Liberty Dollar raided by FBI

[CurtC]

I saw a thread over at LCF about something called the Liberty Dollar: http://www.libertydollar.org/

Apparently, they were trying to take advantage of the folks who think the whole Federal Reserve system is a big conspiracy. You bought gold from Liberty, but they would issue you a paper note, which you could then exchange for the real metal anytime you like (like how silver certificates used to work).

Sounds pretty trustworthy, right? So what would be your first impression upon hearing that they were raided by the FBI?

http://www.libertydollar.org/ld/legal/raid.htm

Apparently, the LCF regulars think this is an example of the government overstepping its bounds and squashing a competing currency.

It seems to me that the only ones left at the LCF are the completely insane people, who trust Liberty Dollar, who think chemtrails are real, and UFO's are being covered up. The regular crowd who question 9/11 but still are somewhat rational in other areas have abandoned them (I think Dylan is one of these).

[BenBurch]

Well, if you are using barter bucks or liberty bucks in commerce, and are not reporting the income thus derived at a reasonable conversion rate on your federal taxes, you are committing a crime.

If Liberty Dollar was helping that happen...

This does NOT apply to NWO scrip or gold-pressed Latinum.

[AMTMAN]

Simple rule of thumb. If a company asks for help in its legal defense fund the best bet is to stay away. Or if the company appears on the US Mint web site stating that their product is not legal tender.

A couple things caught my eye. One was from the list on how to use the Liberty Dollar.

8. Never use a Silver Liberty alone unless the sale is greater than $10 and less than $20. If the total is greater than $20, include the Silver Libertys with FRNs.

It almost as if they are saying "Hopefully the cashier won't notice and you will get away with it".

For approximately six hours they took all the gold, all the silver, all the
platinum and almost two tons of Ron Paul Dollars

Ron Paul dollars, you have got to kidding me.

When it comes right down to it these people are steeling. They are steeling from the people who are naive enough buy a Liberty Dollar. If someone manages to pass one off to a business they are steeling from that business. When the owner or manager of that business tries to deposit that Liberty Dollar the bank is not going to take it.

If you want a good laugh click on supporters on their web site.

[Anti-sophist]

What's the legality of trying to setup an alternate currency?

On first thought, it seems to me like it should be illegal.. but the more I think about it.. the less justification I can find for it being so.

[AMTMAN]

What's the legality of trying to setup an alternate currency?

On first thought, it seems to me like it should be illegal.. but the more I think about it.. the less justification I can find for it being so.

Can you imagine the mess if it were legal for every Tom, Dick and Harry to make their own currency?

[Anti-sophist]

Can you imagine the mess if it were legal for every Tom, Dick and Harry to make their own currency?

But we can... and do.. sort of. As long as both people agree to an exchange, it's valid, right? It's just a sophisticated form of bartering.

Trying to pass off something as US dollars and/or cents is illegal. I understand. But having an alternate "currency" is just sophisticated bartering. People don't have to accept your pseudo-currency, because it's not legal tender.. but if they do accept it.. what's the problem?

[CurtC]

I don't see anything inherently wrong with an alternative currency, as long as the transactions are properly reported for tax purposes. If I want to give you a chunk of silver in trade for something you have, there's nothing wrong with that. Or if I give you a piece of paper that's basically an IOU from someone else, where you can go get your silver, as long as you're agreeable to the terms, that's fine.

I suspect that the raid had to do with whether they were above-board. It's easy to imagine a Ponzi scheme here. Issue certificates in exchange for US dollars, and actually redeem them in silver to establish a trust in the market. Now start keeping some of the money for yourself, without stocking silver. Keep enough on hand to pay off the occasional redeemer. Advertise your business to the paranoid and religious. When it grows to a level that's unsustainable, sell all the silver and pocket the money. When the FBI raids, claim that they confiscated the silver from your vault.

[Anti-sophist]

I don't see anything inherently wrong with an alternative currency, as long as the transactions are properly reported for tax purposes. If I want to give you a chunk of silver in trade for something you have, there's nothing wrong with that. Or if I give you a piece of paper that's basically an IOU from someone else, where you can go get your silver, as long as you're agreeable to the terms, that's fine.

