April 2014 Ponzi Scheme Roundup

Posted by Kathy Bazoian Phelps

     Below is a summary of the activity reported for April 2014. The reported stories reflect: at least 9 guilty pleas or convictions in pending cases; over 85 years of newly imposed sentences for Ponzi schemers; 11 newly discovered schemes allegedly involving over 700,000 victims and nearly $1.2 billion; and an average age of 50 for the alleged Ponzi schemers in the stories reported. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not writing or verifying it.

     Russell Adler, 52, pleaded guilty to charges relating to the Ponzi scheme run by Scott Rothstein and through their firm, Rothstein Rosenfeldt Adler. Adler pleaded guilty to charges that he violated federal campaign finance laws.

     Ron Battistella was arrested and has been accused of securities fraud in connection with an alleged $1.3 million Ponzi scheme that promised 10% annual returns. Battistella ran a car dealer and promised investors that their investments were backed by the cars in his showroom.

     Daniel Bonventre, Annette Bongiorno, Joann Crupi, Jerome O’Hara and George Perez moved to overturn their guilty verdicts. The five Madoff employees were found guilty last month in connection with the Bernard Madoff Ponzi scheme, and now cite flawed jury deliberations and a lack of evidence in their request to overturn the jury verdicts.

     Lt. David Benjamin, 48, and Detective Jeff Poole, 47, were charged with conspiracy in connection with the Scott Rothstein Ponzi scheme. Benjamin and Poole were both Ft. Lauderdale sheriff’s deputies at the time they allegedly accepted over $100,000 in cash and gifts from Rothstein for supposedly illegally arresting of the ex-wife of one of Rothstein’s acquaintances, Douglas Bates, to give Bates the upper hand in a child custody dispute. Both Benjamin and Poole surrendered to face the charges, and both were fired from their jobs. They are expected to plead not guilty but may ultimately enter guilty pleas.

     Ivan Brown, 45, of Utah, was ordered to pay the SEC $1.43 million in connection with a $27 million Ponzi scheme run through Highland Residential LLC and Avanti Capital Partners. Brown had formed the companies for the purpose of making real estate loans called “bridge loans” to people who could not obtain conventional home loans.

     Brian R. Callahan, 44, pleaded guilty to charges relating to his operation of a $96 million Ponzi scheme that defrauded at least 40 investors. Callahan promised the investor funds would be placed in mutual and hedge funds and securities paying high dividends. Instead, he used the money on personal expenses and to retain ownership of Panoramic View Resort & Residence in Montauk. Callahan’s brother-in-law, Adam J. Manson, was also indicted and has pleaded not guilty.

     Timothy J. Coughlin, 63, and his two companies, Oxford International Credit Union and Oxford International Cooperative Union, were charged by the SEC with conducting a Ponzi scheme through a fictitious credit union. The scheme allegedly defrauded more than 5,000 investors who deposited more than $12.8 million. The Oxford International Credit union website (www.oxfordicu.com) reflected that investor deposits were purportedly earning average daily returns of .471%, but the defendants did not actually make investments sufficient to generate those kinds of returns. A criminal complaint was also filed against Coughlin.

     Gregory L. Crabtree, 52, pleaded guilty to a charge in connection with his role in the alleged $81 million Ponzi scheme run by former University of Georgia football coach Jim Donnan. Crabtree and Donnan were partners in GLC Limited Inc., a West Virginia-based business that operated retail stores. Crabtree admitted that that they offered and sold short-terms investments, promising rates of return ranging from 50% to 200%, telling investors that the company purchased “seconds” and discounted merchandise that they were able to sell for a profit. Donnan has denied the charges against him.

     Patrick Daoud, 55, a well known jeweler, was sentenced to house arrest for 10 months for helping to hide a 12.08 carat yellow diamond that Scott Rothstein’s wife was trying to conceal from federal authorities.

     Richard Freer, 68, agreed to enter into a non-trial disposition in connection with charges relating to his alleged $10 million Ponzi scheme that defrauded about 80 people, so he will not face trial as scheduled.

     Tate George, 45, had his sentencing postponed until May. George was convicted on charges relating to a Ponzi scheme that involved about $7 million and 10 victims. George was a well-known University of Connecticut basketball player.

     Johnny “Jay” Grivette Jr., 39, was sentenced to 4½ years in prison and ordered to pay $4 million in restitution in connection with a $100 million Ponzi scheme. Grivette’s company, Advantage Financial Partners of California was part of Loomis Wealth Solutions. Lawrence Leland “Lee” Loomis has been charged in connection with the scheme as well.

 

     Gordon Leroy Hall, 61, was sentenced to 15 years in prison following his guilty plea in connection with his involvement in the Ron Wilson Ponzi scheme run through Atlantic Bullion & Coin. Hall had agreed to hide at least $1.5 million, a bag of gold and 1,000 silver coins, along with 128 acres of property belonging to co-conspirator Wallace Lindsey Howell. Hall, along with his son, Benton Hall, had also created fictitious bonds for 43.5 million in an attempt to secure Howell’s release from jail.

     Joseph Hennessy, 53, was charged with running a Ponzi-type scheme that defrauded at least 10 investors of about $2.9 million. Hennessy co-owned Resource Planning Group Inc., which was operating a private equity fund and promising investors 15% returns.

     Keiko Kawamura, 27, of Hawaii, was doing business as Kawamura Financial and was charged by the SEC with running a fraudulent scheme that defrauded about 70 investors of more than $50,000. Kawamura charged investors a subscription fee of between $94.95 and $174.95 per month to receive access to a locked Twitter account that Kawamura said would provide recommendations on when to sell or purchase particular stocks and options.

     Michael Kwasnik, 42, was indicted on new charges of violating state securities laws. Kwasnik had pleaded guilty in New Jersey last year to money laundering charges in connection with the theft of $1.1 million from a 96 year old widow while managing her investment accounts.  Kwasnik was affiliated with Liberty State Benefits and Liberty State Financial Holdings Corp., two investment companies. Kwasnik’s license to practice law has been suspended and he is awaiting a final decision on whether to permanently bar him from practicing law.

     Anthony M. Livoti Jr., 65, was sentenced to 10 years in prison in connection with charges relating to his role in the $1.25 billion Mutual Benefits Ponzi scheme run by Joel Steinger.  Livoti requested a 6 year sentence, the prosecutors recommended 30 years, the federal sentencing guidelines had a potential of 80 years, and the judge decided on 10 years.

     Lawrence “Lee” Loomis was permanently enjoined barring him from further securities violations. Loomis had been found liable for such violations in connection with his business, Loomis Wealth Solutions, in which Loomis had allegedly defrauded $10,000 from investors. SEC v. Loomis, 2014 U.S. Dist. LEXIS 57423 (E.D. Cal. April 24, 2014).

     Duncan MacDonald III, 50, of Texas, was sentenced to 5 years in prison for his role in a $10 million Ponzi scheme run through Global Corporate Alliance, a holding company that managed North American Consumer Alliance. The scheme sold an “overage program” related to insured benefit association healthcare programs. Co-conspirator, Gloria Ann Solomon, 71, pleaded guilty to a charge in connection with the scheme.

     Gary D. Martin, 62, and Brenda K. Martin, 57, of Florida, were fined $4.3 million and $1.4 million, respectively, for their role in the $32.5 million Ponzi scheme run through Queen Shoals Consultants LLC. The scheme promised investors returns from foreign currency and precious metals. The Martins lured customers into the scheme by misrepresenting their experience and then paid their money over to the mastermind of the scheme, Sidney S. Hanson, who is now serving a 22 year sentence. Gary Martin was sentenced to 10 years. No criminal charges were brought against Brenda Martin.

     Gary Lynn McDuff, 59, of Texas, was sentenced to 25 years in prison and ordered to pay $6.5 million in restitution in connection with the $11 million Ponzi scheme run through Lancorp Investment Fund involving purported top-rated bonds. Two of McDuff’s co-conspirators, Gary Lancaster, 62, and Robert Reese, had previously pleaded guilty and were sentenced to prison.

