Last Modified, November 8, 1999
A Militia Watchdog Bulletin
Wine, New Bottles:
Paper Terrorism, Paper Scams and Paper Redemption
by Mark Pitcavage, Ph.D.
In the spring of 1999 a group of anti-government extremists created
an elaborate web of pseudolegal and pseudohistorical doctrines that brought
together longstanding beliefs in the so-called patriot or
constitutionalist movement into an overarching structure.
These theorists suggested, moreover, that people could manipulate this
system into allowing them to discharge debts and redress grievances, all to
their profit and advantage. The
theorists combined longstanding common law ideology with tactics for
achieving wealth and combating enemies. They
held seminars and sold materials designed to teach people the theory and
practice of this system.
They called it Redemption.
Within just months, this scheme spread across the country.
At last count at least 26 states had reported some activity.
It is probably accurate to say that almost all states have experienced
activity, whether it was recognized as such or not.
One problem in defining Redemptions extent is that it involves many
separate actions, involving private entities as well as federal, state, and
local government agencies. But each
entity sees only a portion of the whole scheme, and may not even recognize that
a pattern exists.
This report has several purposes.
It seeks to 1) gather such information is currently available on the
Redemption scheme (as of mid-October 1999) and explain it as coherently as
possible, 2) identify, to the extent possible, the activities conducted and the
players involved in the scheme, and 3) to encourage law enforcement officials,
prosecutors, and others to look carefully at this tactic.
2. The Pitch
The Redemption scheme, at its heart, consists of the bizarre notion
that a bankrupt United States converted the physical bodies of its citizens into
assets against which it could sell bonds, and that knowledgeable people can
redeem these assets and, through manipulating them and various imagined
accounts, use them to their advantage. Much of the rhetoric is, as is common with sovereign
citizen/common law theories, nearly incomprehensible and often laced
with Biblical references used as points of law.
Moreover, also common with such theories, the language is often
deliberately obtuse, so that the explanation is difficult to follow.
The reason for this is that when people who attempt the strategies run
afoul with authorities, proponents can claim that the strategy was simply not
applied correctly and that correctly following the steps would certainly result
in victory. This rationale was used
previously by proponents of the various bogus money order schemes common in the
early to mid 1990s, as well as in numerous other scams developed by patriot
The pitch is generally delivered in one of two ways.
The most common way appears to be through holding seminars to teach
people the process. To date,
seminars are known to have been held in Oregon, Nevada and Texas, although it is
a certainty that there have been others elsewhere.
The second method of disseminating the scheme is through selling
videotapes, audiotapes, and manuals that describe the process.
Several extremist publications have been instrumental in this method of
The real attraction of the Redemption scheme, despite its outlandish propositions, is that it carefully ties together a number of popular patriot myths and misconceptions into one large structure. Many of the people who attend such seminars already come knowing that their name spelled with all capital letters is somehow different from the same name spelled in upper and lower case, and knowing that the government went bankrupt when it went off the gold standard, even if they dont understand exactly how. The Redemption scheme not only reiterates these myths, but cleverly links many of them together into one explanation. As a result, it is very compelling to many of the people who come across it.
The following explanation of the pitch that the Redemption scheme
uses is drawn from a number of different sources, including seminar materials,
articles about the scheme written in extremist publications, and documents on
the World Wide Web. This
explanation attempts to synthesize these various sources in order to give the
reader a general idea of what the Redemption scheme is supposed to do.
It should be noted that the actual materials are much more difficult to
understand and in fact often are contradictory, sometimes even
The heart of the Redemption scheme is one of the oldest and most
dearly held of all patriot myths: the
Federal Reserve conspiracy. In
1909, according to this myth, the United States could no longer pay its debts
and entered into negotiations with international bankers, who gave the U.S. a
20-year moratorium on paying its debt in return for the establishment of a
Federal Reserve Bank to be owned by international bankers.
Two decades later, suggests the myth, the United States defaulted on this
debt and went into bankruptcy, which is what really started the Depression.
Four years later, in 1933, Franklin Delano Roosevelt, by creating a
national emergency and taking the country off the gold standard, ended
legitimate constitutional rule. From
that point on, the government operated largely through deception (as to its
unconstitutionality), deliberately mixing public, private, and martial laws,
rules and practices. Redemption
theories in particular reference House Joint Resolution 192 (HJR 192), passed in
1933, which they interpret as a declaration of bankruptcy.
Many patriot theories start similarly. The Redemption scheme takes a dramatic departure in arguing
that because there was no longer any legal money (i.e., gold and silver) after
1933, the U.S. government had to find some other way to discharge its debt.
It did this by seizing the energy of the country, in the sense of
energy produced by individuals. In
1936, suggests Redemption theory, with the advent of Social Security, the U.S.
government began to take birth certificates and place them with the Department
of Commerce as registered securities.
These certificates represented all of the work and labor of each citizen,
as well as everything each citizen owned or would ever own.
According to one theorist, a pledge was made for each certificate in the
amount of $630,000 (another pegs it at $1,000,000). Thus everybody and everything in the United States is simply
collateral for the bonds issued by the U.S. government.
