The History of The Liberty Dollar
History of The Liberty Dollar
The Liberty Dollar came about as the result of 25 years of research into monetary economics by Bernard von NotHaus (BVNH) while he was the Mintmaster at the Royal Hawaiian Mint in Honolulu, Hawaii. (www.RoyalHawaiianMint.com)
Driven to offer the citizens of the United States a superior private monetary system, BVNH formed NORFED (National Organization for the Repeal of the Federal Reserve System and the Internal Revenue Service) based in Evansville, Indiana, served as its Monetary Architect and introduced the American Liberty Dollar (ALD) on October 1, 1998.
The ALD currency was 100% backed and 100% redeemable with one ounce 999 fine Silver Libertys. Initially, the currency was issued in gold and silver paper certificates. A silver based electronic Liberty Dollar (eLD) was issued in 2002. The ALD certificates and eLD were legally defined as “Silver Certificates” owned by the bearer. The silver that backed the paper certificates and digital eLD was warehoused at Sunshine Minting in Coeur d’Alene, Idaho.
For nearly nine years, the Liberty Dollar enjoyed great popularity, as evidenced by the amount of news coverage it generated. CBS news covered it numerous times, Paul Harvey called it “something new under the sun,” it was featured in Forbes and most major newspapers and the Learning Channel included it in a video about the history and future of money (https://www.youtube.com/watch?v=eYGDVUb8MjA). Even the officials at the U.S. Treasury Department said “there was nothing illegal about it.”
But in 2006, the U.S. Mint issued a press release stating that prosecutors at the Justice Department had determined that using Silver Libertys as circulating money was a federal crime. The press release also stated that the Silver Libertys were meant to compete with the circulating coinage (currency) of the United States and such competition consequently was a criminal act. The Justice Department also stated that the Liberty 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: “The Liberty Dollar never has claimed to be, does not claim to be, is not, and does not purport to be, legal tender.” BVNH and supporters of the Liberty Dollar asserted that the Liberty Dollar was not legal tender, that legal tender and barter are mutually exclusive concepts, and that the Liberty Dollar was a numismatic piece or medallion which could be used voluntarily in barter.
Bernard von NotHaus v. the U.S. Mint
On March 20, 2007, Bernard von NotHaus, the president of Liberty Services, filed a Declaratory Judgment lawsuit in the District Court for the Southern District of Indiana against the U.S. Mint’s claim that the Liberty Dollar was illegal. Defendants included 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 lawsuit sought a declaratory judgment that circulating Liberty Dollars as a voluntary barter currency was 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.
On November 14, 2007, the Liberty Dollar offices were raided by agents of the Federal Bureau of Investigation (FBI) and the U.S. Secret Service. BVNH and 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. BVNH’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 the Liberty Dollar organization’s website relating to purchases of Liberty Dollars became nonfunctional.
In May 2009, Bernard von NotHaus and three others were charged with federal crimes in connection with the Liberty Dollar monetary organization. On July 31, 2009, BVNH announced that he had closed the Liberty Dollar operation, pending resolution of the criminal charges. On March 18, 2011, BVNH was found guilty of “making coins resembling and similar to United States coins”. His case was only the fifth trial for 18 U.S.C. § 486 that was passed during the chaotic times of the Civil War.
A federal grand jury brought an indictment against Bernard von NotHaus and three others in May 2009 in United States District Court in Statesville, North Carolina and Mr. von NotHaus was arrested on June 6, 2009. Mr. von NotHaus was charged with one count of conspiracy to possess and sell coins in resemblance and similitude of coins of a denomination higher than five cents, and silver coins in resemblance of genuine coins of the United States in denominations of five dollars and greater, in violation of 18 U.S.C. § 485, 18 U.S.C. § 486, and 18 U.S.C. § 371; one count of mail fraud in violation of 18 U.S.C. § 1341 and 18 U.S.C. § 2; one count of selling, and possessing with intent to defraud, coins of resemblance and similitude of United States coins in denominations of five cents and higher, in violation of 18 U.S.C. § 485 and 18 U.S.C. § 2; and one count of uttering, passing, and attempting to utter and pass, silver coins in resemblance of genuine U.S. coins in denominations of five dollars or greater, in violation of 18 U.S.C. § 486 and 18 U.S.C. § 2.
On July 28, 2009, Bernard von NotHaus entered a plea of not guilty.
