The Unjust Conviction of an Innocent Man: The Ian Freeman Case
If one googles the name “Ian Freeman” and “bitcoin,” the result will be hundreds of articles describing Freeman as a “fraudster.”
Part 1
If one googles the name “Ian Freeman” and “bitcoin,” the result will be hundreds of articles describing Freeman as a “fraudster.” That’s because immediately after Freeman’s sentencing in a criminal case in a U.S. District Court in New Hampshire on October 2, 2023, the U.S. Attorney’s office in New Hampshire sent out a press release in which Freeman was labeled a “fraudster.”
There is one big problem, however, with that description: Freeman was never convicted of fraud, and the U.S. Attorney’s office knew that when it sent out that press release on the day of his sentencing.
That’s not to say, however, that there wasn’t any evidence of fraud in Freeman’s trial. There was, but it was fraud committed by the U.S. government official whose testimony the U.S. Attorney used to secure a conviction of Freeman on a bogus charge of “money laundering.” Although the jury found Freeman guilty of money laundering based on the sworn testimony of that agent, the federal judge presiding over the trial, Judge Joseph Laplante, as we see later in this article, threw out that finding of guilt and acquitted Freeman of the money-laundering charge.
Nonetheless, Freeman was convicted on other charges — conspiracy to engage in money laundering, failing to register his bitcoin business with the federal government, conspiring to fail to register his bitcoin business with the federal government, and income-tax evasion, all of which, as we will see later in this article, were as bogus as the money-laundering conviction that the judge rightly threw out.
In short, this article is about the unjust conviction of an innocent man — Ian Freeman — who is now serving an eight-year jail sentence that was meted out to him by the same judge who threw out that bogus money-laundering conviction.
But this is also an article that goes far beyond a detailed analysis of a very complex criminal prosecution in a federal district court, because it also places this criminal case in a much larger context, one that goes a long way toward explaining the dark statist morass into which our nation has plunged. That necessarily will mean a very long, multipart article, one that will not only explain in detail the wrongful conviction of the 43-year-old Ian Freeman but also review the historical, political, legal, and economic context in which an innocent man has been wrongfully convicted and sentenced to serve a very long time in a federal penitentiary.
The federal fraudster
In September 2019, a man named Pavel Prilotsky began purchasing bitcoins from Ian Freeman. We will examine later the nature of bitcoins and how and why Freeman got into the business of selling them, but for now, we are simply going to focus on the fraud in which Prilotsky engaged in an effort to entrap Freeman into committing a crime.
Prilotsky told Freeman that he was in the car business. It was a lie. In fact, Prilotsky was an agent of the Internal Revenue Service who had been assigned the task of secretly investigating whether Freeman was committing any crimes in his bitcoin business, specifically income-tax violations, money-laundering offenses, and violations of bank-secrecy regulations.
Over the course of almost a year, Prilotsky made several purchases of bitcoins from Freeman involving several thousands of dollars. In the process, he established a friendly relationship with Freeman. At the end of this year-long relationship, Prilotsky happened to mention that he was a drug dealer. It was another lie, one that Prilotsky hoped would enable him to charge Freeman with the illegal laundering of drug money by knowingly selling bitcoins to a supposed drug dealer.
There is something worth noting about Prilotsky’s misconduct. Given that he was employing fraud in an effort to secure a criminal conviction of Freeman, it is a virtual certainty that during his year-long investigation he had failed to come up with any evidence that Freeman had actually committed any crimes that fell within the three specific areas of Prilotsky’s investigation I just outlined. After all, at the risk of belaboring the obvious, if Prilotsky’s year-long investigation had turned up any evidence of real crimes that Freeman had committed, there would have been no reason to resort to fraud as a way to induce him to commit a crime.
Prilotsky’s hope of entrapping Freeman with a bogus crime, however, was quickly dashed by Freeman. Once he heard Prilotsky’s fake confession that he was a drug dealer, Freeman told him that he would no longer do business with him.
Not willing to let his fraudulent scheme fail so easily, Prilotsky expressed a deep disappointment to Freeman, pointing out that he had lots of friends who were interested in buying bitcoins from Freeman. What he was obviously trying to do was tempt Freeman into changing his mind with the prospect of making much more money than simply by selling bitcoins to Prilotsky. It didn’t work. Freeman stuck by his guns and told Prilotsky that he would no longer sell him bitcoins.
But the indefatigable fraudster Prilotsky still refused to give up. He asked Freeman about the bitcoin kiosks that Freeman had installed in various retail stores in Keene, New Hampshire, where Freeman lived. Those kiosks were not manned, so anyone could purchase bitcoins from them as easily as purchasing soft drinks from a vending machine.
When Prilotsky brought up the bitcoin kiosks, Freeman told him that he did not have Freeman’s permission to purchase bitcoins from his kiosks. That, of course, should have been the end of the Prilotsky’s fraudulent scheme, but Prilotsky was obviously desperate after almost a full year of investigating Freeman and coming up short. What Prilotsky did next is almost impossible to believe.
After Freeman told Prilotsky that he did not have Freeman’s permission to purchase bitcoins from one of Freeman’s bitcoin kiosks, he nonetheless went straight to one of Freeman’s bitcoin kiosks and purchased bitcoins by depositing the sum of $19,000 of U.S. taxpayer money that the IRS had collected from American taxpayers.
Prilotsky then took all of this “evidence” to the U.S. Attorney’s office in New Hampshire, which then — believe it or not — proceeded to prepare a federal criminal indictment charging Freeman with money laundering, based on the notion that Freeman had sold bitcoins to a “drug dealer” who had purchased the bitcoins from one of Freeman’s unmanned bitcoin kiosks, even though he did not have Freeman’s consent, authorization, knowledge, or approval and had been expressly told by Freeman that he would no longer sell him bitcoins.
The feds went to trial against Freeman with their IRS fraudster as their star witness, and the jury then convicted Freeman of money laundering based on Prilotsky’s testimony.
A judgment of acquittal
There is a long-established principle in the criminal law with respect to the finality of jury verdicts, which is that the jury is the final determiner of a person’s guilt. No judge, at either the trial or appellate level, has the power to disregard the jury’s verdict in a criminal case. It is final. Thus, in an appeal, even though the appellate judges can decide whether the district judge made any “reversible” errors of law, they lack any authority to second-guess the jury.
But there is also a long-established rule in the criminal law that empowers a convicted defendant to file in the trial court what is called a motion for judgment of acquittal notwithstanding the verdict of the jury. The trial judge has the authority to grant that motion by acquitting the defendant, notwithstanding the guilty verdict of the jury. The standard for granting such a motion, however, is extraordinarily high, given the long-established principle of the finality of jury verdicts. To grant the motion, the judge must find that there is no evidence whatsoever to support the guilty verdict that the jury has returned. If there is some evidence to support the verdict, the judge cannot grant the motion for judgment of acquittal, but if there is no evidence to support the jury’s finding, the judge can — and should — grant the motion.
To his credit, Judge Laplante granted Freeman’s motion for judgment of acquittal on the money-laundering count — the count that was based on the testimony of Prilotsky. Mind you, there is no indication that Laplante was morally outraged over what Prilotsky and the prosecution had done. Instead, he was simply upholding a principle of criminal law with respect to judgments of acquittal.
Laplante’s order of acquittal was the correct one, given that Freeman had made it clear that he had no intention of doing business with Prilotsky ever again once he learned that Prilotsky was supposedly a drug dealer. And clearly the judge saw through what Prilotsky was doing when he purchased bitcoins from Freeman by depositing $19,000 into one of Freeman’s kiosks without Freeman’s knowledge, authorization, or consent. What is surprising, however, is that Laplante permitted the money-laundering charge to go to the jury in the first place. He could have — and should have — granted Freeman’s motion for acquittal after both sides closed their cases and before the case was handed to the jury.
What the U.S. Attorney’s office did next is astounding. It filed a notice of appeal of Laplante’s ruling in the First Circuit Court of Appeals. That is, even though Laplante sentenced Freeman to eight years in the federal penitentiary on the other offenses of which he was convicted, that wasn’t good enough for the federal prosecutors. They obviously wanted more than a pound of flesh. After all, why else would they appeal the judge’s order of acquittal on the money-laundering count? They were obviously hoping to get the judge’s order of acquittal reversed on appeal and sent back for sentencing, at which point they would ask the judge to stack another sentence on top of the eight-year sentence Freeman had already received for the other charges. In fact, at sentencing, the prosecutors wanted the judge to sentence Freeman to almost 20 years in jail. They must have been bitterly disappointed when Laplante gave Freeman “only” eight years. We will examine later in this article the roots of the deep enmity that federal prosecutors and other federal officials have toward people like Ian Freeman.
