Court Dismisses Drug Manufacturer’s Suit Against FDA Challenging Bioequivalence Regulations For Lack of Standing

On April 15, 2011, Judge Ellen Segal Huvelle of the United States District Court for the District of Columbia granted the FDAs motion to dismiss a lawsuit brought by ViroPharma, Inc. (“ViroPharma”) under the Administrative Procedure Act (“APA”) challenging the FDAs Abbreviated New Drug Application (“ANDA”) bioequivalent regulations. A copy of the Courts opinion can be read here.

The case centered on the various methods by which a generic drug manufacturer can establish the bioequivalence of its generic drug to an already FDA-approved brand name drug. Under 21 U.S.C. § 355 (j), prior to marketing a generic version of a brand name or “reference listed drug” (“RLD”), a generic drug manufacturer must submit an ANDA. Within the ANDA a generic drug manufacturer must demonstrate that the generic is the “bioequivalent” of the RLD, i.e. the new generic drug can be expected to have the same therapeutic effect as the RLD when administered to patients. There are two standard methods by which bioequivalence is determined, in vivo, (human testing) and in vitro, (laboratory testing). However, under 21 U.S.C. § 355(j)(8)(C), where a drug is not intended to be absorbed into the bloodstream, the FDA may establish “alternative, scientifically valid methods to show bioequivalence if the alternative methods are expected to detect a significant difference between the drug and the [RLD] in safety and therapeutic effect.”

The lawsuit stems from a citizen petition filed in 2007 by another brand name drug manufacturer, in which it petitioned the FDA to require all ANDAs for generics of its drug include in vivo bioequivalence studies. In response to that petition, the FDA asserted that, based on 21 U.S.C § 355(j)(8)(c) and 21 C.F.R. § 320.24, it had discretion to accept in vitro studies if those studies are determined to be scientifically valid methods of showing bioequivalence.

In its Complaint, ViroPharma, a drug manufacturer of the brand name drug Vancocin, alleged that 21 C.F.R § 320.21 established a general requirement that bioequivalence be demonstrated through in vivo testing unless the drug product meets the waiver criteria in 21 C.F.R. § 320.22. ViroPharma alleged that, by announcing that it had discretion to accept in vitro or in vivo testing, the FDA amended its regulations regarding bioequivalence by “interpreting the list of bioequivalence methods provided in 21 C.F.R. § 320.24 as a separate and sufficient basis for waiving in vivo bioequivalence requirements independent of 21 C.F.R. § 320.22.” As a result, ViroPharma alleged that the FDA violated the Administrative Procedure Act by effectively amending its ANDA regulations without engaging in notice and comment rulemaking.

In the Courts Opinion granting the FDAs motion, Judge Huvelle found that ViroPharmas lawsuit must be dismissed because ViroPharma lacked standing, a basic requirement to bringing a case. Put simply, standing is the right of a person to bring a case. In order to establish standing, a plaintiff must demonstrate: 1) that it has suffered an injury in fact, which is an actual or imminent invasion of a legally protected, concrete and particularized injury; 2) causation, i.e. the alleged injury must have been caused by the defendants conduct at issue; and 3) redressability, i.e. the court can provide a remedy to rectify the injury. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-561 (1992). Additionally, in the context of a procedural rule challenge, such as in this case, a plaintiff must “show not only that the defendants acts omitted some procedural requirement, [here a lack of notice and comment as required by the APA], but also that it is substantially probable that the procedural breach will cause the essential injury. . . .” Crt. For Law & Educ. V. Dept of Educ., 396 F.3d 1152, 1157 (D.C. Cir. 2005).

In this case, ViroPharma alleged that as a result of the FDA allowing in vitro bioequivalence studies to be submitted by generic drug manufacturers, it has or would in the future suffer two injuries: 1) future lost profits from generic competition and 2) current harm to its ongoing business operations. However, the Court rejected both of these arguments. The Court found that it was not substantially probable that the FDAs actions in declaring that it had the discretion to accept either in vivo or in vitro bioequivalence studies caused any injury in the form of lost profits. The Court reasoned that ViroPharma has not and will not suffer any injury to lost profits as a result of the FDAs announcement unless and until: 1) the FDA actually approves a ANDA for generic versions of Vancocin and 2) such approval must be based upon an in vitro bioequivalence study that does not qualify for a waiver under 21 C.F.R. § 320.22. However, until such time as the FDA actually relies upon the challenged interpretation of 21 C.F.R § 320.24, the Court ruled that ViroPharma has not suffered an injury.

