Ahab is confused as to why Liberty Dollars are illegal. At first I thought this was another case of the federal government acting outside its authority, but after more research I’m not sure. While I will still say that they should find better use of resources than picking on Liberty Dollars, the Liberty Dollar does appear to be in violation of federal law. The article mentions:

The U.S. 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.”

That would imply they are being charged under Title 18, Chapter 25 of the United States Code, titled “Counterfeiting and Forgery”. They certainly aren’t guilty of counterfeiting, but my guess is that they are probably being charged under this:

Section 486. Uttering coins of gold, silver or other metal

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, shall be fined under this title or imprisoned not more than five years, or both.

It says the coins were of gold and silver, so I’m guessing these guys are nailed. The power to mint currency is one reserved to Congress, so you can’t really argue that it’s outside the federal government’s purview.

UPDATE: Just noticed there’s more about this over at Reason. It seems to me that the argument that because you had to use federal reserve notes to pay for your liberty dollars, that they were fraudulent, seems off base to me. I have to use federal reserve notes to buy video game tokens, poker chips, or various other substitutes for currencies. Are these fraud as well? I will read through the affidavit. But it seems to me the only thing they could be guilty of, based on the limited information I have, is utterance of silver or gold coin.

UPDATE: After reading through the affidavit, I agree there is evidence of fraud.  It seems they were allegedly making claims that their currencies were backed 100% by silver, when that was not, in fact, the case.  There is also accusations of fraudulent marketing practices and such.


12 thoughts on “Counterfeit?”

  1. I’m glad you mentioned gambling tokens. I always wondered why they made them out of ceramics instead of metal. The law you quoted wouldn’t apply as long as the coins weren’t made of metal, note that it doesn’t matter if they are gold or silver since it also lists any metal or metal alloy.

    So, these guys could have made them from a non-metal material and then just backed them with gold and/or silver and they wouldn’t be in violation of this law. With today’s technology, I’m sure it would be easy to make them durable enough and pretty hard to counterfeit.

  2. Many vendors make and sell precious metal medallions as investments and no others are under indictment for counterfeiting. Further, any carnival you ever went to would print any picture you wanted on any bill you provided and many had some pre-mades for sale as novelties. Without the intent to use and/or pass as legal tender the charges of counterfeiting are bogus.

    The treasury department’s own policy has, in years past, determined that such is not a crime so long as there is no intent to pass as legal currency.

    If a customer of the company attempted to pass these items as legal currency he would be subject to charges of fraud, but not counterfeiting, since he didn’t create them. The maker would have no hand in it, unless he passed them off as legal tender.

    However, if the claims the company made are false then they may be guilty of fraud, which is usually actionable under state law and not a federal law, as a consumer protection violation.

    I think this has more to do with the likeness of an aspirant for the presidency being on the medallion. Every bureaucrat fears a constitutionalist, which Paul certainly is. And no, I don’t support him for the nomination. So I have no political dog in this fight.

    Look in every magazine you subscribe to or watch late night television and you will see ads everywhere for precious metal medallions (coins). None of those vendors have been raided and/or indicted.

    Counterfeiting charges, to be proven, require evidence that the novelty, medallion, coin, or rag, was intended to be passed as legal tender by the makers of such. Unless I see more specific proof that this was the case, I think this is more about election tampering than violation of minting laws. I read the affadavit, I read the post at Reason and I notice that the charges and assertions by the government are so vague as to make it impossible to ascertain the likelihood of illegal activity by the manufacturer or vendor.

    When vagueness is so paramount in an accusation that the definition of the crime must be supplied by the accuser, instead of the warrant and accusation convincingly portraying the crime, I get suspicious.

    Read those items as though you had never heard of them until they were presented to you and no one had told you what the intended accusation was and see if you can deterimine what was done wrong without the steering.

