‘Freemen’ Follower Held in Alleged Check Scheme

Federal agents arrested Montana “freemen” associate M. Elizabeth Broderick on Thursday, capping a six-month multi-agency investigation into the fiery tax resister who authorities say raked in $1.5 million from a phony-check scheme and may have stashed the cash in foreign bank accounts.

Federal prosecutors contend that Broderick, 52, has donned the mantle of the burgeoning “patriot” movement to fleece thousands of mostly blue-collar clients by selling allegedly worthless checks.

Broderick calls the checks “comptroller’s warrants” and claims they are backed by liens she has lodged against the U.S. government.

By arresting Broderick and four alleged accomplices Thursday, prosecutors said they forestalled a possible plan to sell Broderick’s allegedly worthless “liens” to foreign governments.

At her detention hearing, Broderick, her voice hoarse and trembling, claimed that the court had no jurisdiction over her and threw the 30-count grand jury indictment against her to the floor.

After prosecutors said Broderick was planning to flee the country, U.S. District Court Magistrate Judge Virginia Phillips ordered her held without bail.

Broderick, who has renounced her U.S. citizenship, calls herself the “Lien Queen” and claims to be a virtual bank that can write checks. She has been charging other people up to $200 to attend seminars in Lancaster and elsewhere teaching them to utilize the “warrants,” inspired by Montana tax resister LeRoy Schweitzer, the indictment alleges.

The FBI’s arrest of Schweitzer in March on similar federal bank fraud charges sparked a standoff with his armed freeman followers, who are currently surrounded by federal agents on a Montana ranch.

The homemade checks are worthless, said FBI Special Agent in Charge Charlie Parsons, but the money Broderick has taken in--she accepts only cash, certified checks and money orders--is not.

“She’s painting this beautiful picture: ‘Come to me, I’ll share my wealth and you’ll be debt-free,’ ” Parsons said at a news conference Thursday morning following Broderick’s arrest. “But there’s nothing noble about the Lien Queen.”

In a series of sweeps beginning before 7 a.m., federal agents arrested Broderick at her Palmdale house, then her alleged assistant Adolph Hoch and Hoch’s 31-year-old daughter, Laura Marie Hooey, at their Riverside County homes.

Hooey, who is eight months pregnant, appeared to go into labor as she was arrested and was taken to a hospital by agents. But when the pains subsided without her giving birth, her husband said, the arrest proceeded.

Also arrested were Barry Switzer, who allegedly paid his rent on a Canyon Country house with Broderick’s checks, and Reseda chiropractor Julian Cheney, who allegedly tried to pay his tax bill with Broderick’s checks. All are scheduled to be arraigned Monday.

Broderick did not physically resist as she was led from her home but threatened to place a lien on the assets of every agent involved, federal officials said.

She was later led into federal court with a net over her head to keep her from coughing on the arresting officers, FBI officials said.

A Canadian immigrant, Broderick moved to California after running at least three illegal pyramid schemes in Colorado, authorities say. After the California attorney general’s office, without filing charges, shut down another alleged pyramid scheme in 1993, Broderick fell in with a group of novel legal thinkers in the so-called patriot movement.

Some adherents of patriot ideology hold that the government has declared war on its citizenry and that true authority resides in common-law courts they create.

At a patriot seminar in Jordan, Mont., last October, Broderick learned how to issue checks whose “value” is declared by common-law courts, the indictment said.

Federal officials say Schweitzer and his freemen followers engaged in a multimillion-dollar scheme to defraud their creditors using homemade checks. Broderick added a new wrinkle, the indictment alleges--charging admission to regular classes where she distributed forms that were good for one check. She charges $100 for each additional check, the indictment alleges.

Lured by the promise of free debt payment, thousands of people attended the seminars. Broderick and Hoch, her business manager, raked in $300,000 each month from the classes, which drew attendees from as far away as the East Coast, the indictment alleges.

Prosecutors say Broderick issued about $120 million worth of her checks, about $30 million of which was used. Nearly all were rejected by creditors, but officials say some were erroneously accepted by banks, car dealers, bail bondsmen and even the IRS. Officials estimate the loss related to the checks at $200,000.

Earlier this month, federal attorneys secured a restraining order to keep Broderick from issuing more checks. But they did not arrest her, leading Broderick and her disciples to proclaim that she must have done nothing wrong.

In Thursday’s news conference, U.S. Atty. Nora Manella brushed off criticism that the investigation took too long, saying that the government had to assemble a complex case against Broderick.

“In the last four weeks we have searched her, sued her and indicted her,” Manella said. “I consider that pretty fast.”

Assistant U.S. Atty. Aaron Dyer said prosecutors found evidence that Broderick was negotiating deals to sell millions of dollars in “liens” to offshore investors and undisclosed foreign nations.

Authorities believe that Broderick also hid the seminars’ proceeds in the nonprofit Brigadoon Foundation she runs in Las Vegas--named after a musical about an imaginary place, Manella noted. Officials have frozen Brigadoon’s assets but have found less than $100,000 of Broderick’s profits, Dyer said.

In a past interview with The Times, Broderick said she stashed thousands of dollars where it would not be found.

Broderick refused when she was brought into court to approach Judge Phillips, saying she would be relinquishing her rights.

“I’m a sovereign citizen of the California Republic,” she said. “I’m not a citizen of the U.S.”

“You understand that you have the right to be represented by a lawyer?” Phillips asked.

“No, I don’t,” Broderick said. “I don’t get any rights from the United States, your Honor.”

Broderick insisted that she be released, saying she was not a flight risk and would stay in the area to care for her ailing, 63-year-old husband, Richard, who walked with the aid of two canes as he arrived for the hearing.

“I will not run away because I’m very vitally interested in pursuing this [case] so we can bring justice to the American people. . . . “ Broderick said. “My husband’s had two strokes. . . . I will not flee because of him.”

But Dyer said Broderick has been packing her belongings and may be planning to buy property in Panama. In court documents he said Broderick fled to Hawaii after agents searched her house last month and that she plans to relocate her seminars to the islands.

Additionally, Dyer said, the search turned up documents indicating Broderick--who has lectured about hiding money offshore to keep it from the U.S. government--and Hoch have secreted large amounts of money in foreign accounts. He also said Broderick was a threat to the community because she advocated violence after the arrest of her mentor, Schweitzer.

Dyer said Broderick, if convicted, faces a likely 15 years in prison, and officials hope to seize at least $400,000 in assets she allegedly accumulated from the scheme. The various charges against Broderick’s associates also carry prison sentences, prosecutors said.

Switzer and Hoch as well as Broderick were ordered held at the Metropolitan Detention Center in downtown Los Angeles without bail. Bail will be set for Cheney at a hearing today, and Hooey--who sat tearfully in court Thursday afternoon--was released pending $25,000 bail.