But what really made their appeal — and, indeed, their prosecution — so phenomenal was their knowledge that Freeman had refused to do business with Prilotsky after he had told him that he was a drug dealer and that Prilotsky had used one of Freeman’s unmanned kiosks to purchase bitcoins after Freeman had told him that he didn’t have his permission to do so. What type of lawyers would pursue a criminal conviction either at the trial level or appellate level based on clear and convincing evidence of innocence, especially when their case is based on the testimony of an IRS undercover agent who, after being told to buzz off by Freeman, refused to give up trying to induce an innocent man to commit a crime?
But then something happened to cause the prosecution to change its mind. Sometime after filing its notice of appeal of Judge Laplante’s order of acquittal, the U.S. Attorney’s office successfully sought a dismissal of its appeal. Maybe it was shame over what they had done, but my hunch is that they simply concluded that it just wasn’t worth the effort. Even if they were successful in getting the judge’s order of acquittal reversed and the jury’s verdict reinstated on the money laundering charge, the chances were that Laplante would most likely make any new jail sentence run concurrently with the eight-year sentence he had already meted out to Freeman based on the other charges of which he was convicted.
The “Lonely Hearts Club”
The charge on which Prilotsky’s testimony was based was money laundering, and that’s the charge on which Judge Laplante issued his order of acquittal.
But another charge that Freeman was convicted of was conspiracy to launder money. While it sounds like those two charges — money laundering and conspiracy to launder money — were the same, they were actually very different.
With the money laundering charge, the government had to prove that Freeman illegally laundered money. That’s what the federal prosecutors were claiming that Freeman did when Prilotsky purchased bitcoins from Freeman’s kiosk.
With the charge of conspiracy to launder money, however, the government didn’t have to prove that the defendant actually laundered money. Instead, it simply had to prove that he entered into an agreement with another person (or other persons) to illegally launder money. The government also had to prove what is called an “overt act” that furthered the conspiracy.
While the laundering charge related to Prilotsky’s acts, the conspiracy to launder money charge revolved around what I would call the Lonely Hearts Club. As the federal prosecutors carefully documented in Ian Freeman’s trial, it turns out that there are lots of lonely people in the world, especially ones in their 60s and 70s, who are looking for love. The problem is that many of them are looking for love in all the wrong places, such as on the Internet.
Of course, as we all know, some people do meet on the Internet, exchange messages, meet each other, fall in love, get married, and live happily ever after. Unfortunately, however, finding love on the Internet doesn’t work for everyone. Some members of the Lonely Hearts Club meet people on the Internet who appear to be handsome, beautiful, and charming and who whisper sweet nothings into their ears via email or similar communications. Some members of the Lonely Hearts Club even end up falling madly in love with people they have never met in person and, even worse, decide to send them extremely large sums of money — sometimes hundreds of thousands of dollars — to help out their new lovers in their time of dire financial need. Only later do these members of the Lonely Hearts Club discover that it wasn’t true love on the part of their lovers but instead a “romance scam” that successfully caused them to part with their money.
There are, of course, different ways for a person to hand over large sums of money to a new lover.
One way is to simply do it in person with cash or a check. But the problem with that is that romance scammers are usually reluctant to use that method, especially given the risk of arrest.
Another method is to have the member of the Lonely Hearts Club wire the funds into the bank account of the new lover. The problem with that method, however, is that the bank can oftentimes identify the scammer and “claw back” the money for the benefit of the victim.
And then another way is to wire money to a bitcoin seller like Ian Freeman with instructions to purchase bitcoins and place them into the bitcoin wallet of the new lover. From the standpoint of a romance scammer, the bitcoin route is the best because it is virtually impossible to trace the identity and contact information of the scammer. Once the bitcoins are purchased and placed into the bitcoin wallet of the scammer, it is virtually impossible for a member of the Lonely Hearts Club to get his or her money back.
During Freeman’s trial and at the sentencing hearing, the federal prosecutors paraded a long line of people who were members of the Lonely Hearts Club before the jury and the judge. They gave heartrending stories about how they had fallen madly in love with the wrong people — people who sometimes they had never met in person — people to whom they had sent extremely large sums of money by purchasing bitcoins from Freeman and having him deposit them in the bitcoin wallets of their new lovers. In fact, while there were other charges against Freeman — two relating to failing to register his bitcoin business with the feds and others relating to income-tax violations, the main thrust of the federal criminal case against Ian Freeman revolved around (1) the money-laundering allegations relating to the testimony of Prilotsky and (2) the money-laundering conspiracy allegations relating to the testimonies of the members of the Lonely Hearts Club whose new lovers had scammed them out of large sums of money.
Notice something important, something that I mentioned at the very beginning of this article: Notwithstanding the U.S. Attorney’s office’s press release on the day of Freeman’s sentencing claiming that he was a “fraudster” — a claim that got repeated all over the Internet and the print media, Freeman was never convicted of fraud. In fact, the feds never even charged Freeman with defrauding or conspiring to defraud any member of the Lonely Hearts Club. Why not? Doesn’t that seem a bit strange given the prosecution’s long parade of witnesses from the Lonely Hearts Club who shared their heartrending stories of misguided love with the jury and the judge?
I should point out something that I haven’t yet mentioned with respect to fraud. After Freeman was first arrested, among the charges for which the U.S. Attorney’s office in New Hampshire had him indicted were wire fraud and bank fraud, two offenses that fell within the investigatory ambit of the federal fraudster Prilotsky. So, given that the U.S. Attorney’s office in New Hampshire initially had Freeman indicted for those two fraud-related offenses, it is clear that the lawyers in that office were very familiar with the legal concept of fraud. Thus, that pesky question naturally arises: Given the many members of the Lonely Hearts Club that the prosecutors paraded before the jury and the judge in Freeman’s trial who shared those heartrending stories about how their lovers had scammed them out of large sums of money, why didn’t those federal prosecutors charge Freeman with either defrauding those members of the Lonely Hearts Club or entering into a conspiracy to defraud them?
We will examine the wire-fraud and bank-fraud charges with which the federal prosecutors initially charged Freeman in part 2 of this article. Suffice it to say for now that just before trial, the federal prosecutors announced that they were abandoning those particular fraud charges against Freeman. But why would they do that? Why would the people who eagerly labeled Freeman a “fraudster” on the day of sentencing suddenly decide to not pursue those wire-fraud and bank-fraud charges at trial? They abandoned those fraud charges for the same reason they never charged Freeman with defrauding or conspiring to defraud any member of the Lonely Hearts Club, and we will examine that reason next.
Part 2
In 2008, a person by the name of Satoshi Nakamoto revolutionized the monetary world with the invention of bitcoin, the world’s first decentralized cryptocurrency. Concerned about the omnipotent control over money that governments all over the world wielded and the massive violations of financial privacy that came with such control, Nakamoto’s bitcoin provided people with a currency beyond governmental control that afforded people the possibility of restoring a tremendous amount of privacy over their financial affairs, something that federal officials naturally feared.
Ian Freeman and bitcoin
Ian Freeman was present at the beginning of the bitcoin revolution. As a libertarian, he understood perfectly the ramifications of federal monetary control and the destruction of liberty and privacy that came with such control. He understood that the U.S. Constitution established a gold-coin, silver-coin monetary standard, one that had protected the American people for some 125 years from the inflationary debauchery that comes with government-issued paper money. He understood the monetary revolution that had taken place in 1913 with the adoption of the Federal Reserve System. He understood the consequences of President Franklin D. Roosevelt’s nationalization of gold coins in the 1930s and the adoption of paper money as the legal tender of the United States as a prelude to the conversion of the federal government to a welfare-warfare state. He understood how the federal government had plundered and looted the American people through the Federal Reserve’s decades-long policy of ever-expanding quantities of paper money. He understood how the federal government had destroyed people’s right of financial privacy with its massive control over the banking industry, especially in combination with the multitudes of rules and regulations that come with the federal government’s decades-long drug war. In short, Freeman grasped the potential that bitcoin provided to upend the government’s control over monetary affairs, which was precisely what Nakamoto hoped to achieve with his invention of bitcoin.
