Tag Archive for 'money'

Towns Creating Their Own Currency May Violate The Constitution

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It’s no secret that times are tough.  Everyone’s hurting for money and people are always looking for ways to cut corners, while also earning some more dough.  Apparently, some towns have figured out a much better and faster shortcut to solve their community’s cash woes: print their own money.

Alright, you got me, my lead-in paragraph was a little deceptive.  It’s not really a complete contravening of the federal currency system (but in some cases, it’s pretty darn close).

Regardless, it’s an interesting trend to say least.  Small towns across the country from Massachusetts to New York to Oregon have started printing out their own version of currency to be used within their community.  One might be thinking: what would be the point seeing as we already have a national currency that works fine right now (other than the constant inflation, of course).

It’s not as pointless of an exercise as it might initially seem to be.  These local currencies generally hold a higher exchange rate than regular old US dollars in their respective communities.  For example, in Southern Berkshire, Mass., that town’s created currency, dubbed BerkShares, trades at 100 BerkShares to $95.  The little bit of extra money can go a long way in these hard times of ours.  And so far in the communities that have started currency programs like it, spending has gone up within these respective towns injecting some much needed money into their local economies, while also allowing residents to get a little more bang for their buck.

Now it’s always nice to hear when financially struggling people, or in this case a town, figure out a way to help dig themselves out of the red.  However, since this is a law blog, you’ve probably already deduced that I’m likely about to say something to ruin the party.

And you’d be right.  Because as far as I can tell, I’m pretty sure what some of these towns are doing may very well be in direct opposition to the Article I, section 10, clause 1 (aka the Contract Clause) of the U.S. Constitution, which states in relevant part that “No State Shall . . . coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts . . .”  The Contract Clause basically makes it unconstitutional for states to make their own currency, as the power to coin money is one that is reserved for the federal government.

Yeah, I know, I’m a party pooper.  But before you guys start tossing your hate mail at me, let me reiterate that these currency programs only might be unconstitutional.

The link I put up shows ten towns that have enacted their own form of currency.  Of the ten, nine of them seem to be perfectly constitutional because their currency acts more like a bartering or discount services program, ala a Groupon or Living Social deal, rather than a usurping of congressional power.  These nine currency programs were started privately by individuals or organizations who worked out deals with local business to accept their currency which in turn was “exchanged” or rather purchased by locals using actual dollars.  In this sense, these nine currencies are more akin to privately sold coupons than actual money since there are fewer places that actually accept them and treat them like money.

The main issue I have is with Southern Berkshire’s BerkShares, as that one seems to be closest to functioning as actual money.  Over 13 banks in their town accept and deal in it; these banks charge a percentage fee to exchange them, over 400 businesses in town accept them and there have been over 3 million BerkShares issued since the currency was launched in 2006.

However, the most important characteristics that set BerkShares apart from other local currency is that it appears to be endorsed by the local town’s government body and it also is more valuable than U.S. dollars in the community since $95 will get you 100 Berkshares.  These two characteristics of government authorization and devaluation of US currency have been viewed by the courts to be essential to the determination of an illegal currency.

Now it might not seem like a big deal if a town wants to create its own money, but it really is.  The reason is because the creation of unauthorized currency can cause financial instability in the country.  For instance, if a state is independently wealthy using its own money, it would have less incentive to adhere to federal guidelines.  It would in a sense become its own true sovereignty, and while states do have this right to some extent under the Constitution’s state police powers, allowing a state to print its own currency is a step too close to succession.

For now it doesn’t seem like too big of a deal to the federal government as no one other than me appears to have noticed this possibly unconstitutional action over in Southern Berkshire.  It’s helping their community and so far hasn’t led to any declarations of independence, so I guess more power to them.

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The TSA May Be Using Your Spare Change to Help Our Troops

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The LegalMatch Law Blog has kept up with the happenings of the TSA, which has often been in the news.  The Transportation Security Administration (TSA) is making headlines yet again due to a proposed bill which will allow the TSA to give the United Service Organizations (USO) spare change found in the bins at airport security check points.  This bill has sparked a heated discussion.  After all, in an economy like ours, there is bound to be many opinions on what to do with extra large sums of money.

