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Saturday, May 16, 2015

Pyramid Scheme Alert Updated

Credit: see below

The "Pyramid Scheme Alert" site, whose logo is above, had been massively updated. Of particular interest is the fact that R. L. FitzPatrick, the creator of the site, also has a related "false profits" blog as one of the parts of the site. Well worth a look.

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Thursday, April 23, 2015

An In-Depth View of MLMs and Minority Communities

Credit: http://www.kingtutone.com/pyramids/information/

Al-Jazeera America has an in-depth five-part series of how MLMs recruit, brainwash, manipulate, and hurt people -- in short, why they are a financial cult -- as well as what the government, and you, can do about it.

As can be expected from this source -- a news network whose target audience is immigrants from the middle east -- they pay particular attention to the way MLMs use what is known as 'affinity fraud' to target minorities and immigrants. The titles of the five parts are worth mentioning:

1. An army of recruits
2. Seeing green
3. Your company loves you
4. Legal remedies
5. Thinking outside the pyramid

The last part, in particular, has some good advice on how to resist the sales pitch of the MLM. But read the whole thing.

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Saturday, February 14, 2015

Is Bitcoin Really Money?

Image credit: www.wired.com

Unless you lived under a rock for a few years, you have heard of electronic currency known as Bitcoin. I accept that if, for some reason, everybody tomorrow (governments included) accepted Bitcoin as money, it would become money. But, I wish here to show how the Bitcoin does not fail to be money due to certain reasons that are often claimed against it, but does fail to be money in one, very crucial, aspect.

Why bother showing how some arguments against Bitcoin fail? The reason is that people are likely to believe that, if the arguments they are aware of that prove Bitcoin isn't real money fail, then it follows that Bitcoin is money. This does not follow logically: indeed, salesmen and, for that matter, scam artists (one legitimately, the other not) are experts at overcoming one's natural objections by having "an answer to everything". But that only means the answer to the would-be buyer's most common objections. Just because those objections fail does not mean there aren't other serious reasons to suspect Bitcoin.

Nothing I write here is the economic equivalent of rocket science. But this, if anything, is all the more reason to write it: the more obvious the problem and the more people ignore it, the more urgent is to show what is going on.

Let us, then, start with some obvious objections that are not, in themselves, crucial -- in the sense that, while true, real money has the same issues.

1). Bitcoin is private currency. It is -- in the sense that it is not backed or issued by any government. This is important (as we shall see later), but, historically, most money was privately printed. Indeed, until the 19th century, most bank notes were notes issued by private banks, for example.

2). Bitcoin is fiat currency. That is, there is no way to limit the amount of money printed. But this is true for government-backed currency as well. The US dollar or the Euro, indeed all modern currencies, are not backed by gold or anything else. In theory the US could print as much money as it wishes. So why should Bitcoin, whose big selling point is that it is limited in quantity, in practice at least, be less money than the US dollar? If anything, it seems it should be more valuable than government-backed fiat money.

3). People speculate with Bitcoin, and its value can therefore fluctuate wildly. Why did Bitcoin's value skyrocket recently and then fall? Because, for psychological reasons, people began to believe its value would increase, increasing demand for it, and creating a self-fulfilling prophecy. Once people began to suspect Bitcoin is overvalued, they stopped buying and started selling -- creating another self-fulfilling prophecy.

Yet this, while true, is not in itself evidence that Bitcoin is illegitimate any more than the existence of bubbles in everything from tulips to internet startups is evidence, in itself, that the underlying commodity is worthless, and the bubble a pyramid scheme.  It is true that there were (and are) deliberate bubbles that are simply frauds -- pump-and-dump schemes for example -- and others that, in hindsight, seem absurd (the south sea bubble, the tulip bubble). But that in itself is not evidence Bitcoin is a scam.

4). Bitcoin is electronic money, and does not exist physically. This certainly be a problem in the sense that it may well be difficult to, say, stop people from counterfeiting it, but in fact most transactions with real money today do not involve the physical transfers of federal notes, let alone of gold coins. It is, in theory, possible to replace all paper money -- or gold coins for that matter -- with electronic equivalents.

