary Shapiro

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