Suing the FED for FRAUD - Is it Time?
Why this post?
From time to time it comes up that someone thinks that the FED has debased the currency, which is fraud and theft, and therefore thinks it is a good idea to lawyer-up and sue the FED or its mouthpieces such as Ben Bernanke, or Ole’ Yellen. The legal theories of recovery stretch from the mundane (fraud/theft) to the extremely creative (Qui Tam). So, what's the problem? They CAN be sued, right? Well, yes, technically, they CAN be sued. But ultimately, the lawsuits will be dismissed upon motion, which motion to dismiss will be granted, and whoever decided to sue will be stuck paying the costs of the ill-fated adventure into the hallowed marble edifices of the regime, known more commonly as United States Federal Court.
Any fraud or theft lawsuit against the FED have, and will, all share a common element: they ALL have zero chance of recovery, for many reasons, philosophically, practically, and more importantly, factually and legally. The only exception I am aware of is for a Freedom of Information Act lawsuit, which can, and has been successfully done. See here: https://en.wikipedia.org/wiki/Mark_Pittman
But, this is not a post about getting documents under a FOIA request from the FED.
This is a post about the propriety, or really, the absurdity, of suing the FED for harm that they ostensibly cause from their operations itself.
An attempt to sue the FED, or Bernanke, or Yellen, or any of the FED Governors, will be met with swift opposition, an order granting the dismissal motion, then certain consequences against the attorney who foolishly tries to embark on such a lawsuit (Rule 11 Sanctions, State Bar ethics complaint, etc.)
So, thinking about suing the FED? Is it a good idea?
The short answer is NO, not now, not ever.
Instead, do something productive. Focus on accumulating tangible resources and assets, shed liabilities and debts, prepare and help others.
There is a reason why attorneys are not filing these cases, at least here in the USA (one brave Chinese attorney is pioneering a case in China. I’ll take long odds against him that the case goes nowhere, but I won’t go so far as to say they execute the poor lawyer for having the temerity to sue! See here: https://bitcointalk.org/index.php?topic=183887.0;imode )
The short answer to the question why the FED cannot be successfully sued is simple. And, it is unlikely to change anytime soon, so move on to more productive things to think about.
The FED is an “instrumentality” of the Federal Government. It enjoys sovereign immunity. It, and its people, like Bernanke and Yellen are represented by the deepest pocket attorneys on the planet, the US Justice Department. U.S. Department of Justice represents the Federal Reserve Board of Governors in civil litigation: see, e.g., TCF National Bank v. Bernanke, 643 F.3d 1158 (8th Cir. 2011); McKinley v. Board of Governors of the Federal Reserve System, 647 F.3d 331 (D.C. Cir. 2011); Fox News Network, LLC v. Board of Governors of the Federal Reserve System, 601 F.3d 158 (2d Cir. 2010). They will certainly oppose any lawsuit, swiftly, and the Federal Judge will inevitably grant the motion to dismiss, ending the foolish lark. Don’t do it.
For proof, look no further than a recent case right out of the USA heartland in Missouri.
I point to this recent example, for definitive guidance, lest anyone think differently.
Example of An Ill-Fated Quest to Sue the FED
United States of America ex. rel. James Carter, Plaintiffs, vs. Board of Governors of the Federal Reserve, et al., Defendants, U.S. District Court, Western District of Missouri, Western Division, Case Number 4:12-cv-00129-HFS. It is available on Pacer, as is the docket sheet listing the proceedings.
The Complaint is filed under seal, as is required in a Qui Tam action. However, the motion to dismiss and order are right out there for the world to see.
In this lawsuit, the Plaintiff, a gentleman in Missouri, James Carter, filed suit against the FED for fraud. His theories are all set forth in detail, in many documents, and websites, scattered all over the internet, that basically argue the same thing.
The theories are unsound, and are factually and legally without merit.
Let’s take a look in detail at the lawsuit and aftermath.
From the federal court motion to dismiss, filed by Acting US Attorney David Ketchmark and Jeffrey P. Ray, Deputy US Attorney, from the Charles Evan Whittaker Courthouse, 400 E. 9th Street, Fifth Floor, Kansas City, MO 64106 (816) 426-3130, firstname.lastname@example.org :
“In his QUI TAM COMPLAINT, Carter alleges that the Federal Reserve systematically and
improperly obtains a “purloined profit” that is concealed from the federal government by the
Federal Reserve through “euphemistic smoke and mirrors.” QUI TAM COMPLAINT, Exhibit A.
Carter estimates that the total amount of funds concealed since 2006 is approximately $7 trillion.
