Liberty Dollar
Encyclopedia
The Liberty Dollar was a private currency
produced in the United States
. The currency was issued in minted metal rounds similar to coins, gold and silver certificates and electronic currency (eLD). ALD certificates are "warehouse receipts" for real gold and silver owned by the bearer, ALD certificate holders according to court documents are about 250,000 people. The metal was warehoused at Sunshine Minting
in Coeur d'Alene, Idaho
, prior to a November 2007 raid by the Federal Bureau of Investigation
(FBI) and the Secret Service
. Until July 2009, the Liberty Dollar was distributed by Liberty Services (formerly known as NORFED), based in Evansville, Indiana
. It was created by Bernard von NotHaus
, the co-founder of the Royal Hawaiian Mint Company. In May 2009, von NotHaus and others were charged with federal crimes in connection with the Liberty Dollar and, on July 31, 2009, von NotHaus announced that he had closed the Liberty Dollar operation, pending resolution of the criminal charges. On March 18, 2011, von NotHaus was found guilty on various counts, including the making of counterfeit coins.
, Bitcoin
and digital gold currency
. Unlike some other alternative currencies, both Liberty Dollars and Phoenix Dollars are denominated by weight and backed by a commodity. Phoenix Dollars are silver, while Liberty Dollars are gold
, silver
, platinum
, or copper
. Liberty Dollars differ from other alternative currencies in that they carry a suggested US dollar face value.
Community currencies may present problems for users because there is little to stop the issuer from producing more currency. Only the allocation of precious metals stands in a coiner's way. The primary difference between the Liberty Dollar and the actual US dollar was that Liberty Dollars were backed by a physical commodity—a weight in metal.
A previous attempt at establishing an alternative currency in the United States of America focused on tying the value of the currency to a specific unit of time; i.e., 1 hour = 1 Time Dollar. The future value of the currency depends on the willingness of people to swap their labor time, regardless of the market value of the labor provided.
Liberty Dollar associates and merchants used to exchange for Liberty Dollars at a discount, so they could "make money when [they] spend money." To further distinguish how Liberty Dollar works, von NotHaus transitioned to a commission structure in June 2007 where associates and merchants receive a commission in the form of extra Liberty Dollars when they place their orders. Regional currency officers have always received larger discounts, since they are the regional distributors and official representatives of Liberty Services.
The Liberty Dollar associate and merchant discounts can range from 0.0%-50%+ (zero to more than fifty percent) depending on where the price of silver is, relative to the Liberty Dollar base value, the Liberty Dollar base value crossover points, and the time periods the price has stayed above varying moving-day averages over 30, 60 or 90 days in a fluctuating market, based on Liberty Dollar formulas worked out by von NotHaus.
The promoter of the Liberty Dollar asserts that Claudia Dickens, spokeswoman for the U.S. Treasury Department's
Bureau of Engraving and Printing
, had previously said American Liberty Currency is legitimate. Dickens was quoted as having said "There's nothing illegal about this", after the Treasury Department's legal team reviewed the currency. "As long as it doesn't say 'legal tender' there's nothing wrong with it."
In 2006 the U.S. Mint issued a press release stating that prosecutors at the Justice Department
had determined that using Liberty Dollars as circulating money is a federal crime. The press release also stated that the "Liberty Dollars" are meant to compete with the circulating coinage (currency) of the United States and such competition
consequently is a criminal act. The Justice Department also stated that the Liberty Dollar was confusingly similar to actual U.S. currency, and the language used on NORFED's website was deceptive.
The Liberty Dollar organization responded to the Mint's press release by stating that "[t]he Liberty Dollar never has claimed to be, does not claim to be, is not, and does not purport to be, legal tender
." The promoters of the Liberty Dollar have asserted that the Liberty Dollar is not legal tender, and that legal tender and barter
are mutually exclusive concepts. The promoter asserts that the Liberty Dollar is a numismatic piece or medallion which may be used voluntarily as barter.
against the U.S. Mint's claims regarding the Liberty Dollar. Defendants include Henry M. Paulson, Secretary of the Treasury, Alberto R. Gonzales, former Attorney General of the United States, and Edmund C. Moy
, Director of the Mint. The suit seeks a declaratory judgment that circulating Liberty Dollars as a voluntary barter currency is not a federal crime and an injunction barring the Defendants from publicly or privately declaring the Liberty Dollar an illegal currency and to remove any such declarations from the U.S. Mint's website.
