Many extremists, both online and off, use scams and frauds as a way to fill their pockets. Like extremists who sell goods or promote products sold by others, those who market scams target other extremists. Often, the victims of these scams do not report them to the authorities because they, extremists themselves, distrust the government.

"Prime Bank Instruments" -  A Ponzi Scheme

In May 2000, the Securities and Exchange Commission (SEC) brought to public attention a scam engineered by anti-government extremist John Wayne Zidar of Gilbert, Arizona and two accomplices. Zidar attracted conspiracy theorists and others on the far-right fringe to his World Community Educational Society Web site and other Web sites with claims that "the entire monetary system of the United States and the free world itself is nothing more than a giant Ponzi scheme." Promising them returns upwards of 120 percent per year, he sold them "prime bank instruments," investments that he claimed are free of risk and government regulation. According to the SEC and the FBI, these investments were bogus, and in fact, all "prime bank" offers are scams. Zidar and friends used some of the more than $50 million they reportedly collected from investors to pay off early depositors making withdrawals, giving them the false impression that they had actually reaped returns on real investments. According to court documents, much of the rest of this money was deposited in the offshore bank accounts of Zidar and his associates or spent by them on new luxury homes and cars.

When the FBI and the IRS raided the homes of Zidar and one of his accomplices, Zidar posted a passionate press release on his Web site defending himself. Other right-wing anti-government sites characterized him as a victim, and one portrayed him as a helpful "teacher" of "adult distance learning classes" on topics including "the banking and government systems which run the modern economic world." Bob Caruso, the attorney representing Zidar, called the SEC civil action against him a "lie" as big "as those at Waco and Ruby Ridge." When Zidar appeared in federal court, more than 50 of his victims gathered in the lobby of the U.S. Attorney’s Office to demand that the government stop persecuting him.

"Pure Trusts"

Just as John Wayne Zidar claimed that "prime bank instruments" reap tremendous returns, other extremist con artists assert that the "pure trusts" they sell will shield the assets of their customers from creditors and tax collectors. In actuality, "pure trusts," like "prime bank instruments," are a sham. They lack two primary attributes of legitimate trusts: some person or organization pays tax on the income generated by the trust, and the person placing assets in the trust does not retain control of those assets. Owners of "pure trusts" detected by the IRS end up paying the government much more money in taxes and penalties than if they had simply reported the income they were trying to hide.

Don Henson of West El Paso, Texas, who has been active in anti-government Texas secessionist groups, sells "pure trusts" at his online store. "No leader, monarch, dictator, president, legislature, or other terrorist organization, publicly recognized as legitimate or not, has the right to restrict any individual’s life, liberty, or property," claims Henson, who explains that pure trusts operate under "common law," free from the "sometimes arbitrary rules of the government." According to Henson, "pure trusts were formerly available only to the very rich," but now he sells them "for only" $1,249. A Web user interested in buying a "pure trust" from Henson needs simply to fill out a form on his Web site and enter his credit card number.

In court cases such as People v. Lynam (1968), the State of California has held that promoting "pure trusts" constitutes fraud. Yet Lynne Meredith of Sunset Beach, California, a leading figure in the extremist tax protest movement, openly markets "pure trusts" online. According to Meredith, such trusts protect assets from "vultures" such as tax collectors and creditors, and they have "NO accounting, bookkeeping or reporting requirements," "NO Income Tax Withholding or Social Security requirements," and "NO quarterly tax payment or reporting requirements." Meredith charges $795 for the first "pure trust," $695 for each additional trust, and $1,750 for three "pure trusts."