You Are Not Free
- Trump gives a (very modest) lift to gold
- Owe back taxes? The IRS can hold your passport hostage
- Park at a mall, go into a federal database
- How the case of “Bitcoin Maven” threatens your privacy
- “Heartwarming” story about a kid’s hot dog stand gives us chills
- How to read The 5, as described by a reader
Whether he meant to or not, the president has put a floor under the gold price.
As we mentioned in real-time yesterday, the president broke with “tradition” and called out the Federal Reserve for raising interest rates. “I don’t like all of this work that we’re putting into the economy and then I see rates going up,” he told CNBC.
Gold instantly jumped more than $10.
The price retreated in electronic trading overnight. But then this morning, he tweeted that “China, European Union and others have been manipulating their currencies.”
The dollar tumbled, and gold jumped nearly $10.
Yet with all of that, gold still can’t recover the critical $1,240 threshold we’ve talked about all month. The Midas metal will have its day. Just not for a while yet…
Stock traders have shaken off both the currency tweet and renewed trade war jitters.
CNBC released its full Trump interview this morning. He said when it came to Chinese tariffs, “I’m ready to go to $500 [billion]” — in other words, lay a tariff on all Chinese imports.
Traders appear to have figured out Knuckman’s law, proffered by our Chicago floor trader Alan Knuckman: Wait 48 hours before reacting to a tweet or off-the-cuff remark from the president. The Dow slid on the open but at last check it’s slightly in the green. Ditto the S&P 500, which is still holding the line on the 2,800 level.
While the market sorts out the latest presidential pronouncements, we’re going to spend most of today exploring some random items that crossed our desk this week. They’re all related somehow to business or finance or commerce… and they all come under a category we’ll call “You Are Not Free.”
Planning an overseas trip? If you’re not current on your income taxes, you might be barred from boarding your plane or ship.
In 2012, we took note of Congress passing and President Obama signing a run-of-the-mill transportation bill with a nasty and unrelated clause tucked inside: People who owe the IRS more than $50,000 could have their passports revoked.
We forgot about all it after that. The bureaucracy did not.
This month, the IRS announced it’s begun sending the names of 362,000 people to the State Department. For now, the State Department is not revoking passports… but it is denying renewals. Enforcement has already generated $11.5 million in revenue from 220 people.
$50,000 sounds like a lot, but that includes penalties and interest — which add up quickly. Adding insult to injury, the IRS notifies the taxpayer at the same time it notifies the State Department — so in some cases there’s precious little time to challenge the levy or set up a payment plan before embarking on a long-planned trip.
Is this even legal, you wonder? Probably, says Georgia constitutional law professor Timothy Meyer: “Courts have upheld statutes calling for the revocation and denial of passports to those in arrears of child support payments,” he told The Atlantic in 2012. “In part, because the child support payments can be contested.”
So it’s all good because you can hypothetically fight the IRS. Alrighty then…
Meanwhile, thousands of shoppers in California are having their license plates fed into a federal database.
The Electronic Frontier Foundation has uncovered evidence that automated license plate readers (ALPRs) are scanning the parking lots at a handful of shopping centers in Orange County.
“The information, including the plate number, time and GPS location, is being provided to U.S. Immigration and Customs Enforcement (ICE),” says an article at PJ Media. “The agency is able to receive near-real-time alerts when a targeted vehicle is spotted in a shopping center’s parking lot.”
For its part, the owner of the shopping centers insists it provides the data only to local police. But the ALPRs come from an outfit called Vigilant Solutions — whose readers are in use all over the country, collecting 100 million license plate records every month.
Time for a 5 flashback: We got a chilling hint at where all this license plate surveillance is going in 2015.
In that year we told you the ACLU released a trove of documents from the Drug Enforcement Administration. Those documents showed how in 2008 the DEA hatched a plan with the Bureau of Alcohol, Tobacco and Firearms to start using ALPRs to track the comings and goings… from public gun shows.
The DEA said it never followed through on that plan, but we only have the agency’s word. The documents raised more questions than they answered: “We just happened to get that tidbit about the gun shows,” the ACLU’s Jay Stanley told The Guardian. “Whether they targeted other groups we just don’t know. That’s the problem. We’re like archaeologists trying to read a scrap of bone and build a picture of the whole organism.”
Three and a half years after those revelations, we have a few more scraps of bone, but that’s it.
Now for a story that takes some of the worst abuses of federal law enforcement — entrapment and the war on cash among them — and bundles them all into a single case.
Oh, and bitcoin figures into it too.
Earlier this month, a federal judge in Los Angeles sentenced Theresa Tetley to a year in prison, three years’ probation and a $20,000 fine. Tetley was known around town as “Bitcoin Maven” and ran a peer-to-peer website allowing people to buy and sell bitcoin anonymously and in person.
Her “crime” was entirely manufactured by the feds. Starting in 2016, undercover DEA agents began conducting transactions with Tetley. At one point, one of the agents said he possessed a supply of “coke, meth and weed” that had been “stolen” — seeming to imply that his bitcoin wealth was the product of money laundering.
