United States v. Von Nothaus
| Decision Date | 10 November 2014 |
| Docket Number | CRIMINAL DOCKET NO.: 5:09CR27-RLV |
| Court | U.S. District Court — Western District of North Carolina |
| Parties | UNITED STATES OF AMERICA v. BERNARD VON NOTHAUS, Defendant |
THIS MATTER is before the Court on Defendant Bernard von NotHaus's Post-Conviction Motions under Rules 29, 33, and 34 (Doc. 197), filed March 31, 2011; the Government's Response in Opposition (Doc. 201), filed April 7, 2011; Gold Anti-Trust Action Committee, Inc.'s ("Gold") Amicus Curiae Brief in Support of Defendant (Doc. 212), filed May 31, 2011; the Government's Response in Opposition to Brief of Amicus Curiae (Doc. 213), filed June 10, 2011; Defendant's Motion to Adopt the Amicus Brief (Doc. 214), filed June 12, 2011; and Gold's Reply (Doc. 217), filed June 17, 2011.
The Defendant, through his newly retained counsel,1 submitted a Supplemental Memorandum (Doc. 267) on March 25, 2013, which triggered another round of briefing. (Docs. 268, 269).
On May 19, 2009, a federal grand jury sitting in the Western District of North Carolina returned a Bill of Indictment against Defendant and three co-defendants. (Doc. 3). This Order pertains only to Defendant von Nothaus. Defendant was charged with violating 18 U.S.C. § 371,conspiracy to violate 18 U.S.C. §§ 485 and 486, and substantive violations of 18 U.S.C. §§ 1341, 485, 486, and 2. On November 17, 2010, the grand jury returned a Superseding Bill of Indictment against the same group of defendants.2 (Doc. 103). This Superseding Indictment charged Defendant with violating 18 U.S.C. § 371, conspiracy to violate 18 U.S.C. §§ 485 and 486, and substantive violations of 18 U.S.C. §§ 485, 486, and 2, eliminating the charge under 18 U.S.C. § 1341.
Defendant's jury trial began in Statesville, North Carolina, on March 8, 2011. The Government rested its case after two days of evidence. The Court denied Defendant's motion to dismiss pursuant to Fed. R. Crim. P. 29. Defendant presented evidence for approximately four days, and rested on March 17, 2011. The Government offered testimony from one rebuttal witness. The jury began deliberations on March 18, 2011. After approximately two hours of deliberation, the jury found Defendant guilty on all counts in the Superseding Bill of Indictment. Following announcement of the jury verdict, the Court likewise denied Defendant's renewed Rule 29 Motion.
Defendant now moves for post-conviction relief pursuant to Rules 29, 33, and 34 of the Federal Rules of Criminal Procedure.
This federal criminal prosecution arose out of an investigation undertaken by the Federal Bureau of Investigations ("FBI") in June 2004 following a report made to the Asheville Police Department from a local branch of the State Employees Credit Union ("SECU"). SECU reported an attempt to pass a coin that looked similar to United States coinage. The coin was not deposited or accepted by the credit union. (3/8/11 Tr. 14-15). The FBI initiated an investigation after consulting with the U.S. Secret Service. (3/8/11 Tr. 15-16).
The Superseding Bill of Indictment ("Indictment") alleged that between January 1998 and May 19, 2010, Defendant Bernard von Nothaus designed, created and minted coins called "Liberty Dollars," coins "in resemblance or in similitude" [or made to look like] of U.S. coins. The Indictment alleged that the Liberty Dollar coins were to be introduced into the U.S. economy and meant to compete with U.S. currency in violation of federal law. According to the Government, the Defendant sought to have his Liberty Dollar coins accepted by merchants (and distributed by merchants) in the place of U.S. currency in order to make a profit for the Defendant and those associated with his Liberty Dollar Organization.
NORFED was the original entity founded and solely owned by Defendant Bernard von Nothaus for the creation of and circulation of the Liberty Dollar. (3/8/11 Tr. 52). NORFED is an acronym for "The National Organization for the Repeal of the Federal Reserve Act and Internal Revenue Code." (3/8/11 Tr. 52). NORFED, a not-for-profit entity (not a 501(c)(3) organization because Defendant did not want to be prohibited from lobbying Congress), was incorporated in Nevada and dissolved, effective November 22, 2006. (3/8/11 Tr. 52; 3/9/11 Tr. 202). The NORFED headquarters, also known as the NORFED Fulfillment Office, was inEvansville, Indiana.4 NORFED began producing currency in 1998. (3/8/11 Tr. 52). There were five primary coins issued and circulated by NORFED: in one dollar, five dollar, ten dollar, twenty dollar, and fifty dollar denominations.