The Court also found that ViroPharma could not establish standing based on current harms to its business. The Court found that the alleged harms were too vague and not sufficiently “concrete and particularized” to establish an injury in fact. Additionally, the Court went on to find that even if such harms could establish an injury in fact, ViroPharma failed to demonstrate a causal connection between these harms and the FDAs announcement because “ViroPharma elected to take [these actions] in response to its own predictions about what the FDA may do in the future. . . .” As a result, ViroPharma could not establish the causation element necessary for standing.

For more information regarding the ANDA generic drug approval process or for any questions regarding how your company can maintain FDA regulatory compliance, please contact us at contact@fidjlaw.com.

FDA Modification to Dietary Supplement Qualified Health Claims Remanded by Federal Court

During the first week in April, a federal judge granted the U.S. Food and Drug Administration (FDA) summary judgment in a federal case brought by dietary supplement manufacturers challenging good manufacturing practices (GMPs) for dietary supplements. During the second week in April, in a separate case, the win went to the dietary supplement manufacturers. On April 13, the U.S. District Court for the District of Columbia ruled that the FDAs decision requiring qualifying language for antioxidant claims for dietary supplements was unconstitutional under the First Amendment.

Dietary supplement formulators and industry organizations brought the lawsuit, Alliance for Natural Health US v. Sebelius, No. 09-1546 (D.D.C. April 13, 2011) (“Alliance II”), challenging an FDA decision to deny a petition for authorization of certain qualified health claims regarding dietary supplements containing vitamin C and vitamin E. The plaintiffs claimed that the FDA decision violated their First Amendment Rights and sought a declaratory judgment that the FDAs final order denying the petition was invalid. The plaintiffs also sought a permanent injunction enjoining the FDA from “taking any action that would preclude the Plaintiff from placing [their proposed] health claims on the labels and in the labeling of their dietary supplements.” Complaint at 36.

The health claims at issue in this case concerned the relationship between vitamins C and E and the risk for certain types of cancer. The FDA refused to approve these claims. A “health claim” is “any claim made on the label or labeling of a food, including a dietary supplement, that expressly or by implication, characterizes the relationship of any substance to a disease or health-related condition.” The FDA allows two types of health claims to appear on dietary supplement labeling: 1) authorized health claims; and 2) qualified health claims. A “qualified health claim” is a health claim that is supported by some scientific evidence but less evidence than an authorized health claim. The FDA requires that qualified health claims be accompanied by a disclaimer explaining the level of scientific evidence supporting the relationship between the dietary ingredient and the disease or health-related condition.

In Alliance II, the FDA required qualification of the following health claims:

  • Vitamin C may reduce the risk of gastric cancer. The scientific evidence supporting this claim is persuasive, but not conclusive.
  • Vitamin E may reduce the risk of bladder cancer. The scientific evidence for this claim is convincing, but not conclusive.

The FDA prohibited the claims as they appear above and would only allow the claims to appear in the following forms:

  • One weak study and one study with inconsistent results suggest that vitamin C supplements may reduce the risk of gastric cancer. Based on these studies, FDA concludes that it is highly uncertain that vitamin C supplements reduce the risk of gastric cancer.
  • One small study suggests that Vitamin E supplements may reduce the risk of bladder cancer. However, two small studies showed no reduction of risk. Based on these studies, FDA concludes that it is highly unlikely that vitamin E supplements reduce the risk of bladder cancer.

The plaintiffs brought their claims under the First Amendment to the Constitution. The Court reasoned that it “has the authority to examine and rule on any actions of a federal agency that allegedly violate the Constitution,” apart from the power of review granted by the Administrative Procedure Act (APA). Alliance for Natural Health USI v. Sebelius, 714 F. Supp. 2d 48 (D.D.C. 2010) (citations omitted) (“Alliance I”). However, the APA “also provides for the Courts to make an independent assessment of constitutional issues,” and the role of the Court is the same “whether the plaintiff sues directly under the Constitution or under [the APA].” Id. (citations omitted). Relying on the analysis set forth by Pearson v. Shalala, 164 F.3d 650 (D.C. Cir. 1999) (“Pearson I”) and by Alliance I, the Alliance II court reasoned that it “is obligated to conduct an independent review of the record and must do so without reliance on the [FDAs] determinations as to constitutional questions, it must also give deference to an agency assessment of scientific or technical data within its areas of expertise.” Id. at 16 (quoting Alliance I).