Deeply dedicated to the principles of liberty and privacy, Freeman began selling bitcoins to people, but he did more than that. He also devoted himself to educating people on the virtues of bitcoin and how it could help them regain their fundamental, natural, God-given rights of liberty and privacy.
Freeman ended up making his hometown of Keene, New Hampshire, a major center of bitcoin activity. He was not only a big seller of bitcoin but also persuaded many retail establishments to accept bitcoin for payment in transactions. Most important, Freeman educated people on what was the central value of bitcoin, which was the financial privacy it provided people.
Given the fact that he was succeeding in showing people how to circumvent governmental control over their financial affairs, it goes without saying that the feds did not look kindly on him. That was why they had their IRS undercover agent, Pavel Prilotsky, befriend Freeman for almost a year in the hope that Prilotsky would find some evidence of criminal activity so they could shut Freeman down and perhaps even lock him up and take his money from him. The deep enmity that the feds have toward Freeman was demonstrated when Prilotsky ended up resorting to fraud as a way to achieve their goal.
Four sets of criminal charges
There were four main criminal charges against Freeman that the jury in Freeman’s criminal case had to consider.
Two charges related to his failure to register his bitcoin business with the federal government. Another related to income-tax violations. Let’s set those charges aside for now and address them in part 3 because they were clearly not the heart of the federal case against Ian Freeman. As I will explain in part 3, they are what I call “add-on” charges.
As I pointed out in part 1, the main thrust of the federal case against Ian Freeman involved two separate counts relating to money laundering. The first count accused him of actually engaging in money laundering: that was the count that involved Prilotsky, who deceived Freeman in an unsuccessful attempt to get him to commit a money-laundering crime. That was also the count that Judge Laplante acquitted Freeman of, notwithstanding the fact that the jury had found him guilty of that offense.
The second count accused Freeman of a conspiracy to launder money.
Those two crimes — laundering money and conspiracy to launder money — appear to be similar, but they are very different. To understand why this is so, I’m going to carefully analyze and compare each of these two crimes by using four hypothetical examples, ones that involve drug transactions.
Conspiracy hypotheticals
Example 1: Mary asks John to sell her an ounce of heroin for $1,000. John says yes. John and Mary agree to meet the next day to make the trade. But have John and Mary committed a federal offense? No, because they didn’t actually make the trade. If the feds indict John and Mary for what they have done, they will be unable to prove that they committed a crime, because John didn’t distribute any heroin to Mary and Mary didn’t possess any heroin.
Example 2: The facts are the same as in example 1, but the next day, John and Mary do meet. John hands Mary one ounce of heroin, and Mary pays John $1,000. We now have two federal crimes that have been committed — distribution of heroin and possession of heroin.
Example 3: Mary asks John and Jane to sell her an ounce of heroin for $1,000. John and Jane say yes. All three of them agree to meet the next day to make the trade. When John and Jane return home, they telephone their heroin supplier Bill and ask him to sell them an ounce of heroin for $500, which they plan to resell to Mary. The next day, however, Mary backs out of the deal.
Have any federal offenses been committed? Yes. We now have a conspiracy, which is simply an agreement between two or more people to commit a crime. Since John and Jane have entered into an agreement to sell heroin to Mary, that constitutes a conspiracy. John and Jane can be charged and convicted of conspiracy to sell heroin even though they never actually distributed any heroin to Mary. It will simply be a one-count indictment charging John and Jane with conspiracy to sell heroin. Assuming the feds can prove the agreement (using a recording of the conversation with Mary) and the telephone call with Bill (using a wiretap), the feds will be able to prove their case and secure a conviction, even though no heroin was ever distributed.
Example 4: Mary asks John and Jane to sell her an ounce of heroin for $1,000, just as in example 3. John and Jane return home. Mary telephones them immediately and cancels the deal. Can John and Jane be convicted of any federal crime? No. What about the agreement between John and Jane to sell heroin to Mary? Isn’t that a conspiracy? Yes, but to be convicted of conspiracy, the feds are also required to show that the defendants committed an “overt act” to further the conspiracy, such as telephoning Bill and inquiring about buying heroin from him. In this example, since the deal was canceled before John and Jane telephoned Bill, there was no overt act. Therefore, even though the feds can prove conspiracy, the defendant will be acquitted because the feds cannot prove that an overt act was committed to further the conspiracy.
Freeman’s conspiracy charge
Keeping these examples in mind, let’s now turn to the Freeman case. Again, let’s set aside the add-on charges relating to failing to register his bitcoin business with the feds and the tax-violation charges. That leaves one money-laundering charge and one conspiracy-to-launder-money charge. The money-laundering charge is the one involving Prilotsky’s testimony, and that’s the charge that Judge Laplante acquitted Freeman of. Since the prosecution dismissed its appeal of that ruling, Freeman’s acquittal on that charge is now final. Under the constitutional principle of double jeopardy, Freeman can never be tried again on that particular charge.
That leaves us with just one charge: a conspiracy charge, specifically a conspiracy to illegally launder money. The following is a verbatim transcript of the jury verdict on the conspiracy charge: “With regard to the crime described in Count Four of the indictment, conspiracy to commit money laundering, we, the jury, find the defendant guilty.”
Keep in mind, once again, that the core element in such a charge is an agreement between two or more people to commit a crime, not the actual crime itself, in this case money laundering. The federal prosecutors had to prove beyond a reasonable doubt that Freeman and another person (or other people) entered into an agreement to commit an illegal act (and also that at least one of them committed an “overt act” that furthered the conspiracy).
The bank-fraud and wire-fraud charges
However, let’s back up for a few minutes. Initially, federal prosecutors had leveled more charges against Freeman, specifically bank fraud and wire fraud. Those charges were based on two allegations, both of which were true.
The first allegation was that Freeman had advised people who were wiring funds to him from their banks to buy bitcoins from him to lie to the banks with respect to what they were using their money for. He told them to falsely tell the banks that the monies they were wiring to Freeman constituted donations to a church that Freeman had organized rather than monies that were going toward the purchase of bitcoins.
The second allegation was that when Freeman opened a bank account for his church, he failed to disclose that he would be receiving money from the sale of bitcoins and instead told the bank that he would be receiving donations to his church.
That’s solid evidence of wire fraud and bank fraud, right? After all, those are false statements, right? Then why did the federal prosecutors, who were clearly out to get Freeman at all costs, as demonstrated by their reliance on the testimony of their agent, Prilotsky, abandon those charges before the start of the trial? The answer is very simple. They knew that they couldn’t prove that Freeman had committed either wire fraud or bank fraud because, in fact, he hadn’t committed either offense, and they knew it. To understand why this is so, we have to examine the difference between a lie and fraud.
Lying and fraud
Lying is ordinarily not a crime. There are exceptions, such as when a person lies under oath, which is perjury, a felony offense. It’s also against the law to lie to a federal official in an official investigation. That’s what the feds charged Martha Stewart with, for example. But usually, lying is not a criminal offense.
Fraud, on the other hand, is a federal criminal offense. It involves lying and deceit, but what’s different about fraud is that it is done with the aim of inflicting harm on the person or entity to whom the deceit is aimed.
Most of the time, fraud involves an effort to illegally deprive a person of his or her money. If I sell you a car for $50,000 that I tell you is brand new when, in fact, it has 20,000 miles on it, I have defrauded you and illegally gotten your money.
But fraud can also involve an effort to inflict nonmonetary harm on a person. A good example was the fraud that IRS agent Prilotsky committed against Freeman. Prilotsky lied to Freeman to deceive him into committing a federal offense that would enable federal officials to target Freeman with arrest, prosecution, conviction, incarceration, and a fine. Of course, it goes without saying that when the feds commit this type of fraud, it is not considered a crime, any more than a murder carried out by the Pentagon or the CIA for the purpose of protecting “national security” is considered a crime.
As the Freeman trial approached, it undoubtedly began dawning on the federal prosecutors that they could never prove that Freeman had committed either bank fraud or wire fraud. They could prove that he had lied to the banks or induced his customers to lie to the banks, but they knew that simply proving a lie would not be sufficient to secure a conviction. They had to prove that the lie involved an effort to inflict harm on the bank, such as by fraudulently stealing its money, and it was clear that Freeman had never done that, which is why the feds abandoned their bank-fraud and wire-fraud counts against Freeman just before trial. They knew they couldn’t prove he had committed a federal criminal offense.
