"The government introduced evidence showing that between 1988 and 1993, Wells engaged in a large tobacco fraud conspiracy. The IRS conducted an audit of Wells and concluded that he had a substantial tax liability resulting from the unreported proceeds of the fraud. Thus, the IRS issued an assessment against Wells for approximately $1.8 million, and assigned to revenue officer Priscilla Smith the enforcement responsibilities. In October and November 1993, revenue officers Smith and Teresa Varnell issued tax liens on several properties that Wells either owned or controlled."In November 1995, Wells and parties close to him began to send Smith and Varnell a series of documents relating to their enforcement efforts in connection with Wells' IRS assessment. On November 11, 1995, revenue officer Smith received a document captioned 'Non-Statutory Abatement' from Wells' daughter, Doris Brantley, in response to Smith's attempt to schedule an appointment with Brantley to discuss the status of some real property believed to be owned or controlled by Wells. The Non-Statutory Abatement alleged that Smith's contact with Wells had been illegal, and it threatened Smith with civil and criminal liability. The envelope in which it arrived bore Russell Dean Landers' return address.
"On December 20 and 21, 1995, revenue officers Varnell and Smith, respectively, each received an 'affidavit' and a 'claim and demand letter' from Wells, himself. The letters discussed the dollar figure of the IRS jeopardy assessment. The accompanying affidavits threatened action against the officers and threatened liability of $1 million in pure silver if the revenue officers did not release IRS tax liens filed against property associated with Wells.
"On January 5, 1996, Wells, Landers, and others attended a two day seminar presented by the Freemen, including Leroy Schweitzer. A portion of the seminar focused on the use of instruments known as comptroller warrants. Comptroller warrants are fraudulent financial instruments that, to some extent, look like legitimate financial instruments.
"Timothy Healy, an FBI Special Agent who infiltrated the Freemen organization, testified that Schweitzer warned class members that they could be arrested if they used the comptroller warrants, and that they should use a compilation of documents called 'proof packs' to establish lack of fraudulent intent. Virtually none of the warrants were being accepted.
"Persons attending a Freemen conference could acquire as many as five comptroller warrants for $100; additional comptroller warrants cost the purchaser $100 each. Wells acquired several warrants during his stay in Montana, some of which had face values as high as $3.7 million. Each was issued jointly to Wells and a third party payee. During November and December 1995, Wells told associates that he could arrange loans for them. He then created lists of those to whom he would negotiate the warrants, which included the acquaintances as well as his creditors. Schweitzer's usual practice was to send Wells comptroller warrants whose face values were twice the amount requested. Soon after Wells returned to North Carolina, he distributed several of the warrants to acquire money. Testimonial evidence established that Wells distributed the following warrants in January, 1996, alone: on January 7, to Eastern Auto Sales for $155,704.00; on January 9, to Royster-Clark Corp. for $1,400,060.00 and to G.R.M. Enterprises for $770,000.00; on January 10, to Taylor Construction Co. for $433,478.00, to Heritage Bank for $7,778.14, to Simba Tech Auto Sales for $424,000.00, and to Travelinks for $384,000.00; on January 11, to the Internal Revenue Service for $3,705,858.00, and to Centura Bank for $9,898.24; and on January 26, to Centura Bank for $21,074.00.
"Wells sent cover letters along with the warrants to notify creditors that the warrants were intended to satisfy debts owed to them. Any additional funds were to be refunded to Wells. According to the letters, failure to refund excess amounts would constitute 'criminal conversion' and trigger the obligation to pay high interest rates.
"In January, 1996, Wells and Landers sent Officers Smith and Varnell documents captioned as 'true bills.' The 'true bills' alleged that the revenue officers had placed illegal restraints on Wells' property and directed them to sign the documents to acknowledge their liability. The documents further stated that failure to comply within 10 days would result in the officers being held personally liable for $100 million in 'silver coins' to Wells. Liability was to extend for 99 years.
"Wells had begun hearing of rejections of the warrants before he had even distributed any of his own. In one instance, Landers had received notice from the Iowa Department of Human Services that it had rejected as invalid a comptroller warrant Landers had submitted to it. Landers responded to the rejection with a January 2, 1996, letter and provided a copy of his letter to Wells.
"When Wells began distributing his comptroller warrants, he also received notices of rejection from banks. On January 12, 1996, he received two rejections. The next day, Wells was notified by mail of a rejection. During the latter half of January, Wells received six more rejections. He received still more rejections in February, including a rejection by the IRS.
"Prajesh Patel, one of Wells' business associates, had more success. On January 18, 1996, he successfully deposited the Travelinks comptroller warrant as a result of the bank's errors. Wells often called Patel for information as to the status of that warrant, and was pleased that it was accepted.
"Officers Smith and Varnell were 'summoned' to appear before 'Our One Supreme Court' in late January, 1996. The summonses informed them that the 'Court' had entered $100 million judgments against each revenue officer personally. The officers were further directed to appear before the Our One Supreme Court on a specific date. Wells signed the summons, indicating that he was the complainant and 'justices' of the 'court' also signed the summonses.
"The revenue officers later learned that the Our One Supreme Court was a tribunal associated with the Montana Freemen Organization that purported to hold trials, and enter judgments against private citizens and public officials. Smith also learned of plans by the Freemen to kidnap and kill a judge, and Varnell learned that the court had marshals upon whom they conferred powers of arrest. After learning those things, Smith and Varnell became afraid.
"Now that the Travel Links account was open, Wells ordered Patel to write a series of checks against the account on Wells' behalf. Patel followed Wells' order, writing six Travelinks checks that totaled over $85,000. Wells immediately used two of the checks to purchase a Chevrolet Suburban and a recreational vehicle (RV) on the same date. A third check was used to buy Russell Landers a computer.
"The Freemen conducted Smith and Varnell's hearing in their absence. Wells was present, and Landers presented Wells' case against the officers. After the hearing, Wells and others traveled to Montana in the Suburban and RV that had just been purchased. They brought the Suburban and RV to the Freemen compound on February 2, 1996. During a February 3, 1996, telephone conversation with business associate Prajesh Patel, Wells stated that he intended to acquire several more Suburbans to give to the Freemen for their use in Montana. Wells had a similar conversation with another acquaintance in North Carolina.
"The Freemen intended to use Suburban vehicles to arrest and execute public officials in Jordan, Montana. Schweitzer wished to acquire approximately 20 Suburbans for this purpose. The FBI was concerned about Wells' arrival at the Freemen compound with the Suburban, because it placed the Freemen closer to their goal of being able to effect arrests.
"After returning to North Carolina, Wells presented a second comptroller warrant with a face value of $254,000 to Patel, who had successfully negotiated a previous warrant. Patel was successful again, as bank errors permitted the warrant to be accepted on February 6.
"Wells was arrested on February 8, 1996. During the trial, the district court realized an error in Count Three. As the indictment had then read, Wells was charged under 18 U.S.C. § 1002 with using a counterfeit document to defraud the government 'for the purpose of enabling himself to obtain from the Internal Revenue Service . . . .' The statute actually reads 'for the purpose of enabling another to obtain . . . .' 18 U.S.C. § 1002. (emphasis added). At the close of the evidence, the court amended the indictment to read correctly. Wells was convicted of all counts."