But Tetley didn’t make that mental connection and in March 2017 she met again with the agent — bringing two Trader Joe’s grocery bags stuffed with $300,000 in cash, expecting to collect an equal amount of bitcoin. Instead she was put under arrest.
We’ll pause in our story long enough to pose a question…
Why would the feds basically induce someone to commit a crime when that person otherwise has zero means, motive or opportunity? Because that’s what the feds do.
If you live in a big city, chances are your local news reports now and then on a scary-sounding terrorist plot that was stopped in its tracks thanks to the brave men and women of the FBI.
In reality, what likely happened is the FBI paid an informant to go to a mosque and find someone with a room-temperature IQ, and coax that individual into mouthing off about how maybe he’d like to blow something up. In some cases, the G-men go as far as providing a dummy bomb or something.
A classic case is the “Liberty City Seven” — a bunch of guys from Miami arrested in 2006 for saying they wanted to blow up the Sears Tower in Chicago. Your editor, working in a Chicago newsroom at the time, remembers the wall-to-wall coverage the story got — even though the FBI admitted at the time the plot was more “aspirational than operational.”
Journalist Trevor Aaronson wrote a chilling book about these manufactured plots in 2013 called The Terror Factory. It documents how the FBI built a network of more than 15,000 informants to gin up these cases and get glowing media coverage.
Key point: The feds are so busy concocting phony terrorism plots, they overlook obvious clues that could have stopped real terrorism plots like the Boston Marathon bombing and the Pulse nightclub shooting.
Back to the Theresa Tetley case, and its implications for you and me.
Writes Brian Doherty at Reason: “The most telling thing about the entrapment prosecution is the sentencing memo, which blatantly lays out the feds’ fear and contempt for any attempt to keep a financial transaction private, whether or not anything inherently illegal is happening.”
From the memo: “Providing cash in envelopes (and in the significant amounts she did), in coffee shops and restaurants, is no way to conduct legitimate business, certainly when that volume exceeds the millions, and someone such as defendant — a former stockbroker and real estate investor — was certainly aware of that.”
As Doherty points out, it doesn’t matter whether someone exchanging cash for bitcoin is aware the bitcoin might be fruits of money laundering. “The sentencing memo insists that they act as if they do.”
In addition to Tetley’s sentence, the feds confiscated nearly $300,000 in cash and 25 gold bars.
In the summer of “Permit Patty,” we’re dismayed but not surprised by the news from Minneapolis.
If you weren’t aware, there’s been a spate of cases this year in which do-gooder busybodies call the cops or the health department or whomever — snitching on a child running a lemonade stand or similar enterprise. The busybody is rightfully shamed on social media. (“Permit Patty” was the name social media gave to a woman in Oakland who called the authorities about an 8-year-old girl selling bottled water.)
Here at The 5, we applaud this pushback against intrusive government: We’ve been chronicling lemonade-stand law enforcement since 2011 and we even mentioned a Permit Patty-type case last year. (We do try to stay ahead of the curve.)
Which brings us to the case of 13-year-old Jaequan Faulkner. He’s been selling hot dogs outside his home in Minneapolis since 2016. But when someone snitched a few weeks ago, all that was in jeopardy.
The official response: “When I realized what it was, I said, ‘No, we’re not just going to go and shut it down,'” Minneapolis Environmental Health Director Dan Huff tells CNN.
“We can help him get the permit.”
Look, we’re happy young Mr. Faulkner can stay in business. But what’s the message budding business owners are getting from this turn of events? “Follow the rules, stay within the lines, don’t make any waves and that’s how you succeed in America.”
There’s even one person on Twitter praising “how government can support and guide young entrepreneurs.”
Bleah. We give up…
Readers write: “Regarding the fellow reader’s complaint yesterday about ‘infomercials (disguised as content)’ that take up a significant portion of most editions of The 5, I’m surprised that you didn’t mention that these mini-essays are largely taken from paid newsletters edited by the quoted authors.
“The comments come with some short time lag from when the newsletters were released and do not end with a related investment recommendation, but the general market commentary in them can provide valuable insights from your editors — given free of charge.
“Of course, when I see commentary in The 5 that I have already read in one of my subscriptions, I skim over it — just looking for some of the added asides or external commentary that you often sprinkle in. If it is not from one of the subscriptions that I receive, I often read more closely.”
The 5: Perceptive, you are.
And we’re sorta flattered that you still seek out those “added asides or external commentary” even when the material looks familiar!
Have a good weekend,
The 5 Min. Forecast
P.S. We’re just a short time away from Ray Blanco’s big reveal — what he’s calling the “World’s Fastest Fortune.”
Ray’s on the case of a tiny company that could race its way to a $100 billion market cap in record time — thanks to a “Covert IPO” transaction he’s uncovered.
You can even claim free shares of the company… and if you play it right, he says you could end up with total gains over $10 million. (He’ll run the numbers for you.)
Watch your inbox shortly after 4:00 p.m. EDT. The subject line will be, “Important: Now Live, the ‘World’s Fastest Fortune’ Presentation.”