Dollars. The FBI also seized computers and files and froze the Liberty Dollar bank accounts. Von NotHaus's email linked to a signup page for a class action lawsuit so that the victims might recover their assets. At the same time, all forms on his website relating to purchases of Liberty Dollars became nonfunctional.
Copies of the email and the warrant documents have been posted to the website. The seizure warrant was issued for money laundering
, mail fraud, wire fraud
, counterfeiting, and conspiracy
.
The local Evansville Courier & Press reported the email, stating that "FBI Agent Wendy Osborne, a spokeswoman for the FBI's Indianapolis office, directed all questions on the raid to the Western District of North Carolina U.S. Attorney's Office. A spokeswoman there said she had no information on the investigation. Bernard von NotHaus, the group's monetary architect and the author of the email, did not immediately respond to a message seeking comment."
The Associated Press quoted von NotHaus on November 16, 2007, as saying that the federal government was "running scared right now and they had to do something .... I'm volunteering to meet the agents and get arrested so we can thrash this out in court."
On July 28, 2009, von NotHaus entered a plea of not guilty.
, after a jury deliberated for less than two hours. The jury found him guilty of one count under and , one count of violating and , and one count of conspiracy, under , to violate sections 485 and 486. He faces up to 15 years in jail, a $250,000 fine, and may be forced to give $7 million worth of minted coins and precious metals to the government, weighing 16,000 pounds. Attorney for the Western District of North Carolina
, Anne M. Tompkins, described the Liberty Dollar as "a unique form of domestic terrorism" that is trying "to undermine the legitimate currency of this country". The Justice Department press release quotes her as saying: "While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country."
According to the Associated Press, "Federal prosecutors successfully argued that von NotHaus was, in fact, trying to pass off the silver coins as U.S. currency. Coming in denominations of 5, 10, 20, and 50, the Liberty Dollars also featured a dollar sign, the word "dollar" and the motto "Trust in God," similar to the "In God We Trust" that appears on U.S. coins". VonNotHaus's attorney is appealing the decision and the arguments made by the prosecution in the case. Dollar
, for example, is a term used by many nations for their currency and has a Czech, not American, origin.
Private currency
A private currency is a currency issued by a private organization. It is often contrasted with fiat currency issued by governments or central banks. In many countries, the issue of private paper currencies is severely restricted by law....
produced in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. The currency was issued in minted metal rounds similar to coins, gold and silver certificates and electronic currency (eLD). ALD certificates are "warehouse receipts" for real gold and silver owned by the bearer, ALD certificate holders according to court documents are about 250,000 people. The metal was warehoused at Sunshine Minting
Sunshine Minting
Sunshine Minting, Inc., is a privately held company based in Coeur d'Alene, Idaho, that processes silver, gold, and other precious metals. The company is known for its role as a supplier of silver planchets to the United States Mint and as the manufacturer of the private Liberty Dollar...
in Coeur d'Alene, Idaho
Coeur d'Alene, Idaho
Coeur d'Alene is the largest city and county seat of Kootenai County, Idaho, United States. It is the principal city of the Coeur d'Alene Metropolitan Statistical Area. Coeur d'Alene has the second largest metropolitan area in the state of Idaho. As of the 2010 census the population of Coeur...
, prior to a November 2007 raid by the Federal Bureau of Investigation
Federal Bureau of Investigation
The Federal Bureau of Investigation is an agency of the United States Department of Justice that serves as both a federal criminal investigative body and an internal intelligence agency . The FBI has investigative jurisdiction over violations of more than 200 categories of federal crime...
(FBI) and the Secret Service
United States Secret Service
The United States Secret Service is a United States federal law enforcement agency that is part of the United States Department of Homeland Security. The sworn members are divided among the Special Agents and the Uniformed Division. Until March 1, 2003, the Service was part of the United States...