I suspect that the raid had to do with whether they were above-board. It's easy to imagine a Ponzi scheme here. Issue certificates in exchange for US dollars, and actually redeem them in silver to establish a trust in the market. Now start keeping some of the money for yourself, without stocking silver. Keep enough on hand to pay off the occasional redeemer. Advertise your business to the paranoid and religious. When it grows to a level that's unsustainable, sell all the silver and pocket the money. When the FBI raids, claim that they confiscated the silver from your vault.

What's awesome about that scenario you've described is that is exactly what happened in an online game in one of the biggest 'scams' in any 'virtual economy' that I know of (estimated value was $100k+).

http://games.slashdot.org/article.pl?sid=06/08/23/1918246&tid=209

[Pookster]

What's the legality of trying to setup an alternate currency?

On first thought, it seems to me like it should be illegal.. but the more I think about it.. the less justification I can find for it being so.

I believe article one of the US Constitution gives the power to coin money to Congress.

[Anti-sophist]

I believe article one of the US Constitution gives the power to coin money to Congress.

That doesn't necessarily imply that an alternate "voluntary currency" is forbidden.

[Cuddles]

Alternative currencies are certainly legal, and many exist without people really noticing. Gift vouchers for shops are an alternative currency issued by that shop (but often accepted in several others). Phone cards. Oyster cards. While many alternatives are backed by standard currency, not all are. For example, most gift vouchers specifically state that they can't be exchanged for money, only goods. Virtual money in games is a particularly good example, since it can be, and is, used as real money, but crosses borders and so can't be based on any single existing currency.

The problem is almost certainly, as others have already said, fraud and tax evasion rather than the currency itself. What are the chances that people who set up a currency because they don't trust the government or the federal reserve actually filing taxes?

[Pookster]

That doesn't necessarily imply that an alternate "voluntary currency" is forbidden.

Legal tender cases over the years though have had the effect of giving complete control of money/currency in the US to Congress. You'd have a major uphill battle to convince a Court otherwise.

[AMTMAN]

But we can... and do.. sort of. As long as both people agree to an exchange, it's valid, right? It's just a sophisticated form of bartering.

Trying to pass off something as US dollars and/or cents is illegal. I understand. But having an alternate "currency" is just sophisticated bartering. People don't have to accept your pseudo-currency, because it's not legal tender.. but if they do accept it.. what's the problem?

One of the reasons we have a single currency is that at one time we did not. And it was one big mess. Legal tender in one area might not be accepted in another. That's the problem with an alternative currency. The other problem is that no bank is going to take it. Then there's the distinct possibility that alternative currencies end up undermining the official legal tender. Which of course has economic implications for all of us.

[Pookster]

Alternative currencies are certainly legal, and many exist without people really noticing. Gift vouchers for shops are an alternative currency issued by that shop (but often accepted in several others). Phone cards. Oyster cards. While many alternatives are backed by standard currency, not all are. For example, most gift vouchers specifically state that they can't be exchanged for money, only goods. Virtual money in games is a particularly good example, since it can be, and is, used as real money, but crosses borders and so can't be based on any single existing currency.

The problem is almost certainly, as others have already said, fraud and tax evasion rather than the currency itself. What are the chances that people who set up a currency because they don't trust the government or the federal reserve actually filing taxes?

It's all based on currency established by the Congress though. It's value is based solely on it.

[Horatius]

There's some discussion of this raid, and some links to more info, on reason magazines Hit&Run blog:

http://www.reason.com/blog/show/123553.html


According to an affidavit (PDF) filed by FBI agent Andrew Romagnuolo in support of a federal seizure warrant obtained from a U.S. Magistrate last week, the feds have been investigating Liberty Dollar not just for violating federal bans on circulating alternative currency, but also for mail fraud, wire fraud, and money laundering

[Alferd_Packer]

So, what's the exchange rate between Liberty Dollars and Dillion Dollars?

[ktesibios]

Can you imagine the mess if it were legal for every Tom, Dick and Harry to make their own currency?

Don't have to imagine it. That was exactly the situation in the USA in the early 19th century.

The result was chaos. If you held a hundred dollars worth of notes from the Bank of Ethel and Ethel went bankrupt, you were SOL. Even if Ethel stayed solvent, you might find that your notes were worthless two counties over, where nobody knew Ethel from Adam. Even where they were accepted in commerce, their purchasing power would most likely be less than their face value and fluctuate from day to day.

It was no way to run an economy.

[Minadin]

It's all based on currency established by the Congress though. It's value is based solely on it.

So, what's the exchange rate between Liberty Dollars and Dillion Dollars?