When you were born, the state became the recipient of your future
energy output, as a title security document, which it converted into a
bond sold on the open market to finance the government. The holder of that bond is the secured party to receive your
future energy output. Does
the bondholder own you? No, not
exactly, but he or she does own essentially everything you do. Each person, in fact, has a mirror entity which represents
that output. This is called, we are
told, the nom de guerre or, more commonly, the straw man.
In essence, it is an appropriation of a somewhat older patriot myth that
there is a significant meaning behind the various ways it is possible to spell
ones name. If a patriot gets a summons addressed to JOHN DOE, he may
refuse that summons because his name is not spelled with capital letters.
The issue is intricate, but what is important here is that Redemption
theorists appropriated this notion and enfolded it neatly into their explanation
of government. Of course, JOHN DOE
is different from John Doe. JOHN
DOE is not you, it is the mirror entity set up to represent your energy output. Every man, woman and child has a straw man.
When you sign your name to something, you are putting property into the
hands of the United States and its bond owners, not into your own hands.
In fact, your hands are not really your own; they are the straw mans.
Redemption theory gives Redeemers a way to use this alleged
situation to their advantage. The
thing to do, they say, is to retake control of your straw man.
Once you control the straw man, then you control the rights and titles of
the property that the straw man acquires, and a whole lot more.
Redemption theorists argue that the government has title to your straw
man by presumption only, but that if you rebut its presumption, you can
gain title to it. Much of the
language regarding this issue parallels earlier language suggesting that you
could become a sovereign citizen and the government would have no hold on
you any more. Redemption theorists
artfully reuse that language. They
also cleverly act upon the experiences of many patriots in court, where their
pseudolegal arguments come to naught when confronted with the real court system.
Redemption theorists claim that all of the courts arguments are being
brought to bear against your straw man, which is presumed to be identified with
you. Because you did not know it,
and did not rebut their claim, it was held as truth in commerce.
Thus all patriot failures in court are explained away, because they were
unfamiliar with the concept of the straw man and did not have control of theirs.
How do you take back your straw man? Well, reply Redemption theorists, one consequence of the
events of 1933 is that there is now a private side and a public side to the
government (the government is often called the democracy corporation in
these writings). Currently, your
birth certificate is in the public side of the government. But you want to get it over to the private side of the
government, because this side is the highest priority of recognition by the
military State. So the public
side would no longer have priority. The
way to do this is through UCC-1 filings of ones Birth Certificate with the
Secretary of State of his or her state. This
allows you to redeem yourself from the public side of the government,
after which the living soul has the right of property ownership in himself
through his straw man who now belongs to the living soul.
Some redemption documents refer to this process as creating a
corporation sole. One should
not dawdle in redeeming ones straw man, because some sources suggest the last
legal date to do so is December 31, 1999.
Is controlling your straw man a good thing?
It certainly is. Not only do you now own what the straw man owns, rather than
the state, but you can take advantage of the fact that you are the owner of the
straw man. This is because,
redemption theorists say, a name is CREDIT.
If any unauthorized person uses your name or the straw mans name, they
have violated the laws of slander of credit.
This becomes a federal securities violation.
Once you have redeemed your straw man, you can then use commercial
process to discharge public funds with private funds and allow the straw man
to spend these public funds that have been converted to private funds for goods
and services in a tax exempt and levy exempt mode. If it sounds confusing, it is.
In essence, it is way of establishing fictitious bank accounts that
can then be used to discharge various debts.
Texas Redemption theorists claim that when you become the holder in
due course of your straw man, the governor becomes responsible for claims on
your straw man. Says one theorist:
Its very much like if the Governor co-signed on a loan for your car
for you and you stopped making the payments, the bank then looks to HIM for the
payments. I dont know about you,
but personally I LOVE THIS IDEA!!! Now
if I get a traffic ticket, I can just let the Governor pay the fine, since he is
the surety for the Straw Man and is liable for all debts/fines/judgments
incurred by the Straw Man.
The key to getting this particular goose to lay golden eggs is
easy. It can begin with your
paycheck. Your employer must pay in
public funds (i.e., federal reserve notes, or illegitimate money), because that
it all it has. It will deposit
these funds into your straw mans bank account.
Redeemers are told to have their straw man do acceptance for value of
the solicitation set forth in the bank statement. What this essentially means is that you are claiming that the
bank owes you that amount in real money, not public money.
You hold the true legal title to the property (i.e., money) the bank has
However, the bank cannot turn over true legal title of these public
funds to you, because the whole public side is bankrupt and does not own
anything by legal title. This is
the advantage you can use, say the Redemption theorists. If the bank does not produce title within 72 hours, a
condition of dishonor occurs and the straw man can do a Bankers
Acceptance to the dishonored agreement.
In essence, your straw man becomes a bank, because it is attempting to
collect the security underlying the contract with the real bank.
A banker has the capacity and authority to create a Bill of Exchange
drawn upon the debtor, payable to the straw man.
So the straw man creates a Bill of Exchange, then deposits the bill of
exchange with the U.S. Secretary of the Treasury in his private side
capacity. The Secretary becomes
a correspondent bank to the banking of the straw man and keeps an account
balance. This balance is numbered
with the number of the Certified Mailing Label on the first letter of deposit
sent to the Secretary. Each account
is mirrored with public fundsthough why this should be so, exactly, is a
little fuzzyand this public fund mirror account, called the Treasury Direct
Account, is numbered with a social security number.
