Who is Franklin Sanders, a.k.a. “The Moneychanger“?
[Over 50] years ago, just a few weeks before I got married, on a drugstore bookstand I found a strange book: Capitalism, the Unknown Ideal. It was a collection of essays about a philosophy of freedom. Two dealt with the American monetary system. The author explained that nothing — no gold or silver — backed our currency. He argued that sooner or later, this fiat money system would lead to disaster, and that only a money backed by real value — gold — could last.
That author was Alan Greenspan. Since then our careers — Alan’s and mine — have taken very different paths.
In 1967, Alan Greenspan was already a fairly well known economic consultant. In the 1970s, President Ford appointed him to his Council of Economic Advisors. In 1987, Alan Greenspan was appointed Chairman of the Federal Reserve Board of Governors.
Funny, he doesn’t talk much about gold anymore.
In 1967, I was a college senior. Susan and I were married on December 16th, and when I graduated in 1968 the draft board gave me 30 days to frolic before conscription. I arrived at Fort Polk, Louisiana one hot October night, caught the Army bus out to the post and sat down behind the driver, facing across the bus. I opened my copy of Aristotle’s Works and began reading.
I noticed I was the only man on board with hair. The fellow sitting across from me asked, “Whatcha reading?” Wordlessly, I flipped up the book so he could read the title on the spine. “Boy,” he said without any reflection. “Have you come to the wrong place.”
In 1969 I retired from the Army to attend graduate school in German at Tulane University. The next year I received a full scholarship to the Free University in West Berlin, where I saw first hand what unchallenged state power could do. The West was pulsing with life and light, the East dead and empty. In the Museum of the Wall at Checkpoint Charlie I read the last radio message from the Free Hungarians in 1956: “Tell Europe we are dying for them.”
After Susan and I came home late in 1973 I worked in several businesses, learning first hand what it means to “make your way in the world.” I kept studying economics and monetary systems, on my own and in graduate classes.
In 1980 I opened my own business in West Memphis, Arkansas, across the Mississippi from Memphis, selling physical gold and silver. First thing I did was write to the Arkansas Attorney General to explain that I thought exchanges of gold and silver money for paper money weren’t subject to the sales tax, since they were exchanges of money for money. What was his official position?
He never bothered to answer my certified letter. Or the second. Or the third.
When he finally responded, it was only to say he wouldn’t answer. I wrote to the Commissioner of Revenue, and told him what I was doing. Nobody ever bothered to answer that certified letter either, so I reported all my sales as “exempt.” Every month.
A year later, in 1981, a Revenue officer showed up to audit my books. I told her what I did wasn’t taxable, and that every trade contract contained a confidentiality guarantee to my customer. She could see them if she would indemnify me in case some customer sued for breach of contract. Alas, she didn’t want to co-operate, so she just multiplied all my “exempt” sales by the sales tax percentage, added penalties and interest, and sent me a bill for about $30,000.
Thus began my merry pilgrimage through the courts. I had landed smack in the middle of Legal Never-Neverland: monetary law. Of course Article I, Section 10 of the U.S. Constitution says, “No State shall make any Thing but Gold and Silver Coin a tender in payment of debt.” Of course the definition of “money” at the head of the Arkansas tax title says, “The term `money’ or `monies’ shall be had to mean and include gold and silver coin.” Of course the U.S. Code at Title 12, Section 152 says that “lawful money” means gold and silver coin of the United States.
Of course, of course, of course . . . it goes on and on. State and federal constitutions, state and federal statutes, state and federal court decisions, US supreme court decisions, all speak with one voice: gold and silver coin are money, bank notes are not money. But whether I raised the issue in a Revenue Department administrative court, chancery court, or federal district court, I ran into the same terrified reaction. “The monetary emperor is naked! Federal Reserve notes aren’t really money! Quick, rule against this clown and drag him out of here!”
I appealed the agent’s assessment, and lost at the administrative level. Then at the administrative court, too. I appealed to chancery court. Had a trial. Lost there, too. By then it was December, 1983, and I received a letter from the Arkansas Revenue Department demanding I fork over $120,000!
A few days later two deputies came to collect their “judgment.” Through several well-nigh miraculous providences, they got nothing. That night, I decamped from Arkansas. I was so amazed at God’s protection through this event that I wrote a friend a long letter about it. Remember that letter.