From the moment the FBI Raid on the Liberty Dollar went public, it created a firestorm of sentiment against the U.S. government and the FBI in particular. Dr. Richard Timberlake, the noted PhD free market economist from the University of Georgia, an arch supporter of private money and the Liberty Dollar in particular, was an outspoken vocal critic of the government’s depreciating US dollar. He titled his December 3, 2007 article: Gestapo Raid on Coin-producing Enterprise. Over 100 articles and countless treats flamed the government for its action against the peaceful Liberty Dollar.
When the New York Times asked Bernard von NotHaus about the government’s motive for accusing him of terrorism, BVNH scoffed, “This is the United States government. It’s got all the guns, all the surveillance, all the tanks, it has nuclear weapons and it’s worried about some ex-surfer guy from Hawaii making his own money? Give me a break!”
Laws regarding Counterfeiting and Private Currency
The only laws regarding the issuance of 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 in them. The Liberty Dollar consisted of both metal rounds and printed paper. Every Liberty Dollar was 100% backed by physical gold and silver commodities. The government alleged that the use of the Liberty Dollar was in violation of 18 U.S.C. § 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.
On March 18, 2011, Mr. von NotHaus was convicted of “making, possessing and selling his own coins”, after a jury in Statesville, North Carolina deliberated for less than an hour. The jury found him guilty of one count under 18 U.S.C. § 485 and 18 U.S.C. § 2, one count of violating 18 U.S.C. § 486 and 18 U.S.C. § 2, and one count of conspiracy, under 18 U.S.C. § 371, to violate sections 485 and 486. He faced up to 22 years in prison, a $250,000 fine, and the threat of being forced to give $7 million worth of minted coins and precious metals to the government, weighing over 16,000 pounds.
After his conviction, Attorney for the Western District of North Carolina Anne M. Tompkins described the Liberty Dollar as “a unique form of domestic terrorism” that was trying “to undermine the legitimate currency of this country“. The Justice Department press release quotes her as saying: “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.”
Domestic Terrorism, however, is defined in 18 USC § 2331 as “activities that involve acts dangerous to human life that are a violation of the criminal laws of the United States or of any State,” and no violence was ever attributed to BNVH or The Liberty Dollar.
The Associated Press reported: “Federal prosecutors successfully argued that Bernard von NotHaus was, in fact, trying to pass off the silver coins as U.S. currency. Coming in denominations of 5, 10, 20, and 50, the Liberty Dollar also featured a dollar sign, the word “dollar” and the motto “Trust in God,” similar to the “In God We Trust” that appears on U.S. coins”.
After his trial, The New York Times stated that some people have described BVNH as “the Rosa Parks of the constitutional currency movement.” He appealed his conviction. In the appeal, BVNH stated:
…if anything is clear from the evidence presented at trial, it is that the last thing Mr. von NotHaus wanted was for Liberty Dollars [to] be confused with coins issued by the United States government…His intention – to protest the Federal Reserve system – has always been plain. The jury’s verdict conflates a program created to function as an alternative to the Federal Reserve system with one designed to [deceive] people into believing it was the very thing Mr. von NotHaus was protesting in the first place… The Liberty Dollar was not a counterfeit and was not intended to function as such. The verdict is a perversion of the counterfeiting statutes and should be set aside.
However, once a defendant has been convicted by a jury of his peers, it is incumbent upon the court, in the absence of compelling evidence to the contrary, to uphold that conviction and pass sentence. On Nov 11th, 2014 Judge Voorhees denied Bernard von NotHaus’ Motion for Acquittal because the arguments therefor simply reiterated evidence already presented during his trial and offered no new reasoning. The conviction would stand and sentence must therefore be passed.
On December 2, 2014, despite Justice Department insistence that BVNH serve 22 years in federal prison, the maximum possible time, Judge Voorhees carefully enumerated the reasons why he felt that this case deserved a severe downward departure from sentencing guidelines. After his lengthy explanation, Judge Voorhees sentenced Mr. von NotHaus to 6 months house arrest, without ankle monitor or drug testing, to be served concurrently with 3 years of probation.
Read the whole story: The Liberty Dollar From Concept To Crypto by Bernard von NotHaus
Early termination of probation was formally granted December 9, 2015 by U.S. District Judge Richard L. Voorhees after only one year – an example of vindication in action – and he is now truly free to continue his quest to return America to a sound, value based, monetary system. http://www.libertydollarnews.org/2015dec/BVNH_pt.pdf.