Once the Secretary of the Treasury has generously established this
account for you, your straw man can direct the Secretary to release the private
side funds from the Treasury Direct Account.
You can do this with a money order and a UCC-3 partial release
instrument registered with the Secretary of State.
There is additional paperwork you must do, including filling out an IRS
Form 1040ES (instead of a 1040) in order to report the location of the public
funds, so that the IRS can collect them from the bank that owes you originally.
So far it seems like a lot of work. What do you get out of it, other than the joy of filling out
forms? For one thing, you get the
opportunity to pay off your public liabilities. These could include items like traffic tickets, mortgages, or
even criminal charges (at $4 million per federal criminal charge, though where
this number comes from is uncertain). One
does this through sight drafts offered to these mortgage companies, etc.
Such companies would then present the sight drafts to the federal
government, which would adjust the appropriate internal accounts.
The tactic is called acceptance for value, and in fact,
sometimes the whole Redemption scheme is referred to by this term.
Essentially, what you are told to do is to accept for value
anything that is given to youa traffic ticket, a court summons, etc.
You can place a value on this document and adjust your internal Treasury
accounts accordingly, allowing you to write more sight drafts.
Of course, the rationale allowing you to do all this is quite
complicated, but thats the practical result.
Redemption theorists make extravagant claims about discharging debts,
even suggesting that the IRS has acknowledged tax bills of up to $400,000
discharged by this process. Many
people apparently skip to the chase and begin writing the sight drafts, often
without even bothering to fill out all the UCC forms they were supposed to.
Unfortunately for Redemption theorists, not everybody in the
government is inclined to agree with their interpretations of law.
Often people who engage in Redemption activities find themselves stymied
at one point or another. But
Redemption theorists provide methods to redress these wrongs.
If one accepts for value a traffic ticket, for instance (at, say $1
million, which seems to be the going rate), then one can demand that the police
officer fill out an IRS Form 8300, ordinarily required to be filed for currency
transactions of over $10,000 (to fight money laundering).
If the officer refuseswhich one would presume would be the likely
resultthe Redemption practitioner may simply file it him or herself in the
officers name. This has the same
effect as the fake IRS 1099 forms that extremists have been filling out for
yearsit causes the IRS to think that the public official has received a large
sum of (unreported) money. Similarly,
some practitioners file Fiduciary Tax Reports with the IRS.
3. The Symptoms and
Even if one cannot quite understand how Redemption is supposed to
workand there should be no blame attached for any such failureit is
possible to see the effects that Redemption has in practice. These are useful in terms of identifying the symptoms of the
scheme as well as some of its adverse and criminal results.
U CC Filings
In order for Redemption proponents to redeem their straw man, they
must follow certain steps, and the first of these involve UCC filings.
These filings are an important first indicator of the extent to which
this scheme may exist in an area. Proponents
of Redemption tell followers to register the straw man using UCC-1 forms
both with the Secretary of States office (UCC Division) and the county
recorder, or with any Secretary of State which will accept it.
Redemption proponents have discovered that some offices refuse to accept
such filings, while others will accept virtually anything.
So they are not very particular about who accepts it, just as long as
The fact that they file with the Secretary of State is a fortuitous
happenstance, because it means that there is a centralized repository for much
of these filings, whereas in many previous such schemes, filings were only done
at the county level, meaning that a state that wanted to track the scheme had to
contact every single county. Although it is certain that not every filing is duplicated at
the state level in this scheme, the fact that many are is very useful.
The UCC-1 filings so far have varied considerably in form, but they
share certain distinguishing characteristics that make them readily
identifiable. One key
characteristic is that on the form, the debtor and the secured party will seem
to be identical, which ought to strike one as unusual, since usually one does
not owe money to oneself. In the
mind of the Redeemer, of course, this actually represents two people, the
flesh-and-blood person and the straw man. Many
times the name of the debtor (straw man) will be all capitalized, or will be
provided last name first, while the name of the creditor will have upper and
lower case letters and will be written last name last.
Under the blank asking for a description of the property covered by the
financing statement will usually appear the persons name and address (they
are redeeming themselves). Usually
they will also provide a social security number, which they may describe as an
Employer Identification Number. Often
they will provide a gratuitous reference to HJR 192, or UCC Article 10, Section
104. Sometimes they will sign for
both the debtor and the secured party, while other times they may attempt to
leave one space blank.
Sometimes the stylings on the form become quite elaborate.
Some forms include a Social Security Number for the debtor, but an
Employer ID number for the secured party. Frequently
the phrase Debtor is a transmitting utility will be used, often in several
blocks in the form. One property
description frequently seen, which gives an idea of the sort of language used,
is as follows: Debtor is a
transmitting utility. The entry of
the debtor, Doe, John, in the commercial registry and the following property: 1234 Happy Lane, Smallville, Ohio 54321, copy attached; all
the property is accepted for value and is exempt from levy.
Adjustment of this filing is from Public Policy HJR-192 and UCC 10-104.
All proceeds, products, accounts and fixtures and the orders therefrom
are released to Debtor.