For most of us, when we see spare change lying around, we rarely think it could add up to a substantial amount.  Well, most of us are wrong!  In 2010, loose change left in the rectangular plastic bins we all throw our stuff in at airport security check points totaled to $376,480.39!  In 2009, this amount was over $399,000!  Apparently, one person’s spare change is turning in to the TSA’s treasure.  Recently, Nico Melendez, a TSA spokesperson, informed people that the unclaimed change is being turned over to the TSA finance office.

Jeff Miller, the chairman of the House Committee on Veterans’ Affairs, has introduced a bill that would allow the TSA to transfer the unclaimed money to the United Service Organizations (USO).  The USO is a private nonprofit organization that operates centers for the military at various airports around the United States.  Miller’s reasoning is that the money left behind belongs to the taxpayers and therefore it should be put to good use.  There can be no better use than giving the money to the USO to help with airport service for active military members.  The bill is currently being considered by the Department of Homeland Security and Transportation.

This bill has sparked a heated discussion amongst many.  Proponents of the bill feel that it is very noble for American taxpayers to contribute to the troops and their families.  The USO’s Senior Vice President, Frank Thorp, stated that any funds will be used to provide comfortable areas where troops and their families can get in touch and spend time together.

Proponents feel that not only is this cause noble, but also well-deserved.  If troops can travel to different countries and risk their lives fighting for the citizens of this county, can we not show our appreciation by providing funding to ensure comfort while getting in touch with their loved ones?  Is this not our duty?  Many feel that it is.  We, as Americans, have a duty to show our appreciation to our wonderful troops.

Opponents feel that the TSA has no right to use the money.  They claim that the TSA has already troubled passengers with invasive search methods and should not be rewarded for doing so by being given control of such large sums of money.  Rather than allowing the TSA to keep the money, it should be donated to charitable organizations or used in making airport procedures more efficient to ease the experience of travelers.

There is of course a compromise that can be considered.  Some of the money can be donated to the USO, while another sum can be donated towards making airport procedures more efficient to increase the convenience of travelers.  For opponents who feel that the TSA should not be in control of such large sums of money, they can push for having signs near security check points cautioning travelers to check the security bins carefully before rushing off to the gate.  A simple “check for loose change” sign can help certify that travelers’ money remains with them at all times.

The possibilities for other compromises between the two views are endless.  If this bill gets passed, which may be surprising since it was not given much attention when it was first proposed in 2009, then knowing that our money is being contributed to helping the troops is a great thing.  Either way, knowing that such a large amount of money can, and will be used towards some charitable goal is a great thing.  In the end, it seems like a win-win situation for all.

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Federal Child Pornography Law Costing States Real Money

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The aim of the Adam Walsh Child Protection and Safety Act of 2006 is to protect children by forcing sex offenders to register, and making the sex offender registry publicly available. In the case of juvenile sexting, though, the “victim” and the “perpetrator” can be the same person. Registering teens as sex offenders and subjecting them to public shame further victimizes these kids.

This result is not something that anyone wants. But, there is money involved. So the decision to protect teens from harsh penalties for sex offenses becomes more difficult in cash strapped states.

States that do not comply with the federal law suffer a 10% loss of law enforcement grant money from the federal government. How much money is that?

Similarly, Florida receives almost $2 million for complying with the federal law.

Compliance comes at a cost though. The federal law requires states that wish to receive grant money to register juveniles as sex offenders for life, if they have committed an aggravated sex offense. This requirement includes registering children as young as 14.

Considering the diminished capacity of minors, the consequences of being registered as a sex offender, and the possibility of rehabilitation, the federal law is extreme.

To date, only four states have complied with the federal law: Florida, Ohio, Delaware, and South Dakota.

