PJ 10
CHAPTER 21
REC #3 HATONN
MON., DEC. 4, 1989 2:15 P.M. YEAR 3, DAY 110
MON., DEC. 4, 1989
FIREARMS AND PRIVACY
No subject is more imbued with threatening connotations than the subject of firearms. While crack dealers and organized crime use automatic weapons at will, communities throughout the U.S. are adopting ordinances that ban even simple revolvers from private ownership.
The Second Amendment to the U.S. Constitution gives clear authority for private citizens to own firearms. Yet it seems inevitable that "the right of the people to bear arms" will become increasingly restricted in the future.
If you buy firearms, you may be required to register your purchase with governmental authorities. Should those authorities in the future restrict or confiscate firearms, registration will provide a "red flag" on the identities of individuals to be targeted for searches and/or seizures. Purchasing a firearm privately may be the only way to insure that you will be permitted to keep it if "dangerous" weapons are ultimately confiscated by governmental authorities.
Depending on where you live, purchasing a firearm privately may no longer be possible. Some state and local governments require that any firearm, no matter how it is purchased, be registered. Other states require that firearm owners purchase a "Firearms Owner Identification Card", but do not require registration of individual weapons. In any case, before you try to purchase a firearm, make certain you are not violating any federal state or local laws.
Gun shows have been touted by "survivalists" as the best place to purchase firearms and related items (knives, ammunition, etc.) in total privacy. While gun shows provide an excellent choice of weapons, and in many cases at a very competitive price, they are no longer the best choice to purchase firearms privately.
Many tables at gun shows are manned by gun dealers. Such dealers are subject to increasingly stringent governmental requirements to identify both their customers and the firearms they have purchased. These regulations apply not only to sales they make at their shops or out of their homes but also at shows. If you want to purchase a firearm in complete privacy, you should avoid purchasing it from a federally licensed firearms dealer.
A better way to purchase a firearm privately is through a classified advertisement in a newspaper or magazine. Watch for someone to sell the weapon you want. What you want is at least a .38 caliber handgun but preferably a .357 or a .45 automatic. A
12-gauge shotgun also gives pause to those facing one. If you purchase a firearm from a private individual rather than a dealer, it may not be necessary to register your purchase with local or state authorities. (Check the laws where you live).
PAY CASH! PAY CASH! PAY CASH!
Just make sure the advertiser isn't a firearms dealer. Before you buy, ask if the seller has a federal firearms license. If he does, he is required to complete a federal form when ownership of the firearm is transferred. While these records aren't yet computerized, there is nothing to keep governmental authorities from eventually "digitizing" this data. Remember: Anytime you buy a firearm from a federally licensed dealer, a permanent record is made.
Another way to purchase a firearm in complete anonymity is to buy a "black powder" weapon. According to Duncan Long, author of Firearms for Survival, ownership of black powder weapons is totally unrestricted. Most are still considered collector's items, not weapons, by most governmental regulators. Moreover, black powder weapons have recently undergone some significant technological advances that overcome many of their drawbacks versus conventional firearms. (See appendix.)
Do not be gullible enough to bite on the "ban guns" touters. The criminal element is outfitted like armed forces--only in some instances--better! You will not control crime or criminals by not having them--you simply reduce your own protection as a citizen to zero.
This is exactly what the government is efforting at producing--a society of defenseless citizenry hidden behind the facade of individual protection. You ones are just about to help them render you helpless on all fronts.
Criminals and thugs (which for the most part IS your government) already have all they need to control or kill you--keep it in mind before you vote for that bill that buries you.
ELECTRONIC INTRUSION
Most Americans assume that they are not being watched, analyzed or recorded. The overwhelming majority of the time they are not. But technological development has blossomed in the privacy invasion industry. Victims of electronic eavesdropping are acutely aware of how vulnerable they are. You should cultivate such an awareness as well, to reduce the possibility that you will become a victim yourself.
TELEPHONE
Each year the average American spends hundreds of hours on the telephone. Chances are, you assume without even thinking that what you say over the phone is private. Usually your conversations are private. But interception of telephone calls is the oldest technique of electronic surveillance. "Wiretapping" has existed since at least the turn of the century. And in 90 years, the federal government and private investigators have become quite accomplished at it.
Since 1968 wiretaps have been illegal for all but the federal government to install without the express permission of the person whose conversation is being recorded. Government wiretaps in most cases must be authorized by a judge, although many loopholes to this requirement exist. President Nixon's White House "plumbers" for instance, illegally tapped the phones of journalists, war protestors, civil rights activists and just about anyone else whose actions were deemed "subversive". Installing a wiretap is so simple that thousands of illegal wiretaps are conducted annually.
A wiretapper need not gain access to your phone itself, but only to the pair of wires leading to and from it. A phone may be tapped at the jack to which it is connected, at a junction box where hundreds or thousands of phone lines meet or even miles away in a central phone switching facility.
