You’re heard the term “con man”.

The term doesn’t derive from the term “convict”, as some believe, but from “confidence man”, meaning someone who swindles his or her victim after gaining their confidence.

Often the con man (or woman) targets specific groups they are part of–a church, a neighborhood, an ideological group, etc.

This works particularly well (from the point of view of the con artist) when potential victims share a distrust of authorities, especially the government and lawyers.

Viewed as an apparent confidence scam, there really isn’t much new in what the Hawaiiloa Foundation has been doing, i.e., using fictional but official-looking financial instruments grounded in a complicated anti-government philosophy claiming a type of sovereignty, with victims who are eager to believe the claims.

Similar scams among anti-government groups on the mainland were described by the agent in charge of the Secret Service Financial Crimes Division during U.S. Senate hearings back in September 1997.

Other groups active in the manufacturing and distribution of fictitious negotiable instruments have received a great deal of publicity for other reasons. These groups, and others like them, i.e., “posse comitatus,” “we the people,” “w.d. mccall,” “l.a. pethahia,” “mount calvary baptist,” “the central dominion trust bank,” “Republic of Texas,” and the “freeman”, are well known for their activities as militia groups and their anti-government philosophy. What is not known is their criminal activities in the area of fictitious negotiable instruments. The philosophies of these groups are generally similar, however, each group has its own unique beliefs. Some groups argue that banks and credit companies do not loan money, only credit, and contend that their phony certified money orders and bankers checks are therefore “credit money” and legal tender.

These groups argue that the real money is in gold and silver and not in the Federal Reserve System, again maintaining that the instruments they use are as good as federal reserve notes. Groups such as the freeman, hold seminars and instruct individuals on how to become “sovereign citizens.” This belief is allegedly based on common law and thereby precludes them from paying taxes. Additionally, they claim to have multi-million dollar liens against various federal, state, and local government agencies.

For a fee, some of these groups give seminars on how to create “comptroller warrants” and instructions on how to use them. These instructions include overpayment on each check issued, with the overpayment being shared with the organizers of this scheme.

As with other fictitious negotiable instrument schemes, all of these groups also use “official” looking documents and correspondence, citing non-existent laws and uniform commercial codes in an attempt to confuse and intimidate individuals, financial institutions, private companies, and law enforcement.

These groups attempt to intimidate those who refuse to accept these instruments as payments and those in law enforcement who are tasked with investigating these cases, with threats of liens on personal property as well as threats of personal harm. Losses attributed to these fictitious instruments have been incurred by individuals, financial institutions, automobile dealerships, and the U.S. government.

Recently, three individuals were arrested by agents from our Jacksonville and Oklahoma city field offices and were later indicted by a middle district of Florida federal grand jury for possession of fictitious financial instruments (18 USC 514). These three individuals were offering two fictitious certificates of deposit, supposedly worth $95 million and $50 million, as collateral to secure approximately $47.5 million in loans.

These certificates were drawn on Japanese and Indonesian banks. After a week long jury trial, all three defendants were found guilty. It should be mentioned that this was the first indictment of 18 USC 514 (possession of fictitious financial instruments) by any federal grand jury.