United States v. Von Nothaus

543 F.Supp.3d 280

UNITED STATES of America,

v.Bernard VON NOTHAUS, Defendant.

CIVIL ACTION NO. 5:09-CR-00027-KDB-DCK

United States District Court, W.D. North Carolina, Statesville Division.

Signed June 9, 2021

Benjamin Bain-Creed, Craig D. Randall, U.S. Attorneys Office, Charlotte, NC, Jill Westmoreland Rose, Thomas R. Ascik, AUSA, United States Attorney's Office, Asheville, NC, for United States of America.

ORDER

Kenneth D. Bell, United States District Judge

THIS MATTER is before the Court for a final ruling on David L. Gillie's ("Petitioner" or "Gillie") Petition for the return of 500 half ounce silver coins, which have been seized by the United States in connection with this criminal action against Bernard Von Nothaus (Doc. No. 499).¹ The Court has carefully considered this Petition, the evidence of record (including testimony and other evidence presented at two hearings held by the Court), the parties’ briefs and related exhibits, and oral argument on the Petition from the parties’ counsel during both hearings. For the reasons discussed below, the Court will DENY the Petition.

I. FACTUAL AND PROCEDURAL BACKGROUND

Beginning in 1998, Defendant Bernard Von Nothaus ("Nothaus"), through his "Liberty Dollar" organization, designed and manufactured "Liberty Dollar" coins in various denominations, including $1, $5, $20, $50, that he distributed across the country to circulate among the public. See Joint Appendix (hereafter, "J.A."), Doc. No. 871-2 (pp. 1-488); 871-3 (pp. 489-947); 871-4 (pp. 948-1392); and 871-5 (pp. 1393-1758) at 259, 315–16, 802–810, 821 and 1462–67. Defendant's distribution network included several levels. Id. at 254. Fifty-five "regional currency officers" paid the Liberty Dollar organization an annual fee to serve as exclusive distributors of Liberty Dollar coins in an assigned geographic region. Id. at 255, 270–71, 318 and 331. Petitioner, a resident of Michigan, became a "regional currency officer" or "RCO" in 2001 or 2002. Doc. No. 871-12 at 19-20.

RCOs could purchase coins from the Liberty Dollar organization in bulk, J.A. at 332–333, and then resell the coins to Liberty Dollar "associates," who paid a smaller fee to participate in the organization, or to merchants who sold ordinary goods and services to the public. Id. at 270, 276, 308–309. Because Nothaus had Liberty Dollar coins minted with dollar amounts greater than the cost of the metal they contained, participants at each level of Defendant's network could profit from the distribution of Liberty Dollar coins. Id. at 304-5. RCOs purchased coins from the Liberty Dollar organization at a cost lower than the dollar value stamped on each coin's face. Id. at 278–79. For example, RCOs could purchase one-ounce silver Liberty Dollar coins stamped with a value of $20 for $11 each, depending upon the price of silver. Id. RCOs then resold the coins to associates or merchants for a price that remained lower than the value depicted on the coin but still provided the RCO with a profit, for example, $16. Id. at 279. A merchant could then net money by giving the coin as change at "face value" to a customer. Id. at 279–300 (e.g., a merchant who paid $16 for a Liberty Dollar that depicted $20 on its face, could make $4 by giving the Liberty Dollar coin to a customer instead of $20 in United States currency).² Id. at 279–80, 304–05. In training sessions and materials, Nothaus emphasized that the coins he supplied were "meant to be spent" instead of collected or stored by investors, J.A. at 275, 293, 313, and that he wanted merchants and customers to conclude that the coins were a "useful viable currency." Id. at 309. With respect to Gillie, he netted a profit by selling "thousands of ounces" of Liberty Dollar coins of "all different designs" to customers of the restaurant he operated. Doc. No. 871-12 at 23:4-25:3, 33:3-16, 41:13-17.

The Liberty Dollar coins were minted with different designs. Id. at 832–833, 840-841. The front of many coins, for example, featured the head of the Statue of Liberty with the word "Liberty" in her crown, a year, and the words "Trust in God." Id. at 227–30, 352. The reverse of many coins featured a dollar sign and number such as $10 or $20, which corresponded to denominations in "the existing monetary system;" words, such as "twenty dollars," reflecting the denomination; the words "Liberty Dollar;" and a torch. Id. at 497, 816, 865–67; Doc. No. 871-9. The face of some coins included the word "Peace" above the head of the Statue of Liberty, with the word "Liberty" in the statue's tiara. J.A. at 497; Doc. No. 871-9. The Liberty Dollar coins distributed by Nothaus also reflected numerous other variations. J.A. at 832–33, 840-41. Some coins, for example, were made of silver. Id. at 785-86. Others were made of gold. Id. at 840–41. Some coins were one-ounce and others were half-ounce. Id. at 802, 842. And, the specific language that appeared on coins changed over time. Id. at 787–814. To manufacture the Liberty Dollar coins, Nothaus contracted with the Sunshine Mint in Idaho. J.A. at 321, 492, 748–49, 1462–63.