This is what I don't understand about what they're selling. If they give you a silver coin that's "valued" at $20 because of the amount of silver in it, what happens when the commodity price of silver goes up against the dollar? Because now you might have a coin that's got $25 worth of silver in it, that you're getting $20 for. Unless I'm missing something here, it seems silly. And, if you get a gold certificate from them, for instance, doesn't that just entitle you to X number of dollars worth of gold? So as the value of the US Dollar drops compared to gold, you get fewer and fewer actual grams of gold for your certificate, right? At least if I actually buy gold I've got the same amount of it later on when the price goes up, and it's worth more.

:confused:

They're claiming that it's "inflation-proof" but I just don't see how that could be. Would someone with more knowledge about monetary systems please enlighten me?

[Pookster]

This is what I don't understand about what they're selling. If they give you a silver coin that's "valued" at $20 because of the amount of silver in it, what happens when the commodity price of silver goes up against the dollar? Because now you might have a coin that's got $25 worth of silver in it, that you're getting $20 for. Unless I'm missing something here, it seems silly. And, if you get a gold certificate from them, for instance, doesn't that just entitle you to X number of dollars worth of gold? So as the value of the US Dollar drops compared to gold, you get fewer and fewer actual grams of gold for your certificate, right? At least if I actually buy gold I've got the same amount of it later on when the price goes up, and it's worth more.

:confused:

They're claiming that it's "inflation-proof" but I just don't see how that could be. Would someone with more knowledge about monetary systems please enlighten me?

I'm not sure that I can be much help with explaining all that. But here is a wiki link that gives a pretty good overview of the Liberty Dollar and some of the issues surround it ...

http://en.wikipedia.org/wiki/Liberty_dollar

[BenBurch]

Can you imagine the mess if it were legal for every Tom, Dick and Harry to make their own currency?

It once was. Scrip (http://en.wikipedia.org/wiki/Scrip) was common in the coal fields of West Virginia in living memory.

[Billdave2]

So, what's the exchange rate between Liberty Dollars and Dillion Dollars?

It is the same as the exchange rate between Shrute Bucks and Stanley Nickels, which has been establised as the same as between leprachans and unicorns.:D

[krelnik]

I'm neither an economist nor a lawyer, but as some have pointed out in this thread you CAN create a barter scrip legally in the U.S. Presumably there are various legal rules you have to follow to do it. Several towns in western Massachusetts have done it, they're called "Berk Shares".

Here's a Reuters story about them (http://www.reuters.com/article/newsOne/idUSN0530157720070619), and here's their home page (http://www.berkshares.org/).

--Tim Farley

[Pookster]

I'm neither an economist nor a lawyer, but as some have pointed out in this thread you CAN create a barter scrip legally in the U.S. Presumably there are various legal rules you have to follow to do it. Several towns in western Massachusetts have done it, they're called "Berk Shares".

Here's a Reuters story about them (http://www.reuters.com/article/newsOne/idUSN0530157720070619), and here's their home page (http://www.berkshares.org/).

--Tim Farley

I believe the key to it being legal is that it's not considered, used as, or called "legal tender", nor does it compete with US currency. As long as it's something like you describe, it shouldn't have a problem.

[nicepants]

It is the same as the exchange rate between Shrute Bucks and Stanley Nickels, which has been establised as the same as between leprachans and unicorns.:D

Don't forget that all Shrute Bucks are backed by beets!

[CurtC]

Maybe the Liberty Dollar could have steered clear of trouble (assuming they weren't running a Ponzi scheme nor laundering money) if they had avoided the use of the word "dollar" and the "$" symbol on the notes.

One of the testimonials on their own web site says "I simply hand them the currency and 95% of the businesses accept it." The business owner whose clerk accepted a $20 Liberty Dollar would not be happy about that, and I could see them reporting it to the FBI that they were passing them off as legal tender, and this testimonial is pretty good evidence that they were doing exactly that.

[leftysergeant]

A few years back, militia and Freemen whackjobs were issuing instruments called "sight warrants" that they swore up and down were legal, and ripping of millions of dollars. Mostly they were secured by liens on property. Problem is, they had no legal liens. They just filed papers attaching the properties of political opponents and did not wait for a court ruling to start issuing notes on the value of the property.

Pewople actually tried to pay their mortgages off with these instruments, then screamed like little babies when the nasty old federal agents came to haul them away.

Let the lot of these wankers sit in pre-trial confinement without bail. They are a flight risk and a hazard to their communities.