Sometimes a letter is attached to the filing that identifies all
the various names for the straw man that apply. For instance, the letter may read: This filing is not limited to the straw man/dummy entity
known AS SMITH, JOHN QUENTIN. This
filing also applies to the strawman/dummy entities SMITH, JOHN; SMITH, JOHN Q.;
SMITH, JOHNNY; SMITH, JOHN QUENTIN; SMITH, JOHNNY Q.; SMITH, JOHNNY QUENTIN; or
any derivative thereof.
Usually, Redemption proponents include a variety of other documents
with the forms they attempt to file. These
can include property descriptions, mortgage documents, birth certificates,
Social Security cards, and drivers licenses, among others.
Taken together, these documents and distinguishing characteristics make
Redemption filings relatively easy to recognize.
In addition to UCC-1 filings, proponents will also file UCC-3 documents, usually as an indication of bogus Sight Drafts that they have passed or are about to pass. These documents are similar in most respects to the UCC-1 documents, in terms of debtor and secured party names, etc., but have different text. One of the most distinguishing characteristics is that the text orders the Secretary of State to perform certain functions. One example from Ohio illustrates their nature: DEBTOR IS A TRANSMITTING UTLITY. PARTIAL RELEASE FROM UCC-1 AP0169252 on 17 August 1999. COLLATERAL ACCOUNT: Invoice Number: Z 292 745 201, for the amount of $100,000.00 as per Money Order #Z 292 745 201 Payable to NATIONAL AMERICAN INSURANCE COMPANY, BEVENS LAW OFFICE, WM. WRAY BEVENS, 112 N. Market Street, Waverly, OH 45690. SECRETARY OF STATE is to adjust my Account #AP0169252 Dated 17 August 1999. SECRETARY OF STATE is to forward directly to WM. WRAY BEVENS the Acknowledgement Copy hereto attached and to adjust my Account.
of the Treasury
The Redemption scheme not only urges people to make county and
state filings, but also tells them to send filings to Lawrence H. Summers, the
Secretary of the Treasury of the United States. The overworked Mr. Summers presumably will not open all of
these himself, but nevertheless his office gets them. This is essential to the scheme, as it helps to magically
create the fictitious accounts that are then manipulated with sight drafts.
Redeemers are urged to send a cover letter to Summers, along with a copy
of the birth certificate filing and the original Bill of Exchange.
Once the straw man has been redeemed, a Redeemer will gladly
accept for value any item such as a ticket, a warrant, court orders, or
financial statement. This
acceptance may be followed by a notice giving the other party 72 hours to
respond. Redeemers are prompted to
address these people by their private name, as in John Doe, d.b.a.
Judge of the United States District Court, rather than District Court
Judge John Doe. The notion is
that once one gives them private notice of this acceptance, then there are
no more public charges (as in debts or criminal charges) and any
subsequent actions would be to act under color of law by disguise upon the
Acceptance for value statements usually will take the form of a
contract laid over the initial offer (i.e., ticket, etc.).
This document will often include a Treasury Direct Account Number,
a Memory of Account Number, a Posted Certified Account Number, the
amount of money for which the item was accepted, the date, an invoice
number, and a signature. In
some cases Redeemers will simply write all these items on the document itself.
Here is the text of one such acceptance for value, written on a
warrant for the Redeemers arrest: Non-Negotiable/Charge
back/Lawrence Summers, Sec. Of Treasury of the United States/I accept for value
all related endorsements front and back in accordance with UCC-3-419 in accord
with HJR-192. Please charge my
Treasury Direct Account #123-45-6789 for the registration fees and command
Memory of Account #123-45-6789 charge the same to the debtors order, or your
order/Posted Certified Account #: Z240 181 658/Value:
$1,000,000,000,000.00/Invoice number: STS7777777778/E.I.N. 123-45-6789/Prepaid
Preferred Stock/Property Exempt from Levy/Signature.
As mentioned above, once something has been accepted for value and
(presumably) ignored, the Redeemer can create a Bill of Exchange by filing UCC-3
addendums with the Secretary of State. Redeemers
are encouraged to notify the public officials of this fact.
One of these bills will generally consist of a description of the
collateral (such as, say, all the personal property of a state highway patrol
officer, as well as all the property of a county government), an outrageous
value of the Bill of Exchange, and various mentions of HJR-192, direct
accounts, and the like.
From a law enforcement point of view, one of the most important
things about the Redemption scheme is that it generates bogus Sight Drafts which
are used to pay for various items or debts. Although some extremists skip the paperwork and cut straight
to creating the fictitious financial instruments, proponents of the Redemption
scheme have created a process that people are supposed to follow in order to be
able to use Sight Drafts. Once one
has created a Bill of Exchange, one can then go about creating Sight
Drafts in order to discharge the public claims.
One of the most important such aspects may be that such Sight
Drafts are supposed to be registered with the UCC Division of the Secretary of
State, along with a UCC-3 partial release form. In fact, the registration numbers are supposed to appear in
the upper left-hand corner of the Sight Draft.
Through monitoring such filings, it may be possible to discover some of
the Sight Drafts and their creators. The
Sight Drafts are also accompanied by a one or two page letter of
instruction explaining what the Sight Drafts are and how they are to be
handled, as well as a cover letter and a copy of the UCC-3 document which
ostensibly justifies the Sight Draft.