. Until July 2009, the Liberty Dollar was distributed by Liberty Services (formerly known as NORFED), based in Evansville, Indiana
Evansville, Indiana
Evansville is the third-largest city in the U.S. state of Indiana and the largest city in Southern Indiana. As of the 2010 census, the city had a total population of 117,429. It is the county seat of Vanderburgh County and the regional hub for both Southwestern Indiana and the...
. It was created by Bernard von NotHaus
Bernard von NotHaus
Bernard von NotHaus is the creator of the Liberty Dollar and co-founder of the Royal Hawaiian Mint Company. He created the Free Marijuana Church of Honolulu...
, the co-founder of the Royal Hawaiian Mint Company. In May 2009, von NotHaus and others were charged with federal crimes in connection with the Liberty Dollar and, on July 31, 2009, von NotHaus announced that he had closed the Liberty Dollar operation, pending resolution of the criminal charges. On March 18, 2011, von NotHaus was found guilty on various counts, including the making of counterfeit coins.
Exchange service
From 1998 to July 2009, Liberty Services exchanged Federal Reserve Notes (US dollars) for silver Liberty Dollars (and later gold and copper).Currency reform
Liberty Services' original name was "National Organization for the Repeal of the Federal Reserve and the Internal Revenue Code" (NORFED). Since its founding, the organization has asserted that the Federal Reserve is unconstitutional and harmful. The company is now in a series of legal battles both defending their exchange service and challenging exclusivity assertions made by the US Mint (see Legal issues).Differences from other alternative currencies
A number of alternative currencies exist in the United States, including Phoenix Dollars, Balimore's BNote, Ithaca HoursIthaca Hours
The Ithaca HOUR is a local currency used in Ithaca, New York and is the oldest and largest local currency system in the United States that is still operating. It has inspired other similar systems in Madison, Wisconsin; Corvallis, Oregon; and a proposed system in the Lehigh Valley, Pennsylvania...
, Bitcoin
Bitcoin
Bitcoin is a decentralized, peer-to-peer network over which users make transactions that are tracked and verified through this network. The word Bitcoin also refers to the digital currency implemented as the currency medium for user transactions over this network...
and digital gold currency
Digital gold currency
Digital gold currency is a form of electronic money based on ounces of gold. It is a kind of representative money, like a US paper gold certificate at the time that these were exchangeable for gold on demand. The typical unit of account for such currency is the gold gram or the troy ounce,...
. Unlike some other alternative currencies, both Liberty Dollars and Phoenix Dollars are denominated by weight and backed by a commodity. Phoenix Dollars are silver, while Liberty Dollars are gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
, silver
Silver
Silver is a metallic chemical element with the chemical symbol Ag and atomic number 47. A soft, white, lustrous transition metal, it has the highest electrical conductivity of any element and the highest thermal conductivity of any metal...
, platinum
Platinum
Platinum is a chemical element with the chemical symbol Pt and an atomic number of 78. Its name is derived from the Spanish term platina del Pinto, which is literally translated into "little silver of the Pinto River." It is a dense, malleable, ductile, precious, gray-white transition metal...
, or copper
Copper
Copper is a chemical element with the symbol Cu and atomic number 29. It is a ductile metal with very high thermal and electrical conductivity. Pure copper is soft and malleable; an exposed surface has a reddish-orange tarnish...
. Liberty Dollars differ from other alternative currencies in that they carry a suggested US dollar face value.
Community currencies may present problems for users because there is little to stop the issuer from producing more currency. Only the allocation of precious metals stands in a coiner's way. The primary difference between the Liberty Dollar and the actual US dollar was that Liberty Dollars were backed by a physical commodity—a weight in metal.
A previous attempt at establishing an alternative currency in the United States of America focused on tying the value of the currency to a specific unit of time; i.e., 1 hour = 1 Time Dollar. The future value of the currency depends on the willingness of people to swap their labor time, regardless of the market value of the labor provided.
