The Liberty Dollar (ALD) coins were produced by a now-defunct organization with the unwieldy name “National Organization for the Repeal of the Federal Reserve Act and the Internal Revenue Code,” or NORFED for short. NORFED’s goal, according its founder Bernard von NotHaus, was to provide an alternative currency to that which is issued by the U.S. federal government: a currency that is backed by gold and silver, and therefore inflation-proof. NORFED has manufactured these coins in various denominations, including $1, $5, $10, and $20 in silver, and $500 in gold.
The currency was issued in minted metal rounds (similar to coins), gold and silver certificates and electronic currency (eLD). 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 (FBI) and the U.S. Secret Service (USSS). Until July 2009, the Liberty Dollar was distributed by Liberty Services known as NORFED based in Evansville, Indiana. It was created by Bernard von NotHaus, the founder of the Cannabis Spiritual Center in Malibu, CA, and the co-founder of the Royal Hawaiian Mint Company.
A number of alternative currencies exist in the United States, including Phoenix Dollars, 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. Liberty Dollars differed from other alternative currencies in that they carried a suggested US dollar face value.
The only laws against counterfeiting private currencies, whether they are printed or minted, 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 coins and printed notes. Liberty Dollars were backed by a physical commodity—a weight in precious metal.
The Liberty Dollar “base value” was created by Bernard von NotHaus. As of 2009, the base value of the Liberty Dollar was $20 Liberty Dollars to one ounce of silver. At the time the Liberty Dollar operation was closed, one ounce Liberty Dollar gold pieces were denominated $1,000 with a maximum charge of 10% over spot price with membership. The previous base values were $10 silver ounce, $20 silver ounce and $500 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 [they] 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 offices were raided by agents of the Federal Bureau of Investigation (FBI) and the U.S. Secret Service (USSS) on November 14, 2007. von NotHaus, 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.
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. “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.”
A federal grand jury brought an indictment against von NotHaus and three others in May 2009 in United States District Court in Statesville, North Carolina, and von NotHaus was arrested on June 6, 2009. Bernard von NotHaus is 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, von NotHaus entered a plea of not guilty.
On March 18, 2011, von NotHaus was convicted of “making, possessing and selling his own coins”, after a jury in Statesville, North Carolina deliberated for less than two hours. 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 15 years in prison, a $250,000 fine, and may be forced to give $7 million worth of minted coins and precious metals to the government, weighing 16,000 pounds. Attorney for the Western District of North Carolina, Anne M. Tompkins, described the Liberty Dollar as “a unique form of domestic terrorism” that is trying “to undermine the legitimate currency of this country”. The Justice Department press release quoted 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.”
According to the Associated Press, “Federal prosecutors successfully argued that 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 Dollars 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”.
He appealed his conviction but his appeal was denied on 10 November 2014
On Nov 11th, 2014 Judge Voorhees denied von NotHaus’ Motion for Acquittal. On December 2, 2014, despite prosecutor demands that he serve as much as 23 years in federal prison, he was sentenced to 6 months house arrest, with 3 years probation. As part of his reasoning for delivering a greatly reduced sentence from what Federal Prosecutors demanded, Judge Richard L. Voorhees considered von NotHaus’ appeal, which 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 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.
The conviction, which was seen as a victory for the government, has now defined 18 U.S.C. § 486 as prohibiting the use of silver bullion, or any other metal coin or bar not issued under government authority, from being used in commerce. The Silver Certificates issued by Liberty Services were not considered any form of counterfeiting or violation of law.
Von NotHaus’ probation officer suggested he file for early release from probation after one year, and recommended the early termination to the court. Termination of probation was formally granted December 9, 2015 by U.S. District Judge Richard L. Voorhees.
In 2017, a significant number of seized Liberty Dollars were returned to their owners after petitions were made to the court for this return. Bernard von NotHaus continues to honor redemption of silver to this day.