The real problem is different: no government accepts Bitcoin as legal tender for the payment of debts, and in particular, of taxes. It is therefore not legal tender. In the USA, people must accept the US dollar as payment, and the government must accept it as payment of taxes. This is not so with Bitcoin. You must convert your Bitcoins to dollars before you can use them to pay any debt to the government.

You might be able to find someone to sell your Bitcoins to for dollars, or who will accept goods for Bitcoins which you can then sell for US dollars, but that is no different than anything else: it is not illegal for a private individual to accept anything whatever, including monopoly money, as payment. Indeed, James Boggs paints his own "money" and actually exchanges his "notes" for goods -- which led to him getting in trouble with the feds, but (correctly) he was acquitted of charges of counterfeiting, since no reasonable person would think his art is genuine federal bills, and he openly tells the person he gives them to that they aren't. But he can do it because people are willing to do it, considering his art collectibles, not because they have any legal duty to accept his bills.

Same with gold, in the "old days". It was not merely the fact that gold was rare that made it money, that is, legal tender (as opposed to making it valuable). It was that the government had to accept it (or at least its own gold and silver coins) as a payment of taxes. Similarly, to simplify, the original bank notes were notes the bank had to accept, legally, for gold or silver in the amount written on the note (which, to simplify, had then to be legally accepted by the government).

So Bitcoin is simply not money if by money we mean 'legal tender'. This does not mean -- in itself -- that it cannot be used for exchange, or is valueless. By definition almost everything that is valuable is not legal tender: corporate bonds, real estate, livestock, and so on. The government is not required to accept cows and oxen as payment -- livestock is not legal tender -- but this does hardly means that such commodities are not valuable: indeed, the term pecuniary comes from the latin pecus, cattle, and the Bible speaks of Abraham of being rich with cattle and livestock, despite the fact that he lived (if he existed in reality) about a thousand years before the invention of coined money.

But here, alas, is Bitcoin's second problem: if something is not legal tender, in order to be valuable, it should have some intrinsic value -- like livestock or bonds. Bitcoin does not. If something is neither legal tender that the government must accept, nor has intrinsic value, the only reason to exchange Bitcoin for legal tender or for goods with intrinsic value is the view that somebody else will want to do so in the future with our Bitcoins. They may -- or they may not. But they, too, would do so only if they think that someone in the future would be willing to do so with their Bitcoins.

Sounds problematic? It is. Bitcoin has, by definition of being "private" money, that, if this is not a contradiction in terms, the crucial bad property of fiat money -- no intrinsic value -- with the crucial bad property of commodities -- not being legal tender.


It is true that, the way this post is written, it may seem that the government can mysteriously create value out of nothing -- as if the mere fact that something is legal tender makes it valuable. Let us say only that things are, of course, not as simple as that. How money, a medium of exchange with no intrinsic value, actually becomes a "store" for value, is significantly more complicated than this. If nothing else, this can be seen by the fact that governments certainly can, and often did, make their legal tender practically valueless with hyperinflation.

All I am claiming here is the opposite: that if something is not legal tender, it by golly better be intrinsically valuable if it is to be used as a store of value. Bitcoin is not. It is not different, in this respect, than (for example) Pokemon or Magic: the Gathering cards. Some people will pay a lot of money for such cards, or for rare tulips for that matter, but...

The argument between "bitcoiners" and economists remind me of the arguments between creationists and biologists: the bitcoiners spend most of their time arguing against fiat money, arguing in particular that fiat money, despite being legal tender, is valueless (as indeed, in particular cases, it is), just like creationists spend most of their time arguing against evolution, not for creationism.

But even if it were true that all fiat money is indeed valueless (as an experiment, ask the next person who tells you that to give you all the valueless fiat money in their wallet), this would not be any evidence Bitcoin is valuable -- just like, if evolution were disproved tomorrow, it would not be one whit of evidence that creationists asre correct.

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Sunday, January 18, 2015

It's not prison, it's "ME time!"

Credit: "whirled musing" blog

Well, thank God for that. Kevin Trudeau, the scam artist who recently got 10 years in jail for fraud and had been involved in MLMs (surprise, surprise), had declared that it is not prison time he's doing, it's '100% "ME" time! ... And I am LOVING IT!" (click on image for large picture).