Liberty Dollar base values, discounts, and commissions
Liberty Dollar is based on the Liberty Dollar "base value" created by Bernard von NotHaus. , the base value of Liberty Dollar was $20 Liberty Dollars to one ounce of silver. At the time the Liberty Dollar operation was closed, one ounce Liberty Dollar gold pieces were denominated $1,000 with a maximum charge of 10% over spot price with membership. The previous base values were $10 silver ounce, $20 silver ounce and $500 gold ounce. Non-members pay full face value for all currency except for certain Special and Numismatic items. Members' discounts range from 0% to 50%+ (actually, for short periods during crossovers it is possible that even members cannot buy Liberty Dollars at cost or less).Liberty Dollar associates and merchants used to exchange for Liberty Dollars at a discount, so they could "make money when [they] spend money." To further distinguish how Liberty Dollar works, von NotHaus transitioned to a commission structure in June 2007 where associates and merchants receive a commission in the form of extra Liberty Dollars when they place their orders. Regional currency officers have always received larger discounts, since they are the regional distributors and official representatives of Liberty Services.
The Liberty Dollar associate and merchant discounts can range from 0.0%-50%+ (zero to more than fifty percent) depending on where the price of silver is, relative to the Liberty Dollar base value, the Liberty Dollar base value crossover points, and the time periods the price has stayed above varying moving-day averages over 30, 60 or 90 days in a fluctuating market, based on Liberty Dollar formulas worked out by von NotHaus.
Regional currency office
A "regional currency office" is a kind of distributor of Liberty Dollars. In exchange for a fee paid to Liberty Dollar they can purchase Liberty dollars for resale at a discount. They are also authorized to purchase, convert, or perhaps exchange Liberty Dollars for Federal Reserve Notes.Federal Government response
Numerous individuals within the U.S. Government have been interviewed regarding the Liberty Dollar. The Liberty Dollar organization asserts that one U.S. Secret Service agent has stated "It's not counterfeit money" while remaining "skeptical" of NORFED. Another agent is reported to have warned that the Liberty Dollar "appears to be in violation of ." The minting of Liberty dollars also appears to be in violation of :The promoter of the Liberty Dollar asserts that Claudia Dickens, spokeswoman for the U.S. Treasury Department's
United States Department of the Treasury
The Department of the Treasury is an executive department and the treasury of the United States federal government. It was established by an Act of Congress in 1789 to manage government revenue...
Bureau of Engraving and Printing
Bureau of Engraving and Printing
The Bureau of Engraving and Printing is a government agency within the United States Department of the Treasury that designs and produces a variety of security products for the United States government, most notable of which is paper currency for the Federal Reserve. The Federal Reserve itself is...
, had previously said American Liberty Currency is legitimate. Dickens was quoted as having said "There's nothing illegal about this", after the Treasury Department's legal team reviewed the currency. "As long as it doesn't say 'legal tender' there's nothing wrong with it."
In 2006 the U.S. Mint issued a press release stating that prosecutors at the Justice Department
United States Department of Justice
The United States Department of Justice , is the United States federal executive department responsible for the enforcement of the law and administration of justice, equivalent to the justice or interior ministries of other countries.The Department is led by the Attorney General, who is nominated...
had determined that using Liberty Dollars as circulating money is a federal crime. The press release also stated that the "Liberty Dollars" are meant to compete with the circulating coinage (currency) of the United States and such competition
Competition
Competition is a contest between individuals, groups, animals, etc. for territory, a niche, or a location of resources. It arises whenever two and only two strive for a goal which cannot be shared. Competition occurs naturally between living organisms which co-exist in the same environment. For...
consequently is a criminal act. The Justice Department also stated that the Liberty Dollar was confusingly similar to actual U.S. currency, and the language used on NORFED's website was deceptive.
The Liberty Dollar organization responded to the Mint's press release by stating that "[t]he Liberty Dollar never has claimed to be, does not claim to be, is not, and does not purport to be, legal tender
Legal tender
Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation. Paper currency is a common form of legal tender in many countries....
." The promoters of the Liberty Dollar have asserted that the Liberty Dollar is not legal tender, and that legal tender and barter
Barter
Barter is a method of exchange by which goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money. It is usually bilateral, but may be multilateral, and usually exists parallel to monetary systems in most developed countries, though to a...
are mutually exclusive concepts. The promoter asserts that the Liberty Dollar is a numismatic piece or medallion which may be used voluntarily as barter.