Fear of the feds
So why did Freeman lie to the banks and induce his clients to lie to the banks? Because he knew that federal officials had put the fear of God into banking officials with respect to bitcoins. As it is, the banking industry is already the most tightly controlled and regulated industry in the country. Whenever a federal banking inspector walks into a bank, every single bank employee, from the president on down, is immediately stricken with deep fear, given the overwhelming federal power to fine the bank large sums of money, or even close it down, for violating federal regulations. In fact, banks have been fined millions of dollars for supposed “shortcomings” in their antilaundering controls.
The bitcoin phenomenon only made things worse. Every banking official knew that the feds hated bitcoin and would look askance on banks that dealt with bitcoin sellers. Thus, when banks would discover that Freeman was a bitcoin seller, some of them would close his account immediately even though selling bitcoins was perfectly legal, because the banks didn’t want to upset the feds. By the same token, if a customer told a bank that he was wiring his funds to buy bitcoins, some banks would refuse to do so, again out of fear of federal retaliation. They might even ask the customer to take his business elsewhere.
That’s the reason that Freeman was deceiving the banks — not for purposes of fraud but rather simply to circumvent bank policies that are rooted in bankers’ fear of federal regulators, and deceiving the banks in this way is not illegal.
Romance fraud
Lack of evidence, which was why the prosecutors abandoned their wire-fraud and bank-fraud charges against Freeman, is also the reason why they never charged Freeman with defrauding even one member of the Lonely Hearts Club — that is, the lonely 60- and 70-year-olds who had fallen in love with the wrong people — people who they had never met but to whom they had sent extremely large sums of money in bitcoin in an effort to please their online lovers. The prosecutors knew that they could never prove that Freeman had defrauded any one of them. Again, if they had had any evidence whatsoever of fraud with respect to the “romance scams,” you can be certain that they would have indicted Freeman for both fraud and conspiracy to commit fraud, given their quest to get him on anything and everything they could.
Remember: fraud necessarily involves lying and deceit as a way to inflict harm on a person, specifically by stealing his money. Freeman never lied to any of his bitcoin customers, including members of the Lonely Hearts Club. On the contrary, like any good businessman, he treated his customers with the utmost of respect, which is why he had received extremely high feedback ratings with respect to honesty and integrity on the website that he was using for selling bitcoins. Therefore, in preparing their case, federal prosecutors knew that they could never prove Freeman guilty of defrauding his customers because the simple truth was that Freeman had never done so.
No evidence of fraud
That left the federal prosecutors with just one count — conspiracy to launder money — against Freeman. To prove him guilty of that one conspiracy count, the prosecutors not only presented their parade of romance-scam victims before the judge but also argued that Freeman had turned a “blind eye” to the romance scams themselves.
That was pure nonsense. For one thing, in his testimony at trial, Freeman established that he did everything he could to ferret out whether someone was being scammed through his or her purchase of bitcoins. In fact, he was able to stop many scams and actively cooperated with law-enforcement personnel to bring romance scammers to justice. The problem was that he could not prevent all scams, which is what the feds claimed he should have done.
Moreover, it was never in Freeman’s interest to have his customers victimized by romance scammers. After all, like many other online businesses, he knew that his business depended on high feedback ratings. The problem was that some members of the Lonely Hearts Club would lie to Freeman about what they were using their money for, even when he questioned them about it. They didn’t want to admit to Freeman that they were sending large sums of money to their new lovers for fear that Freeman might not sell them the bitcoins they intended to send to them.
In fact, Freeman’s customers did the same thing with the banks where they had their monies and from which they were wiring their monies to Freeman. Complying with the federal government’s intrusive “Know Your Customers” regulations, the banks would try to ferret out whether people were being seduced by romance scammers to wire their monies to their new lovers. Wanting nothing more than to please them, and fearful that their bank might interfere with their online love affairs, they would keep their love affair secret from the banks and lie about it if asked. Yet while the feds targeted Freeman for supposedly turning a “blind eye” toward the romance scams, they never targeted the banks that were wiring the monies to Freeman for supposedly doing the same thing.
For that matter, they also never targeted the children of those lonely 60- and 70-year-olds for turning a blind eye to their parents’ online love affairs. That’s obviously because some of the romance-scam victims also didn’t want their children interfering with their new-found and secret love affair and, therefore, presumably also lied to them about their online misguided love affair.
No civil suits
There is something else to bear in mind. There was no evidence introduced at trial that any of the romance-scam victims had ever filed a civil lawsuit against Freeman for fraud. In a criminal case, the government has a heavy burden of proof. It must prove a person’s guilt beyond a reasonable doubt. In a civil case, however, the burden is much lighter. All the plaintiff must do is prove fraud by “a preponderance of the evidence.” Why hadn’t any of the romance-scam victims filed a civil suit against Freeman for defrauding them of their money? Because there was no evidence whatsoever that Freeman had defrauded them—and because they could never have been able to find a lawyer who would be willing to take their case.
In fact, every indication is that the feds came up with these romance-scam victims only after seizing and searching Freeman’s computer as part of a military-style raid on his house and then contacting the victims and convincing them that Freeman bore responsibility for their financial woes rather than the victims themselves.
Romance scams and conspiracy to launder
But there is still the central legal question: What in the world does all this romance-scam evidence have to do with a conspiracy charge? The answer is: Nothing at all!
Remember: In a conspiracy case, what matters is whether an agreement has been entered into between two or more people to commit an illegal act. In this case, there was no such agreement. To prove a conspiracy to launder money, the prosecutors had to prove that Freeman entered into an agreement with the romance scammers to jointly and knowingly commit an illegal act. But it is undisputed that Freeman never entered into such an agreement with any of the romance scammers. All that Freeman did was sell bitcoins to people, a far cry from knowingly entering into an agreement with someone to commit an illegal act.
Why no money-laundering charges with the romance scams?
The natural question arises: Why didn’t the federal prosecutors charge Freeman with laundering money from the romance-scam victims? Why limit their charges to a conspiracy to launder money? Keep in mind that they had already charged him with illegally laundering money by supposedly selling bitcoins to Prilotsky, so why not also charge him with illegally laundering money with respect to the Lonely Hearts Club victims?
The answer is because they knew they couldn’t prove that he had laundered any money. Laundering money entails taking dirty money and converting it into clean money. When Freeman received the money from his customers, it was obviously still clean money, and it remained clean money up until the time that the bitcoins were deposited, at the request of Freeman’s customers, into the bitcoin wallets of the scammers, after which point it became dirty money in the hands of the romance scammers. It’s only after money has become dirty that it needs to be laundered. The feds knew that Freeman had no dealings with the romance scammers after the romance victims had purchased bitcoins and instructed Freeman to deposit them into the bitcoin wallets of their lovers, and that’s why they never charged him with such a crime.
Crime and punishment
So if federal prosecutors never proved that Freeman entered into any agreements, or conspiracies, with the romance scammers to defraud the victims or to illegally launder money, how did they convince the jury and the judge to convict and severely punish Freeman?
They obviously did it by bamboozling both the jury and the judge by flooding them with evidence about the romance scams and making it look like this was a big fraud case, one based on money-laundering, rather than simply a conspiracy case. In that way, they were able to distract the jury’s and the judge’s attention away from the central issue of such a charge — which was: Where is the illegal agreement or conspiracy? — by causing both the jury and the judge to focus instead on the circumstances surrounding the romance scams.
At the sentencing hearing, one of the issues involved was what the federal government was going to do with the $5 million that the feds had seized from Freeman. In its presentence report, the federal probation office stated that it would be improper to use Freeman’s $5 million to reimburse the romance-scam victims. It pointed out that since this was a money-laundering case, not a fraud case, the victim was “society,” and therefore, Freeman’s $5 million should be forfeited to the government rather than be used to reimburse the romance-scam victims. The probation office clearly had it right, although only partly, as I show below.
But the prosecutors paraded some of their romance-scam victims before Laplante at sentencing, just as they had done at trial. In fact, Laplante even pointed out at the sentencing hearing that “the prosecution has gone to a lot of trouble giving me a big binder full of FBI interview reports and evidence that suggest there’s a lot of vulnerable victims here.”
