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New Multi-Million Dollar Scam Takes off in Antigovernment Circles

The latest multi-million dollar scam in the world of antigovernment zealots is taking off across the nation.

Scam artists and right-wing extremists are hawking a pseudo-legal strategy that promises both financial gain and the opportunity to take revenge against what is seen as a sham government. Called "redemption," the technique has earned its promoters untold profits, buried courts and other agencies under tons of worthless paper, and led to scores of arrests and convictions throughout the United States.

In just one roundup of redemption activists this August, authorities in Cuyahoga County, Ohio, indicted people on charges of racketeering and other violations in a scheme involving nearly million in worthless "sight drafts."

The suspects allegedly tried to use the check-like drafts to buy cars and computer equipment, withdraw cash from banks and pay off debts. Some defendants also used fake legal instruments "to terrorize, attempt to intimidate and harass" government officials and law enforcement officers, according to the indictment.

Last December in Michigan, another 12 redemptionists were convicted on similar allegations in a scam that included a remarkable $550 million in bogus sight drafts, as well as court filings intended to trigger probes of judges.

And that is just the beginning. While there are no figures to prove it, authorities believe fraudulent redemption and related antigovernment financial scams are being run in all states. Treasury Department officials describe a flood of redemption-style sight drafts that began appearing at the astonishing rate of about 1,000 each week in late 1999. And officials blame redemptionists for much of the increase in Suspicious Activity Reports (SARs) — a near quadrupling since 1996 — that they fill out for suspect transactions in amounts of at least $5,000.

Redemption is the latest in a seemingly never-ending series of financial scams to course through the American radical right. Whether or not its promoters believe their own claims, the scam has caught on over the last few years in part because it relies on theories popularized by the antigovernment and racist right. For proponents, it marries up political ideas with good, old-fashioned greed.

Like a whole series of other antigovernment paper schemes, redemption represents "the intersection between the financial interests of con artists and the antigovernment political message of the 'Patriot' movement," says Daniel Levitas, an author who has studied the historical antecedents of this latest ripoff.

Pony Up for Freedom
What redemption promoters sell — through hundreds of pricey books, tapes, CD-ROMs, Web sites and interminably dull seminars saturated with quasi-legalistic mumbo-jumbo — is a cockamamie version of U.S. history in which the federal government has enslaved its citizens by using them as collateral against foreign debt.

The government, they argue, is financially bankrupt, and the Uniform Commercial Code (or UCC, which in real life governs commercial transactions) is actually the supreme law of the land. Importantly, any document to which your name is affixed in all capital letters is not legally binding, the redemptionists say. Corrupt judges and lawyers know all this, but they all have been sworn to secrecy.

Luckily, add the salesmen, there is a way out.

By filing particular government forms in a particular order, and by using precisely the right language (don't worry: the redemptionists will tell you how), you can redeem your stolen assets, reclaiming your God-given freedom and a whole lot of money, too.

Using obscure parts of the UCC, you can "capture" your "strawman," which in redemption-speak is the entity (identifiable as your name written out in all capital letters) that the government created to represent the value of each individual life.

Then you can "accept for value" any problematic government document — a court summons, for instance, or an order to pay child support or back taxes — and "redeem" it by drawing on your strawman account. You can also create sight drafts that draw on this phantom account, and use them to pay electric bills or buy yourself a Cadillac.

And if anyone tries to stop you, you can counterattack with any of a whole toolbox of weapons, ranging from bogus property liens and income reports (sent to the IRS to provoke an audit) to seemingly realistic court orders.

The details can be eye-catching. Some redemptionists say that whenever a person is born in the United States, approximately $630,000 is deposited into a special government account. If only you know the right procedure — and the redemptionists will gladly sell you the details — you will be able to withdraw funds from this account, which was supposedly created by the 1935 Social Security Act.

Redemption is a charade. It is time-consuming, nonsensical, and virtually impossible to understand. That it doesn't work goes without saying — many people now in prison are mute testimony to the scam's many perils. And it costs a small fortune to master. For while redemptionists say they'll make you rich, they almost always want to be paid first, in dollars printed by the government they hate.

And If You Believe That...
No single group or leader unites today's redemption enthusiasts, and their motives vary widely. But first and foremost, redemption is a business.

