Undercover federal agents extensively investigated the Liberty Dollar organization in Asheville, leading to the issue of a seizure warrant on Nov. 9 for a raid on the Liberty Dollar headquarters in Evansville, Ind., according to an affidavit obtained by Xpress.
William Kevin Innes, the regional currency officer for Liberty Dollar in Asheville, is named as an executive committee member of the Liberty Dollar company in the affidavit and federal agents thus made him a major target of their investigation. A cooperating witness and three undercover employees of the FBI joined the Liberty Dollar organization in Asheville, which is cited as one of the top three areas in the country for Liberty Dollar distribution along with Austin, Texas and Berryville, Ark. Over 70 businesses in the Asheville area reportedly agreed to accept the Liberty Dollar.
Liberty Dollars are a private “barter currency” backed by silver and gold. Their advocates claim to be completely within their rights to make and use them, because they do not claim that the currency is legal tender. Innes told Xpress earlier that they’re careful not to call the Liberty Dollars “coins,” and that he had gone to the police himself when the company started up in Asheville to seek assurance that the operation was lawful.
“If we’re criminals, why were we going to the police and being out in the open?” Innes said. He added that the reaction to the raid in Indiana had been “polite and peaceful. They just came in and got what they were after. We’re just peacefully exercising our rights here.”
The affidavit accuses the Liberty Dollar of violating the law by being easily mistakable for federal currency, and distributing gold and silver as an alternate currency. It also calls the organization a “multi-level marketing scheme,” saying that distributors make an average profit of $4.66 off every coin, as the amount of silver contained within a $20 Liberty Dollar is valued at $15.34. The affidavit notes this as part of the grounds for its charges of mail and wire fraud, as the Liberty Dollar’s distributors claim that it is “100 percent backed” by gold and silver.
“The only parties in the process who deal with the ALD [Liberty Dollar] at face value are the unwitting victims left holding the ALD currency after all the co-conspirators have made their money,” the affidavit asserts. It also details $100 referral fees paid to Liberty Dollar Associates who recruited others and the transfer of substantial amounts of money (the non-Liberty Dollar kind) between bank accounts. Because the company is conducting its own business with federal reserve notes, the affidavit concludes, the operation is fraudulent.
The company “uses Federal Reserve Notes (FRN) to conduct business,” the affidavit reads. “FRN’s are used to buy Liberty Dollar currency. This reliance upon FRN’s by a group opposed to FRN’s demonstrates that the American Liberty Dollar monetary system is simply a drain on the United States Government’s monetary system for financial profit via fraudulent means.”
Innes has not yet responded to requests for further comment.
A U.S. Mint press release in 2006 called using Liberty Dollars in place of currency a crime (soon after, undercover investigators reported buying a “The US Mint Can Bite Me” shirt at a Liberty Dollar event). A responding release from Liberty Dollar reasserted that it was not legal tender.
Also in 2006, according to an article in Florida’s Naples Daily News, Claudia Dickens, a spokesperson for the U.S. Treasury Bureau of Engraving and Printing, said that stores could use the Liberty Dollar.
“If a merchant wants to accept Liberty Dollars, that is their right,” Dickens claimed in the article. “As long as the person doesn’t claim it is the legal tender of the land.”
Shortly after the U.S. Mint warning, according to the affidavit, the Liberty Dollar company changed its official name from the National Organization for the Repeal of the Federal Reserve and Internal Revenue Codes (NORFED) to Liberty Services, Inc.
While Innes is named in the affidavit after Bernard Von Nothaus, the founder and CEO of the company, no charges have been filed yet and none of Asheville Liberty Dollar’s assets have so far been confiscated.
— David Forbes, staff writer