Dear Friend of GATA and Gold:

The federal raid on the Liberty Dollar organization was the product of an elaborate undercover operation and was based on a claim that Liberty Dollar’s products were “intended for use as current money” in violation of Title 18, Section 486, of the United States Code.

The government’s complaint is outlined in the raid’s seizure warrant affidavit, which was temporarily disclosed by accident in U.S. District Court in Charlotte, North Carolina, and then posted on the Internet by vigilant libertarians. The affidavit can be found here:

http://www.johnlocke.org/site-docs/meckdeck/pdfs/USAVLibdoll.pdf

The government’s complaint also alleges that Liberty Dollar’s marketing practices justify charges of mail fraud and money laundering.

But the government’s main objection seems to be what it considers excessive similarity between government-issued coins and what Liberty Dollar calls its medallions, which, the government contends, causes the medallions to be mistaken for government currency.

This case will be important for its bearing on constitutional law and individual rights to possess and trade in gold, silver, and copper, even as it may turn on the issue of likeness. Liberty Dollar might be in a stronger position if it did not use the word “dollar” or the dollar sign on its medallions and instead denominated its medallions only by weight in metal. Still, it is hard to see how people could be deceived into thinking that the Liberty Dollar products are issued by the government and are legal tender “for all debts, public and private,” rather than devices for barter.

In any event Bill King, editor of The King Report, may have had the most telling observation on the controversy: that the government would have had no problem with the Liberty Dollar organization if, like the wildly unregulated gangsters in the Wall Street financial houses, it had been pushing collateralized debt obligations instead of honest money.

A Washington Post Weblog story that disclosed the libertarians’ posting of the Liberty Dollar raid affidavit is appended.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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In Ron Paul Coins, Federal Agents Don’t Trust

By Alec MacGillis
Washington Post
Friday, November 16, 2007

As if Ron Paul’s supporters needed any more motivation to storm the battlements and wreak havoc on the Republican presidential primary, now comes this: The feds are trying to take away their money.

Federal agents on Wednesday raided the Evansville, Indiana, headquarters of the National Organization for the Repeal of the Federal Reserve and Internal Revenue Codes (NORFED), an organization of “sound money” advocates that for the past decade has been selling what it calls Liberty Dollars, a private currency it says is backed by silver and gold stored in Idaho, with a total of more than $20 million in circulation, according to the group.

NORFED officials said yesterday that the raid occurred just as they were preparing to mail out the first batch of about 60,000 “Ron Paul Dollars,” copper coins sold for $1 and decorated with the craggy visage of Paul, the libertarian Texas congressman, Iraq war opponent and sound-money advocate who has sparked a surprisingly vigorous insurgent campaign for the GOP nomination. The group says that it in recent months it already shipped out about 10,000 in silver Ron Paul dollars that sold for $20.

Bernard von NotHaus, NORFED’s founder and executive director, said in an interview from his home in Miami Friday night that his employees in Evansville had received the copper dollars late last week and managed to mail out only about 3,500 of them so far. After a six-hour raid, he said, the agents left with the rest of the coins, which weighed about two tons total, as well as smaller amounts of silver Ron Paul dollars, gold Ron Paul dollars that sell for $1,000 and platinum Ron Paul dollars that sell for $2,000. There was a separate raid, NotHaus said, of Sunshine Mint in Coer D’Alene, Idaho, a company that prints the organization’s coins, where von NotHaus said agents seized the huge pallets of silver and gold worth more than $1 million that the organization says back the paper certificates issued to its customers.

“They took everything, all of the computers, everything but the desks and chairs,” said von NotHaus, who says he served 25 years as the mintmaster for the Royal Hawaiian Mint. “The federal government really is afraid.”

The Indianapolis branch of the FBI declined to comment on the raid and referred calls to the U.S. Attorney’s office for Western North Carolina in Charlotte. That office’s spokeswoman, Suellen Pierce, also declined to comment. But bloggers at the libertarian Reason Foundation posted on-line a 35-page copy affidavit for a search warrant filed last week with the Western District in Asheville laying out the government’s case against NORFED. Pierce said that the search warrant in the case had been accidentally made public by a court clerk and has since been sealed, under court rules.

In the affidavit, an FBI special agent states that he is investigating NORFED for federal violations including “uttering coins of gold, silver, or other metal,” “making or possessing likeness of coins,” mail fraud, wire fraud, money laundering and conspiracy. “The goal of NORFED is to undermine the United States government’s financial systems by the issuance of a non-governmental competing currency for the purpose of repealing the Federal Reserve and Internal Revenue Code,” he states.

The agent states that the investigation started two years ago. And the U.S. Mint a year ago issued a warning against using the Liberty Dollar, prompting a lawsuit by NORFED. But that has not kept Liberty Dollar fans from speculating on-line that the raid was prompted by Paul’s strong campaign — which recently raised more than $4 million in a single day — or by the precipitous recent decline in the value of the dollar.

A Paul campaign spokeswoman, Kerri Price, said yesterday that while Paul also supports abolishing the Federal Reserve, the campaign “does not have any affiliation with Liberty Dollars at all.” von NotHaus confirmed this, saying that he knows Paul because they “move in the same circles” but that he had expressly not talked with Paul about his plans for the special coins so as not to violate federal election rules.

But the coins have been another rallying point for Paul’s supporters, who have asked Paul to pose for photographs with the coins on the campaign trail. Jim Forsythe, a Paul organizer in New Hampshire who ordered 150 of the copper Ron Paul dollars, said yesterday that the seizure of the coins would likely fuel more support for Paul, who scores close to double-digits in some New Hampshire polls. “People are pretty upset about this,” he said. “The dollar is going down the tubes and this is something that can protect the value of their money and the Federal Reserve is threatened by that. It’ll definitely fire people up.”

Von NotHaus, meanwhile, is urging Liberty Dollar supporters to express their outrage by donating to Paul, saying on the group’s Web site that “in light of this assault on our financial freedom, it is clear that we need Ron Paul to lead this country more than ever.” He said that all of his bank accounts have been frozen and that he expects that a federal indictment will soon be in the offing, saying that “once the federal government starts an investigation like this and takes it to a grand jury, they can indict a ham sandwich.” Should he be charged, he said, “I’ll turn it into my golden opportunity to validate the Liberty Dollar as a legal lawful currency and save the country from a monetary collapse.”

What he’s most concerned about for now, though, is the thought of all his customers waiting for their Ron Paul dollars. “People aren’t going to get their orders, and they aren’t going to get them for a while,” he said.

That is good news, of course, for those already holding the coins. On eBay, the silver Ron Paul dollars that were purchased for $20 were selling for more than $170 last night.

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