Probably the leading redemption cheerleader is Robert Kelly, the publisher of a radical antigovernment newspaper called The American's Bulletin, based in Central Point, Ore. Kelly's paper overflows with ads for redemption products, and he offers telephone consultations, among other things, at $50 an hour.

The Aware Group, based in Greenville, S.C., sells a $995 redemption membership package to financial salvation-seekers — and claims 11,000 members. The Group Liberty Redemption Pack goes for $525. And Right Way ("Learn and Win"), located in Akron, Ohio, peddles a lengthy list of cassette tapes, including the $135 "The Whole Story" set, which describes "how government officials became trustees, not only for our property, but also to our bodies."

Then there's Better Books and Cassettes of America (BBCOA), based in the Tarzana neighborhood of Los Angeles, which hawks redemption books, videos, audiocassettes, Internet radio broadcasts, conference calls, CD-ROMs, and blank government forms — everything you will need for personal liberation.

For a mere $95, you can become a affiliate and receive a 10% commission on sales. Cough up $300 and you can attend an all-day redemption seminar. For $800 (or $1,125 per couple), you can have all the necessary paperwork filed for you.

BBCOA's hottest product is a book and CD called Cracking the Code. The group claims it has sold 5,000 copies of this blueprint for redemption.

From the book's preface, we learn that "Big Brother's modus operandi consists of bringing down the full might of the government upon any unlucky 'citizen' that crosses paths with its divine agenda (absolute ownership and control of all property and people). ... Big Brother's operatives wreak holy hell on a daily basis against any they choose, but continually walk away from the carnage unscathed. For those who follow the precepts as presented in this manual, such days are numbered, if not over."

Roots of Redemption
How can people swallow this tripe? It may be that they're accustomed to the taste.

For the extreme right, which has long been animated by conspiracy theories, redemption "ties together a number of things they have already 'known,'" says Mark Pitcavage, the national director of fact-finding for the Anti-Defamation League, which has studied redemption.

"They 'knew' something was fishy when we went off the gold standard. They 'know' paper money is no good and that any form of money you create yourself is just as valid. They 'know' that if your name appears in all capital letters, it's not really your name. They've already been taught all these things over the years and in different formats, and redemption ties all of them together in one complete explanation. It makes all the pieces of the puzzle fit."

The redemption scam is the last variation on "sovereign citizen" and "common-law" beliefs that spun largely out of the ideology of the Posse Comitatus, a violent, anti-Semitic group active in the 1970s and 1980s.

Closely related to the tax-protest movement, the Posse incorporated an array of pseudo-legal "common-law" beliefs as well as the notion of "sovereignty" — which for many included the theory that whites can declare themselves exempt from laws and regulations.

According to The Terrorist Next Door, a new book by Levitas, the Posse was founded in 1971 by William Potter Gale (see Hate and Hypocrisy). (Gale was an adherent of Christian Identity, a theology that describes Jews as the descendants of Satan and whites as the true Israelites of the Bible.)

A decade later, Gale started a group called the Committee of the States along with antigovernment extremist Roger Elvick. Operating as Common Title Bond and Trust, Levitas' book says, Elvick sold sight drafts to desperate farmers and peddled how-to lessons on using forms to harass enemies. Some of these tactics were outlined in a booklet that Elvick entitled The Redemption Package — apparently the first mention of redemption.

Eventually, Elvick went to federal prison for passing more than $1 million in bogus sight drafts, and was later convicted of counts of tax fraud. But that did not deter others from following in his footsteps.

The tactics he used spread like wildfire in the 1990s, becoming the core of the redemption scam. Not coincidentally, the use of common-law tactics like filing bogus property liens and other kinds of harassing legal papers spread throughout the radical right during the same time period.

Pitcavage says there have been four basic waves of fictitious financial instruments created by extremists:

  • the "public office money certificates" popularized in the early 1980s by tax protester Tupper Saussy;

  • the "bills of exchange" or "sight drafts" devised later that same decade by Elvick and others;

  • the "money orders" and "comptroller's warrants" that were plugged in the early to mid-1990s by Family Farm Preservation, the Montana Freemen, Elizabeth ("The Lien Queen") Broderick, the Republic of Texas and others; and,

  • "redemption sight drafts."

Attacking the New World Order
Apart from making money for its promoters — and offering the false promise of financial liberation for those who manage to follow its arcane rules without going to prison — redemption offers extremists a chance to attack their enemies.

