Liberty dollar (private currency)
The American Liberty Dollar was a private currency produced in the United States.
The currency was issued in minted metal rounds, gold and silver certificates, and electronic currency. ALD certificates are "warehouse receipts" for real gold and silver owned by the bearer. According to court documents, there were about 250,000 holders of Liberty Dollar certificates. The metal was warehoused at Sunshine Minting in Coeur d'Alene, Idaho prior to a November 2007 raid by the Federal Bureau of Investigation and the U.S. Secret Service. Until July 2009, the Liberty Dollar was distributed by Liberty Services, based in Evansville, Indiana. It was created by Bernard von NotHaus, the founder of the Cannabis Spiritual Center in Malibu, California, and 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 pronounced guilty of "making coins resembling and similar to United States coins". In late 2014, a U.S. District Court judge ruled that Liberty Dollars seized in the 2007 FBI/USSS operation should be returned to their owners.
Practices
Exchange service
From 1998 to July 2009, Liberty Services exchanged Federal Reserve Notes for silver Liberty Dollars, as well as for Warehouse Receipts in both paper and digital forms.Currency reform
Liberty Services' original name was "National Organization for the Repeal of the Federal Reserve and the Internal Revenue Code". Since its founding, the organization asserted that the Federal Reserve was unconstitutional and harmful. The company engaged in a series of legal battles both defending their exchange service and challenging exclusivity assertions made by the US Mint.Politics
Ron Paul Dollars were also briefly minted, taking advantage of Ron Paul's public favoring of metals backed currency and the Ron Paul presidential campaign, 2008. However, this raised issues of its legality amid an FBI raid confiscating two tons of the coins. This briefly caught the attentions of the media, taking note of its novelty over any actual value.Function
Differences from other alternative currencies
A number of alternative currencies exist in the United States, including Phoenix Dollars, Goldbacks, Baltimore's BNote, Ithaca Hours, Bitcoin, and digital gold currency. Unlike some other alternative currencies, both Liberty Dollars and Phoenix Dollars were denominated by weight and backed by a commodity: Liberty Dollars used gold, silver, platinum, or copper. Other private currencies use different bases, such as tying their value to a specific unit of time; i.e., 1 hour = 1 Time Dollar. Under the most simplistic version of that model, the future value of the currency would depend on the willingness of people to swap their labor, regardless of the market value of the labor provided. However, systems such as Ithaca Hours have introduced more sophisticated models that allow for variations in market value of labor. Liberty Dollars also differed from other alternative currencies in that they carried a suggested US dollar face value.The only laws that pertain to private currencies are ordinary statutes against fraud. Coining is more technologically difficult than is printing, and inclusion of precious metal in coins has long been seen as a means of "embedding" value into them. The Liberty Dollar consisted of coins and printed notes. Paper and digital Liberty Dollars were legally defined as warehouse receipts and were backed by a physical commodity: a weight in precious metal. 18 USC 486, however, makes it a crime to make, utter, or pass any coin or bar of gold, silver, or any other metal if it is intended to be used as money, so there is a definitive injunction against the minting of coins for that purpose.
Liberty Dollar base values, discounts, and commissions
The Liberty Dollar "base value" was created by Bernard von NotHaus., the base value of the Liberty Dollar was Liberty Dollars to one ounce of silver. At the time the Liberty Dollar operation was closed, one ounce Liberty Dollar gold pieces were denominated,000 with a maximum charge of 10% over spot price with membership. The previous base values were silver ounce, silver ounce and gold ounce. Non-members paid full face value for all currency except for certain Special and Numismatic items. Members' discounts ranged from 0% to 50%+.Liberty Dollar associates and merchants used to exchange for Liberty Dollars at a discount, so they could "make money when spend money." To further distinguish how the Liberty Dollar worked, von NotHaus transitioned to a commission structure in June 2007 where associates and merchants received a commission in the form of extra Liberty Dollars when they placed their orders. Regional currency officers received larger discounts; they were the regional distributors and official representatives of Liberty Services.
The Liberty Dollar associate and merchant discounts ranged from 0.0%–50%+ depending on where the price of silver was, relative to the Liberty Dollar base value, the Liberty Dollar base value crossover points, and the time periods during which the price 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" was a kind of distributor of Liberty Dollars. In exchange for a fee paid to the Liberty Dollar Organization, they could purchase Liberty dollars for resale at a discount. They were also authorized to purchase, convert, or perhaps exchange Liberty Dollars for Federal Reserve Notes.Legal issues
Federal Government response
Numerous individuals within the U.S. Government have been interviewed regarding the Liberty Dollar. The Liberty Dollar organization asserted one Secret Service agent claimed "It's not counterfeit money" while remaining "skeptical" of NORFED. Another agent reportedly warned that the Liberty Dollar "appears to be in violation of." The minting of Liberty Dollar coins 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 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 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 "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.
''Bernard 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 Indiana 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 sought 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 and the U.S. Secret Service on November 14, 2007. Bernard von NotHaus, the owner of Liberty Services, sent an email to customers and supporters saying that the agents took all the gold, silver, and platinum, and almost two tons of Ron Paul Dollars. The agents 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."