     David McQueen’s criminal trial began over allegations that he ran a $46 million Ponzi scheme. McQueen is said to have operated an alleged foreign exchange trading, real property and ethanol-related projects using funds placed into his investment funds - Accelerated Investment Group, or AIG, International Opportunity Consultants, IOC, Diversified Liquid Asset Holdings, DLAH, and Diversified Global Finance.

     Barry Minkow, 47, was sentenced to 5 years in prison for his latest fraud. Minkow pleaded guilty to stealing from the San Diego Community Bible Church. He had previously been convicted in 1988 of defrauding investors our of $26 million through his company, ZZZZ Best Co. Minkow was paroled after serving less than 1/3 of his 25 year sentence and became a pastor and formed the Fraud Discovery Institute to serve as a fraud detection expert. This latest sentencing comes at a time when Minkow is already in custody in Florida on unrelated securities fraud charges.

     Doris “Dee” Nelson, 55, pleaded guilty to charges relating to a $126 million short-term lending Ponzi scheme run through Little Loan Shoppe that defrauded at least 800 investors. Nelson rejected a plea agreement and instead pleaded guilty to all 110 criminal charges brought against her. Nelson had promised the 650 investors returns of between 40% and 60% annually. Nelson had used over $3 million of the investor funds on personal expenses such as clothing, jewelry, luxury vehicles and gambling.

 

     Aaron E. Olson entered into a plea agreement admitting that he defrauded investors of $27.8 million and diverted $2.6 million of those funds to his personal use. Olson plans to plead guilty to tax evasion. Olson had purportedly invested the funds in commodity, stock and bond markets.

     Steven Palladino, 57, has been charged with 25 counts of criminal contempt for violating court orders that froze his assets last year. Palladino, along with his wife and son, had operated a Ponzi scheme through the loan company, Viking Financial Group Inc., and were all convicted in January. Palladino is now accused of spending money that he had been ordered to deposit into an escrow account established by the court.

     Luis Felipe Perez testified against Hialeah former Mayor Julio Robaina, 49, and his wife Raiza Robaina, who are standing trial on charges that they failed to report about $2 million of income, some in the form of cash payments, received from Perez in connection with Perez’s Ponzi scheme. Perez is currently serving a 10 year prison sentence for the scheme, but is testifying relating to an agreement that he had with Robaina that cash payments would be dropped off as interest on Robaina’s investment.

     Dunya Predovan, 59, was sentenced to 5 years on prison and ordered to pay more than $750,000 in restitution. Predovan had pleaded guilty to charges relating to a Ponzi scheme in which she represented to investors that they were investing in a hedge fund overseen by George Soros.

 

     David Prenatt, 53, is facing new charges for allegedly defrauding 17 investors out of $13 million in connection with a Ponzi scheme that involved home or hotel deals. Prenatt is already serving 4 years in prison but could face another 45 years.

     Richard Reynolds aka Richard Adkins, 52, will represent himself during his sentencing hearing. Reynolds was convicted of charges relating to a $4.34 million Ponzi scheme that defrauded at least 140 investors in 20 states.

     Richard Roop and his company Bottom Line Results Inc. were ordered to stop selling interests in mortgages on distressed houses in connection with an alleged $1.6 million Ponzi scheme that allegedly defrauded 25 investors. Roop accused the Colorado Division of Securities of using “numerous inaccurate and misleading statements” to obtain the court order.

     Ronald E. Russell was sentenced to 13 years, 4 months in prison in connection with his "Rent to Own" Ponzi scheme. Russell charged homeowners $2,900 each to get investors to buy their home and then allowed the current occupant to rent it back and continue living there. There were 51 victims who lost a total of $139,000.

     Irene Shannon fka Irene Stay, 50, the former chief financial officer of Scott Rothstein’s law firm, Rothstein Rosendfeldt Adler, was charged with conspiracy in connection with the $1.2 billion scheme and has pleaded not guilty. Shannon oversaw much of the accounting and the banking at the law firm, and it is alleged that she helped Rothstein by moving hundreds of millions of dollars around between accounts to pay investors. It is expected that she will eventually plead guilty. Rothstein has testified that Shannon could be a “knucklehead” but that her duties were “an instrumental part” of the fraud.

     Martin Sigillito, 64, of Missouri, has claimed that the reason he was convicted and is now serving a 40 year prison sentence for his $50 million Ponzi scheme is because he attorneys failed to represent him adequately. Sigillito was a priest who persuaded parishioners to invest in his “British Lending Program,” claiming that their money would go to real estate investments in the United Kingdom. Sigillito alleges in a lawsuit against his lawyers that they helped him set up loan agreements with investors and that the lawyers “knew that funds received from later lenders were used to pay principal and interest due prior lenders.” Sigillito says that at no time did his lawyers advise him that this could be considered to be a Ponzi scheme or involve criminal exposure.

     Joseph Signore, 49, and Paul Schumack, 56, were arrested and charged in connection with an alleged $70.9 million Ponzi scheme that defrauded more than 1,000 investors. Signore and his wife, Laura Grande Signore, are the president and vice-president of JCS Enterprises, and Schumack owns T.B.T.I., Inc., an ATM sales and service business, with his wife Christine Schumack. The scheme involved Virtual Concierge machines, and investors signed contracts providing for income of $300 per month from each $3,500 machine they purchased. The Internet-based kiosks were to be placed in hotels, hospitals, casinos, stadiums and other locations to provide services such as ordering food, downloading movies, playing games or using Skype. Two days after Signore was released from custody, the U.S. Attorney’s Office asked the court to revoke Signore’s bond, alleging that Signore had “brazenly” violated the terms of his release by making direct e-mail contact with investors. Signore's bond was revoked, but Signore requested that he be released based on new information. A Florida court appointed a receiver over the businesses and ordered the company, My Gee Bo, Inc., to be included in the receivership.

     Douglas L. Swenson, 65, along with his two sons, Jeremy Swenson, 41, and David Swenson, 36, as well as Mark Ellison, were found guilty in connection with the real estate Ponzi scheme run through DBSI Inc. that defrauded nearly 10,000 investors. The defendants have asked that the verdicts be overturned or that they be granted a new trial.

     TelexFree LLC, TelexFree Inc. and TelexFree Financial Inc. filed Chapter 11 bankruptcy petitions in Nevada. Telex is also the subject of an enforcement action by the Massachusetts Securities Division which has alleged that Telex is running a pyramid or Ponzi scheme. Prosecutors in Brazil have also alleged that the business is a Ponzi scheme, and fraud warnings have been issued in Uganda and Rwanda. The SEC also filed civil fraud charges against the entities, along with the officers and promoters: M. Merrill, Carlos N. Wanzeler, Steven M. Labriola, Joseph H. Craft, Sanderley Rodrigues de Vasconcelos, Santiago de la Rosa, Randy N. Crosby, and Faith R. Sloan. The Dominican Republic has also launched an investigation into the TelexFree business in that country. TelexFree has denied the Ponzi scheme allegations.  Meanwhile, there have already been at least 6 suicides in the Dominican Republic attributable to TelexFree.

     Deepal Wannakuwatte, 63, announced his plans to change his plea to guilty in response to allegations that he ran a Ponzi scheme through his medical supply business, International Manufacturing Group Inc. Wannakuwatte had allegedly defrauded investors out of $150 million by representing that he had $100 million worth of contracts to supply latex gloves to veterans’ hospitals, when he actually only had contracts worth $25,000 a year. Investor Sammy Cemo won a default judgment against Wannakuwatte and his wife and daughter for $7.1 million. Wannakuwatte is also being sued by a group of about 20 other investors.

     WCM777 had a receiver appointed over its assets at the request of the receiver, and the receiver estimates that there may be more than 479,000 “member accounts” related to this alleged $65 million Ponzi scheme. The receiver identified a $5 million transfer made by WCM777’s operator, Phil Ming Xu, to lawyer Vincent Messina a month before the asset freeze.

