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Last Updated October 30, 1998

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When one thinks of "right wing extremists," all sorts of images easily come to mind: white supremacists holding forth on matters of race, burly survivalists stashing weapons and food, camouflaged militiamen romping through the woods.    But one image that doesn't appear so readily is the image of a victim.   People are more inclined to think of people on the far-right fringe as victimizers rather than victims.  Yet this is often not the case.  In particular, people on the extreme of the right-wing become victims to scam artists and con-men, who are able to prey on their particular weaknesses.  This section of the Militia Watchdog is devoted to exposing such scam artists, the so-called "patriots for profit," who operate both parasitically and symbiotically within the so-called "patriot" movement.

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The "Patriot" Community

Practically anybody has the potential to become the victim of a scam. A con artist can simply approach person after person until he or she finds a willing victim or can broadcast the pitch as widely as possible in the hopes that it will reach an appropriate number of potential victims. However, a con can be far efficient --and more lucrative--if the pitch is aimed narrowly at an audience that may be particularly receptive to such a con. In this report, such audiences are labeled vulnerable communities. Vulnerable communities are groups of people which, for demographic, ideological, religious or other reasons, are particularly likely to be taken in by a particular type of pitch or swindle. Con artists know that if they target vulnerable communities they are more likely to find more victims with less effort.

What are the most prominent vulnerable communities? Essentially there is one broad community--the elderly--and a number of more specific communities. The elderly are by far the largest and most vulnerable community. The typical elderly victim is quite advanced in age, lives alone, and can easily be either confused or intimidated. Often such victims have no one readily available to whom they can turn for advice or support; consequently they are vulnerable to seductive pitches from con men who specialize in targeting the elderly. Particularly troublesome in recent years have been telemarketing scams aimed at the elderly. A second large vulnerable community consists of recent legal or illegal immigrants to the United States. An entire industry of swindles exists to separate from immigrants the dollars they have earned. Recent immigrants may have significant language problems and have little understanding of American law or government. They may also, if they are illegally present in the country, be afraid of law enforcement or other authorities. As groups, immigrant communities tend to be relatively insular and thus vulnerable to pitches from swindlers who have access to that community. As a result, many swindlers are of the same ethnicity as the people they swindle. The third large vulnerable community consists of people who are devoutly religious, particularly in evangelical Christian denominations, and thus receptive to pitches from people or organizations which purport to be theologically aligned. A more mainstream version of such vulnerability can be seen in the millions of dollars sent yearly to televangelists, a number of whom have been proven not to have charitable ends in mind for the money. Some religious denominations are even more vulnerable than others, such as the Amish and Mennonite communities, which not only are receptive to many pitches, but will often refuse to cooperate with prosecution or investigation of such frauds.

These three vulnerable communities--the elderly, recent immigrants and the devoutly religious--are widely known to be potential victims of cons and frauds. News stories appear almost every week about one or another of these groups being targeted by some unscrupulous individual. However, a fourth vulnerable community has received very little attention (in this regard, at least) from the media or law enforcement authorities. This is the so-called "patriot" community or "patriot" movement. It consists largely of people who are, in essence, right-wing extremists. The various wings or subgroups of the "patriot" movement include militias, common law courts, "sovereign citizens" or "freemen," tax protesters and white supremacists, as well as other groups not so readily categorizable. The members of this movement overwhelmingly tend to be anti-government in sentiment. With the rise in membership and activity in this movement after the incidents at Ruby Ridge and Waco in 1992 and 1993 respectively, "patriots" have repeatedly been in the news. Few have not heard of Timothy McVeigh, the Montana Freemen, Richard McLaren and the Republic of Texas, or Aryan Nations. However, this is exactly the context in which the "patriot" movement is usually portrayed: as a source of domestic terrorism or other criminal activity. Very little attention is spent to the fact that members of the movement are also quite frequently victims, that they themselves represent an addition, significant vulnerable community.

