Coloradan Sows Seeds of a Farm Loan Revolt : Agriculture: He tells farmers they can beat the debt game, and collects a $300 fee. But he also claims to have a sky link to Congress and says Navy killed judges.

In rented meeting halls across the heartland, farmers and ranchers facing foreclosure embrace Roy Schwasinger’s message with the hope usually reserved for the hereafter.

Banks and their loans, he says, have been illegal since the 1930s, when the United States went off the gold standard and into debt. Since then, everything done with currency--taxes, loans, foreclosures--has been unlawful, he contends.

“How can banking regulations exist when you don’t even have banks?” Schwasinger asked landowners in Waco, Tex., last year.

He urges farmers and ranchers to fight back with liens and lawsuits.

And for $300, evicted landowners are invited to join his loosely organized “We the People” campaign against the nation’s system of land financing, hoping to share in a court victory and get their land back.

For the besieged people of the land, this is a message of salvation. But to John Davis, a district attorney’s investigator in Ft. Collins, “it’s like any pyramid con scheme,” built on legal theories that are a sham.

We the People, said Kansas U.S. Atty. Randy Rathbun, is “an outright scam” and anyone giving it money might as well just burn their cash.

But still they come. Investigators watching Schwasinger say about 3,000 people have paid the $300 fee; the Kansas State Board of Agriculture estimates Schwasinger has collected more than $1 million from farmers.

Authorities have not found any membership rolls for We the People, and supporters deny the organization even exists.

But the actions of Schwasinger’s followers are well-documented. They have filed liens against lawyers, judges or bankers involved in foreclosing on their land in Texas, New Mexico, Iowa, Colorado, Oklahoma and Minnesota. Some have attempted to pay off loans with worthless money orders.

Schwasinger, 59, delivers his message in a folksy monotone at small meetings throughout the Midwest, Southwest and Rocky Mountain region.

He has no listed telephone number and is inaccessible to the media, but the tapes and court testimony provide glimpses of this balding, portly man.

A native of Nebraska who now lives in Ft. Collins, Schwasinger says he is a university graduate with 33 months of military service. He has worked as a pharmaceutical and magazine subscription salesman and as a meatpacker.

He told the Waco group he was involved until recently in secret operations. Prosecutors in Lubbock, Tex., said Schwasinger claims to have carried a transducer linking him by satellite to Congress and has told people he has been empowered with “the right to kill.” He also alleges that the Navy secretly executed 170 judges and lawyers Feb. 10.

A suspect resume? Perhaps. But some drowning farmers do not question the character of someone who is offering them a lifeline.

The board of governors of the Federal Reserve System reports that there are $1 billion in delinquent agricultural, non-real-estate loans nationwide--most taken out to buy equipment or for operating costs, with land often used as collateral.

This is 2.7% of the loan money outstanding.

This year, the U.S. Department of Agriculture has declared a moratorium on foreclosures while loans are reviewed. But USDA officials said the Farmers Home Administration, the lender of last resort for agricultural operators, foreclosed on 150 farms or ranches last year.

Schwasinger “offers some hope; that’s what they can see,” said Davis, the investigator for the Ft. Collins prosecutor.

Schwasinger insists his strategy could bring huge returns and restore property rights to evicted landowners.

But he has struck out in the courts so far.

In a showcase effort targeting the Federal Land Bank, Schwasinger and others joined William G. Baskerville in a Denver federal court challenge of the bank’s foreclosure on a farm in Larimer County, Colo.

U.S. District Judge James Carrigan dismissed the case in June and ordered the plaintiffs to stop issuing phony citizen’s arrest warrants. The dismissal has been appealed to the U.S. 10th Circuit Court of Appeals in Denver.

Schwasinger financed the court challenge by selling shares--a practice that Iowa Atty. Gen. Bonnie Campbell has gone to court to stop.

“This is not a good investment,” she said. “This is a flat-out scam.”

This summer, Schwasinger was indicted with 10 others by a federal grand jury in Lubbock on charges of trying to influence, intimidate and impede federal authorities.

The charges stem from false financial statements that Jerry and Bettie Herndon and William Mason Bivins are accused of filing, claiming that U.S. Bankruptcy Judge John Akard and other court officials owe them as much as $77 million. They also claim liens against the judge’s and lawyers’ property.

“I did to them exactly what they did to me--filed the same things on them as they filed on me,” Bivins said before the indictments were unsealed.

Herndon, 56, wrote a letter to the editor of The Tulia (Texas) Herald saying: “In my mind, I have done nothing but cooperate fully with the authorities. I filed some paper in the court, and that is the only crime they accuse me of. I want to do what I believe our nation’s laws allow to be done.”

“I don’t think they have any idea of the depth of trouble they’re in,” said Terry McEachern, a state’s district attorney in the Texas Panhandle.

In Clayton, N.M., Craig Reeves, president of the First National Bank, found liens on his salary, assets and pension after the bank moved to claim a large ranch used as collateral on a loan from his bank.

Reeves won $2.6 million in slander judgments against the couple that filed the liens against him, but he does not think he will be paid. He has received certified money orders but, so far, no money.

Despite his track record, Schwasinger’s followers remain loyal.

Allen Dobmeier, a farmer near Nazareth, Tex., acknowledged he paid the $300.

“It might be pie in the sky, but it beats the heck out of the lottery,” Dobmeier said.

Jerry Herndon, one of the 11 indicted by the federal grand jury in Texas, also is accused along with his wife in a state proceeding of retaliating against District Judge Marvin Marshall of Hale County by filing a lien.

Herndon’s wife was called to appear before a grand jury, and when FBI agents searched a We the People office, a letter from Herndon to Schwasinger came in on the fax machine.

“Roy, this is nothing more than intimidation to come after the wives,” the fax said. “This makes me more determined than ever to put these parasites away. Must continue to have your help and guidance more now than ever before.”