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March 21, 2016

Winston Shrout: The Rise and Fall of a Sovereign Citizen Guru

Federal prosecutors in Portland, Oregon, obtained a 19-count grand jury indictment in mid-March against Winston Shrout, a Hillsboro, Oregon, resident and one of the most prominent sovereign citizen gurus in the United States, a man whose videos and seminars have attracted thousands of people to the anti-government extremist movement.

Winston Shrout

Winston Shrout

Shrout was charged with 13 counts of using fictitious financial instruments in connection with an alleged debt elimination scheme. Fictitious financial instruments are bogus checks, money orders, or similar documents that purport to be payments of money but are not in fact genuine. Since the early 1980s, sovereign citizens have been fascinated with fictitious financial instruments, using them for everything from escaping their own debts to perpetrating major frauds and scams, especially against indebted property owners. Passing them became a federal crime thanks to a law passed after the 1996 Montana Freemen standoff; the Freemen having been energetic promoters of such bogus instruments.

Debt elimination schemes are also extremely common within the sovereign citizen movement; sovereigns use their pseudo-legal language and concepts to convince victims that, for a fee, their mortgages or other debts can simply be made to vanish. Often, fictitious financial instruments and debt elimination schemes go hand in hand.

The federal indictment accuses Shrout of creating and spreading more than 300 bogus “International Bills of Exchange” and “Non-Negotiable Bills of Exchange,” instruments with a combined face value of over $100 trillion (but worthless in fact). The indictment claims that Shrout used such instruments himself and also marketed them as a way for others to pay off their debts. Shrout is also charged with 6 counts of willful failure to file income tax returns.

The indictment is a superseding indictment, adding the fictitious instrument charges to the tax charges, which were originally filed against Shrout in December 2015. Since that original indictment, Shrout has declined to use an attorney—a common tactic for sovereigns—and has defended himself using sovereign citizen filings that, among other things, declare his refusal to consent to the jurisdiction of the federal court or to be taxed by the IRS.

Shrout, 67, has been one of the most influential leaders of the sovereign citizen movement in the 21st century. Sovereign citizens believe that, long ago, an evil conspiracy infiltrated and replaced the original “de jure” government with an illegitimate, tyrannical “de facto” government. They claim that the “de facto” government has no authority or jurisdiction over them, which allows them to rationalize ignoring or breaking virtually any tax, law, regulation, or court order. The movement is dominated by a coterie of gurus, the people who come up with the movement’s pseudo-legal theories—as well as its often-illegal tactics—and teach them to their followers.

Shrout grew up in Kentucky but resided in Utah for much of his life before finally moving to Oregon. Shrout has said he is a college graduate but worked various blue-collar jobs such as carpenter, welder, and construction worker until 1998, when, as he put it, “as luck would have it I was able to retire.”

Following this early “retirement,” Shrout encountered the sovereign citizen movement at a time when it was enjoying a burst of popularity. This was due to a new compilation of sovereign citizen theories and tactics, often referred to as “redemption” or “straw man theory,” which swept through the movement in 1999 like a wildfire and still remain quite popular to this day. Longtime sovereign citizen guru Roger Elvick came up with redemption theory—acting on it would eventually land him in prison—and shared it with a group of disciples who became gurus travelling the country, holding seminars and selling manuals and videos explaining redemption theory and its various associated tactics. Many of those disciples are now themselves in federal or state prison.

Shrout has at times seemed to imply that he learned redemption theory from Roger Elvick, but Shrout’s earliest sovereign citizen filings appear to date from 2000, by which time redemption theory was already quite popular in the movement. In August 2000, he filed a notarized document explaining—in sovereign citizen pseudo-legalese—how he had refused to sign or accept a traffic citation from a Washington County, Utah, sheriff’s deputy.

Two months later, Shrout filed his first bogus lien—a common harassing tactic that sovereigns use against perceived opponents or enemies. Shrout filed a $1,340,000 lien dubbed an “Affidavit of Obligation” against Unified Industries, Inc., which is a corporation that holds resources and business enterprises associated with the Apostolic United Brethren (AUB), one of the major fundamentalist Mormon polygamist sects in Utah. The lien stemmed from some sort of dispute Shrout had with El Rancho Motoqua, a subsidiary company of Unified Industries established to create a polygamist community in southern Utah. In such communities, properties are often not owned by individual business owners or residents but rather by a holding company or trust run by the sect. Shrout seems to have been permitted a residence in Motoqua and came into conflict with the polygamists running the community. In the bogus lien, Shrout complained that he had been threatened with “removal” from his house and that he was “excluded from participation in the religious ceremonies and usages” held inside a community building.

Was Shrout himself an adherent of the polygamist AUB? It is not entirely clear from the lien document, though at one point Shrout refers to himself “and several thousand other fundamentalist Mormons.” However, non-adherents have sometimes resided in AUB communities. Some adherents of polygamists sects have gotten involved with the sovereign citizen movement. Shrout’s stepdaughter, April Rampton, was a resident of Motoqua as late as 2012, before she herself was convicted in federal court on nine counts of filing false tax claims while engaged in a common sovereign citizen and tax protest scheme.