     Eliyahu Weinstein aka Edward Weinstein aka Eddie Weinstein, 38, already serving 22 years in prison for a $200 million real estate scam, is facing new charges that he defrauded investors of an additional $8 million. Weinstein had falsely promised investors returns from his supposed access to large blocks of Facebook shares prior to that company’s initial public offering.

     Michael Zuno Zuniga, 43, was sentenced to 5 years in prison and ordered to pay $1.2 million in restitution for his role in a $1.5 million Ponzi scheme that targeted seniors in the Los Angeles area. Zuniga ran the scheme through Omega Investment Group, an unlicensed entity that targeted Latino seniors to refinance their homes and invest in his scheme. Zuniga represented that he would buy and sell real estate that was in foreclosure and that he could guarantee 15% returns. About $663,000 of the investors’ funds was paid to an entity known as Home Brought Current. 18 victims were identified.

INTERNATIONAL PONZI SCHEME NEWS

Canada

     Ronald Jerry Fast sat through his sentencing hearing relating to his $16.8 million Ponzi scheme. At the hearing, 13 investors of Fast’s companies, Marathon Leasing Corp., NuDawn Enterprises Ltd. and H.H. Fast Investments, read victim impact statements describing the scheme. The decision on sentencing has been reserved.

England

     Stephan Evans, 30, was found guilty of running a £4.4m Ponzi scheme. Evans has been dubbed the “Wolf of Old Hall Street.” He worked as a stockbroker and financial advisor for Globaleye Investment and One International in the United Arab Emirates and then set up his own company, Stephan Evans Investments Ltd.

     Alok Dhanda, 53, is facing charges that he orchestrated a £600,000 Ponzi scheme. It is alleged that Dhanda obtained funds from investors in which he represented their funds would be used for a property venture in Bangalore, India. Dhanda has pleaded not guilty.

     Alex Hope, 25, is accused of masterminding a £5.6 million forex Ponzi scheme. During his trial, it was revealed that he spent about £2 million on extravagant personal expenditures. Hope’s partner, Raj Von Badlo, 56, is also charged with involvement in the scheme.

India

     The principal of Pearls Group, Nirmal Singh Bhangoo, had his passport confiscated as officials investigate an alleged Ponzi scheme that involved Rs 45,000 crore and about five crore investors. The investors were given fake guarantees that they would be provided plots of agricultural land. Cases are pending against Pearls Agrotech Corporation Limited and Pearls Golden Forest Limited.

     Regulators sought permission to attach properties of Aastha International and Green Ray International. The two companies are allegedly part of a larger multi-crore rupee chit fund scam have allegedly defrauded depositors of more than `500 crore.

     Investors in the Saradha Group are estimated to have lost Rs 1,983 crore as has been reported in a draft forensic audit report commissioned by the Securities & Exchange Board of India.

New Zealand

     Convicted Ponzi scheme David Ross, who ran a Ponzi scheme through his company, Ross Asset Management, was removed from the Chartered Accountants registry and ordered to pay $7,209.

South Africa

     Net Income Solutions aka DefenceX, along with Zantech Trading, were found guilty of violating the Banks Act by operating a Ponzi scheme with about 200,000 investors that involved about R816 million.

NEWSWORTHY LEGAL ISSUES IN PENDING PONZI SCHEME CASES

     A lawsuit against TD Bank filed by investors Oleg and Angela Shtutman in connection with the Car Miller Ponzi scheme run by Everett C. Miller was permitted to proceed in state court. The lawsuit seeks recovery of $1.5 million for money lost in the scheme that was deposited into a joint TD account with Miller.

     Investors in the $58 million David Dadante Ponzi scheme case are to receive 100% on their claims. The 105 victims may receive about 10% interest on their claims as well. The receiver recovered $59 million. Dadante, 60, is serving a 13 year prison sentence for the scheme. He had defrauded victims by representing that he knew an executive at Goldman Sachs who could provide an opportunity to purchase stock in exclusive public offerings that promised annual returns of 10% to 20%. 

     A civil lawsuit was filed against Farallon Capital Management in connection with an alleged Ponzi scheme that defrauded German real estate investors of $67 million. The founder of Farallon, Tom Steyer, is a billionaire environmentalist who has pledged to raise more than $100 million to elect environmentalist Democrats to Congress through his political group, NextGen Climate Action.  Farallon has not been found to have violated the law in connection with the scheme and denies any wrongdoing.

     Victims of the J.V. Huffman Jr. Ponzi scheme received distribution checks from the receiver in the case. The victims will receive 10.567% of the money they invested. The receiver of the Huffman estate reported that he recovered a total of $3.26 million and, after payment to the receiver and his professionals, $2.9 million will be available for distribution. Huffman was sentenced to 30 years in prison more than 4 years ago. Huffman had operated his scheme through Biltmore Financial Group, promising investors their money would be invested in a mutual fund. Huffman represented he was earning interest between 8.02% and 16.54%.

     The lawsuit brought by Jay Wexler against Tremont Group Holdings, one of the largest feeder funds into Bernard Madoff’s scheme, was dismissed. The lawsuit had accused Tremont of not heeding and investigating red flags that Madoff never actually bought or sold securities. Tremont allegedly had invested $3.3 billion with Madoff. The New York Supreme Court dismissed the case, noting that the complaint “fails to explain how one or more alleged red flags made it so obvious that Madoff was running a Ponzi scheme that defendants must have known about the scheme and wanted to further it.”

     A group of investors in the Bernard Madoff scheme were given permission to add state law claims to their class action lawsuit following the Supreme Court ruling in Chadbourne & Park v. Troice, 2014 U.S. LEXIS 1644 (Feb. 26, 2014). In the Madoff case, the court also raised the possibility that KPMG LLP could be reinstated as a defendant in the lawsuit by Tremont Group Holdings Inc. In re Tremont Secs. Law v. Tremont Group Holdings, 2014 U.S. Dist. LEXIS 52082.

     The BVI liquidator of three feeder funds to the Bernard Madoff scheme – Fairfield Sentry, Fairfield Sigma and Fairfield Lambda – was barred in the British Virgin Islands from pursing the return of more than $1.4 billion from investors who withdrew their funds prior to the demise of the Madoff scheme. The funds’ investors lost about $6 billion to $7 billion.

     The receiver in the Arthur Nadel Ponzi scheme case plans to distribute another $5 million to about 350 victims who were defrauded in the scheme, bringing the total recovery to about 44% of the losses. This will be the fourth distribution by the receiver, bringing the total distributed to $58.2 million. The scheme was run through Nadel’s company, Scoop Management.

     An additional distribution payment was made to victims of the Lou Pearlman Ponzi scheme. The Trustee made a second distribution payment of $5.6 million, in addition to an earlier distribution of $10.4 million that had been made. The recovery so far for victims is about 3.3%, but the trustee anticipates making a third and final distribution later this year. Pearlman is serving a 25 year prison sentence.

     The trustee for the bankruptcy entities once run by Thomas Petters has asked the bankruptcy court for permission to sue to avoid fraudulent transfers in 26 countries. More than 200 lawsuits have already been filed against 382 defendants in the U.S. to recover assets transferred as “false profits, bonuses, commissions, gifts.”

     JPMorgan Chase and other financial institutions sought to move a lawsuit pending against them arising from the Thomas Petters Ponzi scheme to New York federal court. The lawsuit, filed by Ritchie Capital Management LLC, accuses the financial institutions of playing a role in the Petters scheme.

     Charles Ponzi’s house was publicly listed for sale for the first time. The list price is $3.3 million. Ponzi had occupied the house for only 6 weeks in 1920 before he was arrested. All previous sales of the house have been private. Ponzi had first offered $25,000 for the house but raised his offer to $39,000 on the condition that the seller invest in Ponzi’s Securities Exchange Company. Ponzi ultimately paid $9,000 in cash and delivered a Securities Exchange Company certificate that he promised would eventually be worth $30,000.