In the past, fictitious financial instruments created by
anti-government extremists generally came from centralized sources that created
and distributed the instruments. The
Redemption scheme is different in that people are encouraged to create their own
Sight Drafts. Redeemers are given
instructions as to what they ought to look like. Sometimes computer programs are sold which can generate the
drafts; sometimes people are told to have them made at particular printing
Some of the sight drafts may be very sophisticated, including
watermarks, routing numbers, and other features. However, they will typically share certain attributes.
They will commonly reference HJR-192, they will be payable by the U.S.
Treasury (sometimes given with an incorrect address), they will often reference
Treasury Direct Account numbers or Employer ID numbers, and they may have other
odd references to the UCC.
Redemption proponents offer a variety of tactics to use if other
people do not see eye to eye with the Redemption process.
These include acceptance for value of the offer in commerce, and
process their commercial claim for the damages, which apparently would mean a
frivolous lawsuit. Other
suggestions include habeas corpus filings, frivolous appellate court filings,
and resort to superior military action by filing a claim with the military
commander in your area, after the civil process has broken down.
One disturbing tactic used by Redeemers is misuse of IRS Form 8300.
This form is the cash transaction report that should be filed for cash
transactions of over $100,000; it is designed to help combat money laundering.
Redeemers are encouraged to report any trespassers, upon which you
have done acceptances, chargebacks and Bills of Exchange, to the IRS by
way of 8300 filings and 1040ES reports on them.
In order to fill out such 8300 filings, Redeemers will try to get
the social security numbers of police officers, public officials, etc.
This will sometimes result in a rash of W-9 filings, which are a request
for taxpayer ID numbers. One extremist in Texas used these methods as a way to get
back at a city attorney who filed a lien on his property when he did not mow it.
The extremist used the W-9 forms, Bills of Exchange and other documents
to suggest the attorney owed him $4.1 million, with all of the attorneys
property to be held as collateral.
4. The Practitioners
The Redemption scheme has spread far and wide in only a few months.
The sight drafts alone have been spotted in at least 26 different states.
It seems likely that at the very least, UCC filings have appeared in
every state. For this report,
the Secretary of State offices in eight states were contacted:
Ohio, Missouri, North Carolina, Arizona, Pennsylvania, Nebraska,
Minnesota and Maine. Ohio, a state
where it was known there was considerable activity, reported such UCC filings
were coming in every single week. In
fact, there were one or two individuals who would bring people in and walk them
through the process of making the UCC filings.
Missouri, a state with considerable extremist activity, reported a
moderate amount of such activity. North
Carolina, also a state with considerable activity, reported a large number of
such filings. Arizona officials
reported there had been up to fifty such filings in recent months.
Pennsylvania reported about forty such recent filings, most in two large
clumps, probably indicating that seminars had just recently been held in that
state. Nebraska, a state with a low
level of activity, reported a handful of such filings, while Minnesota reported
somewhat more. Maine, another state
with a low level of extremist activity, reported one recent filing.
In most of these cases, officials had no idea what to make of such
filings. About half the states
contacted unfortunately accepted the filings, while the other half did not.
The Redemption scheme apparently originated in the early spring of 1999. Seminars were held in various places during the summer, and in the fall of the same year, it seems to have become very widespread. Sometimes people would travel great distances to attend the seminar; there are records, for instance, of someone from North Carolina attending a seminar in Texas.
Exactly who came up with the Redemption scheme is not certain
(although see below), but there seem to currently be at least three main groups
promoting it. The first group may
well be the oldest, and it is based in Oregon.
The Oregon nexus seems to be centered on one Samuel Lynn Davis, who has
held seminars and written articles on the subject for the extremist publication The
Americans Bulletin. Davis
claims to have been the person who thought up the idea, based on an older
document he read. Closely linked to
Davis is Robert Kelly, publisher of the Bulletin, who allegedly helped
Davis with research and certainly helped him with promotion.
Another player on the Oregon scene is known only in the pages of the
magazine as Qui Tam. Davis also acknowledges three people, Les, Butch, and
Terry, for their research and help.
The first of those three individuals is one Les Moffet, known to have
helped run Redemption seminars.
In recent issues of the Bulletin, the Oregon crowd started
backing away somewhat from the use of sight drafts, saying that Mr. Davis
does not promote, suggest, nor advises in any way for one to use a sight
draft. The magazine suggested
that people who did not understand the sight draft used it improperly, either
submitting it to a bank for deposit without bothering with the UCC process, and
they will likely end up in jail. Mr.
Davis and the Bulletin, readers were informed, would not accept any
responsibility for the mis-use or problems created by the use of Sight Drafts.
The Oregon group also recommends one particular printer who is
willing to print the bogus Sight Drafts used in the Redemption scheme.
These custom sight drafts designed especially for the scheme, can
be purchased by The Edge Graphics. They
are printed on blue check paper with a VOID pantograph, micro printing,
artificial watermarks and a warning band. The
price is about $1 per draft.
Davis and Kelly are not the only people in Oregon promoting the
Redemption scheme. A former Kelly
associate, F. Hayes, who broke with Kelly and went on to publish his own
newspaper, The American Voice, has also promoted Redemption materials. In
the July 1999 issue, Hayes published an article titled Commerce Game Exposed:
Learn to Play; Accept It for the Value, in which he outlined the
essence of the Redemption scheme and advertised an instruction manual for
$15.00. By the September issue,
Hayes was enthusiastic about the response to the redemption manual so far.