The Court described the appropriate inquiry in this matter to be “whether the FDA properly determined that there was no “credible evidence” supporting the plaintiffs claims.” Alliance II at 22. The Court stated that it would “limit its consideration of this question to an assessment of whether the FDAs evaluation was inconsistent with its own standards, irrational, or arbitrary and capricious. Id. The Court evaluated the FDAs 2009 Guidance Document stating that it uses an “evidence-based review system” to evaluate the strength of the evidence supporting a health claim and held the factors the FDA uses, as enumerated in the Guidance Document, to be reasonable and consistent with the FDAs regulatory authority. See id. at 24-25. However, when the Court evaluated the modifications applied to the plaintiffs qualified claims, the Court held that the FDA did not draft “precise disclaimer[s] designed to qualify plaintifss claim[s] while adhering to the ËœFirst Amendment preference for disclosure over suppression, as mandated.” Id. at 35 (citing Alliance I).

Ultimately, the Court held that the FDAs modifications to the claims were unconstitutional under the First Amendment. The FDA did not employ the least restrictive means available to regulate the speech at issue in this matter. The Court held that “health claims that are supported by some credible evidence, and which are therefore only potentially misleading, are protected commercial speechPearson I teaches that empirical evidence of the inefficacy of using disclaimers is required for the FDA to ban a health claim that is only potentially misleading “ i.e., a claim that is based on some credible evidence. Alliance II at 20.

The Court ruled that the FDA “has replaced plaintiffs claims entirely,” and that the claim “qualification effectively negates any relationship between cancer risk and vitamin intake. The FDAs rewordingmakes it difficult to tell what the original health claims are and appears to disavow the FDAs own conclusions that those claims are supported by credible evidence.” Alliance II at 13. The Court remanded the claims regarding the relationships between vitamin C and gastric cancer and vitamin E and bladder cancer to the FDA for further action.

United States Government Requests US District Court to Release Property Tax Records from California Board of Equalization

The United States Justice Department, on behalf of IRS, has asked a federal judge to issue a “John Doe” summons on the California Board of Equalization requiring the board to turn over records of property transfers for little or no consideration (In Re the tax liabilities of John Does, E.D. Cal., No. 2:10-mc-00130-MCE-EFB, filed 12/27/11).

In the gift tax area, this is the first reported time that the IRS has attempted to use John Doe summons to obtain information. The investigation relates to taxpayers who transferred real property between 2005 and 2010. “Based on information received from examinations across the country and information voluntarily disclosed by other states, the IRS has determined that taxpayers who transfer real property to a related party for little or no consideration frequently fail to file Form 709 and report this transfer, despite the fact that they are required to do so by the internal revenue laws,” wrote Josephine M. Bonaffini, Federal/State Coordinator of IRS Estate and Gift Tax Program in a declaration filed with the District Court. “Thus, the IRS has a reasonable basis to believe that a significant portion of the California taxpayers who have transferred property to their children or grandchildren (as reported to the BOE on forms for exclusion of reassessment) for little or no consideration have failed to report these transfers to the IRS.”

Because no statute of limitations applies to gift tax returns, the recipient of the gift will be liable to pay gift tax if the donor fails to do it. The IRS reportedly has teams in Florida, Nebraska, New York, North Carolina, Ohio, Washington, and Wisconsin working on gift tax compliance. Unsurprisingly, many states and counties have voluntarily disclosed their property transfer data. Public data reveals that 323 taxpayers have been examined for failing to File Form 709 and another 217 are currently under examination.

The attorneys at Fuerst Ittleman, PL have experience representing taxpayer in IRS audits and litigation before the U.S. Tax Court, U.S. District Courts, and U.S. Courts of Appeal. You can contact us by emailing:contact@fidjlaw.com.

Federal Prosecution of Tax Crimes up 25%

Federal prosecutors brought criminal charges in 1,250 tax cases in 2010, a 25.3% jump from 2001. Criminal tax prosecution recommendations by the Criminal Investigation Division of the IRS reached a high of 1,507, up 50.4% from 2001. The data is from Transactional Records Access Clearinghouse, a data research and distribution organization.