     The $8.2 million settlement between Bank of America Corp. and a class of victims was approved in connection with claims arising from the Ponzi scheme of Juan Rangel and his company, Financial Plus Investments. The class action involving the claims of more than 400 victims alleged that the Bank of America branch manager accepted bribes from Rangel in returns for laundering $1 million in proceeds from the scheme to bank accounts in Mexico. Rangel had represented that investor funds would be used to buy and sell properties and to make high interest loans to distressed homeowners, and he guaranteed returns as high as 60% per year. Rangel pleaded guilty and was sentenced in 2011 to 22 years in prison.

     Almost 100 defrauded victims in the Scott Rothstein Ponzi scheme filed lawsuits against Bank of America and 4 current and former employees of the bank. The victims, who lost more than $385 million, claim that the Bank and some of its employees knew about and “helped” Rothstein run his fraudulent scheme. The victims are also seeking punitive damages, alleging that Bank of America “concealed, covered up, and possibly destroyed documents reasons: to avoid massive liability and a public relations nightmare.”

     The trustee of the bankruptcy case of Scott Rothstein’s law firm, Rothstein Rosenfeldt Adler, reached a settlement with Frank Preve to pay cash and property to resolve claims against Preve. The settlement is valued at $471,000 on the claim of $5.06 million that was sought by the trustee.

Investors who were placed into the Ponzi scheme run by Joel David Salinas were awarded a judgment by an arbitration panel against a brokerage firm, Golden Beneficial Securities Corp., for its failure to supervise of its employees. The claimants alleged that they invested more than $3 million through the broker but their assets were commingled with funds in the $50 million Ponzi scheme.

     The victims of Nickolas Skaltsis, 64, will receive some compensation. An agreement was reached with Tobias Investments LLC and the victim for allocation of net proceeds to be obtained from the sale of properties owned by Tobias. Skaltsis had run his business, Pheonix Asset Group, as a management company for the properties owned by Tobias. Skaltsis is currently serving time in prison for his scheme.

     The Fifth Circuit affirmed the dismissal of a class action accusing the SEC of facilitating Allen Stanford’s $7 billion Ponzi scheme. The court found that the SEC’s negligence was not a matter of policy and that the SEC was protected by the discretionary function exception of the Federal Tort Claims Act.

     Halo Cos. settled with the SEC appointed receiver over Stewardship Fund run by James Temme to resolve claims that Halo had received $1.2 million from the $35 million Ponzi scheme. Temme asserted his Fifth Amendment privilege and refused to testify in the litigation, and Halo agreed to pay a total of $250,000 in settlement of the fraudulent transfer claim.

     The lawyers for a group of 740 victims sought clarification and/or reconsideration of an order in the ZeekRewards case regarding payment on account of those victims claims. The lawyers seek a contingency fee for their work in assisting the victims to file proofs of claim, while the receiver of ZeekRewards seeks to pay the victims directly rather than paying the lawyers who will retain a contingency fee. The receiver stated that the motion for clarification is another challenge to “the Court’s decision by seeking to change the approved distribution process to require the Receiver to aid the Movant’s attorneys in collecting their attorneys’ fees from the Movants.”

Bitcoin and Other Cryptocurrencies: Regulatory and Commercial Law Concerns

Interest in cryptocurrencies is growing, even after Mt. Gox, formerly the largest international Bitcoin exchange, filed for bankruptcy in Japan following $473 million in losses  (See also, Almost Half a Billion Vanishes). Bitcoin’s resulting drop in value, from a $1,000 high to around $500, should be a reminder that cryptocurrencies are volatile payment systems under which the applicability of existing regulatory and commercial law is unclear. 

Bitcoin Regulation

Because Bitcoin is not backed by any government or central bank, banking and financial industry regulations may not apply to Bitcoin transactions. For this reason, Federal Reserve Chair Janet Yellen testified before Senate that the Federal Reserve lacks regulatory authority over Bitcoin. Similarly, the FDIC indicated in at least one context that a money transmitter like PayPal is not a bank for federal banking law purposes. Consequently, Bitcoin users cannot expect deposit or investment protection from the FDIC or customer protection from the SIPC.

Given this uncertainty, the Federal Trade Commission, Consumer Financial Protection Bureau, Securities and Exchange Commission, and Commodity Futures Trading Commission are studying the need for cryptocurrency regulation. Additionally, New York and California are racing to pass state regulations.

Notwithstanding, it appears Bitcoin exchanges may be subject to money-laundering rules under the Bank Secrecy Act. The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) previously stated that exchanges must register with FinCEN as money services businesses and report large or suspicious transactions. This is not surprising given the anonymous and irreversible nature of Bitcoin transactions, which make them susceptible to money laundering and other criminal activity. For these reasons, it is unclear how Bitcoin exchanges can fully comply with reporting requirements.

Bitcoin Under Existing Commercial Law

It is equally uncertain how Bitcoin transactions are treated under existing commercial laws not designed to address cryptocurrency concerns. Because Bitcoin is intangible, yet acts as a store of value and a financial medium for the exchange of goods and services, it is difficult to classify as a property type. Under non-bankruptcy law, bitcoins are likely a “general intangible” or “payment intangible” for purposes of Article 9 of the Uniform Commercial Code (UCC), as adopted in most jurisdictions. Consequently, a creditor taking bitcoin as collateral should obtain a security agreement from the debtor sufficiently identifying the collateral. Perfection of the security interest would require filing a UCC-1 financing statement in the state where the debtor is located. Failure to perfect may render the creditor’s security interest subject to avoidance by a subsequently appointed bankruptcy trustee. Interestingly, because secured lenders sometimes take blanket security interests in all of a debtor’s property, including general intangibles, many banks and financial institutions may already hold security interests in a debtor’s bitcoins without realizing it.   

At least one commentator has also indicated that, because Bitcoin exchanges may not constitute banks, bitcoin held by an exchange would not qualify as a “deposit account” under the UCC, but rather as a “payment intangible.” Thus, perfection in a debtor’s cryptocurrency held on an exchange cannot be accomplished by an account control agreement typically used to perfect against deposit accounts. As a result, when a debtor transacting  business through a Bitcoin exchange defaults, it may be harder for secured creditors to liquidate their collateral. 

Given Bitcoin’s inherent volatility, and the difficulty secured creditors may face collecting against it, Bitcoin’s use as collateral in conventional lending transactions remains highly suspect. For these reasons, cautious lenders should consider including representations and covenants in lending agreements to prohibit or limit a borrower’s use of Bitcoin.

In bankruptcy, a debtor’s bitcoin at filing would likely qualify as property of the estate since the debtor would have a legal or equitable interest therein. Accordingly, a bankruptcy trustee should be able to assert control over a debtor’s bitcoins (or their value) and liquidate them for the estate’s benefit. A debtor’s failure to schedule or adequately explain the absence of previously held bitcoins, or turn over existing bitcoins to the trustee, could provide grounds to object to the debtor’s discharge. A debtor’s pre-bankruptcy transfers of bitcoins may provide grounds for a trustee to pursue preference or fraudulent conveyance actions against bitcoin recipients. However, identifying the recipients may be complicated by Bitcoin’s anonymity. Regardless, prudent trustees should inquire about a debtor’s existing or past Bitcoin investments or transactions.  See, The Hazards of Lending to Bitcoin Users.

Increased awareness of Bitcoin’s potential security pitfalls highlights the uncertainties surrounding cryptocurrency’s future. Going forward, legislation and case law will likely provide more clarity on existing commercial law and regulatory concerns. Until then, parties transacting business with or investing in Bitcoin should exercise caution.  See, Is UCC Article 9 the Achilles Heel of Bitcoin?