The fraud perpetrated on the romance-scam victims clearly had a big impact on Laplante. He stated at the sentencing hearing: “I do think there’s an abundance of record evidence that the defendant transferred wire fraud victims’ fraudulently obtained money to wire fraudsters.” He also stated: “So they were — they were laundering transactions that were very much part and parcel of the actual defrauding conduct, the — the obtaining of money from victims and transmitting it to perpetrators.”
In fact, Laplante clearly understood that using Freeman’s savings to reimburse the romance-scam victims, which Laplante was clearly determined to do, necessarily depended on Freeman’s having participated in defrauding them, as the probation office had pointed out to him.
Yet, the fact remains that Freeman was neither charged with or convicted of defrauding even one single romance-scam victim! Moreover, let us not forget two critically important points:
(1) The prosecution abandoned its wire-fraud and bank-fund charges before trial. Given the government’s quest to get Freeman at all costs, including having an IRS undercover agent himself commit fraud against Freeman in an attempt to entrap him into committing a crime, there can be only possible reason for abandoning such charges: The prosecution knew that there was no evidence to support them.
(2) If the prosecutors had even one iota of evidence establishing that Freeman defrauded even just one of the romance-scam victims, there can be no doubt that they would have indicted him for doing so, especially given the government’s fierce determination to get him at all costs. The fact that the prosecution did not have him indicted for defrauding even just one single romance-scam victim shows that they did not have even one iota of evidence to support such a charge.
Nonetheless, one thing is crystal clear: U.S. District Judge Joseph N. Laplante punished Ian Freeman by giving him an eight-year jail sentence, plus two more years of supervised parole, plus a $40,000 fine, plus forfeiture of his $5 million in savings for a crime that he was not convicted of, not charged with, and did not commit — namely, fraud. That’s what passes for “justice” in America’s federal-court system.
Bamboozling the probation office and the media
The jury and the judge were not the only ones who obviously got bamboozled by the prosecution. Obviously, so did the probation office. Recall above that the probation office’s position was that since this was a money-laundering case, Freeman’s savings should be forfeited to the government and not be used to reimburse the romance-scam victims. But the probation office was wrong. This was not a money-laundering case. This was a conspiracy case. Freeman was never convicted of or even charged with money-laundering with respect to the romance-scam victims. Instead, he was charged with and convicted of conspiracy, that is, supposedly entering into an illegal agreement. At the risk of belaboring the obvious, there are no victims arising from an illegal agreement.
This bamboozlement on the part of the New Hampshire U.S. Attorney’s office also extended to the media. The press release that it issued on the day of Freeman’s sentencing — October 2, 2023 — stated the following: “Ian Freeman was sentenced today in federal court for laundering over ten million dollars in proceeds from romance scams and other internet fraud…. Dozens of victims … lost their life’s savings by way of Freeman’s bitcoin money laundering scheme. Ian Freeman’s sentencing shows that IRS Criminal Investigation is working vigorously to stop internet fraudsters like Ian Freeman.”
Those were all patently false or misleading statements. As the U.S. Attorney’s office knew full well, at the time that that press release was sent out, Judge Laplante had already acquitted Freeman of the government’s only money-laundering charge — the one that was based on the testimony of IRS agent Prilotsky — and that Freeman had been convicted of conspiracy, not money laundering and not fraud.
The final shock
What actually happened to Freeman’s $5 million in savings was shocking. It was clear that Judge Laplante was going to order a forfeiture of Freeman’s money as part of Freeman’s punishment. The only issue was whether the money was going to go to the federal government or to the victims of the romance scams. Knowing Freeman’s antigovernment mindset, the federal prosecutors got him to agree that $3.5 million of the $5 million would go to the romance-scam victims, which would leave only $1.5 million going to the federal government. As far as Freeman was concerned, since he was going to lose the money anyway, he preferred that it go to the victims rather than to the federal government.
What is shocking about the deal, however, was that they got Freeman to agree that even if he were to succeed in getting his criminal conviction overturned on appeal (which is still pending), he can never get any of his $5 million back. In other words, even if he were to be adjudged innocent on appeal, he’d still lose his money. That’s what passes for “justice” in America’s federal-court system.
In part 3, we will examine the other two add-on charges that Ian Freeman was convicted of — the charges dealing with violations of federal regulatory and tax provisions. We will also examine the roots of the deep enmity that federal officials have for people like Ian Freeman, as well as what this case was really all about.
Part 3
As I pointed out in parts 1 and 2 of this article, the main thrust of the U.S. government’s case against Ian Freeman involved money-laundering and conspiracy to launder money.
The money-laundering charge came after the undercover IRS agent Pavel Prilotsky posed as a drug dealer in an attempt to entrap Freeman into committing a money-laundering offense. But that was the charge that the presiding judge in the case, Joseph Laplante, determined was invalid and threw out.
Freeman was convicted of the conspiracy charge even though, as I pointed out in part 2, there was no evidence whatsoever that he ever entered into any illegal agreement with anyone to launder money. By any objective standard of justice, Laplante should have issued a judgment of acquittal on that charge as well, as he did with the money-laundering charge.
That left two other sets of charges that Freeman was convicted of: (1) operating an unlicensed money-transmitting business and conspiring to run an unlicensed money-transmitting business and (2) attempting to “evade and defeat taxes” in the years 2016–2019.
Add-on charges and plea bargains
I call these particular charges “add-on” charges. What federal prosecutors do when they are charging someone with a crime is load up with as many charges as they can against the accused. They do that to pressure the accused into accepting a plea bargain in which he pleads guilty to one offense and has all the other add-on offenses dismissed. It looks like a great deal for the accused until he realizes that the offense to which he is expected to plead guilty is a felony that entails a very long jail sentence.
Recall what I stated in part 1 of this article regarding the disgraceful actions of the IRS undercover agent Pavel Prilotsky. If he had come up with anything substantial after secretly investigating Freeman for almost a year — that is, something more than licensure violations and tax violations — he never would have resorted to fraud in his effort to entrap Freeman into committing a crime. By doing so, it is clear that he didn’t consider the licensure violations and tax violations that Freeman was later charged with to be very substantial.
In every federal criminal case, the Constitution guarantees the right of trial by jury. But another dark secret of the federal criminal-justice system is that if an accused person elects to exercise that right, he is punished more severely by many federal judges for doing so. That is, they impose a much longer jail sentence on him than they would have imposed if he had pled guilty. That’s because they feel that the defendant “rolled the dice” by making federal prosecutors and judge go through the time, effort, and expense of a trial, and for that, the defendant needs to be punished if he is convicted. Given Ian Freeman’s steadfast insistence on his innocence, however, there was never any chance that he would accept a plea bargain in which he had to plead guilty to anything.
The concept of money
Let’s focus first on the licensing charge. Notice that the charge involves failing to secure a federal license for operating a money-transmitting business. That’s important because the prosecution had to prove that bitcoin was “money.” The Bank Secrecy Act, which governs money transmission at the federal level, was enacted in 1970, long before bitcoin was invented in 2009. Obviously, Congress has had more than sufficient time to enact clarifying legislation as to whether it wants the money-transmission provisions of the Bank Secrecy Act to extend to bitcoin. For whatever reason, it has chosen to not enact such clarifying legislation.
Nonetheless, Judge Laplante held that when Congress enacted the Bank Secrecy Act, it surely meant to include any future forms of money, including bitcoin. Since Laplante is certain that bitcoin is “money,” he decided to uphold the jury’s verdict finding Freeman guilty of those two offenses and sentenced him to jail for operating a money-transmission business without a federal license.
It’s not clear what made Laplante so certain that bitcoin constitutes “money.” The prosecutors certainly didn’t present any expert witnesses at trial establishing that bitcoin is “money.” One gets the impression that Laplante is just personally certain that bitcoin is “money.”
Yet there is an article posted on forbes.com dated June 29, 2021, entitled “Bitcoin Is a Cryptocurrency, But Is It Money?” by Forbes contributor Rick Miller. That was about a year and half before Freeman’s trial. I think most people would acknowledge Forbes magazine to be rather expert in financial matters. After providing a detailed and careful analysis of the characteristics of money, Miller concluded, “Cryptocurrencies have been designed to serve as currencies, but they don’t yet fulfill the central functions of money.”
