No Greater Tyranny
It was June of 2015 when I walked into the neighborhood tavern to meet Burt Wagner. I didn’t have any physical description but it was early enough that I thought he wouldn’t be too difficult to pick out. Sure enough, I found him sitting in a booth, the only other customer.
He didn’t look like a terrorist or a criminal. In fact, he didn’t look too different from me. I was a software engineer, he was an electrical engineer. Like me, he was father to a young daughter. We lived in the same semi-suburban/semi-rural county. Middle-aged, middle-class, white-collar white guys.
But, unlike me, he had been the subject of a federal raid, arrested at a client’s office while his home was ransacked. Unlike me, he’d been shuttled from one holding cell to another – at one point, getting “temporarily lost” between state and federal detention facilities – without even knowing the reason for his arrest. Unlike me, he’d had his life made a living hell by overeager federal prosecutors, aided by our own local law enforcement – men and women who had stood by us during our civil disobedience and joined us in our protests against what we felt were intrusive gun laws just two years earlier.
What had this dangerous man done? He’d run afoul of the federal Financial Crimes Enforcement Network (FinCEN), authorized by the Patriot Act to “safeguard the financial system from illicit use and combat money laundering and promote national security,” by trading electronic bitcoins without having filed a business license. The license is a free, two-page document and is not required when trading for personal investment rather than as, well, a business. A cease-and-desist letter would have been sufficient, but cease-and-desist letters don’t allow federal agencies to make use of asset forfeiture laws.
I listened for over an hour as his story poured out, occasionally asking questions but mostly just letting him talk. At the end, he asked me not to publish any of it. He was still negotiating for the release of at least his family’s personal property and there was a tentative offer to drop the case… but deals were based on the mood of federal prosecutors and he feared what might happen if I wrote something that caused offense.
Welcome to post-Patriot Act America, where facing prison time and the forfeiture of your life savings hinges on not personally upsetting a bureaucrat.
Some weeks later, I read that charges had been “dismissed without prejudice” – though only after Burt agreed to forfeit $80,000 in cash and bitcoins to the U.S. government. Since then, Burt has been telling his story online and in personal appearances around Colorado, hoping to raise awareness of not only his personal experience but also the danger posed to each one of us by abusive laws supposedly enacted for our safety.
In 2011, Burt Wagner decided to supplement his income by trading bitcoins, a “digital asset and payment system” growing in popularity as a medium of financial exchange. While the IRS has declared the electronic asset not to be a currency, the virtual pseudo-currency is still considered a taxable property, and is accepted by many businesses and even political campaigns. Much like trading stocks on an online exchange, Burt bought and sold his coins on legal, open websites as financial need and opportunity met.
Over time, he came to feel that the unstable bitcoin exchanges he was using were not a safe place to keep his money and, in 2013, he began exchanging directly with other bitcoin owners. Using another public website, LocalBitcoins, he arranged transactions with fellow traders who met him in local coffee shops to openly buy and sell their virtual – but legal - property.
Unfortunately for Burt, federal authorities were very much aware of bitcoins but convinced that they were the sole domain of “terrorists and drug dealers”. Already in the process of building a case against “Dread Pirate Roberts,” who had amassed millions in bitcoins running the illicit Silk Road online network, federal agencies were eager to make more examples – and money, through asset forfeiture. Burt and four other local traders found themselves the unwitting targets of an investigation.
Burt estimates he became a target around April of 2013, when interest in private trades took a noticeable uptick. Initially, he was simply pleased, thinking that local interest in investing and trading in bitcoins was growing. However, most of his “fellow traders” turned out to be federal agents or informants paid by them to amass evidence of some illicit behavior. Since he was doing nothing illegal, no such evidence was forthcoming. Federal investigators, however, saw this as proof that he was such a criminal mastermind that he was simply avoiding detection and more surveillance resources were required to uncover his wrongdoing. They placed a tracker on his vehicle and monitored his every movement – every boring, mundane, day-to-day movement – until his arrest in October of 2014.
Eventually, Burt had amassed enough cash to be deemed suspicious, despite the fact that said cash had been supplied by law enforcement operatives buying his bitcoins. Federal agents ambushed him as he left a client’s site, arresting him without telling him the charge. They initially demanded access to the customer’s building but were rebuffed by the company owners. By then, the assault on Wagner’s home was fully underway.
While Burt was being handcuffed, his wife was phoned by federal authorities, advised of a raid in progress, and told not to come home. Fearing for their family pet, she immediately returned anyway and was aghast at the sight that met her.
Their property, nestled in a quiet, semi-rural enclave was surrounded by vehicles. Neighbors who had poured out of their homes to argue with and monitor law enforcement reported counting twenty-two separate vehicles and an estimated thirty-five federal agents, representing US Postal Police (who were Burt’s actual arresting agents), DEA, U.S. Marshals, Homeland Security, and ICE. A SWAT team from the county Sheriff’s Department was also on hand - making them eligible under federal “equitable sharing” rules for up to eighty percent of assets seized. (NOTE: This program was suspended with much fanfare in December of 2015 but has already been quietly resumed.)