The further from your phone a wiretap is placed, the more difficult it is to detect. Fortunately, most illegal wiretaps are installed close enough to the phone to be detected relatively easily. But professional or government wiretaps which are usually made at a central switching office, are practically impossible to detect.
The most common type of wiretap is the "in-line transmitter", installed in the telephone itself and drawing power from the telephone's power supply. A similar device, the so-called "infinity bug", is planted in the phone and activated by the ringing of the phone. An infinity bug is designed to record both phone calls and conversations in the room where the phone is located.
Any long-distance telephone conversation relayed by a microwave tower can be intercepted and reconstructed by relatively unsophisticated electronic equipment. The National Security Agency for instance, has for at least 25 years routinely (and illegally) intercepted and analyzed virtually all telephone conversations beamed by microwave.
The Soviet Union has access to similar or identical technology, and industrial spies have also employed microwave interception to great advantage. Since it is virtually impossible to detect this type of interception, you should never assume your long-distance conversations are totally private.
Maintaining privacy in your telephone communications requires forethought and discretion. The following are a few options you may wish to consider:
1. Request an unlisted number. Unlisted numbers are increasingly popular to stop unwanted phone calls. A recent survey showed more than 20 percent of U.S. phone numbers were unlisted.
However, an unlisted number is not a privacy panacea. For instance, telephone company repair personnel have access to all unlisted numbers. There are many cases where such personnel have been bribed or otherwise persuaded to relinquish this information.
In practice, you will find an unlisted number most useful to deter calls from individuals soliciting products or services in which you have no interest. But if an ex-spouse, ex-business associate, etc., is determined to contact you by phone, he or she will probably be able to obtain your phone number by hiring a private investigator.
2. The best way to get a private number is at the very beginning. Rent a mail box with a false name at the local private mail box company (not the U.S. Post Office). This is one of the cheapest ways on earth of creating privacy. There is nothing illegal about this. It just costs a little extra.
Then, when you move into a new home, give this same false name to the phone company and have the bill sent to your rented mail box. You will probably have to pay a lot of cash or a large money order up-front as a deposit in order to get this "no past records" privilege, but this is the best way to buy phone service.
No one knows who this person is. There is no red flag of an "unlisted number". You simply disappear from all phone records. You are replaced. No one who looks for your number in the phone company records can find you. Pay your phone bills on time, and put some extra cash in the account just in case you forget to pay a bill one month.
A variation on this is to "move out". Have the phone company cancel all service. Then go down in person three weeks later and "move in". Use your assumed name. You are the new renter. You pay your deposit and have phone service hooked up again. Do this during your normal summer vacation.
Why don't you have any past phone history? You have been outside the country. (You need not tell them precisely when).
Now for those of you who are less creative and not really all that concerned about phone privacy, I suggest the following second-best steps:
3. List your phone number, but leave out your address. This at least eliminates the threat of unwanted visits to your home from people who see your address in the phone book. This approach protects your physical privacy, while permitting you to maintain contact with friends or relatives who might be deterred by an unlisted phone number.
Of course you must make the appropriate arrangements with the telephone company when you first have your phone hooked up. If the telephone company insists on publishing an address, ask them to list it as "General Delivery" or use your post office box number.
4. Use an answering machine. Answering machines are ideal for screening telephone calls. When you tape the message your answering machine will give to a caller, you are under no obligation to identify yourself on the taped message.
Do not purchase an answering machine with a "remote access" feature. These systems permit you to listen to messages left on your answering machine from another phone. While the arrangement might be convenient, an enterprising privacy intruder can in many cases use his remote access device to listen to your messages. If you purchase an answering machine with remote access, look for a model that responds only to true touch-tone signals, which are actually two simultaneously sounded tones.
5. If you are contacted by a phone sales representative and don't wish to listen to a "pitch" inform the caller you are hanging up. Then hang up. If you are interested, but don't wish to make a commitment over the phone, you might ask for information to be sent by mail or offer to return the call later but require they NOT call you back. This will deter all but the most determined and officious sales representatives.
If they persist simply tell them if they continue to talk you will be required to charge them $150 per hour for your time. Tell them you are a marketing consultant and this is your fee to evaluate telemarketing representatives. Ask for his billing address or credit card number.
Screen your calls. Technology is now available to allow you to screen incoming calls. One device requires a caller to identify himself with a code before the call is completed. Another allows you to dial a code to prevent calls from certain phone numbers from being completed. (For instance, you could program the phone not to permit calls from a specified phone number to ring in).
Some phone companies provide a service that displays the originating number of a phone call on a video screen. This new development has immense promise to protect the privacy of call recipients. But it has grave implications for those callers who have a legitimate reason for wishing to remain anonymous.
For instance, calls to a government agency or to make an "anonymous tip" to the police might not be as confidential as you think if your number is flashed on a screen at the receiving end. Or if you order merchandise over the phone, your phone number could be surreptitiously recorded and sold to other companies.
You should no longer assume that the origin of an anonymous phone call you make is known only to yourself.