An important clarification regarding counterfeiting law came about from the BVNH/Liberty Dollar case, for in obtaining its conviction, the government defined the law as applying to the actual use of physical silver or gold, or any other metal, in commerce, which is the true nature of the crime for which Mr. von NotHaus was convicted, as defined in 18 U.S.C. § 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.
Current money is defined as: The currency of the country : whatever is intended to and does actually circulate as currency; every species of coin or currency. Miller v. McKinney. 5 Lea (Tenn.) 90. In this phrase the adjective “current” is not synonymous with “convertible.” It is employed to describe money which passes from hand to hand, from person to person, and circulates through the community, and is generally received. Money is current which is received as money in the common business transactions, and is the common medium in barter and trade. Stalworth v. Blum, 41 Ala. 321. (Black’s Law Dictionary https://thelawdictionary.org/current-money/
The forfeiture trial resumed on Monday April 4, 2011. Federal prosecutors were seeking to keep roughly $7 million worth (about eight tons of gold and silver minted Libertys) seized in 2007 from the Sunshine Minting warehouse by the FBI and the United States Secret Service.
In late 2014, U.S. District Court Judge Richard L. Voorhees ruled that all Liberty Dollars dated 2007 and earlier seized by FBI and United States Secret Service raid should be returned to their owners. In 2017, a significant number of seized Liberty Dollars were finally returned to their owners after the petitioners filed their claims with the court for their return. True to his word and at the pleasure of Liberty Dollar supporters, BVNH is still providing redemption of gold and silver certificates today, and will continue to do so until the full twenty year term of every certificate has expired.
The Impact of the Liberty Dollar
It is significant to note that, in gaining its conviction against Bernard von NotHaus for counterfeiting, the government has actually narrowed the scope of its authority: digital non-government currencies are not subject to 18 USC 486. In just the few short years since Bitcoin was inspired by the Liberty Dollar, it is already 2,000 times larger than the Liberty Dollar, knows no national bounds, and is far more contemptuous of the US Dollar.
In addition, the case also clarified the position on Warehouse Receipts, which were never considered to be any form of security, contraband or counterfeit. There is a substantial reference to Warehouse Receipts as lawful negotiable instruments in state and federal laws to ensure that the New Liberty Dollars are legal and will be around for a very long time. This is also codified in
A Warehouse Receipt is Not a Security
A warehouse receipt is a document showing that title to goods is stored with someone else. It is a receipt issued by a person engaged in the business of storing goods for a fee. Generally, a warehouse receipt is considered a document of title. A negotiable instrument can also be taken as a warehouse receipt and is often used for financing with inventory as security. In United States v. Hastings, 296 U.S. 188, 197 (U.S. 1935), it was stated that a warehouse receipt is of special importance and is issued by a warehouseman for products stored for interstate or foreign commerce, or in any place under the exclusive jurisdiction of the U.S. (Warehouse Receipts Act, 1913: https://www.loc.gov/law/help/statutes-at-large/61st-congress/session-2/c61s2ch167.pdf)
Furthermore, The Columbia Law Review clarified the definition of a Warehouse Receipt as a simple document of title rather than any form of security, demonstrating the effects of the Warehouse Receipt Act in a definition that has been accepted as a maxim of law: https://www.jstor.org/stable/1110356?seq=1#metadata_info_tab_contents.
As a result, we know that Liberty Dollar Financial Association Warehouse Receipts are lawful for use as an alternative currency, as “current money” and as a medium of barter exchange, but they are not under any regulations involving securities such as stocks, bonds or investments.
This is the history of the Liberty Dollar. It should be obvious to anyone that BVNH did not intend to break the law and even Judge Richard L. Voorhees alluded to that fact during his sentencing. BVNH’s mission was to bring about lawful change to our country’s monetary policy, not an attempt to subvert it or allow his work to be confused with U.S. money.
Today, BVNH is proud to see the Liberty Dollar Financial Association bringing back the non-political benefits of Liberty Dollars, which means that many people will be able to take advantage of the inherent power of silver to resist the ravages of inflation and preserve their personal purchasing power for the future.
The Liberty Dollar Legacy Lives!