    Further, it appears that many of the accusations are placed simply as a negotiation tool. For instance, how is it money laundering to move your own money around in your own accounts with no more facts than that money was withdrawn from one account to be placed in another. I used to do it all the time. Moved the money from my business, to my personal accounts in accordance with my bills schedule and/or salary requirements. None of it was money laundering. All of it was documented, and all taxes paid. If it was laundering how did Treasury find it in another onshore account? They would not have.

    When accusations are this vague, it usually means chicanery by the state is afoot. I have yet to see any reason why I should draw any different conclusion at this point.

  3. I did some quick and dirty research and wrote an absolutely brilliant comment here (of course,I have been drinking) but it disappeared.

    I don’t suppose you would take my word for it that at this point there is more reason to question the motives of the government than to accept their accusations at face value?

    I’m so pissed at the moment that I couldn’t begin to rebuild it. I hate goddamned machines. I think I am a luddite.

  4. They key thing for their lawyers to argue are that Liberty Dollars were never intended to be used as coin. It’s legal to mint coins for collecting purposes, for use as tokens, and the like. The charge of uttering coinage has to show there’s a strong possibility of the coin in question being used as legal tender, and passed off as currency.

    I think there’s a chance they’ll beat the counterfeiting charges, but the fraud charges might be a bit tougher. Nonetheless, I don’t think the feds are acting unreasonable in this case. The elements are all there to constitute enough probable cause for the warrant. As the affidavit indicates, this investigation has been ongoing for several years. It involves a multi-level marketing scheme operated across several states and utilizing mechanisms of interstate commerce, so I do think the feds have an appropriate power here in the interstate commerce clause. Minting of coin is definitely something reserved to the federal government under the constitution, so counterfeiting is an appropriate federal crime. NORFED claims their currency is constitutional, but the copy of the constitution I have says Congress has the power “To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures”

    They may not be guilty of what they were charged with, but the probable cause is there, and the rest will be up to a federal grand jury as to whether an indictment in this case is warranted.

  5. In doing some research into the accused, they have stated that the product could be used as alternate currency, but in each case they were careful to describe such transaction as “barter”.

    Trading something of value for something else of value is barter, which is not counterfeiting. If you and I trade each other a pickup truck for a fishing boat, we have used alternate currency, but we certainly would not be counterfeiters.

    If these medallions are actually precious metals of the percentage claimed the fraud charge is out the window. And as Liberty Dollar claims their value would be commensurate with value of that metal on the market, again, no fraud. They claim that the Libery Dollars is worth more than the government minted and printed money due to rapid fall of the U.S. dollar’s value in the currency markets, if that is one of the planks upon which rests the governments reasoning that fraud or counterfeiting has occurred, why have they not charged every investment firm in the nation dealing in precious metals investment with the same crimes, they all make the same claim. Further, the claims are true.

    I have many times in my life transferred money from one account to another of my accounts, all open and above board. Still do it, today, in order to make internet payments on some bills without risking all to some id thief or hacker. I don’t know why the money laundering charges were brought, but so far the accusation seems to accuse them of no more than allocating monies to their own various accounts. i see don’t see at this point, with what has been presented, how their actions constitute money laundering since there apparently is no attempt to actually hide the cash nor to hide its origin.

    I also find it interesting that Silver Dollar has sued the government and the AG and others a little over a year ago and a judge’s decision that was expected to be issued in September on whether to allow the suit to proceed has not yet been issued. I find this timing a little suspicious, or at best, damned convenient for the feds. A little too convenient, but I am, by training, cynical of government motive.(they are the ones that trained me to cynicism, I used to be very supportive, regardless) Could it be that the election tampering and improper influencing of the court as regards their case might have more to do with the raid and leveling of charges than any real belief that a crime has been committed?

    I think it could be. I would need many more details about the case to be certain either way, but in reading the affidavit and other governmental claims I was struck by the vagueness of their reasons for the warrant. Vagueness in governmental reasoning almost always is a warning that state chicanery is afoot.

    I am willing to be convinced otherwise, but somehow I doubt any of us will ever be given enough information to form a reasonable opinion. That always makes me suspicious. Time will tell.