Miller was not alone in his opinion. A web page of the Reserve Bank of Australia about digital currencies states the following: “A frequently asked question is whether cryptocurrency can be defined as ‘money.’ The short answer is that cryptocurrency is not a form of money. To understand why, we can ask whether the characteristics of cryptocurrencies match the key characteristics of money.”
And in an article on Medium dated November 27, 2017, entitled “Why Bitcoin is not Currency,” by Anson Zeall, the cofounder of CoinPip, a platform for international payments using Bitcoin, Zeall writes, “Bitcoin does not fulfill the definition of money.”
Now, I’m sure that a number of articles could also be found arguing the opposite — that bitcoin is money. But I have a simple question: Are we really going to convict people of a federal felony and sentence them to jail over a definition of money when there is a clear conflict of perspectives on the issue and without any clarifying legislation by Congress? According to the federal prosecutors and the federal judge in the Freeman case, the answer is yes. They are obviously convinced that lawyers and judges know a lot more about economics and financial matters than economists and financial experts.
Occupational licensure
Another question that arises is: Where is the constitutional authority for the federal government to be issuing licenses for businesses to transmit money? One would search the Constitution in vain to find such authority. Indeed, why should anyone who wishes to go into the money-transmission business have to secure the permission of the federal government before doing so?
That is Ian Freeman’s perspective, just as it is the perspective of every libertarian. Government has no more business issuing licenses for engaging in occupations and professions than it does issuing licenses for engaging in religious activity. In fact, if truth be told, licensure is nothing more than a protection racket for those who hold those licenses — a protection racket designed to protect the rich and privileged from the competition of the poor and the non-elites.
A protection racket for lawyers
A classic example of this phenomenon is the law profession to which all U.S. prosecutors and federal judges belong. In order to practice law, one has to secure a license from the state, and most states will not issue a law license to a person who hasn’t attended a state-approved law school and then passed a state-administered bar examination. Moreover, it is extremely difficult to get into a state-approved law school without first graduating from a state-approved college or university.
All of that costs a lot of money. It’s not something that many people can afford. Thus, in most states, those people who are in the lower economic brackets are prohibited from, say, apprenticing with a lawyer and becoming a lawyer that way, without having to secure a license from the state.
If a person without a law license opens up an office offering to handle uncontested divorce cases for, say, $100, the bar association will immediately go into court and secure an injunction against him. That’s because he is cutting into the business of the licensed lawyers who are charging $1,000 for handling uncontested divorces, and the judges, who themselves are lawyers, will grant the injunction.
Lawyers and judges will argue that licensure protects the public from incompetent and unethical lawyers. And they will say that with straight faces. But consider a February 2, 2022, article in the Concord, New Hampshire, Monitor entitled, “Federal Prosecutor Facing New Accusations of Misconduct.” It states that a federal prosecutor in the New Hampshire U.S. Attorney’s office — that is, the same office that prosecuted Freeman — “was accused of withholding evidence in two recent federal cases.” The article quotes Judge Landya McCafferty, chief justice of the U.S. District Court for the District of New Hampshire: “The government’s failure to learn of and disclose these facts was patent prosecutorial misconduct. The fact that highly similar misconduct has happened at least twice in this United States Attorney’s Office within a short time span raises concerns about the seriousness to which the government takes its constitutional disclosure obligations.”
At the risk of belaboring the obvious, that very same federal prosecutor received a license to practice law, a license that supposedly protects people from incompetent and unethical lawyers.
The inside-the-box mindset
Libertarian opposition to statist measures like occupational licensure — and the lack of respect that libertarians have toward such measures — is only the tip of the iceberg, however. The fact is that libertarians oppose the entire welfare-warfare state and government-regulated society to which statists are so deeply devoted. It is that opposition and disdain for statism that explains the deep enmity that federal officials have toward Freeman and other libertarians.
One can explain the statist mindset as one of thinking “inside the box.” It is that inside-the-box mindset that is inculcated in every child in the government-approved schools to which his parents are forced to send him when he reaches the age of six years old. It is the aim of the state’s educational system to produce what can be called “good little citizens” — that is, ones who are indoctrinated into accepting and embracing the welfare-warfare state, regulated-society way of life into which they are born and raised and then grow up convinced that they are “free.” That’s why adult statists feel very comfortable doing such things as reciting the Pledge of Allegiance, thanking the troops for their “service” for protecting our “freedom” by killing people in Iraq and Afghanistan, and singing, “Thank God I’m an American because at least I know I’m free.”
That’s what life is like inside the box. And then along comes someone like Ian Freeman, or some other libertarian, who challenges the existence of the box itself, or even worse, refuses to play by the rules of the box. Statists go absolutely ballistic. People like Freeman are considered to be a threat to society because they are a threat to the box, and they have to be dealt with. They have to be monitored, spied on, investigated, and set up and entrapped into committing bogus crimes. They need to be removed from society by locking them away in a federal penitentiary for as long as possible. They need to have their life’s savings taken away from them. The threat they pose to the box needs to be eliminated or significantly diminished.
In fact, in a way, Freeman is lucky to have been sentenced to serve his eight years in a federal penitentiary. They could have instead declared him insane for his radical, outside-the-box mindset and sentenced him to an indefinite term in a federal insane asylum, just as Soviet authorities used to do to their citizens who thought outside the box.
The drug war
Consider, for example, the war on drugs, the governmental program that has been going on for at least 60 years. It is a classic inside-the-box program. People like the federal attorneys and federal judges in New Hampshire, including Judge Laplante, all do their part to “win” the war on drugs.
For example, according to a press release issued by the DEA just last month — June 2024 — five people pled guilty to drug-related offenses and are now scheduled to be sentenced by Judge Laplante. They are facing up to 20 years in jail and a fine of $1 million. According to another press release issued by the New Hampshire U.S. Attorney’s office, again just last month, a Manchester, New Hampshire, man pleaded guilty before Judge Laplante to a drug-related offense and is also now facing up to 20 years in jail and a $1 million fine.
It’s probably worth mentioning that a large number of drug busts arise out of the sale of drugs to federal undercover agents or “informants.” For example, according to an article at Foster’s Daily Democrat, a man named Elmer Valladares Rivera pled guilty before Judge Laplante to selling heroin to an “informant.” The problem is that sometimes these “informants,” desperate to make arrests, induce people to commit the crime, which, needless to say, reminds us of what the IRS fraudster Pavel Prilotsky unsuccessfully tried to do to Ian Freeman.
Libertarians, including Ian Freeman, oppose the drug war entirely. We hold that it is none of the government’s business what a person decides to distribute, possess, or ingest. We hold that any society in which government wields the power to punish people for possessing, ingesting, or distributing drugs cannot, by any stretch of the imagination, be considered a genuinely free society.
This libertarian mindset causes inside-the-box statists, especially those in the DEA, the U.S. Attorney’s office, and many federal judges to go ballistic. “How can we stop the drug dealers and the drug cartels if we legalize drugs, like you libertarians want to do?” they cry.
Given their public-school indoctrinated inability to think outside the box, what the inside-the-box statists simply cannot see is that it is their beloved war on drugs that brings into existence the very unsavory drug dealers that they lament. What they cannot see is that with the legalization of drugs, the unsavory drug dealers that they spend so much of their time, effort, and taxpayer money targeting would be put out of business immediately.
The drug war is everything for federal prosecutors and federal judges because it serves to keep them in high cotton with their generous tax-supported salaries. Without drug cases that clog court dockets all across the country, there would be no need for the massive army of federal bureaucrats who wage the war on drugs, including DEA agents, federal prosecutors, federal judges, court translators, drug-war law-enforcement personnel, and court clerks, not to mention the bribes and asset forfeitures that come with the drug war.
In fact, even though they would be loath to admit it, the truth is that the Freeman case is all about the drug war. Oh, sure, they wrapped it up in terms like “money laundering,” but the fact is that their money-laundering statutes were enacted to fight the unsavory drug dealers that their own drug war has created. Their plan was that by tightening control over the ability of drug dealers to deposit their money into banks, thereby making it “clean,” the drug warriors could finally — finally! — win their decades-long drug war.