I moved my business to Tennessee, doing exactly the same thing, exchanging gold and silver money for Federal Reserve notes. By this time I had realized that although every American had a constitutional and legal right to gold and silver money, the problem was, you couldn’t use them in everyday business. We had the right to sound money, but no means. We needed an interface between the paper system and gold and silver.
So in May, 1984 I opened a gold and silver bank. It attracted depositors like wildfire, but somebody didn’t like my idea. On June 18, 1985, two IRS Criminal Investigation Division (CID) agents popped in to announce that I was under criminal investigation. (“Surprise! We just dropped by to pull out your fingernails with pliers!”)
Over the next three years the IRS treated me to the full court press. They got my bank records, and on US attorney’s stationery wrote all my customers, demanding that they send records from their dealings with me to the IRS CID agent and threatening the recalcitrant with subpoenas. These letters remarkably chilled my customers’ enthusiasm. It got harder and harder to make a living.
On September 18, 1986, five agents from the Tennessee Revenue Department appeared at my office with a search warrant, pawed my files and records for two hours, and hauled off boxes of personal papers. That was the first—and last—I heard of them for a long time. They immediately turned over my papers to the IRS.
In the spring of 1988 the IRS and the US Attorney’s office leap-frogged their investigation from me to my church. There was nothing unusual about the church. It wasn’t a “tax protest” church, just a member congregation of the conservative Presbyterian Church in America. The assistant US attorney subpoenaed church members before the grand jury and grilled them about what the church taught. Did the pastor teach people how to not file income tax returns? Did the church have militia practice in the woods? Survival training? Did the church hand back contributions under the table? About the only thing they didn’t accuse us of was trafficking in nuclear warheads.
We landed in the Catch 22 maelstrom of official suspicion. The more the pastor and the elders proved to the US attorney’s office that these accusations were lies, the more convinced they became that we were such clever conspirators that their suspicions must be true. The assistant US attorney issued a subpoena to the church for all her records: counselling, sessional, financial, everything. The session of the church offered to consider any request for specific documents, but refused to open the Bride of Christ up to a fishing expedition.
On January 9, 1990, just at dawn, the IRS struck. Although the agent investigating me knew very well that I was not violent, IRS agents and Tennessee Revenue Department agents roared in my driveway while the SWAT team in their black ninja suits poured out of the woods on either side of my house.
They attacked with reckless, malicious disregard for the safety of my wife and seven (7) children. All they needed to do was pick up the phone and tell me I had been indicted, and I would have gone downtown. No, these IRS thugs wanted headlines from a sensational “pre-dawn raid” to scare the sheep for tax season, and to make me and my wife, the mother of my seven children, look violent and dangerous.
After they arrested me and Susan, the IRS refused to leave my home. Contrary to the law and over the protest of my spunky 15 year old daughter, Liberty, three IRS agents stayed and held my children hostage until the end of the day. They were waiting for a search warrant so they could come back and steal my records and my computer.
On the ride downtown I had no idea what was going on. Why would they arrest Susan? She had never done anything other than minor secretarial work in my business, and spent all her waking hours home-schooling and raising children.
When I stepped into the jail cell, I began to understand. They had indicted her to blackmail me. My friends, customers of the gold and silver bank, and numerous church members were already there, including my pastor and assistant pastor. The indictment was an inch thick. In 72 pages it charged 26 defendants with conspiracy to defraud the government, willful failure to file, and divers other malefactions.
The government claimed that the gold and silver bank was a tax evasion scheme to hide income. Not even two years in the US Army had prepared me for stupidity of this magnitude. How could we hide income when almost everything we took in was in checks, and we deposited the checks into our bank account? Oh, yes, we did pass some of the checks along to other dealers to pay for gold or silver we bought for them, a common practice in the industry and perfectly legal. This, the government taught us, was “laundering checks,” a sinister activity proving we were up to no good. But every bank deposit I had made was a count on the indictment! And Susan—poor home-making, home-schooling, never-stop-running Susan—was the Number Two conspirator, right after me!