This February, South Dakota took a proactive approach that might allow them to keep the federal grant money without having to register teens for sexting. The legislature there considered a bill that distinguishes aggravated sexting from a lesser offense, and prohibits the state from registering minors as sex offenders “solely for committing the offense of juvenile sexting or aggravated juvenile sexting.”

Whether South Dakota’s approach would allow it to remain in compliance with the federal law is yet to be seen. If it works, that legislation might be adopted by other states, as they weigh concerns about funding against the futures of teens.

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America’s Bail System Needs To Be Reformed

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In case you missed it last week, National Public Radio ran a fascinating three-part series on America’s bail system.  The whole series is available here.  If you happen to have some free time on your hands, you should definitely check it out as it does an amazing job of pointing out how messed up on country’s legal system can be if you’re poor.

The NPR report points out a number of deficiencies with the way America’s bail system is currently set up.  The problem is essentially one of access and the disparities in treatment received by those with money versus those who are lacking in it.

Basically, in America when someone is arrested for a crime, that person is placed in jail until the time of their trial.  This isn’t true for all criminal offenses as laws vary from state to state; however, typically for most felony level offenses the defendant is placed in jail until their trial begins.  The only option for defendants in this situation is to either wait it out in jail or post bail, but without money, jail it is.

The rationale for this holding system is that for those who commit serious offenses, the judicial views these suspects as more likely to try and flee formal prosecution because of the heavier consequence they face compared to those who commit infractions or misdemeanors.

Now certainly the government’s fears aren’t completely unfounded.  A felony conviction carries real prison time, very high fines, and also damages a person’s record, which makes it harder for the convicted defendant to get a job and even qualify for loans.  There’s a lot more reason for someone facing these possibilities to try and run away from police custody versus those who commit lesser offenses.  Forcing them to post bail for their release guarantees that the government can at least recoup some of their losses from having to expend resources to track and re-arrest a suspect who flees the court’s jurisdiction.  It also provides some incentive for the suspect to stay and fight their case as an innocent verdict will entitle the suspect’s bail payment to be returned to them.

However, the problem is that most people arrested for felonies generally don’t have enough money to afford to post bail.  And if you think it’s because bail is overly expensive, you’d be mistaken.  Certainly, bail can be high, but for destitute people, even a couple of hundred bucks can be enough to keep them from being released.  The current bail system can devastate a person’s life, especially the working poor – those with jobs who get paid only enough to survive.  For these people, not being able to post bail prohibits them from working at their jobs and can often cause them to lose their employment and livelihood.  This loss not only hurt the arrestee, but also their loved ones who depend on their income to live.

It’s a heartbreaking situation that’s compounded all the more by the bail bond industry, which for most felony offenders is the only place to turn to for bail money.  Bail bondsmen loan defendants the money needed to post bail.  The catch is that they do it at a high interest rate.  However, if the defendant is found innocent, the loan is returned to the bondsman from the court.  But, as you all are probably already aware, our legal system is quite congested and most criminal cases are dealt with via plea bargaining where the defendant accepts a guilty or no contest plea in exchange for a reduced sentence.  This may be a faster way for the defendant to return to his or her life, but pleading out in this way means that they are now responsible for paying back their bail bond with interest.

The NPR report suggests the better way to handle felony defendants is the get rid of the bail system altogether and use alternative means of monitoring such as ankle bracelets.  This would be much cheaper for tax payers whose money would otherwise go toward housing and feed the suspect while they’re in jail, and it would also allow the suspect to return to their normal lives.  I certainly agree with NPR’s sentiments and support greater use of alternative monitoring for suspects.

However, I wouldn’t go as far as supporting a complete abolishment of the bail system; rather a better way to go about it would be to merge the two monitoring methods.  This can be accomplished by modifying the traditional bail and ankle bracelet systems to be offense-specific.

For instance, more serious crimes, such as manslaughter should require the posting of bail and possibly even an ankle bracelet depending on the crime’s severity.  Lesser felonies on the other hand, such as grand theft, should only require an ankle bracelet and no bail.  This system would ensure that only those accused of serious crimes be subject to the higher bail requirements, while leaving non-violent offenders free to return to their lives while they await their trial.

