'Sovereign citizens' get 10 years for duping debtors with phony federal treasury scheme

Three “sovereign citizens” from South Carolina were sentenced to 10 years in federal prison for their roles in a bogus debt-elimination scheme.


James Dew, Jerry Hartsoe, and Mark Shannon were each convicted in April on eight counts of mail fraud in connection with their Eden Gifted Properties, which offered to pay clients’ debts – for a fee – using phony government documents.

A fourth man, Ronald Kevin Hayes, pleaded guilty in January to failing to report a felony to authorities.

The FBI launched an investigation of the company, which also used the name "Hakanumatata For All," after several banks complained about packets containing more than 50 elaborately titled but ultimately meaningless legal documents.

Prosecutors said the men had ties to the sovereign citizens group Republic for the united States of America, or RuSA, and recruited their victims at the organizations’ meetings and foreclosure seminars.

The men told victims they could to eliminate home loans and other debts if they paid Eden Gifted Properties 10 percent of the debt amount, reported The Sun News.

They encouraged customers to obtain cash advances from credit cards or raid their retirement accounts to pay the fees, which they described as “donations.”

The company then flooded banks with official-looking documents that falsely claimed to pay off debts by drawing from a $100 billion Treasure Department bond sent to Timothy Geithner, the former treasury secretary.

Investigators said the men used “complex, legal-sounding language designed to confuse, delay, or otherwise obstruct the lawful role of the IRS, the United States Bankruptcy Trustee, and the banks.”

The men claimed Eden Gifted Properties had stopped more than 1,500 foreclosures and eliminated more than $400 million in customer debt – but in reality, the company’s owners transferred customer fees into their own bank accounts for personal expenses.

The debt elimination scheme is based on the sovereign citizen belief that the U.S. had replaced its original common law system with admiralty law, which governs the sea and international commerce, after the government abandoned the gold standard in 1933.

Some sovereign citizens believe the government pledges its citizens as collateral in backing its debts with the “full faith and credit” of the U.S. government, which then sets up shell corporations containing up to $20 million at the U.S. Treasury in each person’s name.

Sovereign citizens believe they can split the corporate shell – which is identified on government documents in all capital letters -- from the flesh-and-blood person by filing the right paperwork, which they then believe frees them from obligations to pay taxes or obey other laws.

This “redemption,” which involves filing a financial statement through the Uniform Commercial Code, allows a person to tap into his secret treasury account to pay debts, sovereign citizens believe.

Mark Potok, of the Southern Poverty Law Center, said there is “not even the slightest basis” for their “bizarre claims.”

“It’s a movement that tells you you can get something for nothing, which accounts for why it’s the fastest-growing segment of the radical right," Potok said. "People want to believe they don’t have to pay their bills or their overdue taxes.”

Sovereign citizens claim they have set up governments-in-waiting in 38 states to lay the foundation for the Republic for the united States of America.

The organization’s founder, Monty Irvin, described himself as the “governor” of Alabama and compiled an arsenal of weapons to prepare for the collapse of the federal government.

Irvin was convicted with his wife in 2011 of conspiracy to defraud the U.S. government and three counts of tax evasion.

Hartsoe, one of the men involved in the Eden Gifted Properties case, had his skin permanently stained blue after drinking a mixture of colloidal silver and zinc on the recommendation of a chemist as a cure for an illness.

[Image: Businessman Looking At Document Through Magnifying Glass via Shutterstock]