Broderick Linked to History of Scams

M. Elizabeth Broderick, the 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.

The Canadian native came to California after being convicted in Colorado of operating a pyramid scheme, and she remains under investigation of running a similarly fraudulent business in Orange County, according to state prosecutors.

Broderick contends she is being persecuted for her anti-government beliefs, and says 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 suggest that her political rhetoric is just window dressing to her latest suspected scam: charging thousands of hopeful clients fees of up to $200 each to learn how to pay off their debts by drawing upon reserves she claims she has won by filing liens against government officials and agencies.

Even former supporters with a shared distrust of authority note that Broderick’s recent enthusiasm for fringe political ideology, including the teachings of Montana tax resister LeRoy Schweitzer, began after her property was seized by Orange County sheriff’s deputies during a 1993 probe of her business dealings there.

“She’s a patriot for profit,” said Ivy West, another 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 feisty 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, before she once again failed to appear at a federal court hearing Tuesday. During the hearing in U.S. District Court in Los Angeles, Judge William Keller extended an order barring Broderick from issuing any more of her checks.

Outlining her life’s story, Margaret Elizabeth Broderick said she left Saskatchewan, Canada, in 1967, spending three years as a social worker in Omaha, Neb., before moving to Denver and opening three hair salons. “I wanted to be self-sufficient,” she said. “I owned my own business and had a bit of the American dream.”

But starting in 1986, the Colorado attorney general named Broderick in one criminal and two civil cases as helping run three pyramid schemes, Assistant Colorado Atty. Gen. Diana Schatz said.

Broderick pleaded guilty the following year to a misdemeanor charge of operating one of the schemes and was fined $1,000, a spokeswoman for the Denver district attorney’s office said. In 1988, in a settlement of one of the civil suits, Broderick promised to pay a $30,000 fine for having conducted another illegal business, and to never operate another pyramid scheme in Colorado, Schatz said.

Broderick denied ever pleading guilty to running a pyramid scheme or settling the other case out of court, blaming a group of former tenants for operating the businesses from her property.

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

According to both Broderick and state officials, 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 called it yet another pyramid scheme, alleging Broderick drew 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 contends deputies also seized computers, fax machines, gold coins and three diamond rings, and froze $80,000 in cash in her bank accounts. She bitterly complained that her seized property has yet to be returned even though no charges were ever 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 the matter and need the seized materials.

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

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. “That’s it! It’s a fraud!” Broderick said she then realized.

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 and its claims that the U.S. government long ago declared war on its citizenry. She and her husband also moved from Long Beach to the Antelope Valley.

Although Broderick asserts that she has won several of her suits against the government, all have either been dismissed or remain in litigation, government lawyers say. After her first round of suits, Broderick switched tactics and began filing what she calls “commercial liens”--claims for business damages she says can be tried in common-law courts run by her and other patriot-movement disciples.

She continues to file liens against perceived enemies, with recent targets including U.S. Treasury Secretary Robert Rubin and KCAL-TV, and to immerse herself in patriot teachings.

One trip took her to Montana, where Schweitzer lectured on the rights of “sovereign citizens” to renounce their U.S. citizenship along with their driver’s licenses, Social Security numbers and tax obligations, among other trappings of modern-day life. 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.

Broderick maintains that simply studying with Schweitzer does not make her a member of the “freemen.” “They don’t even like women,” she said.

But 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. In no time, through word of mouth, she had capacity crowds filling an Essex House ballroom, her regular meeting site.

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 only 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.

Many members of the crowd at Broderick’s last two-day seminar, which began Easter Sunday, said they were desperate for a way to pay their crushing bills. “It’s hard to believe,” said one 23-year-old Compton woman who said her parents are losing their house to foreclosure. “But might as well take the chance.”

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

Cardenas, a Baldwin Park garment worker and mother of three, said she has attended seven Broderick seminars, paying both for her Essex House hotel room and a $125 advance registration fee each time. “I went to seven classes because I need to pay seven bills.”

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 agents also froze the assets of a Las Vegas corporation called the Brigadoon Corp. that is owned by Broderick’s husband. Her brother, Gordon Cowie of Toronto, is also listed as an officer.

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 and from threatening or filing any more liens against federal employees and their families.

Ever defiant, Broderick says she wants to “haul” Keller and federal prosecutors into her own court to try them for abuse of power.

“Don’t think they’re going to stop me. They’re not,” Broderick vowed. “Sovereignty will be a major industry.”

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