Woman in Check Inquiry Linked to Past Scams

A Palmdale woman under federal investigation for espousing the use of phony checks has a history of running financial scams that predates her interest in the Montana “freemen” or other branches of the patriot movement, authorities say.

M. Elizabeth Broderick, a native of Canada, came to California after she was convicted in Colorado of operating a pyramid scheme, and she remains under state investigation for allegedly running a similarly fraudulent business in Orange County, state prosecutors said.

Broderick contends that investigators are persecuting her for her anti-government beliefs. She says that even though she has yet to be charged with any crimes in California, her property seized in searches has not been returned.

But court records and law enforcement authorities say her political rhetoric is window-dressing for her latest scam: charging thousands of hopeful clients fees of up to $200 each to teach them how to pay off debts by drawing upon reserves she claims to have gotten by filing liens against government agencies and officials.

Even former supporters with a shared distrust of authority say that Broderick’s recent enthusiasm for fringe political ideology, including the teachings of Montana tax resister LeRoy Schweitzer, began after a 1993 probe of one of her businesses.

“She’s a patriot for profit,” said Ivy West, a self-described “sovereign citizen” who briefly offered Broderick amateur legal advice and acted as her attorney before the two had a falling out.

But the 52-year-old Broderick--who wears a button declaring herself the “Lien Queen”--maintains that her rights have been trampled repeatedly by everyone from the Internal Revenue Service to the Orange County district attorney’s office.

“If they can’t follow their own laws, then I’m not going to,” Broderick said in a recent interview. She failed to appear at a federal court hearing Tuesday in Los Angeles, during which U.S. District Judge William Keller extended an order barring Broderick from issuing any more of her checks.

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Outlining her life’s story, Broderick said that she left Saskatchewan, Canada, in 1967, spending three years as a social worker in Omaha before moving to Denver and opening three hair salons.

But starting in 1986, the Colorado attorney general accused her of helping run three different pyramid schemes, said Assistant Colorado Atty. Gen. Diana Schatz.

In one case, Broderick pleaded guilty to a misdemeanor charge and was fined $1,000, a spokeswoman for the Denver district attorney’s office said. In another, handled as a civil matter, Broderick settled out of court by promising to pay a $30,000 fine and to never operate another pyramid scheme in Colorado, Schatz said.

Months later, after her husband, Richard, an aerospace engineer, was transferred to Long Beach, Broderick left Colorado. After her husband retired in 1990, she founded the California Gold Co., opening offices in Long Beach and several Orange County locations.

Broderick and state officials agree that she solicited money from investors through newspaper and radio advertisements, promising to double their money by purchasing gold coins for cut-rate prices on the world market. It cost $150 to join the enterprise.

“Americans don’t need jobs. They need money. We have the money,” one newspaper ad read.

But the California attorney general’s office suspected Broderick of drawing her profits merely from the fees she charged new investors. Some profited from the venture, some had their initial investments returned, but others were left empty-handed, state officials said.

In May 1993, armed Orange County sheriff’s deputies served search warrants at the company’s offices and at the Brodericks’ Long Beach home, carting off boxes of files, according to court records. Broderick says deputies also seized computers, fax machines, gold coins and three diamond rings, and froze $80,000 in cash in her bank accounts. She has complained bitterly that her seized property was never returned even though no charges were filed.

An Orange County prosecutor said her office declined to file charges after deciding that Broderick’s lack of records would hinder the case. But officials at the California Department of Justice say they are continuing to investigate and need the seized materials.

In response, Broderick began flooding the courts with multimillion-dollar claims, suing Orange County and the state of California, as well as a bevy of public officials including California Atty. Gen. Dan Lundgren and Gov. Pete Wilson.

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She and nine investors in the California Gold Co. also began suing each other. They sought $5,000 each from her for breach of contract. Broderick accused them of ruining her business and trying to steal her trade secrets. All but three investors dropped their suits, but those who persisted eventually won in Orange County Small Claims Court.

Meanwhile, Broderick and her husband were battling the IRS over their 1988 taxes, eventually winning a federal appeals court judgment for a refund of more than $2,000.

She said that victory, coupled with the raids on the California Gold Co., convinced her even further that government was corrupt and she embraced patriot movement ideology. She and her husband also moved from Long Beach to the Antelope Valley.

One patriot movement foray took her to Montana, where Schweitzer lectured on the rights of “sovereign citizens,” urging them to renounce their U.S. citizenship along with their driver’s licenses, Social Security numbers and tax obligations. Schweitzer, who has been charged with federal bank fraud, also spoke of the ability of sovereign citizens to pay off debts with checks backed by liens levied in common-law courts.

In November, Broderick renounced her citizenship at a ceremony at the Essex House, a Lancaster hotel. Soon after, she taught her first seminar on issuing her checks in a small real estate office in Marina del Rey. Soon, through word of mouth, she had capacity crowds filling an Essex House ballroom, her regular meeting site.

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At the seminars, Broderick holds herself out as a virtual bank whose reserves are gleaned from the liens she files. She distributes order forms for checks that she calls “comptroller’s warrants,” and tells clients they are good to pay off any debt. She then fills out one check per client to the creditor of their choice, but will make out more checks for additional fees.

Broderick accepts cashier’s checks, money orders and cash to pay for her seminars--though she said she prefers silver. The seminars are so popular that she commands a staff of 25 to help manage them. She also claims to sell her checks and liens to off-shore companies, and carries a cellular phone and nationwide pager.

One client, Esperanza Cardenas, appeared in federal court Tuesday to try to understand why her car was repossessed even though she had financed it with a $17,000 check signed by Broderick. “He said it isn’t real money?” the Baldwin Park garment worker asked, in reference to Judge Keller’s remarks.

On the same day last month that federal agents arrested Schweitzer on suspicion of bank fraud--sparking an ongoing standoff with his armed followers--the FBI searched Broderick’s home and office in Palmdale, as well as a common-law courtroom near the homes of two of her assistants.

Federal officials have refused to comment on the searches but have so far obtained two court orders barring Broderick from issuing more of her checks or filing any more liens against federal employees and their families.

Times staff writers Eleana Callender and Davan Maharaj in Orange County and Marc Lacey in Washington contributed to this story.