In September of 2006, the United States Mint informed Nothaus and other participants in the Liberty Dollar organization by letter that the Department of Justice had determined that the use of Liberty Dollars as "circulating money" was "a Federal Crime." Id. at 205, 435. The Mint also prepared a consumer advisory informing consumers that the Department of Justice had determined that Liberty Dollar coins were illegal. J.A. at 434. Gillie received a copy of the U.S. Mint letter and says he was aware of the warning at "right about the same time" that he was purchasing the coins at issue here, yet he continued with the purchase. Doc. No. 871-12 at 49:9-52:25, 55:8-14. Also, Nothaus and others in the organization continued to distribute Liberty Dollar coins even after being told that the circulation of the coins was illegal. J.A. at 476. Indeed, the Liberty Dollar organization provided its associates with T-shirts that advertised the Liberty Dollar and said, "The U.S. Mint can bite me." Id. at 207. Petitioner Gillie admits that he knew of the T-shirts and their message because he was friends with the person who produced them. Doc. No. 871-12 at 56:4-56:9; see also Doc. No. 871-13 at Exhibit 4 (Trial Exhibit 39).

In October 2007, Gillie purchased 600 "Peace Dollars" from Liberty Dollar for $5,022.00. Doc. No. 871-12 at 67:4-16, 69:1-3; Doc. No. 871-13. As part of their investigation of the Liberty Dollar organization, agents of the Federal Bureau of Investigation searched the Sunshine Mint in November of 2007. J.A. at 492–95. They recovered, among other things, a host of Liberty Dollar coins. Id. at 494–97; Doc. No. 871-6 (Trial Exhibit 71); Doc. No. 871-9 (Trial Exhibit 72). Sunshine Mint representatives told the agents that Sunshine had recently shipped some additional silver coins; and, the representatives called their shipping company and had the coins returned.

J.A. at 495. Later in November, after the returned coins arrived at the Sunshine Mint, FBI agents collected them. Id. at 495; Doc. No. 871-7 (Trial Exhibit 71A); Doc. No. 871-8 (Trial Exhibit 71B). Among the coins that law-enforcement seized from Sunshine Mint in November 2007 were two sets that each contained 1,000 half-ounce "silver liberty peace dollars," J.A. at 494–497, 1331–1332, 1703, 1741-1742; Doc. No. 871-7 (Trial Exhibit 71A); Doc. No. 871-8 (Trial Exhibit 71B). However, the record does not reflect how many of these coins were shipped to particular customers.

A Grand Jury in the Western District of North Carolina indicted Nothaus and charged him with three counts related to his Liberty Dollar operation. J.A. at 158–70. The indictment alleged that a number of different coins and other objects were subject to forfeiture because, among other things, they were counterfeits of coins of the United States subject to forfeiture under 18 U.S.C. § 492. J.A. at 168–69. Among the items that the indictment alleged to be subject to forfeiture were the half-ounce Liberty "Peace Dollars" seized from the Sunshine Mint. Id. at 169, 1741.

At Nothaus’ trial, the Jury and the Court heard, among other evidence, the testimony of Brian Silliman, an expert in the authentication, grading, and identification of coins, tokens, and medals, including counterfeits. Id. at 515, 521. He testified about similarities between various Liberty Dollar coins and United States coins. Id. at 527–29. Using a demonstrative exhibit with illustrations, he identified a number of features of United States coins that appear on Liberty Dollar coins, including depictions of a torch; portraits of Liberty; the "use of the dollar sign"; spelled-out statements of the denomination on the bottom of the coin; a serif font; reeded edges, which are edges with lines; "Liberty" in cursive, and references to the United States of America or "USA." Id. at 527-540.

In his expert report, which was admitted into evidence, J.A. at 546–47, Silliman described the similarity of a "2008 Liberty Silver $10 ‘PEACE’ " Liberty Dollar coin to United States coins. See Doc. No. 871-10 (Trial Exhibit 77A at 3, 6). The Liberty Dollar "peace" coin weighed 15.5 grams — just over half an ounce, United States v. Hackley , 662 F.3d 671, 680 n.2 (4th Cir. 2011) ("One ounce is equivalent to 28.35 grams."), and was 32.3mm in diameter. Id. at 3. Silliman's report identifies features that appear on the "peace" coin that are similar to United States coins, including the depiction of Liberty with a tiara; a torch; a reeded edge; a silver color; the word "Liberty" in script letters; the motto "Trust in God"; the "$" dollar symbol; the word, "dollars"; and the abbreviation "USA." Id. at 6.

The Jury found Nothaus guilty of all counts. The Jury found that Nothaus counterfeited and passed counterfeit coins "in resemblance and similitude of" United States coins, in violation of 18 U.S.C. § 485. Id. at 1347, 1358. The Jury returned a Special Verdict finding Defe...