Well, one wonders, if he loves it so much, why does he keep asking people for money to help with his legal defense fund?  

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Wednesday, December 24, 2014

Sovereign Citizen Cut-Out Kit

Credit: www.amazon.com

Amazon.com will sell, apparently, anything.

One of their interesting items is a Sovereign Citizen's Cut-Out Kit. All you have to do is but the kit, cut out the material, stick it in all kinds of places in your home, wallet, car, etc. -- and you are tax-free, do not have to get a driver's license, and in general have it made.

But aren't cut-out kits usually toys for children who use them to recreate fantasies? Well, indeed they are. Amazon's other cut-out books offer, are, almost exclusively, of that sort. Here is where, ranked by popularity, one finds the Sovereign Citizen's Cut-Out Kit when one searches for "cut out kit" items in "books":

Other items on the list are similar to the first and last item here: e.g., cut-out doll houses, haunted houses, dragons, etc. Of course, the other manufacturers do not imply that, once you are done building their kit, you will own an actual Roman amphitheatre or old-fashioned carousel. The only item to make (or strongly imply) such a preposterous claim -- that once you're done playing with their kit, you really will be a "Sovereign Citizen" -- is the Sovereign Citizen's Cut-Out Kit.

This certainly shows something about the mental and emotional level of maturity of the average "Sovereign Citizen".

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Wednesday, December 10, 2014

Is Anyone Surprised... ?

Image Credit: Illuminutti (well worth visiting)

...that Kevin Trudeau, the serial scammer who had recently been sentenced to 10 years in jail for stealing millions, was involved -- naturally, as the guy at the top -- in an MLM venture, ITV Direct Inc.? Or that, more generally speaking, one MLM after another is being prosecuted as a pyramid scheme -- which, of course, they all are? The last link, incidentally, takes you to an excellent anti-MLM blog.

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Saturday, November 15, 2014

The MLM Plague in Israel (Continued)

Credit: amazon.com

Are there any "good" MLMs? Rhetorical question, I know, but it is interesting to note how it seems that all of them are using the same stale psychological tricks -- no matter where, no matter in what language.

For example, take the following [Hebrew-language] Facebook page, 'Pro MLM Israel'. Yes, it is in Hebrew... but believe me, it doesn't matter. You can all just guess what's there. On the first page, we have:

- 'A one time offer to learn personally from one of Israel's top marketers!'
- 'Our amazing conference! Be there!'
- 'Why most marketers don't make money in MLM' (dead link -- let me guess, anything but the true reason, i.e., that it's a pyramid scam).
- 'Is there another way except for working for peanuts for 40 years'?

...and so on.

The Facebook page itself is defunct -- its last update was in 2012. Strange. Well, I guess the authors of the page are millionaires by now.

Another page, 'I am MLM', is offering the same sort of pop psychology. It includes posts such as the:

- 'We are only using 10% of our brain' myth,
- 'Getting rich is an exact science' (so buy the book / lecture / whatever that will teach you the "secret"),
- 'Every company is a pyramid, get over it' (sure -- only in MLMs, the "workers" don't actually get paid...),
- 'What you need is MOTIVATION' (every second or third post): i.e., if you didn't succeed in MLM, it was because you were not 'motivated' enough.

Naturally, the web page is full of invitations to register for the seminars that will teach you the 'secrets of success', 'how to make money on Facebook', testimonials such as 'I made $100 today sitting next to the pool, you want to as well, right?', etc.

To be fair, they also have standard-issue 'feel good' videos there for free; of course, if that's what one wants, one can find them just as easily on youtube.

People actually pay money for this?


Wednesday, October 22, 2014

RationalWiki and Tax Protestors

'It's not even a good idea' -- the motto below this "pseudolaw" portal logo on the rational wiki web page. 

