State Adds to Federal Charges Against Follower of ‘Freemen’

Adding to imprisoned tax resister M. Elizabeth Broderick’s legal woes, state authorities have filed 45 fraud and grand theft charges against her for a pyramid scheme she allegedly operated before turning to what federal authorities call a phony check scheme inspired by the Montana “freemen.”

Broderick, 53, of Palmdale, cheated about 900 investors out of thousands of dollars through her California Gold Co., which operated out of offices in Santa Ana and Long Beach, said Van Coleman, special agent in charge of the California Bureau of Investigations’ Orange County office.

“She’s good,” Coleman, who oversaw the three-year investigation into Broderick, said Friday. “She’s a very skillful lady.”

Colorado authorities say Broderick was convicted of running a pyramid scheme there in 1987.

Federal authorities arrested Broderick late last month on suspicion of raking in $1.5 million by charging up to $200 for admission to regular seminars at which she promoted the use of homemade checks, supposedly backed by “liens” against government officials.

A member of the burgeoning “patriot movement” who maintains she is beyond the jurisdiction of the federal courts, Broderick remains in custody at the Metropolitan Detention Center in downtown Los Angeles on federal fraud and conspiracy charges.

Long before she made a living hosting seminars at which lecturers warned about the dangers of the New World Order, Broderick peddled shares in her California Gold Co.

The pitch: investors could double their money because Broderick purchased gold coins at cut-rate prices on the world market. The catch: Broderick had no gold, but was using new investments to pay off previous investors, Coleman said, calling the operation “a typical Ponzi scheme.”

Advertising on radio and in newspapers, Broderick drew investors from across the country to her offices, he said. One ad proclaimed: “Americans don’t need jobs. They need money. We have money.” More than 100 investors plunged $1,000 apiece or more into the company, Coleman said.

But, Coleman said, the operation began to fall apart in early 1993 when new investments dried up.

According to court papers filed in support of a 1993 search warrant, the Gold Co. owed as much as $1 million to investors when employees discovered it was a pyramid scheme and went to the authorities.

In the 1993 search, state investigators froze about $20,000 worth of Broderick’s assets but found no gold coins, Coleman said. The Orange County district attorney’s office declined to charge Broderick, saying it was hampered by her poor paperwork. Broderick has said that she then intensified her studies of patriot ideology, which holds that the government is waging war on U.S. citizens.

But the California Department of Justice continued to investigate, and was preparing to file an arrest warrant for Broderick, when federal agents took her into custody April 25, Coleman said.

“It was a very complex investigation . . . a lot of people to talk to,” Coleman said. “They sort of beat us to the punch.”

If convicted of the 30 federal charges against her, Broderick faces a probable 15 years in prison, federal prosecutors say. The state charges, filed Wednesday, carry a possible six-year penalty, Coleman said.

The state proceedings will not begin until after the federal court trial of Broderick and four indicted co-conspirators, Coleman said. The federal trial is scheduled to begin June 18.

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California Gold’s collapse sparked a lengthy battle in Orange County Small Claims court, as Broderick and her investors swapped a series of lawsuits. Three investors persisted, each winning $5,000 judgments but finding themselves unable to claim their money, as it was still being held by state investigators as evidence.

One investor, John Ramirez of Huntington Beach, said he was glad Broderick was getting what he called “her just deserts” but alleged state prosecutors dragged their feet and are still holding the money for no good reason.

Another investor, Clyde Hathaway of La Mirada, said he was heartened by the charges. “I’ll do anything I can to help. I’ll go and testify against her,” said Hathaway, 67, who had his $1,500 investment refunded but sued Broderick because he never saw the promised profits.

“The only thing I feel sorry for are the people she screwed.”