Federal raid on money group riles Ron Paul supporters

WASHINGTON — The ardent supporters of Rep. Ron Paul, the Texas libertarian whose campaign for the presidency is threatening to upend the battle for the Republican nomination, got word Friday of a new source of outrage and motivation: reports of a federal raid on a company that was selling thousands of coins marked with the craggy visage of their hero.

Federal agents Thursday raided the Evansville, Ind., headquarters of the National Organization for the Repeal of the Federal Reserve Act and Internal Revenue Code (NORFED), an organization of "sound-money" advocates that for the past decade has been selling a private currency it calls "Liberty Dollars."

The organization, which is critical of the Federal Reserve, has repeatedly clashed with the federal government, which contends that the money the group produces is illegal.

The organization says it has put into circulation more than $20 million in Liberty Dollars — coins and paper certificates it contends are backed by silver and gold stored in Idaho that are far more reliable than a U.S. dollar and are accepted for use by a nationwide underground economy.

NORFED officials said Friday that the six-hour raid occurred just as its six employees were mailing out the first batch of 60,000 "Ron Paul dollars," copper coins sold for $1 to honor the candidate, who is a longtime advocate of abolishing the Federal Reserve. The group says it has shipped about 10,000 silver Ron Paul dollars that sold for $20 and about 3,500 of the copper $1 coins. But it said the agents seized more than 50,000 of the copper coins — more than 2 tons — plus smaller amounts of the silver coins and gold and platinum Ron Paul dollars that sell for $1,000 and $2,000.

Agents also took records, computers and froze bank accounts during the raid, NORFED's founder and executive director, Bernard von NotHaus, said in a telephone interview from his home in Miami. "They took everything ... everything but the desks and chairs. The federal government really is afraid."

Von NotHaus changed the name of NORFED to Liberty Services earlier this year, but affidavits for government search warrants continued to use the older name.

Von NotHaus said agents also raided Sunshine Minting in Coeur d'Alene, Idaho, a company that casts the organization's coins. He said agents seized the huge pallets of silver and gold worth more than $1 million that the organization says back the Liberty Dollars. Sunshine Minting did not return calls seeking comment.

News of the raid lit up Ron Paul online chat rooms Friday, the latest unlikely episode in a campaign that began as an idiosyncratic bid by the veteran Republican congressman but has grown into a cause with the potential to influence the race for the GOP nomination.

Paul, 72, has attracted droves of disaffected Republicans and independents to his platform, which includes ending the war in Iraq, abolishing the Internal Revenue Service and adhering to a strict libertarian interpretation of the Constitution. He raised a record-breaking $4 million in a single day this month and nears double digits in some New Hampshire polls.

A Paul campaign spokeswoman said Friday that the campaign has "no affiliation" with the Ron Paul dollars.

"We have no connection with that," said Jesse Benton, a campaign spokesman for Paul. "He [von NotHaus] was using Ron as a marketing technique. We didn't have anything to do with that or sanction it or give permission in any way."

But Paul's supporters, some of whom have taken pictures of the candidate holding the coins, said the seizure of the coins was sure to stoke support for the campaign.

"People are pretty upset about this," said Jim Forsythe, head of the Paul Meetup group in New Hampshire, who said he recently ordered 150 of the copper coins. "The dollar is going down the tubes, and this is something that can protect the value of their money, and the Federal Reserve is threatened by that. It'll definitely fire people up."

The Indianapolis bureau of the FBI referred calls to the U.S. Attorney's Office for Western North Carolina in Charlotte. That office's spokeswoman, Suellen Pierce, also declined to comment.

In a federal seizure warrant, federal agents allege the money and other properties seized in the raid were linked to money-laundering, mail fraud and wire fraud.

The raid comes eight months after von NotHaus filed a lawsuit in federal court in Evansville seeking a permanent injunction to stop the federal government from labeling the Liberty Dollar an illegal currency.

The U.S. Mint issued a warning this year that the Liberty Dollars violated the Constitution and warned consumers against using them.

Von NotHaus said he has known Paul for years because they "move in the same circles," but he had not talked with Paul about his plans for the special coins so as not to violate federal election laws. He posted a message on the organization's Web site urging Liberty Dollar supporters to respond to the raid by donating to Paul, saying that "in light of this assault on our financial freedom, it is clear that we need Ron Paul to lead this country more than ever."

The seizure of the coins held an upside for those lucky enough to have received their orders. On eBay, the silver Ron Paul dollars purchased for $20 were selling for more than $300 Friday night.

Material from The Associated Press is included in this report.