One might initially think the "patriot" movement, given its reputation for suspiciousness or even paranoia, would be an unlikely candidate for vulnerability to frauds and deceptions. Of course, many are elderly or devoutly religious, and thus are members of other vulnerable communities as well. Many, too, live in rural areas and are not particularly well educated, which potentially could make them vulnerable to certain types of deceptions. But far more important is the fact that "patriots" tend to possess a number of qualities that make them particularly receptive to the pitches of swindlers. These characteristics include:

    • A fixation on privacy. Members of the "patriot" community often develop an inordinate emphasis on hiding personal information, including especially financial records, from the government, from creditors, and from anybody else. As a result, they are particularly likely to be receptive to advertisements promising "complete privacy" or "utter confidentiality." Schemes such as "barter banks," where "patriots" deposit money to be converted into specie and then "bartered" for various commodities in order to avoid the scrutiny of the government, have long been popular among members of the movement. Other investment schemes, including trusts and offshore banking, are similarly attractive to "patriots."
    • A hatred of the government. The "patriot" movement is overwhelmingly an anti-government movement. Its members routinely distrust or disbelieve statements made by government officials or representatives. One result of this is that warnings made by the Internal Revenue Service, the Federal Trade Commission or other agencies about various fraud schemes are rarely effective in reaching this audience. A second consequence is that even when "patriots" discover they have been duped, their hostility towards the government is often so great that they will not cooperate with law enforcement authorities in attempting to catch or convict the swindlers.
    • A hatred of lawyers. "Patriots" have a dislike for attorneys surpassed only by their dislike for the government. With the exception of a relatively few lawyers who have associated themselves with the movement, attorneys are shunned and disdained by members of the "patriot" community. In fact, some "patriots" even go so far as to believe that there is a "missing" Thirteenth Amendment which would deny American citizenship to lawyers, who are "titles of nobility" because they use the word "esquire" after their name. As a result, investment or tax attorneys are rarely consulted by "patriots" about the viability or advisability of the various schemes that swindlers peddle.
    • A strong belief that others are "getting away with it." The "patriot" movement has a currency of ideas whose most valued specie is conspiracy. Complex conspiracy theories are rife about the "New World Order," usually described as a vast plot to bring the entire world under the control of a tyrannical, socialist government. The people behind the "New World Order," however, are the "plutocrats," the "international bankers," and fabulously wealthy families (anti-Semites like to point to Jews as the culprits). It is commonly believed in the "patriot" movement that people like the Rockefellers and the Kennedys are able to maintain their wealth through using various obscure but legal means of avoiding all taxes, regulations, debtors, etc. Thus "patriots" are susceptible to claims that these secrets have been discovered and are now available--for a price.

All of these attitudes make the "patriot" community a vulnerable one. However, it is not necessarily an easy community to exploit. Many people, in fact, are not aware that it even exists. It is not distinguished by geography, by language, or (necessarily) ethnicity. Nevertheless, it is not an easy community to penetrate. It is relatively insular and comparatively small. Moreover, it uses a somewhat specialized vocabulary in talking about matters of law, politics, race and history. It is not surprising to find, then, that the people who can exploit the community most effectively tend to come from the community itself. They are the ones familiar with the vulnerabilities of the "patriot" movement, who can come and go in "patriot" circles, who can "talk the talk." While outsiders sometimes can and do effectively exploit the movement, it is the insiders who are more likely to be successful. This fact has given rise to a phenomenon known, even inside the movement, as "patriots for profit."

"Patriots for profit" are people who exploit the "patriot" movement for personal gain. While some may do so cynically, believing little or nothing of what they say, a great many of them are actually sincere in their anti-government views (and often have a record of anti-government activity). They simply are not averse to dipping into the pockets of their fellow "patriots" for a little quick cash. There is no clear division between "patriots for profit" and others in the movement. There are, for instance, any number of extremists who make their living catering to the movement by selling books, supplies, seminars or bumper stickers. There are others who host shortwave radio shows --sponsored by coin companies--that predict imminent catastrophe and try to frighten people into investing in gold and silver. There are still others who make a living on speaking engagements and seminars aimed at the "patriot" community. The "patriots for profit"--who tend to offer "goods" which either possess no value at all or tend to lead to adverse consequences--blend in among the other groups seamlessly.

