EDITOR’S NOTE: In August 2011, the FBI warned of debt-elimination schemes advanced by purported “sovereign citizens.” The story below outlines a “bonded promissory notes” scheme advanced in Missouri by Denny Ray Hardin. It is worth noting that AdSurfDaily figure Kenneth Wayne Leaming is jailed near Seattle awaiting trial in a case that alleges he issued a “bonded promissory note” and filed false liens against public officials.
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The 10-year prison sentence of a purported “sovereign citizen” who hatched a scheme in which bogus financial products were sold to customers in a bid to eliminate their debts has been upheld by the U.S. Court of Appeals for the 8th Circuit.
Denny Ray Hardin, 53, of Kansas City, Mo., was convicted in September 2011 of 11 counts of creating fictitious obligations and 10 counts of mail fraud.
The circumstances that led to Hardin’s arrest and trial were just plain bizarre. Hardin, according to prosecutors, divined a a construction by which he was a private banker authorized to issue “bonded promissory notes” (BPNs) backed by the government.
Customers were told they could use Hardin’s manufactured notes to wipe out their debts, and Hardin charged $100 or more for the notes, prosecutors said.
Hardin called his purported bank “The Private Bank of Denny Ray Hardin,” and he operated it from his residence, prosecutors said. The scheme in part operated online, but also through the mails.
“Hardin defrauded customers by selling them BPNs with the false promise that these fictitious instruments can discharge debts,” prosecutors said. “Hardin defrauded creditors by presenting them with worthless BPNs.”
U.S. District Judge Gary A. Fenner sentenced Hardin to 10 years. An appeal followed.
In upholding the sentence, a three-judge appeals panel from the 8th Circuit noted that Fenner could have sentenced Hardin to nearly 34 years in prison but used his discretion under the circumstances of the case to depart downward, ordering a 10-year-sentence and three years’ supervised probation after Hardin’s release.
Records in the case show that Hardin, in October 2010, was ordered “committed to the custody of the United States Attorney General for hospitalization and treatment” after he raised issues of his own competency to stand trial.
In May 2011, Hardin was ruled competent to stand trial.
At a pretrial conference in August 2011, prosecutors announced they had at least 30 witnesses and 487 trial exhibits.
Hardin, who had decided to represent himself and had been appointed stand-by counsel, “refused to participate in the proceeding and objected to the Court’s jurisdiction, according to a memo by the presiding magistrate judge. (Read memo at Leagle.com).
The conviction followed on Sept. 14, 2011, and the appeals panel last week upheld the 10- year sentence.
Among other things, the panel rejected as “meritless” Hardin’s claims that the district court had no jurisdiction over him.
These are among the findings of the appeals panel (italics/bolding added):
Witness testimony and documentary evidence established that (1) Hardin produced
fictitious financial instruments that he called “bonded promissory notes” and (2) Hardin claimed that these notes had monetary value to discharge debt and were authorized by the United States Department of Treasury. Hardin typically sold the bogus notes for a fee and then mailed them to financial institutions on behalf of the purchaser with the stated purpose of extinguishing that purchaser’s debt, including mortgage debt. Hardin continued this course of action even after he was advised about the illegality of his conduct. See 18 U.S.C. § 514(a) (producing fictitious obligations with intent to defraud), § 1341 (using mail in a scheme to defraud).
At sentencing, the panel recounted, “additional evidence was introduced to show that Hardin sold the fictitious instruments to over 50 customers and attempted to extinguish over $100 million worth of debt . . .”