In the wake of the recent Liberty Dollar case, there has been much concern and confusion about what it means to the alternative exchange and local currencies movement. Here is a clarifying statement that has just been issued by the International Reciprocal Trade Association (IRTA), the trade association for the commercial “barter” industry.
Liberty Dollars Case Does Not Involve the Modern Trade & Barter Industry
No Government Precedent Set Against Private Barter Currencies
Recent news stories suggesting that the Liberty Dollars verdict is a signal that the Government is against private barter currencies are categorically incorrect and ignore the facts of the case.
On March 18, 2011, after a six day trial, a North Carolina jury found the defendant Bernard von NotHaus guilty of making coins resembling and similar to United States coins; of issuing, passing, selling, and possessing Liberty Dollar coins; of issuing and passing Liberty Dollar coins intended for use as current money; and of conspiracy against the United States.
In the trial, the defense improperly tried to argue that Mr. NotHaus’s Liberty Dollar coins represented legitimate voluntary private barter currency transactions. But the government and jury rejected that misplaced argument; “there can be no private currency system that functions through the private creation and distribution of counterfeit coins designed in resemblance and similitude of United States coins.” (Government Brief filed on April 7, 2011 in by U.S District Court by U.S. Attorney Anne M. Thompkins).
Several news stories have highlighted an irresponsible quote made by Liberty Dollar’s counsel, Aaron Michel, which said:
“The prosecutors successfully painted Mr. von NotHaus in a false light and now the U.S. Attorney responsible for the prosecution is painting the case in a false light, saying that it establishes that private voluntary barter currency is illegal.”
However, the fact is that the Government rejected any comparison of VonHaus’s counterfeiting activities with legitimate barter currencies. As the Government stated in their U.S. District Court Brief of April 7, 2011; “the defendant was not operating a private currency barter system, rather he was counterfeiting United State coins and using deceptive means to inject them into the flow of current money to defraud the public.” (Page 5.) Further on page 13, the Government states ” the evidence at trial clearly demonstrated that the activities surrounding the creation and distribution of the Liberty Dollars were in no way a competing private voluntary currency system, but rather constituted a deceptive and fraudulent scheme designed and implemented by the defendant.” Lastly, on page 14, the Government goes on to say, “any comparison of Defendant’s creation and distribution of Liberty Dollar coins to localized private exchange systems such as the Ithaca Hour or Disney Dollar are absurd on their face.”
IRTA moved quickly to set the record straight and was successful in getting the following clarifying statement inserted in a revised version of the http://www.examiner.com article by Mr. Schortgen:
Executive Director of IRTA, Ron Whitney says, “Mr. Michel’s quote suggesting that the Liberty Dollar case is related to the legally recognized organized barter industry is misplaced. The IRS website at http://www.irs.gov/businesses/small/article/0,,id=187904,00.html defines barter as “the trading of one product or service for another.” The Liberty Dollar’s case is not about trading one product or service for another, rather it is about violation of Section 18, 486 of the U.S. Code which prohibits the manufacture of coinage or metals intended as current money resembling coinage of the U.S. Mr. vonNotHaus was convicted of the charges of counterfeiting and making and selling currency, barter had nothing to do with the case. The modern trade and barter industry was recognized by the U.S. government as a legal alternative form of commerce by the Tax Equity and Fiscal Responsibility Act (TEFRA), passed in 1982 whereby barter exchanges were deemed third party record keepers and required to comply with IRS 1099B reporting laws. Barter sales conducted through barter exchanges are taxable sales reported annually to the IRS. The Liberty Dollar’s verdict is completely separate from the legally recognized modern trade and barter industry and in our view it does not represent an effort on the government’s part to declare valid TEFRA compliant barter transactions as illegal activity.”
We trust the information above will operate to clear the confusion on this matter. Please call Ron Whitney at 757-393-2292 if you have any questions.