The excellent rational wiki page about tax protestors (or protesters) has all the usual -- detailed -- tax protestor nonsense debunked. It is well worth a visit since it deals with all kinds of pseudoscience and debunks it. It is common for tax protestors to also be creationists (like "Dr. Dino" [Kent Hovind]), conspiracy theorists (like - well - most of them), believers in psuedohistory, and even (in the case of the NESARA scammers, which are not technically tax deniers but share many of the same beliefs) in UFOs.

Note: All links go to the "rational wiki" portal, which is well worth pursuing for its own sake.

Naturally all these areas overlap. They all share the same important point, namely, of making the believer in the theory think that he (usually; most women seem to have more common sense) is special, part of a tiny elite which knows THE TRUTH(tm), and everybody else is brainwashed and wrong.

This explains, incidentally, why many of them fight the IRS even if their financial situation is such that they actually don't owe much, or even any, income tax. It really is a matter of principle, or perhaps worldview, for them -- not necessarily the money.


Saturday, August 30, 2014

Problem Solved(?)

Photo Credit: dailypicksandflicks.com

Quick note: I just found out why the blog suddenly had a "disappearing image" problem. Hope the problem is solved.


Thursday, July 31, 2014

It's not that Good to be the King after all, I Guess.

Photo credit: latest.com

Apparently, the man above -- Crown Prince Emperor El Bey Bigbay Bagby (badaboom badabam), a.k.a. William McRae -- does not, in fact, posses diplomatic immunity. A rather extreme (in silliness, not violence) case of people considering themselves "sovereigns".

The judge threw out his claim for diplomatic immunity, needless to say, but I noticed something in his titles: it is even logically impossible to be a "crown prince emperor el bey", since one cannot even logically be a crown prince, an emperor, and a bey (roughly, a chieftain or ruler of an area within a country) at the same time.

Not that the man in question is even on nodding terms with this thing called "logic", but still...


Saturday, June 7, 2014

Martian Law Not Declared After All

Photo Credit: Deep Though

Sovereign citizens are not known for their literacy, as this post of the SPLC center notes. A man tried to declare that he is not subject to the laws of the state of Georgia (the US state, not the former Soviet Republic), but rather to the law of the "Moorish Nations", and therefore he wants to be tried by their laws, which, presumably, say he can do anything he feels like.

The judge noted that it may as well be "Martian law", which, presumably, is the law they have on Mars, where the man in question -- Akeem Kwame, the executor of the Akeem Kwame trust, a.k.a., somewhat less grandiosly, as Gregory Ross of Covingron, GA. -- seems to be living.

Kwane seemed bewildered when he was thrown in jail: "You're placing the occupant of the executor office of the Akeem Kwame [trust] in custory?". Why yes, Mr. Kwame. Yes indeed.


Sunday, June 1, 2014

An Excellent Anti-Fraud Web Side

Image credit: Tax Guard Blog

A very good anti-fraud web site is the Fraud Files Blog -- which investigates all sort of frauds and scams. Its most recent (May 2014) emphasis is on divorce fraud (spouses hiding assets from each other using all kinds of illegal means), but there are much more information there. In particular, searching for 'MLM' in that blog leads to a huge list of articles, and looking for specific MLMs -- such as "Amway" -- leads to many others, many of them not likely to have been seen by readers here before. See if your own favorite MLM scammer is there (they likely are).

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Saturday, May 3, 2014

Dennis The Constitutional Peasant in Real Life

Well, it had to happen.

A certain "sovereign citizen", Rory Daniel Hawes, this time from Canada, had claimed -- of course -- that he is not under the jurisdiction of the Canadian courts.

Now, the interesting thing is that he, first, agrees with Dennis the Constitutional Peasant that just because some watery tart threw a sword at someone, that hardly makes them a sovereign. He therefore concludes that people must have voted for Queen Elizabeth II:
Mind control drug needles in his ass! In his ass! All because you voted for Queen Elizabeth II, you bastard Canadians!
What's more, he is -- you guessed it (see the same link) -- convinced that he is being oppressed, and that we all should come and see the violence inherit in the system.

Monty Python comes to life.


Saturday, April 5, 2014

Quick Note

There seems to have been a problem with images on this blog. I have removed the "unavailable" images from the posts (finally)...