My bond was set at $150,000, fully secured. For comparison, that same day they arrested a child molester and set his bond at $10,000, not secured. I stayed in jail from Tuesday until Friday, when my parents put up their house to get me out of jail. When the Federal marshals released me at 5:00 p.m., sheriff’s deputies were waiting to arrest me, and me alone, on state charges.
I believe but cannot yet prove that an ex-IRS agent had been sent to work for the Tennessee revenue department to get the search warrant IRS couldn’t get, and to figure out some way to charge me under state law. (You’re not paranoid if somebody is really persecuting you.) I was charged with violating a statute that had been on the books nineteen years: TCA 67-1-1440(d), “delaying and depriving the state of revenue to which it was lawfully entitled at the time it was lawfully entitled thereto.” In all those 19 years, not a single Tennesseean had discovered how to violate it, but I had. Truth to tell, I hadn’t even figured it out, since I was accused of “delaying and depriving” the state of revenue the amount of which was unknown and to which the state had never become lawfully entitled. They accused me of a crime I could not possibly have committed because I didn’t know it existed. Never mind, due process just slows things down.
They were charging me with not collecting sales tax on exchanges of gold and silver money for paper money. You know—like when you go to the bank, and give the teller a twenty and she gives you back a ten and two fives, less sales tax. What? She doesn’t charge you sales tax? Of course not, because it’s an exchange of money for money.
But neither the state of Tennessee nor any other state can admit that gold and silver coin are money. If they do, they will admit they are operating outside the law. The monetary emperor is naked, and state officials from the Chief Justice of the supreme court to the governor to the second assistant tire checker are afraid to tell him. They should be afraid, because the monopoly on money creation is the jugular vein of the American fascist state.
But in January, 1990, I didn’t have time to worry about state charges. Susan and I were both facing 19 years in jail if convicted in federal court. We knew the statistics, too. Humanly speaking, we had no chance. Ninety-eight percent of federal tax prosecutions end in guilty verdicts.
The next year and a half was a wretched struggle to persevere without despair. Only a survivor of a criminal prosecution could understand how it hammers your soul. Most defendants never make it to trial. Through the investigation alone, federal agents and prosecutors can destroy their businesses and their families, and break their spirit. Stripped of business, money, family, and hope, most plead guilty just to end the nightmare. In our case one poor defendant pled guilty with no idea what it meant. When a defense attorney asked him who he had conspired with, he screwed up his face in confusion and paused several minutes. “I dunno. Myself, I guess!”
Our trial began on February 26, 1991, over a year after our arrest. Right after the noon break that first day, I received word that our sons Wright (10) and Christian (8) had been severely burned playing with gasoline. Susan spent the first two weeks of trial with them in the hospital.
Just when it seemed that things couldn’t get worse, they did. Day after day I had to listen as the prosecutor hatefully twisted everything I had ever done into something evil—including the good things. This went on for four and a half long months. The government entered immaterial documents by the hundredweight.
The vast but tediously shallow silliness of the whole farce made me the maddest. Do you remember in C.S. Lewis’ Perelandra, when the Unman is struggling to convince the Green Lady to disobey Maleldil’s command not to spend the night on the land? Ransom notes with dismay the childish silliness of evil. Throughout the night while the Green Lady sleeps, the Unman repeats, “Ransom? Ransom?” When Ransom answers, “What?”, the Unman responds, “Nothing.” At its depths, evil is not noble or grand. It’s merely a silly, spoiled child, flicking boogers at his betters.
To the charges of “willful failure to file income tax returns” we argued that no statute makes anyone liable for an income tax (except “foreign withholding agents”). No one—not the federal district court judge, not the assistant US attorney, not the IRS, no one—was able to point out that statute, because it doesn’t exist.
Here was a “man bites dog” story if ever there was one, but was the local media interested? Hardly. The first trial day was covered by an old reporter for the Commercial Appeal who, with great insight, described issues and characters. Next day he was yanked off the case and replaced with a Stalinist “comrade” who loyally published whatever official line the US attorney’s office gave him.
But our jury was more open-minded. On July 9, 1991, the jury returned its verdict: seventeen defendants not guilty on all counts! To God be the glory! We threw an enormous party and that Sunday had one bodacious worship service.
I still had to face a state trial. I no more than caught my breath when I had to dive back down into the sewage of the “justice system.”