[ChristineR]

Liberty Associates can earn money by obtaining NORFED Liberty Dollar medallions at a discount and then can spend them into circulation.

The medallions bear inscriptions and design similar to those found on United States coinage, which may lead unwary merchants or consumers to accept the medallions as legal tender by mistake.

The same documents make it clear that as a barter system it's completely legal. They were encouraging people to cheat other people. They apparently had no problem with the papers, except that these guys want to call them "dollars." They were also valuing one ounce of silver at $20; although they offer to convert them back to real money it was at a "discounted" rate; in other words, they were encouraging people to buy a $20 coin (with $15 worth of silver) for a discounted rate of less than $20, spend it for $20 worth of goods, then offering merchants less than $20 once they figured out it wasn't real.

A more obvious scam would be harder to find. They only got as far as they did because they were bringing out lame arguments about the supposed collapse of non-metal based currencies.

[SpitfireIX]

This is what I don't understand about what they're selling. If they give you a silver coin that's "valued" at $20 because of the amount of silver in it, what happens when the commodity price of silver goes up against the dollar? Because now you might have a coin that's got $25 worth of silver in it, that you're getting $20 for. Unless I'm missing something here, it seems silly. And, if you get a gold certificate from them, for instance, doesn't that just entitle you to X number of dollars worth of gold? So as the value of the US Dollar drops compared to gold, you get fewer and fewer actual grams of gold for your certificate, right? At least if I actually buy gold I've got the same amount of it later on when the price goes up, and it's worth more.

:confused:

They're claiming that it's "inflation-proof" but I just don't see how that could be. Would someone with more knowledge about monetary systems please enlighten me?


Well, from reading their web site, it appears that the "currency" is redeemable for a fixed amount of gold or silver; the denominations are only a "suggested" equivalence to the US dollar. Presumably as the prices of gold and silver rise people will cash in their certificates, and new ones will be issued in the same denominations but backed by progressively smaller amounts of metal.

The claim that precious metals can be used to hedge against inflation is, well, specious (pun intended). The basic idea is, if you buy $4000 worth of gold certificates, and both the price of gold and the Consumer Price Index increase by 25% over the next four years, you can then sell your certificates for $5000, and be exactly where you were when you started. The problem is, you now have to pay tax on your illusory $1000 capital gain. Further, you've lost the opportunity to invest in something better, such as tax-free municipal bonds, or a well-performing mutual fund.

BTW, I was ashamed to learn that these people are headquartered in Indiana. :boxedin:

[BenBurch]

If I REALLY thought we were headed to a Mad Max future no way would I want their scrip at all. Nor would I want gold. I can put a fortune in diamonds into my pocket.

[ChristineR]

Why would you want diamonds? There are countless ones already in circulation and their prices are artificially elevated by a cabal. If they were sold unrestricted as currency instead of keepsakes the price would collapse. And don't even get me started on artificial diamonds.

[defaultdotxbe]

Well, from reading their web site, it appears that the "currency" is redeemable for a fixed amount of gold or silver
that seems to be what they are implying, but i cant find anywhere that actually tells me what that fixed amount is, im thinking about calling that phone number just to put them on the spot, lol

If I REALLY thought we were headed to a Mad Max future no way would I want their scrip at all. Nor would I want gold. I can put a fortune in diamonds into my pocket.
ill see your fortune in diamonds and raise you a fortune in twine

[BenBurch]

Why would you want diamonds? There are countless ones already in circulation and their prices are artificially elevated by a cabal. If they were sold unrestricted as currency instead of keepsakes the price would collapse. And don't even get me started on artificial diamonds.

Diamonds are industrially useful if nothing else, but I predict that, as long as there are women who fit the more-or-less traditional role, somebody will be forced to barter for a nice diamond.

A really nice Ruby or two would be a good idea as well.

But I don't think that will ever come to pass barring a natural disaster like Yellowstone blowing or a Tunguska-like meteor. I am an engineer by temperament, and I simple HAVE to believe that we can engineer ourselves out of this mess if that becomes somebody's priority soon enough. I really do think we can avoid the Malthusian crisis.

[stilicho]

Don't have to imagine it. That was exactly the situation in the USA in the early 19th century.

The result was chaos. If you held a hundred dollars worth of notes from the Bank of Ethel and Ethel went bankrupt, you were SOL. Even if Ethel stayed solvent, you might find that your notes were worthless two counties over, where nobody knew Ethel from Adam. Even where they were accepted in commerce, their purchasing power would most likely be less than their face value and fluctuate from day to day.