By Robert N. Gilbert and Alexandra D. Blye , Carlton Fields, Jorden Burt, Miami, Florida

Links provided by JSM

Valuable Reading for Commercial Law

Now that most states have adopted the 2010 Amendments to Article 9, a new copy of the ABA's Portable UCC (5th edition) might be helpful, if you've not already seen it.  In other interesting new reads:

1. The CISG as Soft Law & Choice of Law: Gōjū Ryū? (Lisa Spagnolo).
2. UCC Suvey - Sales (Jennifer Martin).  Highlighting cases from 2013 decided under Article 2 of the Uniform Commercial Code. Particular Article 2 highlights include the mixed goods case of Whitecap Investment Corp. v. Putnam Lumber & Export Co., a case involving multiple transactions for treated lumber where the court found that application of the “predominant purpose” test to determine whether Article 2, or common law, applies to disputes is dependent upon whether the parties have an overriding agreement for the transactions or whether the court evaluates each individual transaction on its own. The Sales Survey also took up the merchants must read their mail case of Brooks Peanut Co., Inc. v. Great Southern Peanut, LLC., a case involving peanut brokers and communications among the parties and their brokers.
3. The Uniform Commercial Code Survey: Letters of Credit (James Barnes & James Byrne).  This survey concentrates on the most significant letter of credit ("LC") issues addressed in cases decided in the United States in the year 2012.
4. The Incoherent Role of Bargaining Power in Contract Law (Max Helveston & Michael Jacobs). 

This paper was presented at the KCON in February.

Here it the video for that session:

Understanding the birth registration process

Remember in Admiralty, Vessels documented by registration under the laws of the United States are entitled to privileges and subject to the obligations prescribed by the laws of the United States for merchant vessels.

To start out with, your parents due to their prior birth registration were already considered being registered documented vessels/mentally incompetent wards of the State, being under the guardianship of the State, who by legal marriage, where the State is a third party to the marriage contract, had an offspring/ward which they brought into this world by delivery[1], the act by which the res the subject matter of a trust, or substance thereof was placed within the actual or constructive possession or control of another in the delivery room of the maternity ward of the hospital, the port of entry for vessels/wards. Then they asked your mother for your legal name[2] in Upper Lower case which consists of one Christian name and one surname which is the name on the RECORD OF LIVE BIRTH written in upper and lowercase letters. What your mother was not told is that she delivered you to an agent/licensed doctor of the State, in a federally funded hospital, an act by which the res[3] the subject matter of a trust or substance thereof was placed within the actual or constructive possession or control of another, the State, for which in equity they created a Certificate of Live Birth with the all CAPITAL LETTERS and recorded that warehouse receipt in the commercial registry as cargo under transportation.

The hospital documented your birth with the legal name Title[4] in a distinctive style or appellation, Upper Lower case, the name by which anything is known, and because under trust law whenever title or money is transferred, a trust is created by operation of law, representing you, for which they created a CERTIFICATE OF LIVE BIRTH in all CAPITAL LETTERS, which was filed with the local Registrar and registered with the State, via Certificate of registry[5], in commercial maritime law which is a certificate of registration of a vessel according to the registry acts, for the purpose of giving her a national character i.e. U.S. citizen born in a federal zone, hospital zip code, in the judicial district in which the birthing of the vessel occurred identified by the filing with the Florida State Department of Health, Office of Vital Statistics within 5 days after your delivery, and then sent to Washington, D.C., for which the hospital receives a check for that vessel.

Then the local registrar issued your parents a copy of the warehouse receipt for the cargo, the CERTIFICATE OF BIRTH from the State of Florida in all CAPITAL LETTERS, representing a vessel/ward of the State representing the abandonment of your title by registration. The State of Florida the Creator/Trustor then created a Cestui que trust (constructive trust) behind your back after the fact, with the all Upper Lower case name, and placed a value on it, based on actuarial estimates of your future labor/human resource. Then they issued a Bond against the trust’s asset, a certificate of indebtedness[6] and funded the bond through the IMF based on your future earnings from your labor as the contributing beneficiary, which is a trust asset, and set up a Federal Reserve account for the same. So now the IMF has a beneficial interest in and out of the trust estate, the legal title is now vested with the State of Florida, and held by the Alien Property Custodian in Washington, D.C.; equitable title copy of CERTIFICATE OF BIRTH held by you representing equity/labor; the Governor acting as the managing fiduciary trustee; the Secretary of State Registrar acting as fiduciary trustee until you turn of legal age; and you acting as fiduciary trustee for the trust with duties and obligations once you turn of legal age, and the Secretary of Treasury in charge of the Federal Reserve account.

That ward/vessel is a now a Vessel of the United States, documented by registration under the laws of the United States and subject to its laws and jurisdiction, and the Title goes to the Alien Property Custodian in Washington, D.C. In a maritime in rem action, jurisdiction over the person of the "defendant", the vessel, is premised upon the presence of the vessel within the district in which the court sits. The only vessel they have jurisdiction over is the trust, that is evidenced by the CERTIFICATE OF LIVE BIRTH, establishing the three points of jurisdiction NAME, SOCIAL SECURITY NUMBER and DATE OF BIRTH, the Federal Reserve account under the supervision of the Secretary of the Treasury who is also the managing trustee for the Social Security Administration and governor for the IMF.

Up until you turned of legal age to work, the deputy Registrar on behalf of the Registrar/ Secretary of State, or the Registrar/Secretary of State whichever signed the CERTIFICATE OF LIVE BIRTH has been the fiduciary trustee for that trust created behind your back and securitized where the government owns it in part and you own it in part. Meaning the Registrar had the fiduciary duty and obligation for that Trust up until you started your first job. That is why the State can take the child away from the parents, because it is the duty and obligation of the fiduciary trustee as guardian, to look after the ward, and make sure he or she is taken care of properly.

When you filled out the Application Form SS-5 for a Social Security Card, the Registrar turned over the duty and obligation of the fiduciary trustee over to you, because he did not want to be responsible as fiduciary for anything you do in commerce using that SS Card/number. You then became the contributing beneficiary and fiduciary trustee for that trust with the duties and obligations for filing and paying the licensing taxes, registration taxes, and taxes on profits, gains and income generated for the trust once it starts to operate in commerce with a Social Security Card/number on all commercial transactions, because you on behalf of the beneficial owner “the trust”, which is resident within a territory occupied by military forces with which the United States is at war, or a resident outside the United States, for which you are considered an enemy doing business with a license and tax identifying number for the purposes “of trade” effectively connected with the conduct of a trade or business within said territory for which you are granted a license under the authority of the President pursuant to the Trading with the Enemy Act, as an enemy in order to trade, or attempt to trade with the enemy for the beneficial owner the “trust”, and as the fiduciary trustee paying, satisfying, compromising, or giving security for the payment or satisfaction of any debt or obligation, and for drawing, accepting, paying, presenting for acceptance or payment, or indorsing any negotiable instrument or chose in action on behalf of the trust.

If you have a mortgage you need to read this!

First you must know that the federal government took America off the gold standard in1933, during a staged bankruptcy called the “Great Depression” and replaced the gold with an economic principle known as "Negotiable Debt Instruments." [YES, THE GREAT DEPRESSION WAS STAGED!] The government needed to create a catastrophe to implement standards that were designed to steal your possessions and God-given rights. The process of creating a catastrophe was discovered by behaviorists. Take away a person’s food, comfort and safety long enough and they won’t care or question the illusion provided, as long as their stomach is full, they have shelter, a comfortable bed and the means (real or imagined) to keep or continue their comfort. President Roosevelt unconstitutionally collected America’s gold by Executive Order and sold it to the Vatican by way of China to conceal its true ownership. The gold in Fort Knox belongs to the Vatican and not the United States. Absent a gold base, Commerce now essentially trades in “debts.” So if you borrowed money for a mortgage and there’s no gold or real value to support the paper called U. S. Currency, what did you actually borrow? Factually, you borrowed debt. The mortgage company committed the ultimate fraud against you because they loaned you nothing to pay off the imaginary balance, not even their own debt instruments. They then told you that you owe them the unpaid balance of your home and that you must pay them back, with interest, in monthly installments.