"Patriots for profit" have been around as long as the "patriot" movement itself has, but the 1990s have produced a number of very prominent schemes. Many "patriot for profit" schemes center around income tax evasion. Because the "patriot" community is so united against the income tax and tax protesters make up a prominent portion of the community, a number of would-be swindlers offer various tax avoidance schemes for sale at exorbitant prices, none of which, not surprisingly, actually work. One of the most prominent such schemes was that promoted by the Pilot Connection Society. Based in Stockton, California and headed by Phillip Marsh, the Pilot Connection Society held seminars and even barbecues designed to get people interested in their "untax" kits in the early 1990s. One IRS spokesman called it "one of the biggest, if not the biggest, illegal tax protest group in the country." The Society sold kits that promised to explain "How to Un-Tax Yourself" (involving filing false W-4 forms with 50 exemptions), as well as offshore trust accounts. Like many of the larger "patriot for profit" groups, the Society operated with "associate members" who paid several thousand dollars each for the privilege of operating Society franchises. The Pilot Connection Society had at least 300 "associate members" and over 9,000 (some estimates ranged as high as 17,000) "clients" nationwide. Prices for the "products" varied widely, perhaps depending on the whims of the associates, but often cost between $1,200 and $2100 apiece. The Internal Revenue Service, after executing search warrants on its offices in several states, claimed that Phillip and Marlene Marsh received between $1 and $6 million in 1991 alone. The success of the Pilot Connection Society, moreover, created several "copycat" groups such as Certified Untax Consultants in Texas, the Federal Research Institute in Nevada, and the Society for Truth and Freedom in New York. By the end of 1993 it was operating in all fifty states and had grossed more than $10 million since 1990. Eventually the Marshes and six associates were indicted on multiple counts of conspiracy, tax evasion and mail fraud. U.S. Attorney Michael Yamaguchi characterized the group's activities well when he claimed that they were selling "snake oil." "They're essentially preying on the gullibility of people," he said. "That's the mark of a great con…Their own common sense should have told them that, if you could file papers and drop off the tax rolls, why isn't everyone doing it?" Thousands of the group's members ended up investigated by the Internal Revenue Service, much to their dismay.

Of all of the "patriot for profit" schemes of the 1990s, perhaps the most ambitious one--and the scheme which reveals most clearly how vulnerable the "patriot" community is to such fraudulent promotions--is the one masterminded by Roy Schwasinger, head of a group called "We the People." Schwasinger was a former Nebraska meatpacker who became involved in anti-government activities associated with the Posse Comitatus and similar tax protest and "patriot" groups. Schwasinger developed his speaking skills addressing meeting rooms filled with angry farmers. At some point, however, Schwasinger came up with a rather novel way to extract money from his audience members.

Schwasinger brought good news to his audiences and to the recipients of his flyers. In August 1992, audiences were told, Schwasinger filed a class action suit against the United States because he had discovered that the United States had gone bankrupt in 1933 and most of its actions since then were illegal. The Supreme Court, he claimed, ruled in his favor, against the United States government, to the amount of $600 trillion. In fact, Delta Force commandos had recently brought that amount of "fraud money" back from overseas banks to the U.S. Treasury so that it could be paid back to the people of the United States. Anybody who was a U.S. citizen and had paid income or property taxes, had suffered a loss in a financial transaction where interest was paid, had ever had an adverse judgment, tax lien, or any of a number of other common circumstances, could submit a claim. Claimants could receive an average of $20-$40 million each; even children could file claims. And it would all be tax-free. Conveniently, Congress appointed We the People to process the claims for this suit. All it would take to become a party to the suit was to pay $300 to the "Claims Writer" to cover "the cost of meetings, paperwork, phone, travel, office space, etc."