All of the Liberty Dollar coins were minted at Sunshine Minting, Inc. ("Sunshine Mint") in Coeur d'Alene, Idaho.5 (3/8/11 Tr. 40-41; 3/9/11 Tr. 150). The Defendant, through the entity, Shelter Systems, LLC ("Shelter Systems"), was responsible for production of the original Liberty medallion. On August 24, 1998, Shelter Systems entered into an "Exclusive Manufacturing and Warehouse Agreement" ("EMW Agreement") with Sunshine Mint.6 (Government Exh. F-60). The EMW Agreement contemplated that Shelter Systems would purchase specifically minted silver pieces (or "Liberty Silver") from Sunshine Mint at a favorable price for resale to the general public in the form of a paper certificate entitled "American Liberty Currency" (or "Liberty Certificates"). (EMW Agreement, 1). Sunshine Mint agreed to warehouse the silver and then mint a troy ounce .999 fine silver as "Liberty Silver" for each Liberty Certificate sold / issued. (EMW Agreement, 1). Sunshine Mint further agreed to issue the paper Liberty Certificate along with a Warehouse Receipt for each Liberty Silver it manufactured. (EMW Agreement, 1). The minted Liberty Silver coins were then to remain in the Sunshine Mint Warehouse pending further notice from Shelter Systems. (EMW Agreement, ¶6). This mechanism for the Liberty Dollar coin-minting enterprise remained intact throughoutthe conspiracy period, although Defendant von Nothaus utilized multiple corporate entities (collectively, the "Liberty Dollar Organization") ("LDO") to conduct his operation.7
Defendant structured his Liberty Dollar Organization by relying on Regional Currency Officers ("RCOs") to distribute the Liberty Dollar coins across their respective regions to Liberty Dollar Associates ("LDAs"), who purchased the coins at a discounted rate. (3/8/11 Tr. 33-34, 54, 83-86, 97-99; Gvmt Exh. 29). Liberty Dollar Associates were then to insert the Liberty Dollar coins into the economy. Id. There was a $250 fee for LDO membership and $100 remittances for referrals for someone identified as the person responsible for a new recruit or member.
Defendant educated the Liberty Dollar Organization membership by conducting Liberty Dollar University events ("LDUs") hosted by RCOs. Defendant was the primary LDU instructor and physically present throughout. Video recordings of Liberty Dollar University seminars, as well as a variety of different print media, were introduced into evidence by the Government showing Defendant's practice tips on how to actually present the Liberty Dollar coins or "Do the Drop" "by literally dropping it[Liberty Dollar] into [a person's] hands from about three inches above their palm." (Government Exh. 25B-1, 25C, 25E, 25H; 3/8/11 Tr. 103-06, 120-21). One rationale for the "Do the Drop" method of presentation was to allow the merchant to feel the weight of the Liberty Dollar. (3/8/11 Tr. 77; 3/9/11 Tr. 103-04; Doc. 197, 26). In one instance, Defendant is shown on the training video approaching an individual and presenting the LibertyDollar coin by representing, "This is the new $10 silver." (Government Exh. 25C-1; 3/8/11 Tr. 120-21).
Special FBI Agent Karen Walsh ("Walsh"), acting undercover as "Kristen Wallace," posed as a Liberty Dollar Associate in 2005 - 2006 while living in Asheville, North Carolina. (3/8/11 Tr. 23). Walsh attended her first Liberty Dollar University event ("LDU 7") held in Asheville, North Carolina, October 19 through October 22, 2005. During the October 2005 LDU 7, Defendant's "New RCO Strategy" was featured. (Government Exh. 21). The new strategy represented a shift from the organization's initial focus on having the consumer offer the Liberty Dollar to merchants to having the merchant either offer the Liberty Dollar to the consumer when making change or mixing the Liberty Dollar in with U.S. currency). (3/8/11 Tr. 117-18). Agent Walsh attended a second Liberty Dollar University seminar ("LDU 11") held in Skokie, Illinois, in October 2006 where she had occasion to speak directly with, and even train with Defendant in a small group setting. (3/9/11 Tr. 165-66, 171-73). (Government Exh. 14, 15).
According to the Government, Defendant von Nothaus and his fellow Liberty Dollar Organization members made money on each transaction. (3/8/11 Tr. 54, 106-11; 3/9/11 Tr. 245). Walsh testified that when distribution of a given value of Liberty Dollar coin was no longer profitable for the organization, Defendant collected the existing coins (always the same 1 troy ounce silver coins) and had them reminted at a higher face value. (3/8/11 Tr. 110-11; 3/9/11 Tr. 205). This procedure was called the "move-up."8
In 2006, the FBI and the U.S. Department of Justice contacted Daniel Shaver, Chief Counsel for the U.S. Mint, for his input concerning the lawfulness of the Liberty Dollar Organization's activities. (3/9/11 Tr. 261). On September 14, 2006, the U.S. Mint posted an advisory to consumers regarding the Liberty Dollar medallions on its website entitled "Consumer Awareness - Hot Items" with the caption or headline, "Liberty Dollars Not Legal Tender, United States Mint Warns Consumers, Prosecutors with Justice Department Determine Use of Liberty Dollar Medallions as Circulating Money is a Crime''9 (Doc. 114-21 / Defendant's Motion To Dismiss) (italics in original). The consumer advisory received national attention in the press and was also...
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