As support for his conclusions, Carter relies on the 2009 ANNUAL REPORT TO CONGRESS BY THE BOARD OF GOVERNORS, the SEPTEMBER 2009 TREASURY BULLETIN, the CITIZEN’S GUIDE TO THE 2010 FINANCIAL REPORT OF THE UNITED STATES GOVERNMENT, the GAO FINANCIAL AUDIT:
BUREAU OF THE PUBLIC DEBT’S FISCAL YEARS 2010 AND 2009 SCHEDULES OF FEDERAL DEBT, and other public documents. Indeed, the idea that the Federal Reserve is engaging in an ongoing “Ponzi scheme” and utilizes “creative accounting” so that “profit can easily be reclassified as expense,” has been advanced publicly by other theorists. See, e.g., C. EDWARD GRIFFIN, THE CREATURE FROM JEKYLL ISLAND, www.jesus-is-savior.com/Evils%20in%20Government/
Federal%20Reserve%20Scam/federal_reserve.htm). And in actuality, Carter himself – in an
earlier publication1 of the document he attaches to and principally relies upon in the QUI TAM
COMPLAINT – has noted that, once the public records are examined, “the rest of the analysis is an inescapable mathematical progression.” JAMES CARTER, RIP-OFF BY THE FEDERAL RESERVE, www.freepatriot-press.com/2011/06/rip-off-by-federal-reserve.html.”
There are many websites that have his and others’ theories, just go look. (With only very minor variations, Carter’s Exhibit A (“Rip-Off by the Federal Reserve”) has been previously published on numerous Internet web sites, including EndoftheUSA.com, Scribd.com, RTR.org, TheMarketOracle.co.uk, RonPaulForums.com, TheDebtWeOwe.com, NolanChart.com, and ConspiracyArchive.com. These are generally published under screen names such as “Olde Reb,” “Jim,” “Sartre,” “OldeReb1,” and “Liberty.” An example of one of these publications, dated January 10, 2011, was attached to the motion to dismiss).
The lawsuit was premised upon the theories Carter espoused on one of his lengthy web rants, such as “Rip-Off by the Federal Reserve (a mathematical analysis). See here: https://www.freedomsphoenix.com/News/077314-2010-10-20-rip-off-by-the-federal-reserve-by-jim-carter.htm which takes you here: http://www.ncc-1776.org/tle2010/tle592-20101017-05.html , or here: http://ppjg.me/tag/federal-reserve-swindle/ which perpetrates this information circulation that gives rise to these questions for which I am hoping to put to rest.
The US Justice Department attorneys responded with a motion to dismiss the complaint. They laid out the compelling case against the theories, all of them, and the court granted the motion dismissing the case.
From that case, one has all the answers one needs to the questions that typically arise about suing the FED, etc.
Since the case was from Missouri, in that spirit, let me “show you” and let me answer them all in the words of the US Justice Department attorneys, with official blessing by the Federal Judge’s Order dismissing the case.
Question: Can someone sue the FED for theft, fraud, debasement of the currency, etc.?
No. Not even under the extremely creative, but legally unsound theory of Qui Tam.
From the Order dismissing the case:
“James Carter filed this qui tam complaint on January 27, 2012. The essence of Carter’s
complaint is that the Federal Reserve is engaged in an ongoing accounting and financing scheme related to deficit spending and Carter seeks the return of “purloined profits” in excess of 7 trillion dollars. (Complaint ¶ 8 - 15). On March 30, 2012, the United States filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6). (Doc. 4). The government argued that dismissal is appropriate because: (1) Carter’s allegations fall outside the scope of the qui tam provisions of the False Claims Act; (2) the proposed defendants are entitled to sovereign immunity; and (3) this action cannot be maintained by a pro se litigant. . . . ORDERED that the government’s motion to dismiss (Doc. 4) is GRANTED. It is further ORDERED that the Clerk of Court provide a copy of this order by regular and certified mail to James Carter at the following address: 33905 East State Route Two, Harrisonville, Missouri 64701.
/s/ Howard F. Sachs
HOWARD F. SACHS
UNITED STATES DISTRICT JUDGE
Dated: May 1, 2013
Kansas City, Missouri”
Question: Was there any merit to any of the claims? No. The Qui Tam action was doomed as unsound factually and legally from the start.
The Qui Tam action failed for both factual and legal reasons. Factually, it was doomed because it was based on information previously publicly disclosed, and the plaintiff did not have independent knowledge. These are fatal factual flaws and easily defeated the case.
