A federal jury in North Carolina finally is bringing the hammer down on the NORFED "Liberty Dollars" scam artists for trying to undermine U.S. currency: The leader of a group that marketed a fake currency called Liberty Dollars in the
March 21, 2011

A federal jury in North Carolina finally is bringing the hammer down on the NORFED "Liberty Dollars" scam artists for trying to undermine U.S. currency:

The leader of a group that marketed a fake currency called Liberty Dollars in the Asheville area and elsewhere has been found guilty by a federal jury of conspiracy against the government in a case of “domestic terrorism.”

Bernard von NotHaus was convicted Friday at the conclusion of an eight-day trial in U.S. District Court in Statesville. The jury deliberated less than two hours, according to the Department of Justice.

Charges remain pending against William Kevin Innes, an Asheville man who authorities said recruited merchants in Western North Carolina willing to accept the “barter” currency, according to court records. Innes was indicted along with von NotHaus in 2009.

“Attempts to undermine the legitimate currency of this country are simply a unique form of domestic terrorism,” U.S. Attorney Anne Tompkins said. “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.”

The case was investigated by the FBI, Buncombe County Sheriff's Office and U.S. Secret Service with help from the U.S. Mint.

“We are determined to meet these threats through infiltration, disruption and dismantling of organizations which seek to challenge the legitimacy of our democratic form of government,” Tompkins said.

Von NotHaus, 67, faces up to 25 years in prison during sentencing, which hasn't been scheduled.

Back when the feds first raided von NotHaus' operations in 2007, CNBC's Lawrence Kudlow invited him on for an interview that was remarkably congenial, if notably ill-informed:

KUDLOW: I don't understand why people aren't free to choose. If they want to circulate your coins or your paper, they should be free to do that. I do think it is against the law, but I think in a perfect world they should be free to choose.

Von NotHaus' outfit called itself NORFED -- the National Organization for the Repeal of the Federal Reserve Act & Internal Revenue Code. Among the coins it minted just before it was busted were Ron Paul dollars.

On CNBC, Von NotHaus went on to claim that the NORFED currency was perfectly legal. Just for the record, minting coins to be used as currency in fact is illegal, under 18 USC 486:

Whoever, except as authorized by law, makes or utters or passes, or attempts to utter or pass, any coins of gold or silver or other metal, or alloys of metals, intended for use as current money, whether in the resemblance of coins of the United States or of foreign countries, or of original design, shall be fined under this title or imprisoned not more than five years, or both.

NORFED and its defenders liked to claim that there was nothing illegal about minting your own coins if you choose -- though of course others this is true only if you don't make them look like legal tender. It's also somewhat irrelevant if you're selling them as part of a pyramid scheme, and using the business for illegal money laundering -- which is what NORFED was doing. As the original affidavit explained:

The marketing system NORFED operates to sell the currency is a multi-level marketing scheme. The scheme gives NORFED, RCOs, and Associates a profit for selling the ALDs into circulation. When the ALD reached the point of being unprofitable, NORFED conducted a "move up" of the currency. In 1998, the ALD currency was minted using a $10.00 base, meaning that a $10.000 ALD coin, eDollar, or warehouse receipt was backed by one troy ounce of silver. In November of 2005, the thirty (30) day moving average of the spot price of silver reached the "move up point" set by the NORFED. NORFED recalled all of the $10.00 base coins and warehouse receipts and "re-minted" the currency as a $20.00 base currency. This change made what the day prior had been a $10.00 denomination ALD coin, warehouse receipt, or eDollar backed by one troy ounce of silver, a re-minted re-issued $20 denomination coin. This instantly doubled the value of the currency. The "move up" left the silver and gold holdings at the same level as they were at the $10.00 base. Thus the value of the entire currency was doubled without changing the holdings at all. The other effect of the "move up" was a tremendous increase in profits for NORFED, RCOs and Associates.

The U.S. attorney's description of NORFED's activities as "domestic terrorism" has raised some eyebrows -- Ben Smith at Politico calls it a "novel expansion" of the word's definition, while the usual suspects of the wingnutosphere have been squawking.

But there's nothing particularly novel about it at all: "terrorism" has long been used to include crimes where the intent and motive involved attacking and undermining the government of the United States. And that's abundantly self-evident in this case.

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