Unclear on the Liberty Dollar Specifics

[drunken_scot]

I am unclear on the specifics of what about the Liberty Dollar setup is illegal, leaving aside for the moment the allegations of money laundering and the like. At the bottom of the post is a list of points of confusion. One that puzzles me most at the moment is Title 18, Part 1, Chapter 25, Section 486 of the USC: http://www.usmint.gov/consumer/index.cf ... aw18USC486. According to the US Mint, this is being violated by NORFED: http://www.usmint.gov/consumer/index.cf ... ems#NORFED. If their coins were made of semiconductor-grade silicon (a semi-metal), would they be in violation then? Would they still be illegal then? If silicon won't cut it, then we can choose sulfur or carbon, both of which are non-metals, and carbon even has a very (market-) valuable form (diamond).

Points of Confusion

• Coins not made of metal
  Gold clauses are once again legal
  Various alternate currencies are legal

[Nikki]

But no bagpipes, right?

Please no bagpipes.

[drunken_scot]

I suppose another issue is misrepresentation. In which case, if they were Liberty Quatloos, would they be illegal?

[Quixote]

I am unclear on the specifics of what about the Liberty Dollar setup is illegal, leaving aside for the moment the allegations of money laundering and the like.

They are coins made of metal and intended for use as current money. Section 486 clearly makes them illegal. Coins made of another substance might not be in violation of Section 486, but Liberty Dollars are not made of some other substance; they're made of metal.

[drunken_scot]

I am unclear on the specifics of what about the Liberty Dollar setup is illegal, leaving aside for the moment the allegations of money laundering and the like.

They are coins made of metal and intended for use as current money. Section 486 clearly makes them illegal. Coins made of another substance might not be in violation of Section 486, but Liberty Dollars are not made of some other substance; they're made of metal.

A second question is how this interacts with the legality of gold clauses, requiring payment in either a fixed amount of gold or a fixed amount of money. Gold clauses are legal again, and is it not conceivable that you could have a contract among participants who will accept a gold coin at face value in exchange for a good or service and give change in US dollars? Would this be legal?

[Pottapaug1938]

A second question is how this interacts with the legality of gold clauses, requiring payment in either a fixed amount of gold or a fixed amount of money. Gold clauses are legal again, and is it not conceivable that you could have a contract among participants who will accept a gold coin at face value in exchange for a good or service and give change in US dollars? Would this be legal?

Without researching the subject, I question whether or not a gold clause in a modern contract would work the same as they did before 1933. In 1907, if I signed a contract in which I was to be paid $100 in gold, the other party and I could be certain that the $100 he would give me under the contract would be worth the same $100 that it was worth when the contract was signed -- gold was a stable $20.67 per troy ounce; and a $5 coin (for example) contained $5 worth of gold (unless worn, in which case it was sent in for melting and recoinage). Now, if I sign a contract calling for me to receive $10,000 in gold coins with a face value of that amount, the fluctuations in the price of gold will mean that, when the payment is made, I wlll receive either more or less than I was entitled to receive under the contract.

I would guess, then, that any viable gold clause would state that payment under the contract could be tendered in gold, valued at the then current commodity price, with change being given in dollars (or supplemental fractional payments being tendered in the same currency).

[Brandybuck]

My take on it has Nuthaus doing two things wrong:

1) Minting metallic coins for use as money. He explicitly marketed them as copper, silver and gold money. And marked in US Dollars. As much as I personally think it's a bad law, it's still against the law.

2) The second is far worse in my mind: he took advantage of his ignorant customers. Not illegal, but still unethical. He sold 1oz gold coins for $1000 at a time when gold was selling for around $750. And then repeatedly did not deliver the goods. He couldn't deliver because he took orders before he had them minted. Refunds were slow to non-existent.

[drunken_scot]

I believe a gold clause stipulates a fixed weight of gold or a fixed amount of currency. Their enforceability has been upheld.

[notorial dissent]

The main reason von Whack Job got in trouble was because he was minting slugs that had enough of an appearance of valid US coinage to trip the counterfeiting statutes(utterance). If he’d left the $ sign and the numeric off them they would have just been curiosities(maybe). He didn’t, and then he tried to get his suckers to attempt to use them in place of legal tender which also tripped the statutes for passing. Unless you are totally brain dead, the outright violation of two major Federal statutes is more than obvious, and more than enough to send von Whack Job away for a very long time. And just for giggles, anyone passing them is liable for the passing charges if the Feds get cranky, and if the slugs are determined to meet the counterfeiting requirements, possession of them is illegal, and the holders could also go to jail, as well as lose what they spent for them, since purchasing contraband is not reimbursable. So he has screwed them three times already, and we haven’t even discussed his serious overcharge for them. What part of con game isn’t obvious here?

[drunken_scot]

I realize now I was conflating some hypothetical situations in the case and projecting some of my dislike of the law. It seems to me that there are several things that could have made it legal, which was part of the confusion. I now definitely see the issues of passing and generally the counterfeiting.

[Brandybuck]

The main reason von Whack Job got in trouble was because he was minting slugs that had enough of an appearance of valid US coinage to trip the counterfeiting statutes(utterance).

That's what the Federales say, but I've seen Liberty Dollars (photos of them, at least), and they do not resemble any US currency I have seen present or past. It's a very odd claim for them to be making. Not that I am in any way absolving Nuthaus, but it's really reaching to try to pin counterfeiting on him.

[notorial dissent]

Then you obviously haven’t looked much or hard. The main die that von Nutbert uses is all but a direct steal of the US Peace dollar, only uglier. At first glance, they are nearly identical and one could easily be confused for the other, thus the violation of the in appearance of statute. It also bears enough similarity to the current platinum liberty to be an issue as well.

The Liberty motif was quite popular on bi-metallic era coinage, and without being familiar with the differences the “Libbies” have the appearance of valid US coinage, which brings them under the counterfeiting statute.

[wserra]

I've seen Liberty Dollars (photos of them, at least), and they do not resemble any US currency I have seen present or past.

They don't have to.

Whoever, except as authorized by law, makes or utters or passes, or attempts to utter or pass, any coins of gold or silver or other metal, or alloys of metals, intended for use as current money, whether in the resemblance of coins of the United States or of foreign countries, or of original design, shall be fined under this title or imprisoned not more than five years, or both.

Emphasis supplied. The gravamen of the crime (as courts say) is that one utters or passes metal coins intended for use as currency. Applying that to von Nuthouse doesn't seem a stretch at all.