Now certainly there is always the possibility that an innocent person wrongly accused of a serious felony could end up having their life destroyed under this system.  However, compared to the current system where every felony offender, regardless of their felony’s severity, faces this possibility, the modified system proposed here would ensure that a lot less innocents endure such an injustice.

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Commit Murder, Inherit a Fortune?

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It’s a common trope in crime fiction: a wealthy relative writes a will leaving a large sum of money to a family member – a child or niece/nephew, for example. Unwilling to wait for nature to take its course, the greedy beneficiary arranges to have the benefactor murdered, or even does the deed himself.

While situations like this are rare in real life, they do happen on occasion. Obviously, allowing a person to inherit money from someone they’ve murdered is fundamentally unjust. Thankfully, the majority of states have laws dealing with these situations. Usually, if a beneficiary is convicted of killing the benefactor, they can’t inherit.

It appears, however, that some states don’t have such laws, and a worst-case scenario (also reported here) is coming to pass.

A man who confessed to killing his mother-in-law during an attempt to steal some of her jewelry (apparently to support his heroin habit) is going to inherit about $250,000. The victim’s will left all of her assets to her only daughter (the killer’s wife). The daughter’s will, in turn, left all of her assets to her husband. The daughter inherited all of her mother’s assets when her mother died. She died about a year later, while her husband was in jail, meaning that he is, at least on paper, entitled to his victim’s fortune. After serving up to 25 years in prison, as part of a plea deal, the killer will be released, and presumably have access to that money. And this guy is pretty young, so he’ll only be in his 40s when he’s released, meaning he’ll have time to enjoy the money.

This seems to be an unfortunate loophole in so-called “slayer statutes” (laws that bar killers from inheriting anything from their victims), and it’s not clear what type of modifications could be made to the law to avoid these results. After all, assuming the daughter had nothing to do with her mother’s death, should she be barred from inheriting her mother’s fortune, based on the possibility that the money might find its way to her killer? Most would say no, I think.

So, what can be done in a situation like this? It’s possible that the court, depending on the laws and judicial precedents of the state, could set up a constructive trust, which is an equitable remedy designed to avoid unjust enrichment. Basically, this is set up when a court can’t outright transfer ownership of something from one person to another, but it would be extremely unjust to let the legal owner maintain possession and control of the asset.

In this case, the court might be able to craft an arrangement whereby the killer retains legal ownership of the money, but in name only. He would essentially hold the money in trust for someone more worthy of it; presumably his victim’s surviving family members.

So, it’s at least possible that the courts can avoid allowing this guy to profit from committing murder.

However, reading some comments on online articles covering this story, I’ve seen a few somewhat-disturbing sentiments. Some people are calling on the state to simply seize the money and hand it over to someone more deserving, with or without legal authority to do so.

This sentiment is perfectly understandable. The idea of a murderer being able to profit, even indirectly, from his crimes would leave a bad taste in anybody’s mouth. However, it’s essential to remember, especially in situations like this, that the government is just as bound as the rest of us (perhaps more bound) to follow the law.

Living in a civilized society of ordered liberty has its costs. Those costs include the occasional guilty criminal defendant going free, and a viscerally unfair result when the rule of law is upheld.

While the law of wills and trusts, particularly the laws covering what is to be done with an inheritance when the beneficiary kills or attempts to kill the testator, works fairly well, and prevents criminals from being unjustly enriched in the vast majority of cases (and, thankfully, such cases are rare to begin with). However, when an unusual case like this comes up, which the law isn’t completely prepared to deal with, an unfair result might result. If lawmakers deem this to be a major problem, they can try and tweak the law to make such results less likely in the future.

What we shouldn’t do, however, is toss the law out and do whatever we want because it would make us feel better. Sure, if it happened in this particular case, I wouldn’t feel sorry for the guy, and I’d be happy to see his victim’s estate go to someone more deserving.

But if we toss out the rule of law when it’s convenient, or when a sufficient number of people perceive it as fair, we will have started down an extremely dangerous path.

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