Alleged Freemen Scam Totals In Billions Group Floated $15.5 Billion In Phony Checks, Irs Says

Montana freemen leaders authored 3,432 bogus checks totaling $15.5 billion against a single nonexistent bank account during their 18-month operation, an Internal Revenue Service investigator said Thursday.

Losses to the swindle totaled $1.8 million, including $29,000 in refunds that freemen followers around the country bilked from the IRS, Special Agent Loretta Rodriguez told a federal court jury.

She said the IRS received 413 of the checks, totaling $215.2 million, and tax agencies in 20 states received 145 checks, totaling $324.6 million. She did not detail losses to private businesses.

All the checks were signed by three top freemen - LeRoy M. Schweitzer, Rodney O. Skurdal and Daniel E. Petersen, she said.

Federal investigators have said some 800 people paid to learn the freemen’s financial theories in classes at their remote farm compound 30 miles outside Jordan, Mont., in eastern Montana’s “Big Open.”

Freemen followers sent the bogus checks for amounts exceeding the taxes they owed, sometimes by thousands of dollars, and requested refunds - plus interest at 18 percent, Ms. Rodriguez said.

Only two of the six freemen now on trial, Elwin Ward, 57, of Salt Lake City and Edwin Clark, 47, of Brusett, Mont., are implicated in the bogus check operation.

Clark is charged with bank fraud by trying to deposit a $100 million freeman financial instrument in the Garfield County Bank in Jordan. Ward is charged with submitting a $282,634 check to pay $143,241 in back taxes, but it was not honored.

Fourteen top freemen are scheduled for trial starting May 26.

The six defendants now on trial are charged primarily as accessories for helping others in the remote farm stronghold avoid arrest.

The other defendants are Jon Barry Nelson, 42, of Marion, Kan., and Steven C. Hance, 48, and sons James E. Hance, 25, and John R. Hance, 21, all of Charlotte, N.C.

The 3,432 checks Rodriguez outlined were all drawn on an account at Norwest Bank of Butte. It had been opened by federal district court in 1990 merely to hold $100 that a freeman had left on the court clerk’s counter when the clerk refused to accept it for some sort of bond, said Lou Aleksich, chief clerk of the federal courts in Montana.

Freemen leaders tried to bully Norwest Bank officials into giving them control of the account in 1993, and they tried to sneak themselves onto a $200 private account at the Jordan bank in 1994, bank officials testified.

The freemen threatened criminal actions - in their own courts - against Norwest Bank and its officers when they were rebuffed, said Laura Arnston, bank vice president. The bank closed the account and sent the $100 back to the federal court when numerous phony instruments began showing up using the account number.