Part of the increase resulted from criminal charges in cases involving Swiss banking UBS. UBS agreed to assist the IRS by providing account data for 4,450 American clients. The U.S. Department of Justice recently disclosed in court documents that the IRS is investigating HSBC for assisting U.S. taxpayers hide accounts and income in India. Recently a New York woman plead guilty to filing a false 2008 income tax return that did not disclose that she owned multiple HSBC accounts in India that held $8.3 million. Additionally, the IRS recently opened field offices around the world including Australia, China, and Panama.

The attorneys at Fuerst Ittleman, PL have extensive experience in criminal and civil tax litigation, IRS audits, and federal tax compliance. You can reach an attorney by emailing us at: contact@fidjlaw.com.

U.S. District Court Grants Government’s Motion to Issue John Doe Summons to HSBC

On April 7, 2011, the U.S. District Court for the Northern District of California, in case # 4:11-cv-1686, granted the Governments ex parte motion to issue “John Doe” summons to HSBC. The full text of the order can be found here

Of particular note is the description of the “John Does” “ “United States taxpayers, who at any time during the years ended December 31, 2002 through December 31, 2010, directly or indirectly had interests in or signature or other authority (including authority to withdraw funds; trade or give instructions to receive account statements, confirmations, or other information, advice or solicitations) with respect to any financial accounts maintained at, monitored by, or managed through the Hongkong and Shanghai Banking Corporation Limited in India (HSBC India)”.

As we previously discussed, those that have a financial interest and/or control over foreign accounts must disclose the accounts to the Department of the Treasury. The IRS recently announced a second offshore voluntary disclosure initiative to those that still had not come forward to be compliant with the reporting requirements. Our prior discussion regarding this second voluntary disclosure initiative can be found here.

The attorneys at Fuerst Ittleman, PL have extensive experience in voluntary disclosures, offshore accounts, IRS audits, and criminal tax investigations. You can reach an attorney by emailing us at: contact@fidjlaw.com.

Former GlaxoSmithKline in house counsel re-indicted

On March 23, 2011, U.S. District Judge Roger Titus dismissed the indictment of former in house counsel Lauren Stevens due to concerns that the prosecutors erroneously advised the grand jury regarding the advice of counsel defense. We originally blogged about this prosecution here and here.

Under certain circumstances, it is a defense to a charge of willful criminal conduct that the defendant relied on the advice of a lawyer in committing the offense. This reliance on the advice of counsel negates the defendants specific intent to violate the law. When Judge Titus raised the concern that the prosecutors may have improperly advised the grand jury regarding the defense, Judge Titus dismissed the indictment without prejudice, and allowed the government to re-indict Stevens.

The Government re-indicted Stevens shortly thereafter. On April 14, 2011, a different grand jury re-indicted Stevens on six counts that she allegedly obstructed justice, made false statements to the FDA and concealed and falsified documents in regard to a federal investigation, essentially the same charges with which she was originally indicted. Trial is scheduled for April 26, 2011.

Department of Justice Shuts Down Three of the Largest Internet Poker Sites in US, Charge Owners with Unlawful Internet Gambling, Fraud, Money Laundering, and Seek to Recover $3 Billion in Civil Penalties.

On April 15, 2011, federal prosecutors indicted eleven people in connection with their involvement in running PokerStars, Full Tilt Poker, and Absolute Poker, three of the largest internet poker sites in the United States. The Department of Justice has charged these individuals with multiple charges including violations of the Unlawful Internet Gambling Enforcement Act (“UIGEA”), conspiracy to commit bank fraud and wire fraud, operating an illegal gambling business, and money laundering conspiracy. A copy of the indictment can be read here.

Additionally, the FBI obtained a court order to block seventy-six bank accounts and five internet domain names associated with the poker websites. As of April 15, 2011, the FBI had shut down two of the sites, Full Tilt Poker and Pokerstars and were working to shut down Absolute Poker. The Department of Justice is also seeking $3 billion in civil money laundering penalties.

Prosecutors allege that, in an effort to get around the prohibitions on unlawful internet gambling under UIGEA, the defendants engaged in a fraudulent scheme to deceive US banks and financial institutions as to the true identity of the funds being transferred and payments being processed. Authorities allege that the companies used highly compensated third party payment processors to disguise money received from US poker players as payments to non-existent online merchants and phony companies. Authorities alleged that the phony websites, ranging from flower shops to pet supply stores, were all created to handle credit card payments to get funds from US players. A copy of the Department of Justices press release can be read here.

