A federal indictment against Asheville resident William Kevin Innes and other officials from the Liberty Dollar private currency operation alleges that they were trying to compete with — and replace — official U.S. currency while making a profit. Innes faces up to 45 years in jail if convicted on the charges.
Innes was the regional currency officer for LIberty Services, the company that distributes the Liberty Dollar, a private currency backed by precious metals. He is also one of three members of Liberty Services’ executive committee. Also named in the indictment are Liberty Dollar founder Bernard Von NotHaus, company fulfillment manager Sarah Bledsoe and COO Rachelle Moseley.
“It is a violation of the law for private coin systems to compete with the official coinage of the United States,” the document reads.
According to the indictment, Liberty Services, referred to in the indictment by its pre-2007 name, the National Organization for the Repeal of the Federal Reserve and Internal Revenue Codes (NORFED), violated the law by designing currency with similar design to that of official U.S. currency (the indictment cites the use of the head of Lady Liberty and a torch on both) and encouraging private merchants to make change with Liberty Dollars stamped at five, 10, 20 and 50 dollar denominations.
The goal, the indictment alleges, is to provide unknowing customers with “coinage which cannot legally be used as U.S. currency, nor can it be deposited in the U.S. banking system.”
Furthermore, the indictment spells out the organization of Liberty Services, alleging that regional currency officers, Liberty Dollar associates and merchants who accepted the currency made a profit because Liberty Dollars have less than their printed value of precious metals inside, and that the dollar’s proponents used the phrase “making money by making change.”
The indictment cites a 2006 warning by the U.S. Mint that the Liberty Dollars were illegal. However, in the same year, a Treasury Department official told press that merchants were free to accept the coins as they saw fit.
After a federal raid on Liberty Services’ headquarters in 2007, Innes told Xpress that he has never claimed that the Liberty Dollar is official U.S. currency or legal tender and that he was always open with local law enforcement about his activities. Innes also said that to keep the Liberty Dollar operation running, it was necessary to make a profit off their product, and thus have less than the stated value of gold or silver within.
Local or private currencies are not unheard of — in specific towns or resorts, for example — and have not generally faced legal challenges. What differentiates the Liberty Dollar, however, is its nationwide reach and the precious metals in the product. The forfeiture order in the indictment specifies “all property involved in the violations” and notes that federal authorities have already seized thousands of ounces of silver and copper coins, silver scrap and $250,000 in U.S. currency.
It is unclear if the forfeiture will be extended to all Liberty Dollars in circulation (approximately $20 million according to the indictment) or simply to those in the four defendants’ possession. One clause in the order does mention that if property has been passed on to a third party, higher fines will be levied on the defendants.
According to a 2007 affidavit, Asheville is one of the main centers for the Liberty Dollar, and the organization’s Web site has a list of 74 businesses that it claims accepted the currency.
— David Forbes, staff writer