Christianity and MLMs

Credit: Lifechurch
We have already discussed how Judaism sees MLMs, and how Kantians do. What about Christians? An excellent take-down of MLM's problems from a couple who happens to be Christian, What is Wrong with MLMs (2nd article -- but the rest is well worth reading), is well-known among MLM critics on the internet. However, their faith plays no role in that particular article; it is pure economics.

One example of an article which speaks about the Christian's duty concerning MLMs agrees, broadly, with the Jewish view noted in this blog before. To wit, while the Bible (needless to say) does not consider MLMs directly, there are best avoided by good Christians because of their potential, indeed near-certainty, of leading to sin -- such as that of greed, hurting others, etc.

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Tuesday, January 21, 2014

"But I Made a Lot of Money" / "Look at all those Successful People!"

Credit: Wow Blog.
A common argument by MLMers is the argumentum ad populum -- so many people are successful, why won't you be? If they are all successful, can they all be wrong?

There are two reasons. First of all, they are likely simply lying. Statistics show that the average MLMer loses money and only a tiny fraction makes more than a part-time minimum wage job would have made with a lot more security and less effort.

But suppose they are correct? If so, then this is another reason to not join the MLM. As MLMs are pyramid schemes, where money is made by those in the top from those on the bottom, if many people are successful it merely means the pyramid's top -- joining it being the only way to make money -- is already full, so your chances of making money are even smaller than they already were.

I mean, would you buy a scratchcard from someone who told you to buy it because he already had won the grand prize in that batch?  

So the next time someone tells you to join an MLM because they made it big, tell them 'that's why I'm not joining!'.

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Saturday, December 7, 2013

MLMs and Jewish Law

What does Jewish law say about MLMs? An interesting answer is given (in Hebrew) by a in an article called 'Slaves of the Pyramid' on Ynet, Israel's most popular news site.

Rabbi Aryeh Wohlander (ph. spelling from the Hebrew), first distinguishes "pyramid MLMs" (where the money is mostly or exclusively from recruiting a downline, not from product sales) from "non-pyramid scheme MLMs". He notes that the latter are legal, but he distrusts 'we are not a pyramid' claims of MLMS (he notes all MLMs make them) and gives a rule of thumb: whether one can make money without recruiting others or having a downline.

In practice -- I add, the Rabbi does not, perhaps due to Ynet's fear of lawsuits -- this means all MLMs are pyramid schemes. As for pyramid schemes, whether with a product ("pyramid MLMs") or not, the Rabbi notes that it is explicitly forbidden -- a form of fraud -- to give a false description of the product (in this case the MLM "opportunity") or to hide flaws in it, e.g. by overemphasizing atypical success stories or blaming failure on the person instead of the rigged system.

What's more, since a person who joins and does know all the facts, and then does not succeed in recruiting others had lost money due to deliberately bad advice by the recruiter, this is a serious sin, hurting others who are in no position to defend themselves, forbidden by the biblical command to 'not put an obstacle in front of a blind man'.

Finally, such "pyramid MLMs" are similar to gambling, an activity that 'is of no use' -- one man's gain being simply another man's loss, which is forbidden by Jewish law (e.g., by the Rambam), even if there is no fraud involved, as a waste of time, to say nothing of its corrupting properties. This is as opposed to genuine economic activity -- buying or selling goods or services -- where both sides gain from the deal, and thus is not a waste of time.

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Saturday, July 20, 2013

Kiyosaki: Don't let Logic Stop you from Getting Rich!

Well, what do you know. Robert Kiyosaki, the world's worst financial adviser (but the world's best self-publicist), gave an interview to an Israeli Financial Newspaper in 2007.

While the above quote doesn't appear literally in the interview, it follows from what he says. The link is in Hebrew, so here are some gems. What is amazing is that just about everything he says is either a logical contradiction, or a tautology, or just plain wrong.

Here are some contradictions from the article:

Rule 8 "for getting rich": "take care of yourself first, of your bills later".
Rule 9: "don't get into debt".

Rule 1: "Real estate is an asset, it creates income".
Rule 2: "Owning a house is a liability, it creates expenses".

"I'm an investor. Real investors always know what will happen".
"Oil will soon reach $200 a barrel".
"I don't see the big deal about the social networks on the Internet".