Though the law does not specifically address internet pay for play poker sites, UIGEA defines “unlawful internet gambling” as: 1) placing, receiving or transmitting a bet, 2) by means of the Internet, even in part, 3) but only if that bet is unlawful under any other federal or state law applicable in the place where the bet is initiated, received or otherwise made. However, since UIGEAs passage, debate has raged over whether pay for play poker qualifies under the act with poker sites and federal prosecutors reaching opposite conclusions. Internet poker site operators have argued that UIGEA does not apply because poker should be classified as a game of skill, not a game of chance, and thus beyond the reach of UIGEA.

The indictments may mark a shift in the strategies of federal prosecutors in dealing with internet pay for play poker websites. As we previously reported, prosecutors have previously focused their efforts on payment processors, the financial outfits that move money between online poker sites, their players, and the banks, rather than internet poker sites directly. However, with these new indictments, the Department of Justice has made clear its belief that internet pay for play poker sites do, in fact, violate UIGEA.

If you have questions pertaining to UIGEA, the BSA, anti-money laundering compliance, and how to ensure that your business maintains regulatory compliance at both the state and federal levels, or for information about Fuerst Ittlemans experience litigating white collar criminal cases, please contact us at contact@fidjlaw.com.

Summary Judgment Granted to FDA in Challenge to Dietary Supplement Good Manufacturing Practices

The U.S. District Court for the District of Columbia granted summary judgment for the U.S. Food and Drug Administration (FDA) in a case challenging good manufacturing practice (GMP) regulations for dietary supplements. The order, dated April 6, 2011, can be found here.

In the case Alliance for Natural Health U.S. v. Sebelius, No. 09-1523, 2011 U.S. Dist. LEXIS 37027 (D.D.C. April 6, 2011), the plaintiffs include Sandy Shaw and Duke Pearson, scientists who formulate dietary supplements and license the formulations to dietary supplement distributors and manufacturers. Other plaintiffs to the lawsuit include industry organizations, Alliance for Natural Health USA and the Coalition to End FDA and FTC Censorship. The plaintiffs sought to have various provisions of the dietary supplement GMPs declared invalid and to have the enforcement of the GMPs enjoined. The FDAs dietary supplement GMP regulations and guidance documents can be found here.

The plaintiffs challenges to the GMP regulations included the following:

1) That several GMP regulations went beyond the statutory authority of the FDA to regulate dietary supplements;

2) Some of the GMP regulations were unconstitutionally vague and in violation of the Fifth Amendments Due Process Clause; and

3) Due to the vague sections of the GMP regulations, these regulations were arbitrary and capricious and an abuse of the FDAs discretion under the Administrative Procedure Act (APA).

The plaintiffs asserted that under Section 402(g) of the Federal Food, Drug, and Cosmetic Act (FDCA) (21 U.S.C. § 342(g)), the FDA is prohibited from issuing GMP regulations that “impose Ëœstandards for which there is no current and generally available analytical methodology.”

In Judge Beryl Howells order, the court explains that “the plaintiffs read this clause to mean that the FDA is only permitted to issue GMP regulations that are based on analytical methodologies and that these methodologies must also be current and generally available” while on the other side “the FDA reads the clause to mean that if and when the FDA issues a regulation that incorporates a standard based on an analytical methodology, then that analytical methodology must be one that is current and generally available.”

The court first stated that the plaintiffs were precluded from contesting the FDAs regulatory authority because the plaintiffs had failed to raise this issue during the rulemaking process. The court then proceeded to evaluate the plaintiffs challenges to the the FDAs statutory authority using the two-step analysis of Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). Under the first step of Chevron, the court analyzed the text of the FDCA, as well as the structure and legislative history, and “conclude[d] that the clear meaning of Section 402(g) is the FDAs interpretation of the statute.” The court stated that once “the FDA imposes a standard that requires the use of an analytical methodology, the methodology must be current and generally available to manufactures. The statute does not mean that the FDA may only adopt GMP regulations that require the use of such an analytical methodology.”

The court went on with the second step of its Chevron assessment and found, quoting Chevron, that “if a statute is ambiguous with respect to a specific issue, the Court must uphold the agencys interpretation if it is Ëœbased on a permissible construction of the statute.” Under the two steps of the Chevron analysis, the court held that it “could not conclude that the FDAs construction of the statute is impermissible.”

The court went on to address the plaintiffs contention that certain GMP regulations are unconstitutionally vague by stating that, while certain words are not defined in the GMPs (like “adequate,” “suitable,” “qualified,” etc.), the regulations explain the terms by providing “numerous details clarifying what the FDA means.” The court ultimately concluded that the regulations are not facially unconstitutional and “are not arbitrary and capricious under the APA.”