He also complained that there are those out there who are taking
advantage of the great interest people have in this process.
They are selling the information, which they got for free (as we did),
for exorbitant prices.
In fact, both Kelly and Hayes apparently did get their information
from a single source, as did other promoters of the redemption scheme.
Multiple sources from within the patriot movement confirm that the
originator of the redemption notion was Roger Elvick (or, according to one
source, Elvick and two other, unidentified people).
Roger Elvick is a veteran anti-government activist who has been
associated with various right-wing extremist and white supremacist causes over
the past several decades. While
living in North Dakota in the early 1980s, he was apparently active in the Posse
Comitatusalthough he denied this at the timeand supported Gordon Kahl, the
Posse activist who murdered two federal marshals near Medina, North Dakota, in
1983. Although connected to various
groups, including allegedly Aryan Nations and the Barristers Inn School of
Common Law (reportedly Elvick later started his own Nitty Gritty School of
Common Law), he came to prominence in 1984 as one of the founders and spokesmen
for the Committee of the States, an offshoot of the Posse Comitatus created by
Californian William Potter Gale, a prominent Posse leader and white supremacist.
By then, Elvick was living in California, where he and his son had created an entity called the Common Title Bond and Trust in
The main purpose of Common Title was to issue various bogus financial instruments, including sight drafts, bills of exchange, and checks. By June 1987, these instruments had been reported in about thirty states and at least one Canadian province. That month the Federal Bureau of Investigation seized documents belonging to Common Title, as well as an affiliated business in Phoenix, Arizona, Pima and Associates, apparently run by John Godfrey. Elvick, Godfrey, and various associates took advantage of the serious farm crisis of the 1980s, selling the sight drafts to farmers who would ostensibly use them to pay off their farm debts, making payments to Common Title instead. Of course, banks would not accept the sight drafts. According to Godfrey, Pima and Associates alone wrote between $50 and $70 million of those sight drafts in the summer of 1987. Similarly, in Kansas, James E. Patterson sold sight drafts for $757,000 to pay off the debts of a tire company in Wichita. He received $14,000 and a promised payment program for the drafts, which came from Common Title. Federal and state indictments were handed down in Kansas, North Dakota, Ohio, and South Dakota, while other states filed consumer fraud suits or issued cease-and-desist orders. Convictions and judgments against individuals using such sight drafts continued through 1989.
In April 1990 a federal grand jury in North Dakota indicted Roger
Elvick, and three associates. The
four were charged with nineteen counts, mainly related to mailing false tax
returns, as well as false IRS 1099 forms filed to harass people.
They were also indicted for using sight drafts.
Two months later the defendants were convicted on all 19 counts.
Elvick, however, was already in jail.
He had been convicted in Texas on federal charges of passing more than $1
million in bogus sight drafts. These
drafts purported to be certified IRS sight drafts. The false 1099 form schemewhich was eventually used by
about 400 different people issuing nearly 4,000 such forms for amounts of more
than $21 billionwas basically Elvicks idea, which he compiled into a
booklet interestingly titled, The Redemption Package. Elvick received a sentence of nearly four years for his role
in the scheme.
Thus the essential criminal elements of the Redemption scheme, including bogus sight drafts and bogus IRS forms, all had their origins over a decade earlier. The judge who sentenced Elvick aptly characterized his behavior accurately when he complained to Elvick that I want to be courteous if I can to you, but I cant understand the way you so easily and glibly throw around constitutional terms with no apparent logic. The judge told Elvick and the other defendants that he had no hope that prison would rehabilitate them or deter them. Instead, he hoped the sentence would send a message to deter others from getting involved in such schemes. Judging by the subsequent success of the Redemption scheme, it would seem that the judges hopes were to be dashed within a few years.
Oregonians were not the only people who picked up Elvicks
message. Especially energetic in
promoting the Redemption scheme were certain Texans, members of an extremist
group known as the Republic of Texas. This
group formed in late 1995, though within two years it had split into several
competing factions, one of which was involved with an aggravated kidnapping and
subsequent armed standoff in the spring of 1997.
The faction of the Republic of Texas which chanced upon the
Redemption scheme was that headed by President Jesse Enloe, and based in
the Dallas-Ft. Worth area. Based on
the minutes of their meetings during the summer of 1999, the two members of the
group most involved with formulating and promoting the Redemption scheme were
Enloe and Rice McLeod. Enloe and
McLeod regularly spoke on Redemption issues throughout the summer. At the July 23 meeting, Enloe told the audience that in
Idaho an automobile had been purchased using the Acceptance for Value
process. In the ensuing case,
the judge dismissed the case and an FBI agent told the defendant that there was
no money in the U.S. treasury and asked the man not to do it again.
The dealer kept the car, but the man was not charged.
At another meeting, the secretary recorded the words of McLeod urging
people to attend the seminars. Read
the books. Study and understand the Frankenstein system that has been
foisted upon us in place of the system our ancestors fought to create.
Enloe and McLeod arranged Redemption seminars that brought attendees not
only from Texas but also from far away states.
Other members speaking on Redemption issues included John Hunter, Lewis
Daniel, and Darrell Franks. It
is clear from the minutes that Redemption was indeed the single hottest topic of
the summer for this group.