  6. I am willing to be convinced otherwise, but somehow I doubt any of us will ever be given enough information to form a reasonable opinion. That always makes me suspicious. Time will tell.

    It’ll be up to a grand jury at this point. They’ll be the ones to determine whether the FBI and US Attorney are full of crap.

  7. Unfortunately, grand juries are little more than rubber stamps for the prosecutor. Not supposed to work that way, but usually does.

    Any prosecutor in the country can get a grand jury to return a true bill against a ham sandwich for armed robbery.

  8. I thought casinos used to issue metal tokens. A counterfeiter even started to make fake tokens to defraud the casinos.

  9. I have to take issue with your interpretation of the U.S. constitution, Sebastian. Yes, the feddies are granted the power to mint coinage. Is there an exclusivity clause there?

    I have only a passing knowledge of early (i.e. pre- Federal Reserve) banking practices, but I do know that many banks issued their own notes. Also, in the early days of the Republic, what coinage do you suppose was in circulation? Certainly, at the moment of final adoption of the Consititution, it didn’t become instantly illegal to use the various crowns, sovreigns, pence, dubloons, or what have you in circulation at the time, did it?

    I’ll also note that NORFED was issuing, in addition to coinage, printed silver notes, advertised as being fully backed by reserves. Since it’s a redundancy to issue silver coinage “backed by silver reserves”, the fraud charges are more likely to do with the amount of silver held by NORFED in relation to notes issued.

    Of course, fractional reserve banking is common — even the norm. However, if NORFED was failing to fullfil their marketing promise of full backing, then shame on them. (Yes, I know NORFED is not a bank, in the modern sense of the term.)

    Also, I have a vague recollection of a somewhat recent story of some municipality using “community dollars” as a way of encouraging local enterprise — something of an anti-Wal-Mart sentiment going on there. Wish I could remember more about it. It reminded me of LETS — Locate Exchange Transaction System. Interesting concept.

  10. Meant to as whether anyone knows if early banks issued their own coinage as well as notes.

    Also, I thought that counterfeiting pertain only to making imitations of the official currency. For example the latest Clinton note isn’t counterfeit, is it?

  11. Well, it does prohibit the states from coining money. It also gives congress the power “To provide for the Punishment of counterfeiting the Securities and current Coin of the United States” Now, the law doesn’t say it’s unlawful to make coins. The law says that it’s unlawful to make coins that could be confused as coins of the United States or foreign nations. In other words, it doesn’t have to be an exact facimile of US coin or notes, only similar enough to possibly be accepted as US coin or notes, or some other security.

    That’s not to say that the feds have a case against NORFED in particular, but the coins do have similar features to US currency. Whether or not it’s similar enough to warrant an indictment under the statute that criminalizes utterance of coins will be a matter for the Grand Jury.

  12. Reading the above warrant is only offers further evidence to me at how US tax money is being wasted.

    The seizure warrant above basically describes a lot of usual and customary goings ons of a business that sells silver, gold and platinum medallions (as Liberty Dollar web site always refers to them), some books and rectangular warehouse receipts.

    It further asserts that Bernard von NotHaus drives all of a 1999 silver colored Cadillac sedan and that Kevin Innes drives a 1992 white Volvo sedan (jet setting bankers they are not). I should hope that once this current campaign of harassment is neutralized that increased awareness of will enable Mr. von NotHaus and Mr. Innes to trade in their cars for newer models.

    I have been a satisfied customer of Liberty Dollar for several years and many hundreds of dollars of purchases. I have been happy that there is a business out there that prints up educational books about the Federal Reserve and the nature of money that those pitiful excuses for currency my bank requires (Federal Reserve Notes). I hope there will continue to be a business that prints up books, sells round silver, gold and platinum discs and makes a legitimate profit at it because Citibank, Chase Bank and Bank of America certainly don’t.

    Now I must log off so I can sell my $20 Ron Paul silver dollar on eBay for $100/200/300+ as I have a feeling that they won’t be scarce for long.

    Who is this Ron Paul?

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