Here’s how they did it. At your closing, the mortgage company had you sign a “Promissory Note” in which you promised your sweat, your equity, full faith and credit against an unpaid balance. Then without your knowledge, the mortgage company sold your Promissory Note (your credit) to a warehousing institution such as Fannie Mae or Freddie Mac. The warehousing institution uses your Promissory Note (your credit) as collateral and generates loans to other people and corporations, with interest. Collateral is essential to a corporation because corporations have no money or credit. They’re not real, they’re a fiction and require the sweat, the equity, the full faith and credit of living individuals to breathe and sustain the life of the corporation. Corporate Governments operate under the same principle. The warehousing institution makes money off the “Promissory Note” (your credit) and even though the profits made are nothing more than new Negotiable Debt Instruments, those instruments still have buying power in a Negotiable Debt Economy. These debt instruments are only negotiable because of the human ignorance of the American people and the human ignorance of people in other countries of the world, who have all been lied to, told this has value, and the people don’t know the difference. Did you ever give your permission to the mortgage company to sell your credit? So where is your cut of the profits? If the mortgage company invested nothing of their own in the purchase of your home, why are you making a monthly mortgage payments to them with interest? And where do they get off foreclosing on or against anyone or threatening to foreclose? They do it by fraud and the Masters and their Agents (the governments, the courts and the banks) all know it! Everything done to us and against us is about sustaining their lives, the lives of the corporate governments they command and to keep “We the People” under their complete control. They accomplish this control by taking away or threatening to take away your comfort and independence. They all use fraudulent means, disguised as law.



Note: When you applied for a mortgage, the mortgage company ran a credit check on you and if you had a blemish on your credit record, they charged you points (money) to ease their pain and lighten the risk (a credit risk) of their loaning you a mortgage. More Fraud! Why are you paying points, when they never loaned you a dime? The credit report is just another scam. If you have a high credit report, the government and banks identify you as an “Obedient Slave” and yet your “Promissory Note” sold for the same value as the “Promissory Note” endorsed by the man who is “a credit risk.” Credit didn’t matter. The fact that you are a living person is what matters!



More Fraud: The mortgage company maintains two sets of books regarding your mortgage payments. The local set of books is a record that they loaned you money and that you agreed to repay that money, with interest, each month. The second set of books is maintained in another State office, usually a bank because the mortgage companies usually sell your loan contract to a bank and agree to monitor the monthly payments in order to conceal the fraud. In the second set of books, your monthly mortgage payment is recorded by the bank as a savings deposit because there is no real loan. When you pay off the fraudulent mortgage, the bank waits 90 days and then submits a request to the IRS. The request states that: “Someone, unknown to this facility, deposited this money into our facility and has abandoned it. May we keep the deposit?” The IRS always gives their permission to the bank to keep the deposit and your hard-earned money just feathered the nest of the Rockefellers, Rothschilds and eleven other wealthy families in the world!


Equity Law, which once controlled America’s Corporate Courts, has been replaced with Admiralty/Maritime Law, pursuant to Title 28 of the United States Code and the Judiciary Act of 1789. This is the Law of Merchants and Sailors. Under Admiralty/Maritime Law, the courts presume you owe the mortgage or the tax or that you committed a crime defined as a Criminal Statute and it is your obligation to prove you’re innocent! This means, you’re guilty until you prove you’re innocent, which is the same standard and procedure used in a Military Court Martial. Haven’t we always been told that “You are innocent until proven guilty?” Lies, Lies and more Lies! We are not free men; we are slaves, and bound to our Masters by adhesion contracts and secret Trusts. The goal of the Masters and their agents, our elected officials, is to keep the people oppressed and subservient to them. As the Masters’ agents, they utilize propaganda techniques through government-controlled schools, churches, the media and mind control by force and or the threat of force through the courts and police enforcement. Police officers in America have been pumped full of more bullshit than a manure spreader and because of their trust, public school conditioning and training, they haven’t the ability to see what is going on. Many have been conditioned by previous military service not to think for themselves but just follow orders, which makes many of them as dangerous as a Terrorist! Now ask yourself - who are the real Terrorists in America? Guess what? The Constitution isn’t for the Police either, and still they are forced to swear an oath to defend it. The more regulations, statutes and codes created, and the greater the number of regulatory officers and agencies created to enforce them, the greater the Masters’ control over their slaves; and that is mind control by force and threat of force, by the very people we rely on, to protect and serve!
Facts:


1. The Federal Reserve Bank is a private banking system created by foreign interests. Call any branch for verification.

2. The Federal Reserve Bank is the sole creditor of the United States and the entire national debt is owed to the Federal Reserve Bank. Write your congressman for verification.

3. There are twelve member banks in this system and according to their bylaws (articles of association) they each have the power to act as depositary and fiscal agent (tax collector) of the United States.

4. Federal Reserve Board regulations and Generally Accepted Accounting Principles prohibit member banks within the Federal Reserve System from lending money from their own assets or from other depositors. Federal Reserve member banks do not make loans.

5. Bank customers fund their own mortgage transactions by signing a note. The note is the creation of currency that never existed before being signed by the customer.

6. Because the banks have monopolized the market on negotiable instruments, only banks will accept your promissory note. You can't buy groceries with a promissory note for example.

7. The practice of failing to disclose these facts in the mortgage agreement voids and nullifies the note because it violates 12 CFR 226.17(c)(1) of the Truth in Lending Law.

8. Unsecured debts assigned to debt collectors are not legally enforceable without the consent of the customer.

9. The banks must pay their customers back the entire value of each note and credit limit minus fees and interest.

10. These facts apply to both secured (e.g. mortgages, credit cards) and unsecured (e.g. credit card) accounts.

11. There are no disclosure or application requirements for a social security number. There are no penalties for refusing to disclose a social security number to anyone. 26 CFR 301.6109-1(c). This is a ruse perpetrated by the FDIC, Federal Reserve and insurance industry for the purpose of illegally monitoring American citizens.

12. The credit reporting system is the creation of the Federal Trade Commission. Its primary use is to collect and build information databases about Americans. It also provides an inexpensive means for banks to unfairly punish people and destroy reputations by subverting the legal requirements normally imposed upon them under the court system.


Extract From THE BANKER'S MANIFEST, for private circulation among leading bankers only. "Civil Servants' Year Book (The Organizer)" Jan 1934 & "New American" Feb 1934

"Capital must protect itself in every way, through combination and through legislation. Debts must be collected and loans and mortgages foreclosed as soon as possible. When through a process of law the common people lose their homes, they will be more tractable and more easily governed by the strong arm of the law, applied by the central power of wealth, under control of leading financiers. People without homes will not quarrel with their leaders. This is well known among our principal men now engaged in forming an imperialism of capital to govern the world. By dividing the people we can get them to expend their energies in fighting over questions of no importance to us except as teachers of the common herd. Thus, by discreet action we can secure for ourselves what has been generally planned and successfully accomplished."

The Commercial Lien Strategy.

Faced with corrupt lawyers and judges, no litigant can expect to win in court by simply
playing defense. To beat them, you must be able to scare them. You must be able to make
them respect you, and that means you must be able to take the offense — attack them
personally.