The Republic of Texas may not, however, be the only group in Texas
promoting the Redemption scheme. One
extremist publication recently had an advertisement for The Timeline Group,
selling a one-hour UCC Redemption video featuring Rhett Webster Pease for
$18.00. This reportedly took place
at a Freedom Seminar in Austin Texas on 9/18/99.
The Buckeye state is another state where Redemption promoters are very active. This seems to be primarily due to the activity of an extremist group based in Uniontown, Ohio, known as Right Way L.A.W. This common law group is extremely active, holding seminars and meetings, not only in various towns in Ohio, but also in states across the nation. It encourages the formation of Right Way L.A.W. study groups in different areas, and such groups are known to exist as far away from Ohio as New Jersey, New Mexico, Oregon and Washington. Even as far away as Kasilof, Alaska, a tax protester received a two-year prison sentence because, on the advice of Right Way L.A.W., he had decided not to file his tax returns. Significantly, prospective members of the group must sign an application form in which they must state that they are not an agent of government and will not use or cause to be used the information shared as a basis for government action against the group or its members.
Right Way L.A.W. is led primarily by
four individuals: Rick Schramm,
Jack Smith, Jeanne Collins, and Mary Keane.
The group very actively sells its common law materials at survivalist
expositions, on the Internet, and elsewhere, so it is not surprising that it
would pick up on the Redemption scheme and begin holding seminars.
The only seminars known for sure to have been held by Right Way L.A.W.
have been in the Pacific Northwest, but the printed material handed out at such
seminars always used Ohio addresses and place names as examples, so it seems
reasonable to suspect that they originated in Ohio.
No names appear on the materials themselves.
However, the Redemption scheme seems to
have attracted the attention not only of Right Way L.A.W., but other prominent
anti-government activists in the state. Chief
among these are Larry Russell and Bill Elwood, two of the leaders of the common
law court movement in the state. Russell,
from Canal Winchester, Ohio, a suburb of Columbus, is fresh from his 18-month
sentence on escape charges. In
February 1996 a Columbus police sergeant unwisely tried to serve an arrest
warrant for driving without a license to Russell while Russell was at a common
law court meeting. Members got in
the officers way while Russell fled all the way to Alaska, where he was
arrested while trying to cross the border into Canada.
Brought back in 1997, he represented himself in court andnot
surprisinglylost, but escaped again in 1988.
Apprehended three weeks later, he was finally put in jail.
Bill Ellwood was the chief justice of the most active common law
court in Ohio. According to
officials at the Ohio Secretary of States office, Russell is a repeat visitor
to the office, showing new redeemers how to make the UCC filings (presumably for
Ohio has the distinction of having one
of the first arrests stemming from the Redemption process.
During the summer of 1999, Cleveland-area residents Joan Susan Bowman and
Richard A. Lewis attempted to use sight drafts to pay for eight Cadillacs.
They were arrested, charged with forgery.
Police searching their apartments following the arrest found nearly
twenty guns, unarmed grenades, and more than 6,700 rounds of ammunition, as well
as various examples of extremist literature.
According to court records, Lewis was linked to the Cuyahoga County
Unorganized Militia. Interestingly,
they tried to title the cars under eight different names, one of which was one
Sam Davis, which could very well be both the Sam Davis active in promoting the
Redemption scheme as well as the person Jesse Enloe talked about in Texas.
However, Idaho prosecutors could not identify any laws that had clearly
been broken, according to the Cleveland Plain Dealer, and Davis was not
charged after returning the truck. Following
the arrest of Bowman and Lewis, the car dealership received a packet of demands
for the social security numbers and tax returns of dealership
employeespresumably a preliminary step to filing a Form 8300 or other
harassing maneuver. As it turns
out, other car dealerships in Ohio have also been given the bogus sight drafts.
The Bowman/Lewis incident in Ohio was
not, however, the first arrest stemming from the Redemption scheme.
That honor appears to go to Veral R. Smith of Moyie Springs, Idaho.
Smith and his wife, Judy Ann Smith, were indicted in March 1999 on tax
counts, but a superceding indictment issued in August 1999 included
counterfeiting, resisting arrest and assault charges (against the U.S. Marshals
who came to arrest him). Smith
allegedly tried to use two bogus sight drafts to pay back taxes and to purchase
two vehicles. Smith was convicted
in October; his wife earlier pleaded guilty.
Promoters from other states are clearly active.
One such is Greg Williams, a Washington resident.
Greg Williams has given seminars in Montana and Texas, with a cost of
$125 per person, spouses free, and the entry fee generously including an edition
of his book.
5. What to Do
Unless something is done to stop the spread of this scheme, it is
clear that other extremists groups will jump on the bandwagon and become
involved. One only has to remember
how fast and far the bogus check/money order scheme of groups like Family Farm
Preservation, the Montana Freemen and the Republic of Texas spread during the
mid-1990s to see that schemes such as Redemption can become wildly popular among
the anti-government fringe in no time at all. That result would mean more counterfeit financial
instruments, more harassing paper against officials, and perhaps even the
possibility of future incidents like the Montana Freeman and Republic of Texas
standoffs. Clearly action needs to
be taken quickly to determine the extent of this scheme, identify its leaders,
and take effective legal action.