"People need to invest in real estate and metals."
"You should not listen to investment advisers."

Here are some tautologies, and/or meaningless cliches:

"Want to be rich? Learn from rich people."
"Wise financial and personal management are important for success."
"You need to decide if you want to be rich or poor."
"Rich people let money work for them".

All this -- and there's more -- in a two-page interview.


People actually pay this guy money to tell them this sort of worthless pap? How about flipping a coin?


Sunday, May 5, 2013

The Herbalife "Org" in Israel -- Same Old, Same Old

"I was a kid from Kiryat Ata [a poor town in Israel -- A.P.] Today I drive a car that costs as much as a house... those who bring money to invest here will succeed like I did... don't listen to your parents, they're dream stealers. People outside Herbalife are losers, making pennies, and want you to fail like they failed. Real friends support Herbalife; if they are critical, flush 'em. Haven't got money to invest? Take a loan from the bank..."

Sounds familiar? This, according to Haaretz [page in Hebrew], were common quotes in brain-washing "training seminars" passed by Israel's Herbalife "big man", Tzachi Gozali. If this sounds familiar, it should -- presuming that this is true, it is precisely the same sort of brainwashing technique used by other cults, in particular commercial cults like Amways' "orgs". 

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Saturday, October 13, 2012

"Redeeming Lawful Money"

Overview.  Among the newer scams to hit the usual sites - schemes which only work in the fevered or avaricious imaginations of those who advocate them - is "redeeming lawful money".  Its proponents begin with a federal statute - 12 USC § 411 - and spin out from there into the ozone.  This entry takes a look at it.  The subject has been discussed in some detail on the Quatloos board, where one of its major proponents has been allowed to expound on it in mind-numbingly repetitive detail.  Neither he nor anyone else has been able to cite a single verifiable instance where "redeeming lawful money" has ever accomplished anything.  It has, on the contrary, repeatedly crashed and burned.  Verifiably.

12 USC § 411.  In relevant part, that statute provides that federal reserve notes "shall be redeemed in lawful money on demand at the Treasury Department of the United States, in the city of Washington, District of Columbia, or at any Federal Reserve bank".  Proponents of "redeeming lawful money" draw two conclusions from this: that FRNs themselves are not "lawful money", and that "redeeming" your paycheck makes it non-taxable.  The first of those conclusions is wrong but understandable; the second is wrong and gibberish.

To understand the current version of the statute, one needs a little history.  The predecessor version of 12 USC § 411 was first enacted as 38 Stat. 265 in 1913. The U.S. was on the gold standard in 1913, "redeem" meant something very different than it does today, and the statute in so many words permitted redemption in gold. In 1934, the Gold Reserve Act nationalized privately-held gold bullion (not, obviously, ornaments and jewelry), and eliminated the provision of § 411 that permitted redemption in gold. However, there were still other forms of lawful money in circulation then - silver certificates, U.S. Notes, and perhaps one or two others (someone else can look it up). Those no longer exist today, but that provision of § 411 remains, basically an anachronism. The law contains many anachronisms. Everyone has seen the compilations of laws still on the books which do things like prohibit herding cattle on Main Street.

So, as to the first contention: proponents take the anachronism "redeem in lawful money" and infer that it means that FRNs are not "lawful money", something not completely illogical.  It's wrong, though.  "Lawful money" is not a phrase with a well defined meaning such as "legal tender".  FRNs are, of course, legal tender.  31 USC § 5103.  It is very difficult to see how, whatever "lawful money" may mean, something which is defined by statute as legal tender isn't also "lawful money".  The law requires a creditor to accept something that isn't money?  That's pretty nuts.