At times it seemed as if Schwasinger and his followers were attempting to see just exactly whether or not there was a limit to what outrageous claims his audiences would believe. The "missing" Thirteenth Amendment would be "enforced," and "all elected and appointed officials who are lawyers will be sent home, except for those that will be tried for treason. This will include Clinton and all past living presidents." No judges were legally judges. Janet Reno had fired all U.S. Attorneys. The "districts" of Canada would become new U.S. states. In a videotape of one of Schwasinger's presentations, he claimed that he and his unit "have a license to kill people" and that the organization recently took 170 judges and attorneys to a secret base and executed them. Schwasinger also claimed to "wear a transducer which emits a signal to Congress." One We the People audiotape claimed the development of a gold molecule that could make steel beams levitate and that Christ used this power to heal the sick.

Eventually the law caught up with Schwasinger, but not before he (and his "associates," who would keep one-third of the $300 fees they collected and send the rest to Schwasinger) raked in millions of dollars from all fifty states and two provinces of Canada. Not everybody who attended the meetings organized by Schwasinger and his followers were swayed, but a surprising number of people fell for the pitch. One North Carolinian who attended a Schwasinger meeting called his assertions "outrageous," but noted that he "actually saw people, incredibly, sign up for this." Actually, more than a few people signed up. In $300 increments, Schwasinger grew rich. From Colorado We the People took in more than $385,000. From Oklahoma, probably another $400,000. From Iowa and Michigan nearly $2 million more. Federal officials identified at least 6,832 individuals who had fallen prey to the scheme, with an unknown additional number. Schwasinger eventually received convictions in Texas and Colorado and a lengthy prison term; followers of his were prosecuted in several states. However, most of the money was never recovered.

The We the People episode reveals in startling clarity how vulnerable the "patriot" community is to the pitches of conmen and swindlers. Two issues merit particular attention. The first is that there seemed to be no limit to the outrageousness of the claims that Schwasinger could make and still make conversions. Because Schwasinger obviously came from the community and could speak its particular language, "patriots" required a far, far lower burden of proof from him than from, for instance, a government official warning them against such a scheme. Second, investigators and prosecutors in the various states which tried to stop We the People found it extremely difficult to get victims to testify against its members. Some may have been embarrassed, while a few were inevitably in denial or still hoped that the group's claims were true. However, the majority seemed simply to resent the government far more than they resented Schwasinger and his group, even if they had been cheated by them.

One last facet of the "patriot" movement as a vulnerable community deserves mention. Especially since 1995 the Internet (and in particular the World Wide Web) has opened up an entirely new medium of communication. Of the vulnerable communities mentioned here--the elderly, immigrants, fundamentalist Christians and "patriots"--most have not made the translation to the Internet. The elderly and recent immigrants face obvious barriers in terms of learning curves, language barriers and perhaps economics. Vulnerable Christian groups are just now beginning to make the translation to the Internet and in the future will undoubtedly be present in force. But the "patriot" movement has been on the Internet for years in considerable force.

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The Patriots for Profit Rogues' Gallery

Your help in bringing to light more instances of "patriots for profits" so that their cons and scams can be exposed is greatly needed!  The Militia Watchdog welcomes additions to this list. 

Please note that the Militia Watchdog also has a lengthy and illuminating report on one particular type of scam called the "pure trust" at puretrust.asp.

Law enforcement officials are cordially invited to investigate all of the below groups for possible wrongdoing.

 

Rogue Number One:  The First Amendment Church of Truth and Sanity or F.A.C.T.S. (PO Box 339, Adrian, MI 49221; 1-888-820-2126). 

This "church" is the product of Pastor Rick Strawcutter, a long-time fixture on the extreme right.  Strawcutter is known primarily for having operated a pirate radio station, Radio Free Lenawee, and for having helped to produce militia figure Mark Koernke's first video, "America in Peril," in 1993.  He currently manages a mail-order business for extremist videotapes, claiming to have over 500 available for sale.

The First Amendment Church of Truth and Sanity is a pyramid scheme cloaked as a church, although Strawcutter claims that it is multi-level marketing.  However, there is essentially no product being sold--the only way members can benefit is to recruit more members, which means that the scheme will inevitably fail (one can contrast this to Amway--in Amway, even people who do not recruit members can still sell Amway products and make money doing so). 