Unfortunately, judges, lawyers, and other government officials enjoy various levels of
personal immunity provided by both law and "professional courtesy." How do you sue a
lawyer for malpractice? You hire another lawyer — if you can find one who’ ll take the
case. How do you sue an IRS agent for violating your Constitutional rights? Only with
great difficulty. How you sue a judge for railroading you in court? You don ’ t.
As a practical matter, private citizens can’ t sue the President of the United States, a
Governor, judge, or even an IRS agent for failing to obey or enforce the laws. If we try to
sue in court to compel our government officials to obey the law and perform their lawful
duties, the judges routinely ignore our petitions and laugh us out of court.
Because legal and de facto immunities shield government personnel from being sued for
committing crimes against the People, the public is legally disarmed, unable to
aggressively sue the government or its agents and compel them to obey the Law. As a
result, the public’ s legal posture is fundamentally defensive: we try to duck, dodge, and
hide in legal loopholes to defend ourselves against the government and the courts. We try
to escape, evade, and avoid, but we seldom counter -attack against our antagonists, largely
because we think there are no lawful weapons to do so. However, it appears that a
powerful offensive legal weapon may now have been discovered, tested, and proven for
common Citizens — the commercial lien. We don’t try to sue a government official for
failing to perform his lawful duties. Instead, we simply file a lien that encumbers the
official’ s personal property and credit rating like a ton of bricks until he voluntarily
satisfies our demand to perform his lawful duty, and we, in turn, voluntarily agree to
excise the lien.
Example 1 — Edward J. Wagner, an hourly, unionized employee at General Electric,
received Notices of Levy from the IRS, garnishing his wages and moneys received from
several other sources. Wagner tried to persuade G.E. not to honor the Notices, since they
were not properly attested as "true bills of commerce." His efforts met with no success.
After giving G.E. proper Notice and Demand, Wagner and his wife filed a Commercial
Lien in the amount of $224,640,00.00. In the lien, Wagner impounded G.E. inventory
that he had worked on (including air conditioning units, analyzing equipment, etc.) as
security for the lien. This is similar t o an auto mechanic impounding a car he had repaired
("mechanic’ s lien"). This meant that G.E. could not lawfully sell or transfer the
equipment until the lien was either extinguished or satisfied.
Among the reasons for the high dollar amount are that the law allows for such high sums
as rewards for damages incurred, and it generally has to be large enough in relation to the
size of the company involved, to get its attention. Otherwise such a large company might
just ignore it.
Consequently, a legal war followed, and by June of ’ 92, G.E. had gone to court several
times trying to remove Wagner’s lien, all without any real success. This was in spite of
the fact that G.E. had the best, most highly paid, and highly motivated lawyers.
In June of ’ 92, the first major victory for the Wagners came. The IRS issued four
different official Releases of Levy, one to General Electric, plus three other places where
they had wages and income that the IRS had levied — the Port of Seattle, Dean Witter
Reynolds, and Ohio State Life Insurance Company. These effectively released the IRS ’ s
attachment on the Wagners ’ income and assets. That’ s a pretty solid testimonial to the
power of the arguments in Mr. Wagner’s lien.


Although this lien strategy is explosive, it ’ s more like nitro-glycerin than hydrogen
bombs. You need to be knowledgeable and careful to use nitro -glycerin, but you don’ t
need to be a nuclear physicist. However, nitro -glycerin can blow up in your face if you
handle it carelessly!
Likewise, "bombing" government officials with liens is a craft, not a science, that can be
used as easily by knowledgeable pro se’ s as it can by lawyers and legal scholars. The
commercial lien is simple, inexpensive, and takes very little time. It requires no court
action or judge’ s approval. And, it has proven to be very direct and effective, if it is
handled correctly. However, a few careless pro se’ s have had their liens "blow up" in
their faces, so be meticulous when you use them.

Trust layout

Trusts Layout

The United States, a private for profit Federal Corporation, is bankrupt and has to pay our bills

The united states “...is a corporation, a legal fiction that existed well before the Revolutionary War.”


Republica v. Sween, 1 Dallas 43.

United States Code Title 28, Part VI, Chapter 176, Subchapter A, § 3002;

(15) “United States” means, (A) a Federal corporation

1933 March 9, a bank emergency [bankruptcy] was declared by President Roosevelt because of the insolvency of the United States. Executive Order 6073, 6102, 6111, 6260; Senate Report 93-549, pgs. 187 & 594, 1973.

1933 March 9,“The new money (paper promissory notes) is issued to the banks in return for Government obligations, bills of exchange, drafts, notes, trade acceptances, and banker’s acceptances. The new money will be worth 100 cents on the dollar, because it is backed by the credit of the nation. It will represent a mortgage on all the homes and other

property of all the people in the Nation.” Senate Document No. 43, 73rd Congressional Record, 1st Session.

1933 May 1, gold was transferred from U. S. Citizens to the United States by Executive Order 6102.

1933 May 23, Congressman, Louis T. McFadden brought formal charges (Congressional Record May 23, 1933 page 4055-4058) against the Board of Governors of the Federal Reserve Bank system, The Comptroller of the Currency and the Secretary of United States Treasury for numerous criminal acts, including but not limited to, conspiracy, fraud, unlawful conversion and treason. The petition for Articles of Impeachment was thereafter referred to the Judiciary Committee and has yet to be acted on.

1933 June 5, to mitigate McFadden's charges (and prevent being hung for treason), Congress passed House Joint Resolution 192 to provide U. S. Citizens the right to set off all debt obligations as the consideration (something bargained for i.e., an exchange) for the transfer (theft) of all the gold and property.

1950 Congress declared "bankruptcy and reorganization". Secretary of Treasury appointed receiver in the bankruptcy. Reorganization Plan, No. 26, 5 U.S.C.A. 903; Public Law 94-564; Legislative History, Pg. 5967.

1973 "Since March 9th, 1933, the United States has been in a state of declared national emergency (bankruptcy)..." Senate Resolution 9, 93d. Congress, 1st. Session, Foreward.

1977 Oct. 28th, the United States as a "Corporator" and "State" declared insolvency. State banks and most other banks were put under control of the "Governor" (Secretary of the U. S. Treasury) of the "Fund" (I.M.F.). 26 IRC 165 (g)(1); U.C.C. 1-201(23), C.R.S. 39-22-103.5, Westfall vs. Braley, 10 Ohio 188, 75 Am. Dec. 509, Adams vs. Richardson, 337 S.W. 2d. 911; Ward vs. Smith, 7 Wall 447.

1993 March 17th, United States Congressional Record, Vol. 33, page H-1303. Speaker-Rep. James Traficant, Jr. (Ohio) addressing the House: "Mr. Speaker, we are here now in chapter 11.. Members of Congress are official trustees presiding over the greatest reorganization of any Bankrupt entity in world history, the U. S. Government. It is an established fact that the United States Federal Government has been dissolved by the Emergency Banking Act, March 9, 1933, 48 Stat. 1, Public Law 89-719; declared by President Roosevelt, being bankrupt and insolvent. H.J.R. 192, 73rd Congress m session June 5, 1933 – Joint Resolution To Suspend The Gold Standard and Abrogate The Gold Clause dissolved the Sovereign Authority of the United States and the official capacities of all United States Governmental Offices, Officers, and Departments and is further evidence that the United States Federal Government exists today in name only.”

The SUBSTANCE of the American citizenry, their real property, wealth, assets and productivity that belongs to them, was pledged by the government and placed at risk as the collateral for US debt, credit, and currency for commerce to function.

Under the 14th amendment and numerous Supreme Court precedents, as well as in equity, private property cannot be taken or pledged for public use without just compensation or due process of law. The United States cannot pledge or risk the property and wealth of its PRIVATE CITIZENS for any government purpose without legally providing them remedy to recover what is due them on their risk. Courts have long ruled that to have one’s property legally held as collateral or surety for a debt, even when one still owns it and still has it, is to DEPRIVE him of it since it is at risk and could be lost for the debt at any time.

The United States Supreme Court said that, the Constitution provides that “private property shall not be taken for public use without just compensation.” United States v. Russell, 13 Wall, 623, 627.

“Sureties compelled to pay debts for their Principal have been deemed entitled to reimbursement, even without a contractual promise… And probably there are few doctrines better established…” Pearlman v. Reliance Ins. Co., 371 U.S. 132, 1962

United States Code Title 31 section 3123 states that the US Government has an obligation to pay 'dollar for dollar' principal and interest in legal tender ALL debts accrued by the American people.