Legally it also failed because the federal government cannot sue itself, as such a lawsuit is what is referred to as a “non justiciable case or controversy.” Further, one MUST have an attorney to sue under Qui Tam, but Carter did not and his case was doomed under that theory because he had no attorney (“Carter has brought his qui tam action against the Federal Reserve as a pro se litigant.")
By its plain language, the FCA is silent on whether a private individual not utilizing the services of an attorney can bring a qui tam suit. Nonetheless, several federal courts, including the Eighth Circuit, have concluded that pro se litigants may not maintain a qui tam action under the FCA. See, e.g., Timson v. Sampson, 518 F.3d 870, 873 (11th Cir. 2008); Stoner v. Santa Clara County Office of Education, 502 F.3d 1116, 1126-28 (9th Cir. 2007); United States ex rel. Lu v. Ou, 368 F.3d 773, 775-76 (7th Cir. 2004); United States v. Onan, 190 F.2d 1, 6-7 (8th Cir. 1951).”). No competent attorney will ever take such a case, as to do so would guarantee some sort of disbarment action.
Question: Can a Qui Tam case EVER succeed against the FED? NO. Qui Tam fails against the FED because the US Govt cannot sue itself for fraud.
Qui tam is short for the Latin phrase qui tam pro domino rege quam pro se ipso in hac parte sequitur, which means “who pursues this action on our Lord the King’s behalf as well as his own.” The phrase dates from at least the time of Blackstone. Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 769 n.1,
120 S.Ct. 1858, 1860 n.1 (2000)
From the motion to dismiss: “The False Claims Act (“FCA”) establishes a unique form of litigation through the qui tam mechanism. The qui tam provisions of the FCA provide a special means for the United States to recover damages suffered as a result of fraud or false claims, through the assistance of private parties (“relators”) who file suit “for the person and for the United States Government.” 31 U.S.C. § 3730(b). Under this statute, the relator initially files a complaint under seal and serves it and a statement of evidence on the United States. 31 U.S.C. §§ 3730(b)(1), (2). The United States thereafter has 60 days (and any extensions granted by the district court) to investigate the allegations and elect whether or not to intervene in the litigation. 31 U.S.C. §§ 3730(b)(2), (3). The Act provides for trebling of the damages the Government has sustained, and civil penalties of between $5,500 and $11,000 for each false claim submitted. 31 U.S.C. 3729(a); 64 Fed. Reg. 47,099, 47,104 (1999). Damages are liberally calculated to make certain that they “afford the government complete indemnity for the injuries done it.” United States ex rel. Marcus v. Hess, 317 U.S. 537, 549, 63 S.Ct. 379, 387 (1943).”
It is well established that a qui tam suit against a federal agency or employee presents no justiciable case or controversy, as required by the United States Constitution. U.S. CONST. art. III. See also Secretary of State of Maryland v. Joseph H. Munson Co., Inc., 467 U.S. 947, 955 n.4, 104 S.Ct. 2839, 2845 n.4 (1984) (Article III’s case or controversy requirement is jurisdictional).
In any qui tam action, the United States is the real party in interest. Stoner v. Santa Clara County Office of Education, 502 F.3d 1116, 1126 (9th Cir. 2007). Thus, in a qui tam action naming federal agencies and officials as defendants, a relator is essentially suing the United States in the name of the United States. Kentucky v. Graham, 473 U.S. 159, 166, 105 S.Ct. 3099, 3105 (1985) (a suit against a federal officer acting in an official capacity is a suit against the United States); Daly v. Department of Energy, 741 F. Supp. 202, 204 (D. Colo. 1990) (a suit against a federal agency constitutes a suit against the United States). Inasmuch as such a suit is tantamount to a suit by the United States against the United States, it presents no justiciable case or controversy. [C]ourts only adjudicate justiciable controversies. They do not engage in the academic pastime of rendering judgments in favor of persons against themselves. United States v. I.C.C, 337 U.S. 426, 430, 337 S.Ct. 1410, 1413 (1949).
Question: Is the FED is a government instrumentality and part of the federal government? Yes.
The Federal Reserve is a unique instrumentality of the federal government, and is a part of the federal government such that a qui tam action against the Federal Reserve is a case by the United States against the United States and, thus, presents no justiciable case or controversy.
From the motion to dismiss:
“The Federal Reserve is an instrumentality of the United States. The Federal Reserve Act established the federal reserve banks as part of the Federal Reserve System in 1913. 12 U.S.C. §§ 221, et seq. The preamble to the Federal Reserve Act states that its purpose is to “provide for the establishment of Federal Reserve Banks, to furnish an elastic currency, to afford means of rediscounting commercial paper to establish a more effective supervision of banking in the United States, and for other purposes.” FEDERAL RESERVE ACT, ch. 6, 38 Stat. 251 (1913). The system consists of twelve federal reserve banks and a Board of Governors. Members of the Board are appointed by the President with the advice and consent of the Senate. 12 U.S.C. § 241. The Board oversees the federal reserve banks and has additional enumerated powers to control the operations of the banks. 12 U.S.C. § 248.