Strawcutter, through personal appearances and a 28-minute video, recruits people to become "missionaries" for his church.  They have to pay $125 to do so.   In return, they get a "freedom manual" (which discusses jury nullification and phone-bombing public officials), a religious tract which appears to be Christian Identity in nature, and two copies of the 28-minute video, which they will use to help them recruit others.  Members can buy other copies of the video--in ten tape blocks--for $30. 

Strawcutter's "missionaries" are expected to recruit further missionaries.   Each time they do so, they will get $25 of the $125 the new missionary pays.   If those missionaries recruit others, the original missionary will get $5 for those second-level recruits.  This is true for third, fourth, fifth and sixth level recruits (theoretically; there are unlikely to be any). 

Strawcutter furthermore tells his "missionaries" that all such income is not taxable because it is an "offering" from the church.

This scheme is fraught with danger.  Strawcutter may be breaking laws against pyramid schemes as well as income tax laws--if he himself is not reporting the money as income.  There is also the possibility of mail fraud, since he is mailing out the videotapes. People should be aware that if they get involved in a pyramid and recruit others, they themselves will be breaking the law. 

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Rogue Number Two:  Freedom's Call (11757 W. Ken Caryl Ave, F237, Littleton, Colorado, 80127, 800-873-7165; http://www.galaxymall.com/stores/freedom/).

Freedom's Call, a "private membership club dedicated to personal and financial freedom," is the child of Chuck and Linda Meyers, who reputedly are 'common law' activists in Colorado.

Essentially, Freedom's Call is a method by which the Meyers separate willing victims from their money.  This is done via a three-staged "Prosperity Triad":   Understanding, Prosperity and Protection.  It is also a pyramid scheme in which people are asked to refer new members.  Freedom's Call's web page promises the possibility of earning $10,000 in the first four weeks, and "$250,000 realistic potential earnings in just one year."

One can only hope that they will get $250,000, because they certainly will be shelling over a lot of money to Chuck and Linda Meyers.  To reach Stage One, "Understanding," participants must pay a $999 membership fee.  In return they will get a "home study program" which consists of a mishmash of "patriot" materials. The second stage, "Prosperity," allows participants to attend an "intensive workshop" on doing business over the Internet.  This workshop "will be in luxury accommodations at a desirable resort location within the Continental U.S."  Amazingly, the workshop is "paid for by Freedom's Call."  However, the membership fee for Stage II is $5,999, which may explain how Freedom's Call can afford to be so generous with its free workshops.   The third stage, "Protection," is one in which members "will be wooed by representatives of various countries of the world extolling the virtues of conducting business in their jurisdictions."  Members will visit several Caribbean island nations as part of a "luxury cruise," again, paid for by Freedom's Call.  The price tag for membership:  $16,999. 

People who fill out an application form must agree to a variety of provisions, ranging from the rather innocuous "that I will nuture and protect the ideals of personal freedom as presented in the Freedom's Call Pledge," all the way up to the sinister "that the terms of this agreement are governed by International Law and that any dispute or claims between the members or between members and Freedom's Call shall be exclusively resolved by binding arbitration through the AAA International Arbitration Network with said arbitration to occur within the jurisdiction designated by the complaining member when the dispute is between members and by Freedom's Call if the dispute is between members and Freedom's Call." 

Freedom's Call appears to be a very nasty and high-priced pyramid scheme that sucks its victims in deeper and deeper.

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Rogue Number Three:  NORFED (http://www.norfed.org).

October 29, 1998

Militia Watchdog Official Alert

Investigators, Journalists, Others Urged to Monitor NORFED

The Militia Watchdog has learned of a new organization which, as described, carries considerable potential for fraud or misuse. The Militia Watchdog urges all law enforcement officers, journalists, activists and others to scrutinize this organization and its activities carefully.