It was no way to run an economy.
Sounds like you're defining the meltdown that was caused by canal stock speculation. Imagine the dot.com meltdown of 2000-2001 only nobody along the chain can collect anything and everyone loses their house.

[Hokulele]

Another random example of an alternative currency is frequent flier miles. They can be donated to certain charities, exchanged for goods or services, and in some cases can be purchased or transferred.

And if the economy would collapse overnight, I wouldn't want diamonds or rubies, but coffee and chocolate. Exchange line forms on the right.

[gtc]

In the event of apocalypse I would recommend carrying antibiotics as a 'currency'.

SM Stirling's 'Dies the Fire' series of novels deals discusses what happens to money and traditional stores of value in an apocalypse.

[leftysergeant]

For the possible melt-down in 2000, I laid in extra coffee, cigarettes and ammunition for my pistol, and bought a rifle and a whole lot odf ammo for that.

I am still accumulating ammo. I have more than a lifetime supply now, but I figure that it could be valuable in a total crisis.

[Mangoose]

So where is the CBIG (Coming Boom in GoldTM) we were promised? :confused:

[ChristineR]

The $20 coins contain 1 ounce of silver, which is currently worth about $15. They would redeem the coins for $15 US or 1 ounce of silver. They would not redeem the coins for $20, and they were urging people to spend them for $20 US worth of goods. That's what was illegal, not the alternative currency. They minted them and sold them to their friends for less than $20 and then only reimbursed the victims $15.

There are currently two threads going on this.

[Architect]

I wonder if I could sell 'em some Scottish Pounds for, like, face value +25% or something. And the thing is, they'd even be legal tender.....

[geni]

I wonder if I could sell 'em some Scottish Pounds for, like, face value +25% or something. And the thing is, they'd even be legal tender.....

Only by court precedent. By statute the only universaly legal tender in scotland is the pound and 2 pound coin (and I think the 50 pence but not sure on that one)

[Oliver]

For approximately six hours they took all the gold, all the silver, all the
platinum and almost two tons of Ron Paul Dollars

Ron Paul dollars, you have got to kidding me.


Nobody is kidding - they have Ron Paul Dollars - just like the
"Disney Dollars", for example. But anyway - Dr. Paul has nothing
to do with it:

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.

http://blog.washingtonpost.com/the-trail/2007/11/16/post_203.html?hpid=topnews

[AMTMAN]

Nobody is kidding - they have Ron Paul Dollars - just like the
"Disney Dollars", for example. But anyway - Dr. Paul has nothing
to do with it:

Never said he did have anything to do with it. Although knowimg him he probably enjoys the attention from another fringe group.

[AMTMAN]

They minted them and sold them to their friends for less than $20 and then only reimbursed the victims $15.

There are currently two threads going on this.

The proper term is sucker, not victim.

[BenBurch]

Nobody is kidding - they have Ron Paul Dollars - just like the
"Disney Dollars", for example. But anyway - Dr. Paul has nothing
to do with it:

Except that he accepted one them from Liberty Dollar, or so I was told.

I'd like to see him address WHY he accepted that, given their pattern of gross criminality?

[jezcoe]

Looking into this story there is a surfacing of the normal anti Federal Reserve/anti fiat currency claptrap. One thing that has come up that I am having trouble sifting through is the The Credit River Decision or Martin V Mahony. The trail supposedly declared Federal Reserve Notes Unconstitutional so all transactions made with them are fraudulent.
Now I have a hard time believing that we all live this lie. I can't find any real good information that is not filtered through a "Patriot Movement" lens. Does anyone know anything more about this decision and rulings afterward?

[jezcoe]

Never mind.... found the info I was looking for.... If any of you ever come across this argument here, at first glances seems to be the records of the case
http://fights4rights.com/1/daily.php

[Father Dagon]

For approximately six hours they took all the gold, all the silver, all the
platinum and almost two tons of Ron Paul Dollars

Ron Paul dollars, you have got to kidding me.LOL! LOLLERSKATES! ROLFCOPTER! Here's a picture: http://hidebehind.com/A6F263

And could someone with skillz please shoop the coin so that it says "He ate my hamster" or something? Just for the lulz!

Regarding private currency, it should be a-okay as long as you not are trying to pass it off as some other currency, right?