The home was ransacked. Walls were smashed, electronics were broken, desk drawers were overturned and emptied, safes were broken into. Photos, computers, memory cards from cameras, private journals, cash, bitcoin wallets, and their child’s piggybank were all seized. His wife, recovering from a traumatic brain injury, had her private journals – essentially, her reconstructed memory – seized and removed as “potential evidence.” No warrant was shown or left behind at either the site of Burt’s arrest, the raid of his family’s home or the raid of his corporate office.
Because he didn’t have a business license he didn’t need.
“Secrecy is the keystone to all tyranny.” – Robert A. Heinlein
The lack of a displayed warrant was barely the tip of the iceberg in terms of lack of transparency. Since “Operation Avalanche,” as it was later determined to be named, was under the Patriot Act umbrella of national security, all records are sealed. The details of the arrest and search warrants, the grand jury testimony provided to obtain them, all evidence and justification for the government’s actions live in a black hole of secrecy. Burt and his family will never know why all this happened. Only that it did.
After his arrest, Burt was taken to Denver County jail, still ignorant of the charges against him. He spent the night there while his wife desperately sought a lawyer for a pre-trial detention hearing the next day. The attorney demanded a $50,000 retainer, up front, in cash before he would take the case – and it turned out to be unnecessary. At the hearing, the judge merely asked the prosecutor what “the state’s pleasure was,” and agreed to no bail and the maximum number of detention days – six, including over a weekend. Burt’s attorney wasn’t heard at all.
After leaving the courtroom and without authorities notifying his family, Burt was transferred to the limbo of the Federal Detention Center in Littleton. Citing concerns about mingling with co-defendants being held in the same facility, Burt was placed in solitary confinement where he sat in a small cell for twenty-three hours a day for three days and two nights. For his one free hour, he was allowed to stand outside – in an open space not much bigger than the cell.
In the Federal Detention Center Burt asked hourly for a phone call and never got one. His wife and attorneys were never able to find out where he was being held; however they were finally able to get him a bond hearing that Friday, sparing him a weekend stay in his box.
It was then that Burt learned the structure of civil asset forfeiture. Under current law, you may be charged with a crime – but, separately, so may your property if it is argued to be tied to that crime. Even if your criminal charges are dismissed, your property is still “prosecuted” under the civil charge – and kept, despite the fact that no jury has convicted you of wrongdoing.
And, if you choose to fight for both your rights and your property, you’ll likely spend as much if not more than what you stand to lose. Since the cases are split between criminal and civil, you’ll need to hire separate attorneys to argue in separate courts. And, of course, you may need a third for any tax-related charges levied by the IRS.
The strategy is designed to financially bleed out the target of the prosecution, and fill government coffers regardless of how that target may counter. As Burt said, “They don’t have to care. The just make up the charges, records are sealed, and you bargain. Half the time, answers given in the court recordings didn’t even match the transcripts. They don’t care.” Now, this strategy was being directed against Burt Wagner.
After months of careful negotiation, the government returned his wife’s work computers, family movies and DVDs, and camera memory sticks. More was to come, but at a price. Per Burt, “I was first offered a ‘lesser felony’ and then a misdemeanor.” He refused both, and determined to fight in court despite the expense. Eventually, he was made an offer to end the nightmare. The federal government would dismiss the criminal charges against him and settle the civil forfeiture case against his property… if he paid the Federal Asset Forfeiture Fund $80,000.00 in cash and bitcoins. As extortive as this was, it was still far less expensive than the court battle.
This was where his life was when we met, waiting to see if he could buy his freedom from false charges; if he could escape an unknown fate for the crime of not committing a crime for “only” another $80,000. And this was when he asked me not to publish anything – just in case.
He shared one more chilling tale to underscore his request. Just a few months prior to our meeting, the Colorado Senate held hearings on a bill that would end the state’s involvement in the “equitable sharing” program. Burt’s wife testified on behalf of the bill, outlining what their family had experienced under the eyes of the very law enforcement they had trusted to “serve and protect.” During her testimony, someone – yet another unknown in this saga – called the federal prosecutor to report to her that his wife was testifying to the Colorado state senate judiciary committee. The prosecutor then called Burt’s attorney to let him know she was aware of the statements being made by his wife, “and tell her I know she’s lying.”
In The End
Criminal and civil charges have now been dropped against Burt Wagner. The final price for his freedom – legal fees, costs, assets forfeited to the government – was $287,326. There is no recourse through the courts, and the federal government is not obligated to pay any damages or reimbursement, despite having dropping the charges. His passport, which had been seized, was finally returned. While he lost the multi-year contract with the client who faced down the arresting federal agents, he has since found a new client and is trying to rebuild his family’s finances. In addition to his contract work, he is raising funds via donation and speaking engagements, describing his story and raising awareness of the horror that any of us could face.
His young daughter is in counseling and now lives in fear of police. She refuses to say the pledge of allegiance at school and panics when her father doesn’t answer his phone right away. Like her father, though, she is trying to use her experience to encourage reform, and recently put together a presentation for her school’s civics class, outlining the dangers of civil asset forfeiture. At the time of our meeting, Burt said she'd gone so far as to start searching online for other countries to live in. It’s an understandable reaction to a traumatic betrayal by one’s own government, from federal agents, to the court system, to the smiling local deputy who would wave and toss you candy from the Independence Day float.
Sadly, it’s a betrayal of our own making, as we allowed our freedoms to be traded for a perceived sense of security. And it’s a betrayal that will be repeated until enough of us stand up, speak up, and demand an end to it.