Those backing the nation’s credit and currency cannot recover what is due them by anything drawn on Federal Reserve notes without expanding their risk and obligation to their own selves. Any recovery payments backed by this currency (FRNs or Federal Reserve Accounting Unit Devices; FRAUDs) would only increase the public debt its citizens are collateral for, which an equitable REMEDY was intended to reduce, and in equity would not satisfy anything, for there was no longer actual money of substance to pay anybody. In other words, there is no actual money in circulation by which debt owed from one party to another can actually be repaid. Since 1933 no one has ever really been “paid” because there's been no money of substance. Every time we spend a dollar (IOU) we increase the national debt by that same amount. Every time we send our bills to Treasury for the set off we reduce the national debt by that same amount. Federal Reserve Publication “Public Debt, Private Asset” says the national debt is owed to its creditors which is you and me.

Live Birth Record or Birth Certificate

ELIMINATE CREDIT CARD DEBT

There are at least 3 debt elimination procedures that can be used administratively to eliminate credit card debt:

1. challenge the validation of the debt
2. file a commercial lien against YOUR trust
3. novation of contract
Validation as a debt elimination process to eliminate credit card debt
First you must understand that in our money system there are no funds because there is technically, no money. There is only debt and the debt instruments that are used in place of money. The credit card lender did not loan you any money. They didn't even lend you their credit. They aren't allowed to do that. They used YOUR credit to authorize the use of the card. You can very simply establish this by demanding that they validate the debt. That is, someone in a position of authority at the "lending" corporation would have to sign an affidavit under oath that the debt that they claim you owe is a valid debt. They can't and they won't. They have actually committed fraud and now you are asking them to sign for it. No way they want to stick their neck in THAT noose. Failing to sign the affidavit, they just write the debt off as a loss. This normally takes a series of communications and eventually you paint them into a corner and they quit. If they try to have a collection agency get involved, you simply remind them that the collection agency is not a party to the contract and cannot speak for the "lender." They might have an attorney get involved, but the attorney would have to validate the debt, as well, and handled very promptly, exactly and professionally, your process grinds them to a halt.

Filing a commercial lien against your own trust to eliminate credit card debt

Another version of this debt elimination process picks up on the fact that there are no funds, just debt money. Look at a dollar bill. It does say Federal Reserve NOTE, right? It's a debt instrument that's being used as though it were real money. When you agreed to use the credit card, they used your assent, your signature to create the credit. They used your name to create a trust with themselves named as trustees, and they have used that trust as collateral on the national debt.

That collateralization is in an asset account for the trust after it was monetized on the world money market. Eliminate Credit Card Process #3 establishes YOUR right as the trustor and takes that trust back under your control. Under your control you can transfer trust assets to the trust debt account, thereby discharging the debt. Debt elimination by discharging debt.


You next must understand that the debt is not yours personally. You have, since you began doing money transactions, functioned as a voluntary fiduciary representative for that trust account, paying its bills with your own phony debt money. When you set up your first checking account, you accepted this relationship with the trust the government had set up in your name. You have not had control of this trust because you never claimed it and your parents could not control it for you because they were wards of the State like you and had never claimed it..

One way to see this in action is to notice how the "System" maintains the illusion by artifice and deception. Look at your checkbook. How did they present your name? ALL CAPS. Odd, isn't it? That's similar to your name but you most likely don't spell it with all capital letters. What I did a few years back when I needed more check blanks was to ask the people at the bank to CHANGE my name to normal capitalization of the first letters of my name. She COULDN'T do it because her computer would not permit that. The bank personnel will be unaware of why that is. I just shrugged my shoulders, grinned and told her that that was OK, go ahead and do it the way it was. Do they insist on ALL CAPS because they would like to be very clear and allow no mistakes? The clue to that answer is in the line on which you sign your name. It's not a line. It's nearly microscopic words, fine print, some of the finest fine print you might ever encounter. It generally says something like "ONLY AUTHORIZED REPRESENTATIVE".

If you are familiar with the corporate world, you know that only AUTHORIZED personnel are permitted to sign corporate checks. The AUTHORIZED REPRESENTATIVE of the corporation alone has this role. So you the human being has been given authority to sign the checks of your trust, which is an incorporated entity, a fiction.

For over 125 years, corporations have had many of the attributes of human citizens. Making a fictitious entity that has real attributes of a living person in the law, they can deceive you the real human whose name the bank corporations have appropriated from your birth certificate. The birth certificate represents an Official Certificate of Manufacturer that in the hands of the government can be pledged on a debt, the national debt. The IRS is the collection agency for this pledge. Its roots are not in the United States Code but in the necessity of the Federal Reserve and its parent corporation, the IMF, to collect on the debt instrument they hold. This ALL CAPS name is how the US corporation, State corporation, County corporation, or School District corporation can communicate with you through this Corporate YOU. Interesting, isn't it. It gets better.

When you place a commercial lien against the Corporate YOU for what it owes you for paying its bills or simply because it is yours and you have the birth certificate, drivers license, etc to prove it, then and only then do you take back the power that they had usurped from you at birth. The Constitution says that they cannot levy a tax directly on the citizens of a State. So they don't. They levy a tax on a corporation which they control and send the bill to wherever you reside knowing that you will never figure it out. And you will pay and pay obediently.

Similar to The Matrix, you are trapped in a system that extracts your energy through a fiction and fools the real you into identifying with that fiction. As long as you identify with that fiction they can continue to control the real you in many ways because you are chattel for their purposes. Your children can be taken away, sent off to fight in wars, forced to bow to the demands of the System. That's why debt elimination is the path to real freedom. Are you starting to get the picture?

It's all commerce. That's why witnesses in court testify in the "dock." They are vessels. That's why the flag displayed in the courtroom has all that gold braid and fringe. It's an admiralty court that administers the law of commerce. No, the government might not wish to release you from your debt slavery but when you have taken the necessary legal steps to discriminate between you, the real person, and the fictitious person, they cannot by law expect you to pay the bills assessed to the fiction because you have declared that IT owes you and before ANYONE gets paid, you get paid. It's a commercial lien on a debtor entity. You are following THEIR rules to obtain YOUR freedom and independence.

It's not YOUR poor spending habits. It's not even YOUR national debt to be repaid. The malfeasance and misfeasance of the government is at fault. Since they took all of the REAL money away, and took your energy through fraud, they left no means to ACTUALLY pay your bills.  When you agreed to the use of any or all credit cards, YOU, the living human being, created the "money" to pay the bills. The Federal Reserve Bank (a private institution with NO reserves) deposited that fake "money" in THEIR account and has demanded that you pay interest on it until you have obtained sufficient debt instruments ('money") to exchange for the discharge of the debt. That credit card is not yours, either, you know. Look at the name. Take out your credit cards and look at the name...ALL CAPS. The debt is owed by the fiction even though you have had use of the merchandise or services. The fault lies in a government that has coerced, cajoled, or was complicit in extorting energy from you and intentionally or unintentionally fumbling away your heritage and the future of your family. When you finally TAKE RESPONSIBILITY for yourself instead of remaining a ward of the state, you mark your maturity as a real human being who is the creator of government, not its chattel. When you eliminate credit card debt you are also doing your patriotic duty to the real united States of America.
Secret Weapon Against Lawsuits, the IRS, and More!

Banks rarely go to the trouble and expense of attempting to sue someone who has stopped paying on their credit cards, and that's under normal circumstances!  When they know you have evidence that they've violated Federal law it's very unlikely that they will file suit. They certainly don't wish to sign their names to any affidavit of validation. They must obey the regulations that prevent predatory lending in consumer protection laws.

The non-adversarial, administrative approach shows you how to use 3 different ways to use the UCC administrative processes for those who are not in default or in danger of default. All are non-adversarial ways to eliminate credit card debt and cost the same no matter the number of credit cards, the amount owed, or the number of times you wish to use the process to eliminate credit card debt. We show you how to use a commercial filing of a lien against a constructive trust account at the US Treasury which with proper forms and procedures gives you status as First Creditor. Transferring assets within the national bankruptcy you can discharge your debt as you reduce the national debt. You might be able to continue to use the credit card....and keep on discharging it! The third wau to eliminate credit card debt utilizes the law of contract to change the contract the same way the credit card "lender" often changes it without you knowing it. This third process to eliminate credit card debt is called Novation.