But I have some questions for the federal prosecutors in New Hampshire and Judge Laplante: How is all that working out for you? Have all those rules and regulations placed on banks, which have destroyed the financial privacy of the American people, succeeded in winning the war on drugs? Has that $10,000 reporting requirement for bank deposits won the drug war? How about the asset forfeitures totaling millions of dollars seized from innocent people, principally blacks and other minorities? How about all the violent drug raids and the multitudes of searches and seizures, both legal and illegal? Indeed, have your endless criminal prosecutions, convictions, incarcerations, fines, and forfeitures for drug-related offenses or money-laundering offenses that have destroyed the lives of so many people, including that of Ian Freeman, brought you victory in your beloved drug war? I don’t think so.
Decades of mindless drug warfare
What is fascinating about this issue is that federal prosecutors and federal judges today cannot see that what they are doing is no different from what federal prosecutors and federal judges were doing 50 years ago. For example, in the 1970s, there was a federal judge in San Antonio named John H. Wood, Jr., who was called “Maximum John.” The reason he had acquired that moniker was because he would blindly impose the maximum jail sentence on drug-war defendants regardless of the facts and circumstances surrounding each case.
For example, Wood was once faced with sentencing three young men who had been convicted of a one-count drug conspiracy indictment. Mind you, they had never actually distributed or possessed the drugs. All they had done was agree to purchase them. Wood gave all three of those young men the maximum 15-year jail sentence on that one-count conspiracy charge, and the conviction was upheld by federal judges on appeal. It was Wood’s way of doing his part to win the war on drugs.
In 1979, Wood was assassinated. It turned out that he was unethically cooperating with federal prosecutors to help them win drug-war cases. The drug lord who hired the assassin held the quaint view that a judge should be fair and impartial, even in drug cases. Of course, Wood was just another casualty among all the other countless casualties in the decades-long war on drugs, the government program that is so beloved to every single inside-the-box statist, especially those who make their living off of it.
In the drug case I cited above, the one in which Elmer Valladares Rivera repeatedly sold drugs to a federal “informant,” another man in the same case, Israel “Izzy” Cruz, also pled guilty before Judge Laplante to drug-related offenses. Reflecting a classic example of the inside-the-box mindset that characterizes federal officials, Assistant U.S. Attorney Terry Ollila declared, “Israel Cruz, for the next 12½ years, will be off the streets.” It’s the same type of pronouncement that federal prosecutors were making back in the 1960s, 1970s, and beyond.
I have a question for Terry Ollila: What difference does it make that you have removed Israel Cruz off the streets or, for that matter, Joaquín “El Chapo” Guzmán, Pablo Escobar, Miguel Ángel Félix Gallardo, or all the other countless drug dealers? It obviously doesn’t occur to Ollila or, or for that matter, to any other federal drug warrior that, under the natural laws of supply and demand, Cruz will immediately be replaced by another drug seller, which, of course, enables U.S. officials to play this deadly and destructive whack-a-mole game into perpetuity. Just google “drug lords” to see the endless nature of the drug war.
The statists waged the war on drugs throughout the 1960s, 1970s, and beyond, employing an ever-increasing array of totalitarian police-state measures. Federal prosecutors tried an endless number of drug cases, and federal judges imposed long jail sentences. And all for what? For nothing! The drug war just kept going on and on, with no end in sight, but with an ever-growing trail of destruction of lives, liberty, and privacy. Those federal prosecutors and federal judges who were doing their part to “win” the war on drugs in the 1960s and 1970s are now dead or living on their fat federal tax-supported pensions, while their successors, such as the federal prosecutors and the federal judge in the Freeman case, just mindlessly continue doing the same things on their generous tax-supported salaries as their predecessors back in the 1960s and 1970s were doing.
It’s a classic “inside-the box” mindset, one that is threatened by anyone who questions the box itself, especially the much-beloved drug war and government-regulated society, including government-issued licenses for operating money-transmitting businesses.
During Freeman’s trial, federal prosecutors made a big deal out of Freeman saying to the IRS undercover agent Prilotsky (who, interestingly enough, was falsely posing as a drug dealer) that Freeman would not KNOWINGLY sell bitcoins to a drug dealer. Freeman had capitalized that word in his communications with Prilotsky. The prosecutors argued that this proved that Freeman was using a “wink and a nod” to tell Prilotsky that it was okay for him to go buy bitcoins from Freeman’s unmanned kiosks, even though Freeman specifically told the fraudster that he didn’t have Freeman’s permission to buy bitcoins from his kiosks. It was a classic case of inside-the-box thinkers unable to understand the mindset of an outside-the-box thinker.
What Freeman was saying was that as a libertarian, he had no objection to selling bitcoins to drug dealers or drug users. As far as Freeman and other libertarians are concerned, what people do with their consensual drug transactions is their business. Thus, what he was saying with his use of the word “knowingly” was simply that if someone admitted to him of being a drug dealer, he would then refuse to sell him bitcoins for fear that the feds would target him for violating their money-laundering rules and regulations — a fear, as we have seen, proved to be well-justified.
Corruption and the drug war
There is something else to note about the corrupting nature of the drug war. Notice that the federal prosecutors in the Freeman case had no reservations about trying to convict an innocent man based on the testimony of an undercover IRS agent who was falsely posing as a drug dealer and doing his best to induce Freeman to commit a crime. Notice also that Judge Laplante, although entering a judgment of acquittal on that particular charge, expressed no moral outrage over what would be considered to be outrageous conduct to any outside-the-box thinker. Perhaps the reason for that lack of moral outrage is that Laplante has become so accustomed to presiding over drug-war cases involving drug sales to government “informants.” That’s what the drug war has done to the moral compass of so many government lawyers and judges in the federal system. As soon as Laplante learned what Prilotsky had done, he should have dismissed the entire case as a way to send the prosecutors the following message: While this type of thing is done in Russia, it’s not going to be done here in the United States.
America’s outside-the-box heritage
It’s worth noting that this statist inside-the-box mindset under which we have all been born and raised has not always been the prevailing one among Americans. If we go back to, say, 1890, we see that the mindset of libertarians like Ian Freeman was the more common one, and statists were in the extreme minority. Just think: no income tax or IRS or federal criminal prosecutions for “attempting to defeat or evade taxes.” No Social Security, Medicare, or other socialist programs. No drug war or DEA. No money-laundering statutes. Hardly any immigration controls (or illegal immigrant cases clogging the federal courts). Very few economic regulations, including regulations on banks. No Federal Reserve System. No paper money. No governmental debauchery of money. No gun control. No Pentagon, CIA, or NSA. No foreign empire of military bases. No Gitmo. No torture, indefinite detention, or state-sponsored assassinations. And no FBI.
An American Gestapo
It’s worth pointing out something about the FBI, given that the federal prosecutors called FBI agents to the witness stand to help them convict Ian Freeman. We shouldn’t forget that those agents are working for an entity that honored its longtime director, J. Edgar Hoover, by naming the FBI building in Washington, D.C., after him. What’s wrong with that? Hoover was a serial blackmailer who used his position to spy on American citizens and kept secret files on them so he could blackmail them into doing whatever he wanted them to do. We also shouldn’t forget that it was the FBI who shot (and killed) 14-year-old Sammy Weaver in the back and shot (and killed) his mother Vicki in the head at Ruby Ridge, Idaho, in 1992. And that it was the FBI who murdered scores of Branch Davidians in Waco, Texas, the following year by injecting flammable gas into their compound knowing that it would ignite and burn all the inhabitants, including women and children, to death, and who then immediately bulldozed the site to prevent forensics investigators from determining the truth. And that it is was the FBI (and the CIA) that President Harry Truman was concerned was becoming an “American Gestapo.”
And yet federal officials have no reservations about convicting American citizens on the testimony of people who work for an entity that honors the biggest serial blackmailer in U.S. history, an entity that murders innocent people, and an entity that is clearly an American Gestapo. As far as inside-the-box statists are concerned, there’s nothing wrong with that.
There was an amusing part of the Freeman trial relating to the FBI. An FBI agent was testifying about the violent paramilitary raid that was launched in the dark early morning hours to arrest Freeman and search his home, which included the use of an armored vehicle called a “Bearcat” to break in a window so that they could send a drone into the house.
Freeman’s attorney asked about why they had felt the need to disable cameras that Freeman had installed in his house.
FBI Agent:“I think it’s for tactical purposes so, you know, these types of recordings aren’t put out on some platform of social media that would cause us harm in future arrest.”
Freeman’s attorney: “How do you know it wasn’t for some just vindictive nasty, destructive reason?”
FBI Agent: “I don’t work with people like that. We’re very professional. We’re extremely professional.”