Von NotHaus v. the U.S. Mint
On March 20, 2007, Liberty Services owner Bernard von NotHaus filed suit in the District Court for the Southern District of IndianaIndiana
Indiana is a US state, admitted to the United States as the 19th on December 11, 1816. It is located in the Midwestern United States and Great Lakes Region. With 6,483,802 residents, the state is ranked 15th in population and 16th in population density. Indiana is ranked 38th in land area and is...
against the U.S. Mint's claims regarding the Liberty Dollar. Defendants include Henry M. Paulson, Secretary of the Treasury, Alberto R. Gonzales, former Attorney General of the United States, and Edmund C. Moy
Edmund C. Moy
Edmund C. Moy is an American businessman and former government official. From 2006 to 2011 he served as the 38th Director of the United States Mint.-Early life and education:...
, Director of the Mint. The suit seeks a declaratory judgment that circulating Liberty Dollars as a voluntary barter currency is not a federal crime and an injunction barring the Defendants from publicly or privately declaring the Liberty Dollar an illegal currency and to remove any such declarations from the U.S. Mint's website.
FBI / Secret Service raid
The Liberty Dollar offices were raided by agents of the Federal Bureau of Investigation (FBI) and the United States Secret Service on November 14, 2007. Bernard von NotHaus, the owner of Liberty Services, sent an email to customers and supporters saying that the FBI took all the gold, silver, and platinum, and almost two tons of Ron PaulRon Paul
Ronald Ernest "Ron" Paul is an American physician, author and United States Congressman who is seeking to be the Republican Party candidate in the 2012 presidential election. Paul represents Texas's 14th congressional district, which covers an area south and southwest of Houston that includes...
Dollars. The FBI also seized computers and files and froze the Liberty Dollar bank accounts. Von NotHaus's email linked to a signup page for a class action lawsuit so that the victims might recover their assets. At the same time, all forms on his website relating to purchases of Liberty Dollars became nonfunctional.
Copies of the email and the warrant documents have been posted to the website. The seizure warrant was issued for money laundering
Money laundering
Money laundering is the process of disguising illegal sources of money so that it looks like it came from legal sources. The methods by which money may be laundered are varied and can range in sophistication. Many regulatory and governmental authorities quote estimates each year for the amount...
, mail fraud, wire fraud
Wire fraud
Mail and wire fraud is a federal crime in the United States. Together, 18 U.S.C. §§ 1341, 1343, and 1346 reach any fraudulent scheme or artifice to intentionally deprive another of property or honest services with a nexus to mail or wire communication....
, counterfeiting, and conspiracy
Conspiracy (crime)
In the criminal law, a conspiracy is an agreement between two or more persons to break the law at some time in the future, and, in some cases, with at least one overt act in furtherance of that agreement...
.
The local Evansville Courier & Press reported the email, stating that "FBI Agent Wendy Osborne, a spokeswoman for the FBI's Indianapolis office, directed all questions on the raid to the Western District of North Carolina U.S. Attorney's Office. A spokeswoman there said she had no information on the investigation. Bernard von NotHaus, the group's monetary architect and the author of the email, did not immediately respond to a message seeking comment."
The Associated Press quoted von NotHaus on November 16, 2007, as saying that the federal government was "running scared right now and they had to do something .... I'm volunteering to meet the agents and get arrested so we can thrash this out in court."
Indictment
A federal grand jury brought an indictment against von NotHaus and three others in May 2009 in United States District Court in Statesville, North Carolina, and von NotHaus was arrested on June 6, 2009. Bernard von NotHaus is charged with one count of conspiracy to possess and sell coins in resemblance and similitude of coins of a denomination higher than five cents, and silver coins in resemblance of genuine coins of the United States in denominations of five dollars and greater, in violation of , , and ; one count of mail fraud in violation of and ; one count of selling, and possessing with intent to defraud, coins of resemblance and similitude of United States coins in denominations of five cents and higher, in violation of and ; and one count of uttering, passing, and attempting to utter and pass, silver coins in resemblance of genuine U.S. coins in denominations of five dollars or greater, in violation of and .On July 28, 2009, von NotHaus entered a plea of not guilty.