In First National City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611, 103 S.Ct. 2591 (1983), the Supreme Court generally defined a government instrumentality:
A typical government instrumentality . . . is created by an enabling statute that prescribes the powers and duties of the instrumentality, and specifies that it is to be managed by a board selected by the government in a manner consistent with the enabling law. Id. at 624, 103 S.Ct. at 2599. The Federal Reserve conforms to the general description of government instrumentalities as enunciated in First National City Bank. It was established directly by Congressional legislation for the public purpose of increased control of the nation’s currency and banking system. Although it consists of partially-independently-owned corporations, it nonetheless exists only by virtue of the enabling statute and possesses only the powers granted by the legislation. Moreover, the individual banks are supervised by an entity that bears the hallmarks of a federal agency, in that the Board of Governors is subject to more direct political control via the Presidential appointment and Senate confirmation of its members.
Consequently, it is unsurprising that the Eighth Circuit has unequivocally held: In light of the important governmental functions performed by the federal reserve banks and the United States Supreme Court's willingness to hold that financial institutions performing even fewer governmental functions are federal instrumentalities, we hold that the federal reserve banks are instrumentalities of the federal government. Federal Reserve Bank of St. Louis v. Metrocentre Imp. Dist. No. 1, City of Little Rock, 657 F.2d 183, 186 (8th Cir. 1981) (emphasis added) (also noting that the “holding is consistent with other circuits that have faced this question.”).
Question: Is the Federal Reserve is protected by sovereign immunity. Yes. As such, even if the lawsuit is filed, it will be dismissed upon motion as the FED enjoys sovereign immunity which means it cannot be sued absent some strict statute that so allows, like, e.g., the FOIA.
The Federal Reserve enjoys the status of a non-appropriated fund instrumentality (“NAFI”) that receives no funding through congressional appropriations. Albrecht v. Committee on Employee Benefits of Federal Reserve Employee Benefits, 357 F.3d 62, 67 (D.C. App. 2004); Texas State Bank v. United States, 60 Fed. Cl. 815, 818 (2004). See also United States v. Hopkins, 427 U.S. 123, 125 n.2, 96 S.Ct. 2508, 2510 n.2 (1976). Although the Supreme Court has never expressly held that a NAFI, as an instrumentality of the United States government, necessarily enjoys sovereign immunity, it has established that where NAFIs are “arms of the government deemed by it essential for the performance of governmental functions” and “share in fulfilling the duties entrusted to [the federal government],” they “partake of whatever immunities it may have under the [C]onstitution and federal statutes.” Standard Oil Co. of California v. Johnson, 316 U.S. 481, 485, 62 S.Ct. 1168, 1170 (1942). At least one court has noted that “[f]ederal agencies or instrumentalities performing federal functions always fall on the ‘sovereign’ side of [the] fault line; that is why they possess immunity that requires waiver.” Auction Co. of America v. FDIC, 132 F.3d 746, 752 (D.C. Cir.1997) (emphasis in original).
Based on these legal principles, lower federal courts repeatedly have concluded that the Federal Reserve enjoys sovereign immunity. See, e.g., Albrecht, 357 F.3d at 67 (“we have no doubt that the Board of Governors enjoys sovereign immunity”); Research Triangle Institute v. Board of Governors of the Fed. Reserve System, 132 F.3d 985, 987-88 (4th Cir.1997). See also Federal Reserve Bank of Boston v. Commissioner of Corporations and Taxation, 499 F.2d 60, 62 (1st Cir. 1974) (“[F]ederal reserve banks . . . are plainly and predominantly fiscal arms of the federal government [and t]heir interests seem indistinguishable from those of the sovereign.”). As concluded by the Albrecht court: An integral part of the federal government, the Board conducts monetary policy, regulates banking institutions, and maintains the stability of the nation’s financial system. . . . Therefore, at least with regard to the existence of sovereign immunity, [the plaintiffs’] claim against the Board is little different from a claim against the United States. Albrecht, 357 F.3d at 67 (emphasis added).
Qui Tam = certain dismissal.
FED = govt instrumentality, sovereign immunity.
Sovereign immunity = motion to dismiss GRANTED.
Suing fed = waste of time.
Reading TFMR = excellent use of time.