A wide variety of potential crimes are linked to this scheme.
The state of Texas, whose Attorney Generals office has been very alert
to extremist crimes
issued a preliminary report on the scheme that noted possible federal violations
could include mail fraud, bank fraud, counterfeiting, attempting to interfere
with the administration of Internal Revenue Laws, and making false statements to
federal agencies. State violations
will vary by state, of course, but could include obstruction, fabricating
physical evidence, and theft, among others.
People interested in the experience of Texas should contact the Office of
the Texas Attorney General, P.O. Box 12548, Austin, TX 78711-2548 (512)
936-1407; fax (512) 494-8283.
On the federal level, several agencies have already issued
warnings, although these warnings are limited to the sight drafts and do not
explain the entire scheme. The
Federal Deposit Insurance Corporation warned banks about the drafts in an alert
that can be found on the Internet at http://www.fdic.gov/news/news/financial/1999/fil9980.asp.
It suggests that people who find such instruments alert the FBI.
The source for this warning was the Office of the Comptroller of the
Currency, which earlier issued its own, available at http://www.occ.treas.gov/ftp/alert/99-10.txt.
It also advises informing the FBI, as well as the Office of the
Comptroller of the Currency, Enforcement & Compliance Division, 250 E Street
SW, Washington, DC 20219 (202) 874-4800, fax (202) 874-5301.
interested in the issue is the Criminal Enforcement Section of the Tax Division
of the U.S. Department of Justice; contact (202) 514-5171, fax (202) 514-0961.
Other federal agencies to contact would include the IRS and the U.S.
Postal Inspectors Office.
Special efforts need to be made not only to prosecute civil and criminal violations, but also in terms of educating Secretary of State offices, county recorder offices, banks and lending institutions, car dealership, and all other entities and individuals who may come into contact with this far-reaching scheme. One of the reasons the scheme is popular is because to date the establishment has not really recognized or understood it, and certainly has presented no concerted action against it.
Sometimes also referred to as acceptance for value.
The author would like to thank the following people for assistance and
information in preparing this report: the participants in the September 1999 Economic Crimes Focus
Group, especially Bill Kerr, Pete Haskel, and Greg Rosen; Tod Sellars; Roy
Korte; W. W. Bevens; Barbara
Schultz; the Secretary of State Offices for Minnesota, Maine, Ohio, Arizona,
Missouri, Pennsylvania, Nebraska and North Carolina; and those who helped
but asked not to be named. The
author would like to note that this is a subject he is actively
investigating and would appreciate notification of interesting items or
developments. His e-mail
address is firstname.lastname@example.org,
telephone (614) 487-8144, fax (614) 487-8149.
The term sovereign citizen movement and common law movement, as
well as freemen and constitutionalist, are terms used to
describe a movement with a philosophy derived from an extremist group called
the Posse Comitatus which posits that there are two types of citizens:
Fourteenth Amendment citizens, who are subject to the laws and
taxes of the federal and state governments; and sovereign citizens,
who are subject only to the common law.
Sovereign citizens claim that they have absolute mastery over all
their property (including freedom from laws, taxes, regulations, ordinances
or zoning restrictions), that they essentially do not have to pay taxes
(aside from tariffs and a few other insignificant taxes); that they are not
citizens of the United States but are non-resident aliens with respect
to that illegal corporation; that
the only court which has jurisdiction to try them for any matter is a
common law court; that
they can never be arrested or tried for a crime or matter in which there is
no complaining victim; as well as various other notions.
Note: several common attributes
of all extremist filings may also help to identify some of these documents.
Among common practices are the following:
1) putting punctuation before ones last name, as in Franklin
Delano; Roosevelt, 2) not using a zip code, including brackets around a zip
code, referring to a zip code as a postal code, or other bizarre zip code
practices, 3) using terms such as sui juris after ones name.
The transmitting utility phrase is actually used to indicate public
utilities sharing power lines, etc. In such cases, signatures are not required for both parties.
This is apparently why the phrase was adopted by the Redeemers, in
order to explain the presence of only one signature.
Robert Kelly uses the telephone number 541-799-7709 and the address PO Box
3096, Central Point, Oregon, 97502. His
magazine advertises the Redemption Book, currently in its third
printing, for $30, sent to the above address.
Additionally, people may purchase the May 1999 Reno, Nevada,
Redemption video set, a 4 tape set with ten hours of material, conducted
largely by Samuel Davis and Les Moffet.
This set costs $110 and can be ordered from American Magazine Video
Productions, c/o 12162 S. W. Scholls Ferry Rd., Suite 217, Tigard,
Oregon, 97223, phone 503-590-1567. People who wanted to attend the Reno seminar were asked to
leave a message at 818-955-6509.
The Edge Graphics, 1089 Medford Center #401, Medford, Oregon, 97504.
The American Voice, 6500 Shadow-Glen, Eagle-Point, Oregon, 97524,
phone 541-826-9050, e-mail email@example.com.
The Timeline Group, PO Box 82541, Austin, Texas 78708, dessie.Andrews@prodigy.net.
Also sometimes known as Wisdom
Group, its address is 3463 Massillon Rd., #363, Uniontown, Ohio 44685, ph
Largely thanks to now-departed Assistant Attorney General Peter Haskel.