The trial started in May, 1992, and lasted three weeks. The judge and the prosecution did their best to keep out my evidence—evidence that showed how many hundreds of hours I had haunted the law library to study out my position and make sure I was right.
It did little good. Remember the letter I wrote a friend when I escaped from Arkansas? The Revenue Department had seized it in 1986, and the prosecutrix used it to make me look like a hypocrite.
Even at that, three jurors held out for three days. I later talked to one of the holdouts, and he said that one of the women who gave up said, “Oh, well, he’ll get another trial on appeal.” Can people really be that ignorant, or will they just use any excuse to justify their own cowardice? On May 18, 1992 I was convicted on two counts of “delaying and depriving.”
A month later the judge sentenced me to two years in jail, but he suspended all but 30 days, provided I would pay $1,000 a month for 73 months as “restitution” and do 1,000 hours (half a year’s work) of community service. With seven children to support, it was a deal I couldn’t refuse.
I appealed. In August, 1994 the Court of Criminal Appeals overturned one count of the conviction for double jeopardy. I couldn’t be guilty of one count of “delaying” and one count of “depriving” for the very same conduct. On the money issue, however, the real heart of the case, the court dodged and denied all my arguments.
We appealed to the Tennessee Supreme Court, and they heard the case on All Saints Day, 1995. Dr. Edwin Vieira, Jr., constitutional attorney and America’s foremost expert on monetary law, prepared the briefs and argued the case. For over 6 months we heard nothing. Then on May 28, 1996 the Supreme Court affirmed my conviction, once again dodging the money issue.
I am still appealing, this time into the federal system, but the appeal couldn’t be filed quickly enough to prevent my arrest on June 28, 1996. The petition for habeas corpus in federal district court was assigned to the same judge who had tried our federal case. She took jurisdiction of the appeal, but refused to order my release. From June 28th until July 23rd, I was a guest of the Shelby County Jail and the Shelby County Penal Farm.
The next hurdle is securing a stay of execution on the $72,000 fine. Failing that, I go back to jail for another eleven months while the appeal goes on.
Why keep on fighting? After 15 years, why not just put down the load and forget it?
Because the fiat money system is both the strength and weakness of America’s tyrants. It bleeds the people’s wealth and labor, but it also threatens to collapse under its own weight—or whenever the scales fall off the people’s eyes. With its green engravings of famous Americans, electrons whirling around in bank computers, and loans created out of thin air, it is one vast confidence game. As long as the people believe they can’t see the emperor’s naked pink flesh, his power and dignity will be preserved. But let one little boy hollers, “Hey, he’s nekkid!” and the tyranny collapses.
I didn’t sally forth looking for dragons to slay. The dragon came to me. He came with a lie, and either you oppose a lie, or you become a liar. You can kid yourself and say I’m only going along because they have all the guns, but day by day, year by year, your integrity erodes. Finally, you become like the tyrants: just one more liar.
Even if you have no chance to win, you have to fight. Not many are willing, but even a few keep the tyrants from sleeping at night. If we don’t fight, how many more Ruby Ridges and Wacos will there be? How many more SWAT team attacks? How many more police check points? How many more bureaucrats watching your bank account and your finances? How many more children held hostage by IRS agents? The bill of rights is already dead. Will it be time to fight when your wife and children are dead, too?
The US government spent millions of dollars trying to jail me and my wife and my pastor and assistant pastor. The assistant US attorney here told one lawyer that I was “the most dangerous man in the mid-South.” In a four and a half year investigation the government spent $5-$10 million, maybe more. We heard they spent nearly two million on the trial alone.
We can’t both be right. Either the government is right and gold and silver coin is not money, or I am right. This is not a gentlemen’s “difference of opinion.”
If I’m right, and if I win in the courts, then no state will ever be able to charge sales tax on gold and silver coin again. The greatest disability to free trade in gold and silver will have been removed. We will have broken own the last illegal roadblock to sound metallic money.
The above article was originally published in Chronicles: A Magazine of American Culture, February 1997.
Because the conditions of probation were so burdensome on him and his family, Mr. Sanders returned to jail and was relocated to a medium-security prison on November 4, 1996. He was released on December 20, 1996.
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