Plenty of courts have specifically held that FRNs are "lawful money".
Defendant argues that the Federal Reserve Notes in which he was paid were not lawful money within the meaning of Art. 1, § 8, United States Constitution. We have held to the contrary. United States v. Ware, 10 Cir., 608 F.2d 400, 402-403. We find no validity in the distinction which defendant draws between "lawful money" and "legal tender." Money is a medium of exchange. Legal tender is money which the law requires a creditor to receive in payment of an obligation.
United States v. Rickman, 638 F.2d 182 (10th Cir. 1980) (emphasis supplied).  There are many, many others.  For a few, see Poe v. C.I.R., T.C. Memo. 1983-312; United States v. Farber, 679 F.2d 733 (8th Cir. 1982); United States v. Ware, 608 F.2d 400 (10th Cir. 1979); Love v. Baldwin United Mortgage Co., 168 Ga.App. 361 (1983); Herald v. State, 107 Idaho 640 (1984); Brand v. State, 828 S.W.2d 824 (Tx App. 1992).  In fairness, there is a case in which the Third Circuit in dicta says differently.  United States v. Thomas, 319 F.3d 640 (3rd Cir. 2003).  A thread in Quatloos discusses that case in some detail.

But, ignoring the history and the law, there is nonetheless some logic in saying that, since FRNs can be redeemed in lawful money, they are not themselves lawful money.  Legally that's wrong, and historically it ignores how parts of statutes can become, through changing times and amendments to related statutes, anachronisms which no longer support that sort of inference.  But, just from the language of the statute, it's not illogical.

It's the next part where they sail off into the cream cheese.  One only arrives at the conclusion that 12 USC § 411 somehow renders otherwise taxable income non-taxable through logical knots of Gordian proportions.  Those knots includes things like monetizing debt, Treasury accounts, public money and private credit (or was that private money and public credit?), the Chinese, the Sanhedrin and logarithmic spirals superimposed on maps.  In other words, nothing that makes any sense.

Epic Fails.  On several occasions, people have actually attempted to make something out of nothing, by arguing "redeeming lawful money" in federal courts.  Below are seven examples.  Five have already crashed and burned.  Two are pending; this author has sufficient confidence in his conclusion that this stuff is nonsense that he posts them while they are still undecided.  It shouldn't be long before they, too, are ex-lawsuits.

(1) Michael David [Cress - these guys don't believe in last names] v. Geithner, 12-cv-3442 (CAND).  The complaint looks a whole lot like the ones in the cases below - virtually identical, in fact, down to the "refused for cause" notice of levy and the insistent "I am not pro se" and signature "Lawful money" on the civil cover sheet.  With no proof that he had even served the summons and complaint, Cress tries to file a "default judgment".  Judge Chesney of course refuses, and sua sponte directs him to show cause why she shouldn't toss the sorry mess into the trash (alright, alright, she said "dismiss").  Cress refuses the Court's order for cause.  Dismissed, sua sponte, about two months after Cress filed the action.  Short and sweet:
By order filed August 9, 2012, the Court directed plaintiff Michael David (“David”) to show cause, in writing and no later than August 31, 2012, why the above-titled action should not be dismissed for failure to state a cognizable claim against defendant Timothy Franz Geithner, the Secretary of the Treasury.

On August 15, 2012, David filed a copy of the Court’s August 9, 2012 order, on which copy David had written “Refused for Cause.” David has not otherwise responded to the Court’s August 9, 2012 order, and, in particular, has not shown cause why the above titled action should not be dismissed.

Accordingly, for the reasons stated in the Court’s order of August 9, 2012, the instant action is hereby DISMISSED without leave to amend.
The Clerk of the Court is DIRECTED to close the file.

(2)  Scott Daniel [Macneilage - see above] v. Geithner, 12-cv-1781 (CACD).  Same gibberish complaint and RfCs.  This is a relative biggie - the total (tax, interest, penalties) is $175K.  Macneilage appears to be a cut above the others - at least he actually served Geithner.  Of course, he also RfCs everything in the docket.  Dismissed, July 5, 2012, four months after Macneilage filed it.  Macneilage files eight RfCs after the dismissal.  Maybe they're his grocery lists.

(3)  Jesus Victor [Rodriguez - see above] v. Geithner, 09-cv-1091 (CASD).  I'm not linking to every complaint - they're all the same anyway.  Dismissed April 2, 2010.

(4)  Alvin Ruiz v. Geithner, 09-cv-1332 (CASD).  Dismissed less than four months after filing.