Conviction
Von NotHaus was convicted of "making, possessing and selling his own coins" on March 18, 2011, in Statesville, North CarolinaStatesville, North Carolina
Statesville is a city located in Iredell County, North Carolina, United States and was named an All-America City in 1997 and 2009. The population was 24,633 at the 2010 census...
, after a jury deliberated for less than two hours. The jury found him guilty of one count under and , one count of violating and , and one count of conspiracy, under , to violate sections 485 and 486. He faces up to 15 years in jail, a $250,000 fine, and may be forced to give $7 million worth of minted coins and precious metals to the government, weighing 16,000 pounds. Attorney for the Western District of North Carolina
United States District Court for the Western District of North Carolina
The United States District Court for the Western District of North Carolina is a Federal district court which covers the western third of North Carolina....
, Anne M. Tompkins, described the Liberty Dollar as "a unique form of domestic terrorism" that is trying "to undermine the legitimate currency of this country". The Justice Department press release quotes her as saying: "While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country."
According to the Associated Press, "Federal prosecutors successfully argued that von NotHaus was, in fact, trying to pass off the silver coins as U.S. currency. Coming in denominations of 5, 10, 20, and 50, the Liberty Dollars also featured a dollar sign, the word "dollar" and the motto "Trust in God," similar to the "In God We Trust" that appears on U.S. coins". VonNotHaus's attorney is appealing the decision and the arguments made by the prosecution in the case. Dollar
Dollar
The dollar is the name of the official currency of many countries, including Australia, Belize, Canada, Ecuador, El Salvador, Hong Kong, New Zealand, Singapore, Taiwan, and the United States.-Etymology:...
, for example, is a term used by many nations for their currency and has a Czech, not American, origin.
Forfeiture trial
The forfeiture trial is scheduled to resume Monday April 4, 2011. Federal prosecutors are seeking to take roughly $7 million worth or five tons in Liberty Dollars minted in gold and silver seized in 2007 from a warehouse by the FBI.See also
- J. S. G. BoggsJ. S. G. BoggsJ. S. G. Boggs was an American artist, best known for his hand-drawn, one-sided depictions of U.S. banknotes and his various "Boggs bills" he draws for use in his performances. He spends his "Boggs notes" only for their face value. If he draws a $100 bill, he exchanges it for $100 worth of goods...
- List of community currencies in the United States
- Islamic gold dinarIslamic gold dinarThe modern Islamic gold dinar is a currency that aims to revive the historical gold dinar which was a leading coin of early Islam. They consist of minted gold coins, Dinar, and silver coins, Dirham.-Dinar history:According to Islamic law, the Islamic dinar is a coin of pure gold weighing...
- NotgeldNotgeldNotgeld is the name of money issued by an institution not authorized for money emission. This occurs usually when money is not available from the central bank. The most well know emergency money emissions occurred in Germany and Austria-Hungary around the end of the first World War, that's why the...
- Digital gold currencyDigital gold currencyDigital gold currency is a form of electronic money based on ounces of gold. It is a kind of representative money, like a US paper gold certificate at the time that these were exchangeable for gold on demand. The typical unit of account for such currency is the gold gram or the troy ounce,...
- Gold as an investmentGold as an investmentOf all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a hedge or harbor against economic, political, or social fiat currency crises...
- Platinum as an investmentPlatinum as an investmentPlatinum has a much shorter history in the financial sector than either gold or silver, which were known to ancient civilizations.Platinum is relatively scarce even among the precious metals. New mine production totals approximately only 5 million troy ounces a year...
- Silver standardSilver standardThe silver standard is a monetary system in which the standard economic unit of account is a fixed weight of silver. The silver specie standard was widespread from the fall of the Byzantine Empire until the 19th century...
- Silver as an investmentSilver as an investmentSilver, like other precious metals, may be used as an investment. For more than four thousand years, silver has been regarded as a form of money and store of value. However, since the end of the silver standard, silver has lost its role as legal tender in many developed countries such as the...
External links
- Liberty Dollar Von Nothaus Indictment-Exhibits March 21, 2011 files at Cryptome.org
- Official Web Page (Archive.org from June 2009)