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Bernard von NotHaus says his Liberty Dollars are valid notes of exchange. The government disagreed, and seized two tons of silver coins and notes last fall

Last Dec. 4, the Polk County (Wisconsin) Sheriff's Office received a report of a man causing a disturbance at a local gas station after a clerk there refused to accept silver coins that were not U.S. currency as payment. When a deputy arrived, Balsam Lake resident Martin Chapman, a self-declared "sovereign citizen," fled to a nearby house where he armed himself with a crowbar.

After Chapman ignored several orders to drop his weapon, the deputy Tasered and pepper-sprayed him. Chapman continued threatening the deputy, who then fired a single shot. Chapman wasn't hit but pretended to be, investigators said.

Arrested for attempted battery of an officer and fleeing an officer, Chapman tried to pay his $35,000 cash-only bond with what a police report described as "30 silver pieces."

Although it wasn't clear from police reports, it's likely that the coins Chapman offered were "Liberty Dollars," a brand of "currency" that's popular with tax resisters and sovereign citizens, who typically believe that the federal government has no right to tax or otherwise regulate them. If they were, Chapman was trying to spend what could soon be hard-to-come-by collector's items. That's because federal agents last November seized two tons of Liberty Dollars from a warehouse in Asheville, N.C., that belongs to Liberty Services, a group formerly known as the National Organization for the Repeal of the Federal Reserve, or NORFED.

Many extremists believe that the Federal Reserve, America's central bank, is actually a private body secretly run for personal profit at the expense of everyday Americans. Some subscribe to the belief that its owners are an international cartel of Jewish bankers.

Bernard von NotHaus, Liberty Services' leader in Evansville, Ind., is a longtime promulgator of the theory that U.S. dollars have been illegitimate currency since the Federal Reserve was established in 1913. Liberty Dollars, Von NotHaus says, are a "private voluntary barter currency" pressed at the company's private mint in Idaho. He claims the Liberty Dollars are "100% backed by silver" and accepted by hundreds of businesses listed on his website.

In September 2006, the U.S. Mint warned Von NotHaus that circulating Liberty Dollars in lieu of U.S. currency is a crime. Nevertheless, Von NotHaus continued to mint the coins, even introducing the new "Ron Paul Dollar" in $1 copper, $20 silver, and $1000 gold denominations. In court documents, federal agents pointed out that, at current silver prices, each of Liberty Services' $20 coins is actually worth around $15.

Von NotHaus remains defiant. He claims to be minting a new "arrest" batch of Liberty Dollars, complete with a small handcuff mintmark. His website directs that advance payment be made in U.S. currency or checks made out to "Bernard."