On March 18, 2011, Bernard Von NotHaus, the founder of the American Liberty Dollar, was convicted in the United States: history and legal battle.
The American Liberty Dollar (ALD) was a private currency produced in the United States, issued in coins, paper certificates, and electronic currency (eLD).
The founder of ALD was Bernard von NotHaus, an Austrian economist and financial consultant, as well as a monetary freedom activist. Von NotHaus’s goal was to create an alternative currency to the dollar that would protect purchasing power and counter inflation. To turn his idea into reality, von NotHaus founded the organization NORFED (“National Organization for the Repeal of the Federal Reserve and the Internal Revenue Code”), which argued that the Federal Reserve was unconstitutional and harmful. Later, the organization changed its name to Liberty Services, a company based in Evansville, Indiana, which distributed the Liberty Dollar until 2009.
The Liberty Dollar was based on a system of precious metal reserves, initially gold and silver, later also platinum and copper. Each Liberty Dollar was issued based on the amount of gold or silver deposited with von NotHaus’s company. The metals were then transferred and stored at the Sunshine Minting company in Coeur d’Alene, Idaho, for production and processing.
Regarding the distribution of the Liberty Dollar, Sunshine Minting would produce the coins, while Pro Forms, based in Porterville, California, would print the banknotes.
Although von NotHaus’s idea might seem clever, there was a “small” problem: the Liberty Dollar coins closely resembled the official coins issued by the United States Mint, the Mint of the United States.
Controversies and legal challenges
The Liberty Dollar proved to be a controversial project from the start, attracting the attention of the United States government. Von NotHaus and NORFED faced several legal actions from the federal government.
In particular, on September 14, 2006, the US Mint announced that the Department of Justice had determined the use of the Liberty Dollar as legal tender to be a federal crime. The announcement argued that the Liberty Dollar was designed to challenge the official currency of the United States. The Department of Justice then accused Liberty Services of issuing coins deceptively similar to the US dollar and using misleading language on its website.
However, the company did not sit idly by and rejected the US Mint’s statement, stating that “the Liberty Dollar had never claimed to be, nor was it, legal tender.” Von NotHaus likened the Liberty Dollar to a numismatic item that could be freely used in barter.
Subsequently, on March 20, 2007, von NotHaus sued the US Mint in the Southern District Court of Indiana. He asked the Court to declare that the use of the Liberty Dollar as voluntary currency for barter was not a federal crime, to prevent the labeling of the Liberty Dollar as illegal currency, and to remove any statements to that effect from the Mint’s website.
Despite this, the attacks from authorities did not cease. On November 14, 2007, the FBI and the U.S. Secret Service raided the Sunshine Minting, where customers’ precious metals were stored. The warrant was based on charges of money laundering, postal fraud, computer fraud, counterfeiting, and conspiracy. Government agents seized nearly 500 pounds of silver, 50 ounces of gold, and two tons of copper coins featuring the image of the 2008 presidential candidate Ron Paul. They also took official documents and froze the company’s bank accounts.
Bernard von NotHaus informed his clients of the incident via email. The communication contained a link to a registration page for a class-action lawsuit to help victims recover their assets. Meanwhile, the company’s website stopped functioning.
Things worsened in May 2009 when von NotHaus and three others involved in the project were indicted for violating federal laws and charged with conspiracy, postal fraud, sale and possession of counterfeit coins, and counterfeiting silver coins. Von NotHaus was arrested on June 6, 2009, but pleaded not guilty to the charges. On July 31, 2009, von NotHaus announced the closure of all Liberty Dollar-related activities pending resolution of the criminal charges.
On March 18, 2011, the final verdict arrived: von NotHaus was found guilty of counterfeiting and domestic terrorism for “minting coins similar to those of the United States.”
Lawyer Anne Magee Tompkins described the Liberty Dollar as “a unique form of domestic terrorism” that sought to “undermine the legitimate currency of this country.” The Department of Justice press release proclaimed: “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.“
According to the Associated Press, “federal prosecutors believed that von NotHaus was, in fact, attempting to pass off the silver coins as US currency. The denominations of 5, 10, 20, and 50 also featured a dollar symbol, the word ‘dollar,’ and the motto ‘Trust in God,’ similar to ‘In God We Trust’ appearing on US coins.”
By the end of 2014, a ruling by a judge of the United States District Court established that the Liberty Dollars seized during the FBI and U.S. Secret Service operation in 2007 should be returned to their rightful owners.
On November 10, 2014, Judge Voorhees rejected von NotHaus’s appeal against his conviction. Despite prosecutors’ requests for a 23-year federal prison sentence, on December 2, 2014, the creator of the Liberty Dollar was sentenced to six months of home confinement, with three years of probation. As a justification for imposing such a reduced sentence compared to what the federal prosecutors requested, Judge Voorhees took into account von NotHaus’s appeal, stating:
“…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 Dollars 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.”
After a year of probation, von NotHaus requested early release, which was granted on December 9, 2015, by Judge Voorhees.
Following the 2014 ruling, in 2017, a significant number of seized Liberty Dollars were returned to their rightful owners. According to court documents, there were approximately 250,000 holders of Liberty Dollar coins and certificates.
In the years following his conviction, von NotHaus continued to promote the Liberty Dollar and criticize the fiat monetary system.
He passed away on December 4, 2022, at the age of 74.