For libertarians, especially those familiar with the FBI’s murderous actions and cover-ups at Ruby Ridge and Waco, that response would be extremely funny. And, in fact, the court reporter typed: “Laughter in audience.”
But federal Judge Laplante, failing to find any humor in the matter, was clearly not amused. Considering the largely libertarian audience’s spontaneous act of laughter to be a “disruption,” Laplante indignantly exclaimed, “No outbursts. This isn’t for your entertainment. This man’s in here accused of a crime and his lawyer’s defending him. Any more outbursts, it’ll be the last one.”
In my opinion, what Laplante was really saying was that he would not permit anyone, especially libertarians, to disrespect in his courtroom agents of the federal law-enforcement agency that President Truman had referred to as an American Gestapo.
The statist victory
By the late 1800s, the statist philosophy was already percolating and spreading in the United States. In 1913, the statists succeeded in securing the passage of the Federal Reserve Act, which ushered in a system of continual, decade-after-decade monetary debauchery, and the passage of the 16th Amendment, which effectively converted the American people into income-tax, welfare-warfare state serfs, ones who live in constant fear of receiving any communications from the IRS, one of the most tyrannical agencies in U.S. history — and the agency for which Pavel Prilotsky was working undercover when he launched his fraudulent scheme to entrap an innocent American citizen.
The final statist victory came in the 1930s, when President Franklin D. Roosevelt implemented the welfare-state, regulated-society way of life under which we now live, and which is considered to be “normal” by inside-the-box statists. But it is anything but normal. Instead, it is a combination of socialism and economic fascism. There is an excellent book titled Three New Deals: Reflections on Roosevelt’s America, Mussolini’s Italy, and Hitler’s Germany, 1933–1939 by Wolfgang Schivelbusch, which I highly recommend. It describes the similarities between Roosevelt’s statist programs and philosophy and those of Adolf Hitler in Germany and Benito Mussolini in Italy. In fact, it’s no surprise to outside-the-box thinkers that Hitler himself sent FDR a letter commending him on his statist programs and philosophy.
For a while during this time, there were outside-the-box-thinkers who fought to preserve libertarian economic values. They included four justices on the Supreme Court — Butler, Sutherland, Van Devanter, and McReynolds, who came to be known as the “Four Horsemen” — who, along with Justice Roberts — declared much of FDR’s socialist-fascist program unconstitutional. A good example was the National Industrial Recovery Act, a regulatory program straight out of Mussolini’s fascist economic playbook, especially given its infamous Blue Eagle propaganda campaign. Although the Supreme Court rightly declared it unconstitutional, it set the foundation for a government-regulated society, one that would come with such things as federal offenses for operating a money-transmission business without a federal license.
The outside-the-box thinking effectively came to an end with the Supreme Court case of West Coast Hotel v. Parrish in 1937. That’s because Roosevelt had come up with a scheme to pack the Supreme Court with more than nine justices so he could choose legal cronies who would be expected to uphold the constitutionality of his unconstitutional programs. While Roosevelt’s court-packing scheme ultimately failed, it was, according to many legal scholars, sufficient to cause Justice Roberts to switch over to the statists in what became known as the “switch in time that saved nine.”
From that point on, U.S. presidents appointed statist inside-the-box lawyers to the federal bench, including lawyers serving as federal prosecutors. Over time, the entire federal judiciary became composed of inside-the-box thinkers. For example, Judge Laplante himself is a former federal prosecutor. Another example is Seth R. Aframe, one of the federal prosecutors who prosecuted Ian Freeman and who delivered the federal government’s final argument in the Freeman case; he was recently confirmed as a federal appellate judge in the First Circuit Court of Appeals.
The statist system that Roosevelt’s court-packing scheme launched back in the 1930s has, decade after decade, simply reinforced itself because there is virtually no possibility that any U.S. president would ever appoint a libertarian lawyer to the federal bench or that a statist U.S. Senate would confirm him. The closest the nation has ever come to having libertarian-oriented lawyer appointed to the Supreme Court was when President Reagan nominated Douglas H. Ginsberg, who is currently a professor of law at the libertarian-oriented Antonin Scalia Law School at George Mason University, to the Court. But statists forced him to drop out of contention when it was discovered that he had smoked marijuana in his younger years, just like, we might recall, former President Clinton did. But I suppose the difference was that Ginsburg inhaled while Clinton supposedly did not.
Freeman’s bogus tax conviction
Finally, there were the tax-violation charges with which Freeman was convicted. They demonstrate perfectly the deep enmity that federal officials have toward libertarians like Ian Freeman. If the IRS had been dealing with, say, a high-school principal, the IRS would have scheduled an appointment with him, gone over his tax records, compiled any deductions or credits he was entitled to, and advised him about any back taxes owed. They would have then proposed a schedule for payment. Only if all that failed would they target the principal with criminal tax evasion charges.
Not so with Ian Freeman. There was no IRS meeting for him. They just issued an add-on indictment against him for not paying income taxes that he supposedly owed. In fact, the IRS agent who the federal prosecutors called to the witness stand to establish Freeman’s guilt even admitted as much:
Question: Generally, if somebody owes taxes or you think somebody owes taxes or if you want to check something out, you have the — the ability — in fact, you generally send out a letter and say let’s get together and talk about your taxes, right?
Answer: For civil purposes, yes.
Question: Well, let’s — let’s cut right to the chase. In 2016, the IRS didn’t send a letter, did not send a letter, to Ian Freeman or any of the church entities he identifies with, correct?
Answer: Yes, not to my knowledge.
Question. Right. You didn’t say we’d like to talk to you, come on in with your legal counsel, come on in with your documents, come on in so we can straighten out, you know, what you owe or what we think you owe, right?
Answer: Correct.
Question: All right. That — that — that’s generally what you do, right?
Answer: In general program, yes, that’s what would be done.
Sure, that’s what’s done with good little citizens who play by the inside-the-box rules, but not when it comes to lower-class libertarian citizens like Ian Freeman who question their entire statist box, including the income tax, the IRS, and criminal prosecutions for tax violations.
The IRS agent calculated the number of commissions that she estimated that Freeman must have earned on his bitcoin sales and then used what the IRS calls a “standard deduction” to calculate back taxes that Freeman supposedly owed. But Freeman himself stated that he and the church he organized made sizable donations to worthy causes, donations that might well have left Freeman owing no taxes whatsoever. But since the IRS witness never took the time to meet with Freeman and pay him the standard courtesy that is extended to good little inside-the-box citizens, she couldn’t really be certain whether Freeman actually owed any taxes at all.
In fact, the IRS witness admitted as much in her sworn testimony:
Question: You didn’t include things like overhead; you didn’t include things like property tax; you didn’t include things like charitable giving, stuff like that; right?
Answer: On the individual, no, I — we gave the standard deduction.
Question: Right. And the standard deduction generally could be much less than what he’s actually due, correct?
Answer: It could be.
Question: Right. In fact, if he went through an itemization, detailed, and you sat down with him, quite frankly, he may owe nothing, right?
Answer: Correct.
Notwithstanding that startling sworn admission, Ian Freeman was convicted of “attempting to evade or defeat taxes.” Again, that’s what passes for “justice” in the federal criminal-justice system.
Freeman’s appeal
Ian Freeman’s case is on currently on appeal. Does he have any realistic chance of getting his conviction and eight-year jail sentence reversed on appeal? Maybe. There are instances in which federal judges do the right thing, such as when Judge Laplante entered the judgment of acquittal on the bogus money-laundering charge. But the problem is that ordinarily federal judges, including those on the appellate level, are themselves “inside-the-box” thinkers who are deeply committed to upholding statist programs like the drug war and the government-regulated society. Even worse, some of them are former prosecutors who bend over backwards to give federal prosecutors the benefit of the doubt in criminal cases.
Meanwhile, an innocent man spends his time in a federal penitentiary serving a manifestly unjust eight-year sentence, not to mention the permanent loss of his $5 million in savings, most of which came from the fortuitous rise in the value of his bitcoins, which undoubtedly rankled federal officials who live on their tax-supported federal salaries.
If you would like to write to Ian Freeman (whose wife is named Bonnie and who also is a libertarian), this is his mailing address:
Ian Freeman
Register # 34755509 Unit JA
Federal medical center, Devens
PO Box 879
Ayer, MA 01432
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