(5)  Patrick Teruo [Walsh - see above] v. Geithner, 09-cv-1644 (CASD).  Dismissed about six months after filing.  In the order, the Court noted that "Mr. Teruo’s complaint is a frivolous, stock complaint that he downloaded from the internet, and that other federal courts have summarily dismissed."  The complaint is just like the others.

(6)  Todd Donald [Weiss - see above] v. Geithner, 12-cv-4493 (CAND).  Same gibberish complaint, same notice of levy refused for cause, only filed a couple of months ago.  Weiss has already "refused for cause" two orders - discovery schedule and referral to M-J.  Nothing more yet.  Maybe Judge Illston's chambers can speak with Judge Chesney's.  Hint to wackos: you don't get to refuse orders, for cause or not for cause.

(7)  Denise Elizabeth [Lam - see above] v. Geithner, 12-cv-7719, CACD.  The complaint is exactly like the others.  It varies between laughable and incomprehensible.  Documents attached to it show that the IRS is threatening her with penalties for frivolous filings.

So, ladies and gentlemen, here we have real-life, unredacted proof that "redeeming lawful money" fails every time.  If anyone tells you otherwise, demand the same.  And then don't hold your breath.

1-9-13 update: Yesterday Judge Illston dismissed Weiss' action.  That's 0 for 6.  Lam's case is still pending, as are the motions to dismiss it.  There is therefore still no evidence that "redeeming lawful money" has ever done anything at all, other than to allow interest and penalties to accrue - and enforcement actions to continue - on unpaid taxes.

2-9-13 update: The last surviving effort at "redeeming lawful money" goes down in flames.  A couple of weeks ago, Judge Snyder dismissed Lam's complaint (see above for link).  Since this is the last case standing, we might as well quote the entire order:
Plaintiff’s complaint is largely incomprehensible and rambling. The Court cannot discern what claims for relief it is attempting to assert, nor on what factual (sic) plaintiff seeks relief. A “complaint that is ‘obviously frivolous’ does not confer subject matter jurisdiction. . . .” [citations omitted]. Dismissal for lack of subject matter jurisdiction is proper when the federal claim is “so insubstantial, implausible, foreclosed by prior decisions of this Court, or otherwise completely devoid of merit as not to involve a federal controversy.” [citation omitted].

The manifest insubstantiality of the present complaint deprives this Court of subject matter jurisdiction. This jurisdictional defect could not be cured by amendment.
Accordingly, the Court hereby DISMISSES this action with prejudice.

In other words, Lam's complaint - the one the purveyors of this nonsense provide to "redeem lawful money" - is such gibberish that it does not even give a court jurisdiction to consider the issue.  That's not easy to accomplish.

That's 0 for 7.  Despite numerous requests, those who advocate "redeeming lawful money" have refused to provide verifiable proof of a single success, so we had to find these seven cases on our own.  None left - every single one has been ignominiously dismissed, frequently sua sponte.  Anyone who uses this monumentally silly idea deserves what s/he gets: liens, levies, continuously-accruing interest and penalties, a judicial determination that the position is nonsense, and no relief whatsoever.

Since we began showing how this "process" does nothing but collect penalties, those who push it have come up with a new tack: they knew all along that the cases would be dismissed.  They only told the poor schmucks to file cases in order to provide them with an "evidence repository".  Don't believe them?  Think it's an ad hoc excuse for abject failure?  Au contraire.  It's actually written in stone on a plaque attached to the bridge they want to sell you.

It isn't worth much time debunking "the dog ate my homework".  Still, a couple of points: The only thing filing a document proves is that it existed on the date is was filed.  Period.  It doesn't prove that it does anything; after all, the above seven people filed complaints, all of which were dismissed.  Whether a document existed at a certain time is almost never an issue.  If you have a letter from the IRS, you have a letter from the IRS; if they deny it, they look like idiots.  If you need proof that you served a document outside of litigation, you get either a return receipt (if served by mail) or an acknowledgment or affidavit of service (if served in hand).  Paying to open a court docket just to hold papers serves no useful purpose, and the court may not permit it in the first place.  But yes, lawyers do have "evidence repositories".

They're called "files".

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