"It gums up the work of government and puts people in the position of directly challenging federal authorities," Levitas explains. "They feel like they are confronting what previously was the abstraction of the nameless, faceless, international conspiracy. They are now engaging it on their own terms and on their own turf."

Many of those who do so are hardened extreme-right ideologues. Among those convicted last December in Michigan, for instance, was long-time common-law activist Rodger Yates, who went to jail in for passing bogus checks fabricated by the Montana Freeman.

Other redemptionists-cum-Patriots include Howard Freeman, a veteran tax protester whose far-right resumé includes a stint with the Northern Michigan Regional Militia. Freeman also peddles a redemption book of his own entitled Money, Debt, Taxes, and the UCC Connection.

Robert Kelly, publisher of The American's Bulletin, covers an array of antigovernment themes even as he pushes redemption in his newspaper's pages. In the last year, Kelly's paper also has been rife with attacks on the IRS (the "Illegal Regiment of Satan"), the Bureau of Alcohol, Tobacco and Firearms, and the federal judiciary.

Alongside ubiquitous ads for redemption materials were articles asserting that the "9/11 Attack was an Inside Job" and pointing to the USA Patriot Act as further proof that the American government is at war against its own citizens.

Enthusiasm for the scam can be hard to quench.

Consider the case of "Bill Jones," an Oregon man accused of a building code violation. Writing in an article headlined "Redemption Win" in the April 2002 issue of The American's Bulletin, Jones says he defended himself in court by invoking the redemption rationale that treats all legal proceedings as commercial transactions.

When your name is called in court, Jones explained, "they are calling it in all capital letters ... which sound the same."

Jones recounted how he "answered with the question, 'Are you calling the debtor, or the secured party?' The judge would not answer my question as he obviously knew what I was up to and could not fall into my trap with a full house of other customers (defendants) in the room. So what he did was after calling my name several times and getting the question over and over, he threatened me with a charge of contempt and armed police to remove me from the court room, which they did as I would not succumb to his threats."

That was simply confirmation for Jones that he was on the right track. In the periodical's next issue, he offered readers still more advice on court strategy.

"They all end up losing," Levitas said of the redemptionists who pursue such court battles. "But a certain percentage become highly radicalized as part of the process, and that creates a new pool of more militant people. It's a great sifting mechanism for determining who is willing to take it to the next level. ... The Patriot movement has a track record of recruiting people based on paper activism and transforming them into those who would use bullets instead."

Levitas may have a point. Large stockpiles of weapons and ammunition, along with antigovernment literature, were found during recent raids on redemptionists in Ohio.

And redemption propaganda also was found in the home of Donald Matthews, a "constitutionalist" who shot and killed a Massilon, Ohio, police officer in August. Matthews was shot to death moments later while being chased by police.

Special Audiences
The redemption craze has found a particularly receptive audience in prison, where periodicals like The American's Bulletin often circulate. Last June, Robert Kelly wrote that he was "months behind" in his prisoner correspondence.

Perhaps most surprisingly — given the white supremacist roots of the scam — redemption also has found favor among black nationalists, including those who call themselves Moorish Nationals and claim to be exempt from U.S. laws.

One of the men recently indicted in Ohio was Charles Bailey (a.k.a. Shareef Malik El Bay), who purports to be the "prime minister" of the Great Seal of Moors. In Philadelphia last year, another 10 black separatist redemptionists were tried on charges of creating false property deeds and forging checks to pay child support and buy cars.

In East St. Louis, Mo., redemptionist Federick R. James (who goes by Nkosi Niyahuman-Dey) tangled up the legal process for months when he was brought in on charges of selling marijuana.

A member of the Cahokia Great Seal Moors, James refused to answer questions, claimed he was not subject to the court's jurisdiction, and sent the judge a bill for $151 million — half a million for each time the judge mentioned his name, which James said was copyrighted. In the end, James was tried and convicted on drug charges, along with two counts of contempt of court.

With outcomes like these, the promise of redemption eventually may fade away. But extremists and con artists will surely find something else to take its place.

For true believers, paper attacks on the government they hate will always be attractive, holding the promise of action without the dangerous necessity of taking up arms. For crooks who masquerade as patriots, the attraction of an audience that already believes in the wildest conspiracy theories is just too good to pass up.