United States Petitions Court for Leave to Issue “John Doe” Summons to HSBC

On April 7, 2011, the U.S. Department of Justice “ Tax Division, filed a petition in U.S. District Court for the Northern District of California, San Francisco Division, for leave to issue a “John Doe” summons to HSBC. The case number is CV-11-1686-LB. On the same day, the Department of Justice issued a press release, available here.

the government alleges that since at least 2002, thousands of U.S. taxpayers of Indian origin have opened and maintained accounts at HSBC. The government further alleges that HSBC used representative offices in New York and California to solicit and maintain those accounts, and that HSBC assured its customers that the accounts in India would not be disclosed to the IRS.

The press release states that although HSBC India closed those offices in June 2010, its clients may still access their accounts at HSBC India from the United States. According to the petition documents, HSBC clients have told IRS investigators that HSBC representatives in the United States assured the clients that they could invest in accounts at HSBC India without paying U.S. income tax on interest earned on the accounts and that HSBC would not report the income earned on the HSBC India accounts to the IRS.

The governments attempt to obtain documents from HSBC comes in the wake of recent activity where grand jury subpoenas have been issued to taxpayers to produce their documents of the foreign bank accounts as required by the Bank Secrecy Act and the federal regulations issued by the Department of the Treasury.

The attorneys at Fuerst Ittleman, PL have been actively litigating against the Department of Justice in response to recent grand jury subpoenas. Additionally, the attorneys at Fuerst Ittleman, PL have extensive experience dealing with both the IRS and the Department of Justice in regards to undisclosed foreign bank accounts, civil and criminal tax evasion, and voluntary disclosures. You can reach an attorney by emailing: contact@fidjlaw.com.

U.S. Attorney Seeks $7 Million In Forfeiture Trial Of Privately Printed “Liberty Dollars”

On April 4th, federal prosecutors will resume the forfeiture trial of approximately $7 million in precious metals used to create “Liberty Dollar” coins, a privately minted and distributed currency which prosecutors believed was designed to compete with US currency in violation of federal law. The forfeiture trial comes after the March 18, 2011 conviction of the Liberty Dollars creator, Bernard von NotHaus, on multiple charges including making coins resembling US currency, issuing and passing Liberty Dollars coins intended for use as “current money,” and conspiracy. A copy of Federal Bureau of Investigations press release announcing the conviction can be read on their website here.

The authority of the federal government to regulate and coin money traces its roots directly to the U.S. Constitution. Article I, section8, clause 5 of the U.S. Constitution grants Congress the power to coin money. The power of Congress to regulate and coin money also necessarily includes the power to place restrictions on circulation of money printed by non-federal entities. However, no law currently exists that prevents a local community from printing and circulating it own currency.

Although locally printed and circulated alternative or “local currencies” do exist, they are subject to several federal laws. For example, 18 U.S.C. § 485 prohibits possession and sale of local currencies in “resemblance or similitude of any coin of a denomination higher than 5 cents.” This not only prevents local currencies from printing currency with the marks of U.S. minted coins and dollars, such as “In God We Trust,” but also prevents local currency minters from printing currency with marks which closely resemble those familiar U.S. marks, such as “Trust in God.” 18 U.S.C. § 485 protects against local money being printed and passed off as official legal tender of the U.S. Additionally, 18 U.S.C. § 486 prohibits individuals and organizations from creating “current money,” private coin and currency systems to compete with the official coinage and currency of the U.S. as the recognized legal tender.

In this case, prosecutors alleged that von NotHaus, and his organization National Organization for the Repeal of the Federal Reserve and Internal Revenue Code (NORFED), minted Liberty Dollar currency with features that resembled U.S. coin and currency. Additionally, prosecutors alleged that based upon the widespread sale of the Liberty Dollar through the U.S. and Puerto Rico, “NORFEDs purpose was to mix Liberty Dollars into the current money of the U.S.”

Von NotHaus, who remains free on bond, faces a sentence of up to 15 years imprisonment on count two of the indictment and a fine of not more than $250,000. Von NotHaus faces a prison sentence of five years and fines of $250,000 on both counts one and three. In addition, the United States is seeking the forfeiture of approximately 16,000 pounds of Liberty Dollar coins and precious metals, currently valued at nearly $7 million. For more information, please contact us at contact@fidjlaw.com.