Background: One of the major "hot button" issues for adherents to the so-called "patriot" movement is the "money" issue. A summary of this issue would be that the creation of the Federal Reserve and the change from a gold standard to paper money was not only illegal and unconstitutional, but part of a large plot to impoverish the country and enrich the "international bankers" (usually alleged to be Jews). As a result, paper money (federal reserve notes or "FRNs" as the "patriot" movement abbreviates the term) is looked upon with suspicion and disgust. This has led to numerous attempts to invent alternative currencies, often by people who are themselves all too willing to accept federal reserve notes in exchange for dubious alternatives. In the early 1980s tax protester Tupper Saussy created a stir with his "Public Office Money Certificates," which were a sort of bogus promissory note. In the late 1980s, various conmen created illegitimate "sight drafts" that were alleged to be as valid as federal reserve notes. And in the mid-1990s a host of groups including USA First, Family Farm Preservation, the Republic of Texas and, most famously, the Montana Freemen, created billions of dollars worth of bogus money orders and checks. This last resurgence resulted in scores of successful prosecutions around the country. However, these convictions only stopped certain perpetrators; they did nothing to end the sentiment. It would only be a matter of time before the next alternative currency scheme was hatched.

NORFED: NORFED is an abbreviation for a group calling itself the National Organization for the Repeal of the Federal Reserve Act. In its own words, it is a "membership based nonprofit organization dedicated to using all its revenue to restore a honest monetary system for all Americans, as required by our Constitution. It is governed by a Board of Directors, and a Members Advisory Council." No Board or Council members could be found listed on its website.

Contact information for its leaders is as follows:

Jim Thomas/Tri-State Redemption Center/812-473-5250

Bernard von NotHaus/NORFED/888-421-6181

FAX 812-473-5199

Postal address:  4900 Tippecanoe, Suite 6 / Evansville, IN 47715

Webpage: www.norfed.org.

NORFED has created something it calls "American Liberty Currency." This consists of "silver certificates" in $1, $5, and $10 amounts. The $10 certificate is allegedly backed by one ounce of .999 pure Troy silver, and the other certificates backed proportionately. However, the silver itself is kept in a "warehouse" run by "Sunshine Minting."

The current price of silver is only about $5.10 per troy ounce.

NORFED is also engaged in the creation of "a National Network of Redemption Centers." The function of these centers is "to exchange Federal Reserve Notes for American Liberty Currency (warehouse receipts)." In other words, to take people's dollars and give them this new "currency." Redemption Centers can buy certificates from NORFED at a 10% discount, then provide them to others. Ostensibly, these centers will also exchange silver certificates for silver coins. The centers are also urged to recruit "members" and will get a portion of the membership fee.

What are the dangers of NORFED? The possibilities are endless.  The first danger is that one will lose one's money by basically exchanging it for half its value in silver (or, more accurately, silver certificates which are supposed to represent silver).   The second danger is that there might be no actual silver at all, despite the "independent audits" that NORFED assures people will be conducted. In this case, people will be exchanging good money for worthless money. A third danger is that NORFED will be used as a warehouse bank, which is a way to hide money or financial transactions. There are many other potential problems as well, all of which cry out for careful scrutiny of NORFED and its operations.

One warning sign consists of some of the people and organizations who have so far signed up to be "Redemption Centers." These include but are not limited to Charles Eidson, a Florida-based white supremacist who has been prominent in placing bogus liens and marketing abusive trusts; the Save-A-Patriot Fellowship, one of the largest tax protest groups in the country; and the Cascadian Resource Center, involved in various aspects of "paper terrorism," including the marketing of abusive trusts. Even though NORFED has supposedly been in operation only since October 1, 1998, it has already amassed a large number of "Redemption Centers." This could grow very quickly.

NORFED leader Bernard von NotHouse is "printmaster" for Royal Hawaiian Mint, a Honolulu-based numismatic dealer. Leader Jim Thomas is the founder of "Media Bypass" magazine, a magazine which caters to right-wing extremists. Coincidentally, the November issue of "Media Bypass" will feature an article on NORFED. "Sunshine Mint" is located in Hayden Lake, Idaho. The address associated with the domain name (from Internic) is a mailbox in a university bookstore in California. The mailing address for NORFED is the same as for Media Bypass.

The Militia Watchdog is not alleging that NORFED is currently engaging in any illegal activity. However, because of the clear potential for abuse now or in the future, it urges people to monitor NORFED and its activities very closely.

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