Operation Stolen Treasures

Amid the nation's economic meltdown, financial-conspiracy theories fueled a tax-fraud case for the ages

Kirk served four years in federal prison in the early 1990s after being convicted of possessing a pipe bomb. Since his release, he has become a prominent tax defier, hocking DVDs and offering seminars in Washington and Nevada through a company called Indian Nations Advocate Law Office. Kirk's teachings have raked in some $8 million for more than 30 clients through erroneous IRS refunds. In 2011, the U.S. attorney in Seattle sued Kirk to enjoin him from further promoting his tax-fraud scheme.

Equipped with Kirk's methods, Ruiz and Mendoza returned to Southern California  ready to strike out on their own—they formed Old Quest Foundation in August 2008 and started selling "land patents" to homeowners who were in default on their mortgages and trying to avoid eviction.

The land-patent program, which Mendoza and Ruiz launched with a meeting at a church, involved little more than the sale of laminated signs warning that the homes displaying them were "sovereign kingdoms" on which trespassing would be considered an "act of war." Homeowners who purchased the signs for $12,500 on installment plans—$2,500 up front, then $1,000 per month—hung them in their windows, believing they invoked precise legal language that would keep bank officials and Sheriff's Department deputies off their property and unable to evict.

Seized funds
Seized funds
The site of many presentations
The site of many presentations

The land-patent program never saved anyone's home, but the venture was still so lucrative that by March 2009, Old Quest subleased a two-story office building in Fontana, hired a number of full-time employees, motivated recruiters through healthy commissions, and began offering almost daily Spanish- and English-language seminars that introduced potential customers to what they called their "special program."

*    *    *

"The United States government took certified copies of all our birth certificates and placed them in the United States Department of Commerce . . . as registered securities. As collateral for our loans. Since you are the only one who gives 'value' to the birth certificate because of your labor, you are the only one who can go to the 'bank' and redeem and regain control of the [your] birth certificate. They took the 'title' to your body, the birth certificate and borrowed money against it. That is exactly what a birth certificate is, A TITLE."

Such imaginative claims were exhibited on PowerPoint slides at every Old Quest presentation. They stem from a decades-old conspiracy theory called Redemption Theory, the brainchild of a white supremacist named Roger Elvick.

A fixture in the militia movements of the '70s and '80s, Elvick is still regarded as a folk hero by many "sovereign citizens" who declare themselves "free" from the jurisdiction of the federal government. He posited that with the birth of every citizen since sometime during the Great Depression, the government has borrowed money against their future labors and deposited that money into a secret account. Adherents often call this account a "straw man"—a fictitious legal persona used by unscrupulous bankers to commoditize every American's life.

Elvick identified a Jewish banking cabal as the administrator of the secret accounts, but more recent incarnations have carefully stepped back from the rabid anti-Semitism associated with the earlier movement. Still, proponents across the country maintain your life is regarded as no more than a traded security controlled by one of several possible bogeymen: a Jewish cabal, the Federal Reserve, the International Monetary Fund, English banks, the New World Order.

Elvick ended up applying redemption theory to a bogus check scam in Ohio that landed him back in prison in 2005. Most of his original compatriots also served lengthy sentences for their attempts to "liberate their straw man" through various pseudo-legal redemption maneuvers.

But the secret-accounts assertion has become a central tenet of many simpatico anti-government movements whose followers believe in its truth with a religious zeal. They call themselves redemptionists, or sovereign citizens, or freemen on the land, and they insist that through filing obscure tax forms and elaborate legal ploys, they can reclaim what is rightfully theirs. Essentially, they want to cash out.

Old Quest presenters would recount at seminars the standard redemptionist historical narrative: In 1917, Congress created the Federal Reserve, surrendering the country's financial system to a few wealthy families. Then, in 1933, President Franklin D. Roosevelt took the United States into bankruptcy. That same year, Congress and Roosevelt abandoned the gold standard and seized all gold held by private citizens. At that point, something happened in which real money ceased to exist, all debt became meaningless, and without knowledge or consent, American citizens became slaves to the corporation that replaced the U.S. government.

"The idea was that a national peacetime emergency was declared in 1933, and it never ended," says Walker Todd, a research fellow at the American Institute for Economic Research.

As with most good conspiracy theories, it's the kernels of truth that make it appealing—that make it possible for intelligent, often-well-meaning people to convince themselves of preposterous notions.

"They'll pick something that has a germ of truth in it, and they'll build some huge, confabulated theory around it," Todd, an expert in tax-fraud schemes, explains.

The truth is that the United States did go off the gold standard in 1933, and ever since then, all public debt has been guaranteed by the full faith and credit of the United States government. The country has citizens who pay taxes, and this dependable base of future tax revenue is what allows the U.S. government to promise those to whom it owes money that it will be able to pay them back sometime in the future.

« Previous Page
Next Page »