Before the end of 2000, Shrout filed a series of redemption-related documents and he soon became a redemption guru, teaching the theory to sovereign audiences. In 2004, Shrout and Patricia Bekken formed an entity called Solutions in Commerce to market sovereign seminars and workshops. Shrout proved to be a popular speaker, with a folksy demeanor that he deliberately played up, referring to it once as “hillbilly shtick.” The debt elimination schemes that Shrout promoted were also popular; one admiring extremist in 2004 referred to Shrout as a “top dawg” among such promoters.

Shrout’s reputation within the sovereign citizen movement grew in the mid-2000s, but it was the social media revolution that really helped propel him to the top ranks of sovereign gurus, as YouTube videos of some of his appearances and seminars began to circulate widely by 2008-2009, bringing him far greater attention and popularity. This same time period corresponded with the beginnings of the great recession and the mortgage crisis, events that helped spawn a major resurgence of the sovereign citizen movement by creating a large pool of angry and desperate people who were potential recruits.

Shrout held seminars across the country but hardly limited his activities to the United States. In the 1990s, the sovereign citizen movement had taken root in Canada, so Shrout spoke to attentive audiences in that nation—until Canadian authorities finally prohibited him from entering the country. But Shrout found other international audiences, holding seminars in Australia, New Zealand, and Great Britain, helping to bring the sovereign citizen movement to all of those countries—to the dismay of authorities.

More recently, Shrout expanded beyond strictly sovereign notions to express himself on UFOs and other “New Age” issues, claiming that in the early 2000s he and friends of his have been visited by alien “Pleiadians.” He’s made references to everything from incarnated fairies to “Hollow Earth” theory. Several years ago, Shrout set up a new website, dubbed Exo-Commerce, to provide “insight from a universal perspective,” which appears to be an attempt to blend sovereign citizen theories and tactics with “New Age” beliefs. It is difficult to determine whether these are sincerely held beliefs or merely a cynical attempt on the part of Shrout to expand to another gullible audience.

The new federal charges against Shrout could put an end to such opportunism, cynical or sincere. If convicted on all charges, Shrout may face what could be an effective life sentence.

 

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May 17, 2013

Cigarette Smuggling Case Linked To Hamas

cigarette-hamas-hezbollah-smugglers

New York Attorney General Eric Schneiderman announcing the indictment

Earlier this week, authorities in New York announced the indictment of 16 men accused of smuggling more than $55 million worth of cigarettes from Virginia to New York.  Fifteen of the men are in custody while one is at large, believed to be in Jordan.  One of the accused is also believed to have sold the gun used in the 1994 murder of Ari Halberstam in Brooklyn.

Several of the men in the smuggling ring are reportedly suspected of having ties to Hamas and other militant groups.  Although authorities do not yet know where the revenue was directed, they noted that, in the past such operations have been used to finance Hamas and Hezbollah.

While fundraising for terrorist organizations is not limited to cigarette smuggling, there have been several cases within the United States in recent years, including:

  • A group of approximately 20 men ran a criminal enterprise in Dearborn, Michigan, trafficking in contraband cigarettes, cigarette papers and Viagra, as well as stolen infant formula and toilet paper.  Prosecutors contend that the ring diverted some of the funds to Hezbollah.  Naturalized U.S. citizen Karim Hassan Nasser pleaded guilty to racketeering charges in September 2006, as did Theodore Schenk of Miami Beach, Florida and Imad Hamadeh of Dearborn Heights.
  • Dearborn resident Elias Mohamad Akhdar was sentenced in January 2004 to nearly six years in prison for his role in a cigarette-smuggling ring designed to finance Hezbollah. Another Dearborn resident, Hassan M. Makki, received a sentence of nearly five years in prison in connection with the scheme.
  • Carole Gordon and her granddaughter Brandy Jo Bowman were among eleven people charged in January 2003 for their involvement in a cigarette smuggling ring that funneled its proceeds to Hezbollah.   Both Gordon and Bowman pleaded guilty to racketeering charges.
  • Mohamad Hammoud was charged in March 2001 for raising funds and conspiring to provide “a variety of items that Hizballah [sic] would use to engage in violent attacks and to film such attacks for use in Hizballah [sic] propaganda efforts,” according to court documents.  Hammoud allegedly procured dual-use technologies for Hezbollah, including goggles, global positioning systems, stun guns, naval equipment, nitrogen cutters and laser range finders.  Hammoud and his brother, Chawki, were convicted the following year of providing material support to Hezbollah through their cigarette-smuggling ring that knowingly directed money to the terrorist organization.
  • At least three naturalized U.S. citizens – Said Mohamad Harb, Bassem Youssef Hammoud and Hussein Chahrour – and U.S. citizen Angela Georgia Tsioumas are among a group of nine individuals who bought cigarettes in North Carolina, shipped them to Michigan and sold them at a price lower than the tax-inflated Michigan price.  From 1995 to 2000, the scheme generated over $7 million used to procure dual-use technologies for Hezbollah.  Items were reportedly purchased for Hezbollah in both the U.S. and Canada, including goggles, global positioning systems, stun guns, naval equipment, nitrogen cutters and laser range finders.  Harb pleaded guilty to providing material support for terrorists and racketeering charges.  Tisoumas  pleaded guilty to racketeering and money laundering charges.   Chahrour pleaded guilty to racketeering charges.  Bassam Youssef Hammoud pleaded guilty to trafficking in contraband cigarettes.

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