6. Protect telephone privacy in your home or office. If you suspect that someone might be listening in to your conversations on another extension, you might wish to purchase a device known as "PhoneGuard" which is attached to your phone. If another extension is picked up, a light will begin to flash, alerting you to possible eavesdropping.
7. Use public phones. For calls you wish to keep confidential, consider using a public phone. Some public phones are bugged but the sheer number of public phones assures that most are not. Maximum privacy requires that you pay for the call with coins, not a credit card that can be traced back to your name or telephone number.
8. Use a cellular phone. Another way to increase telephone privacy is to use a cellular phone in a moving automobile. As you travel, different portions of the cellular phone network handle your calls. While it is relatively simple to intercept a cellular phone call, it is difficult for a stationary observer to listen in while the target moves through different zones in the cellular network. Just make sure that you take your cellular phone with you when you leave your vehicle, so someone can't break in and plant a bug in it! (If you really think your car might be bugged, you can get it "swept" by a professional, just as you could your home or office).
WIRETAPS
A few measures to protect against wiretaps are as follows:
1.Consider purchasing equipment to detect wiretaps. In-line transmitters and infinity bugs can be detected through "wiretap detectors" that measure the electrical characteristics of a telephone circuit. An example is the "Telephone Security Analyzer", available for around $60 from Josef's Storhaus. (See appendix.)
However, such devices are hardly foolproof. A tap may be placed nearly anywhere on the line and the detector will be effective only for those wiretaps located near enough so that a electronic disturbance can be detected. For professionally placed taps, wiretap detectors are practically useless. (See appendix: THE BIG BROTHER GAME and ELECTRONIC EXPOSURE: HOW TO PROTECT YOUR PRIVACY.)
2. If you are told your phone is always busy, even when you know it is not, you may be the victim of an infinity bug. Disassemble the phone and inspect it for any foreign components.
3. Know how to defeat a voice stress analyzer. Even if your conversations aren't surreptitiously recorded, they may be run through a "voice stress analyzer" to determine if what you are saying is true. This device, which can be used with either live or taped conversation, detects vocal "microtremors" that supposedly indicate stress; if there is stress in your voice, the analyzer is designed to detect it.
Insurance companies, government agencies and private investigators all use voice stress analyzers. Using one is not illegal, although the conclusions of its operator (as a lie detector) are not admissible in court.
If you believe that your conversation is being analyzed by such a device, lower your voice and whisper. The effectiveness of microtremors is reduced considerably in whispered or hissed speech.
Incidentally, voice stress analyzers are even less reliable than lie detectors. In fact, several tests of voice stress analyzers showed them to actually have an accuracy of less than 50 percent--a rate you could achieve by simply randomly guessing whether or not a particular person is telling you the truth.
4. As a last resort, consider a voice scrambler. A voice scrambler is designed to make conversation over a telephone line unintelligible to anyone without the appropriate decoding device. However, all but the most sophisticated scramblers can be defeated by a knowledgeable electronics practitioner. Moreover, if you use a voice scrambler, anyone listening in is bound to wonder what you are trying to hide.
5. Even if you are confident your phone is not tapped, don't make the mistake of assuming your telephone calls are private. Their content may be, but your telephone bill itself is not. For instance, government agencies are routinely given access to records of long-distance phone calls.
By examining the phone calls you have made, a revealing profile of your lifestyle, your investment habits and your friends can be constructed. In addition, some long distance telephone companies sell records of telephone calls to private companies who reconstruct the calls you have made and sell the resulting data to direct marketing firms.
MISCELLANEOUS TYPES OF
ELECTRONIC SURVEILLANCE
The telephone is merely the most convenient access to your private conversations for a would-be eavesdropper. A much wider variety of technology is available for a determined spy.
Enter the "bug". A bug is nothing more than an electronic device that is capable of detecting spoken conversation and relaying it to another location. Bugs at their simplest consist only of a microphone and a transmitter. While most bugs are now illegal to sell, anyone with a rudimentary knowledge of soldering can construct one in a few minutes with components purchased over-the-counter at an electronic hobby store.
One popular item is a microphone about 1/4 inch on a side. Add a transmitter, and for less than $25, you have a device that can be hidden almost anywhere and is virtually invisible. Wired into a building electrical system, it will transmit any conversation in a room as far as several hundred feet away to a waiting receiver. The receiver may be nothing more sophisticated than an FM radio.
An individual planting a bug is limited only by his imagination as to where he might place it. Bugs have been found on the undersides of ashtrays, in wastebaskets, underneath desks, inside telephones and in light fixtures.
The simplest bugs are "stationary mike" designs, such as the $25 device just described. Such a unit is planted in a location where the intended target spends a large amount of time (such as an office or bedroom). One type is a flexible "tube mike" that can be placed in electrical outlets, keyholes, air ducts, etc. A "spike mike" is more rigid and can penetrate relatively hard surfaces such as walls. A "contact mike" can be attached to any interior surface.
The bugs I have described thus far are "active" devices that emit electronic signals that can be detected with the appropriate equipment. Other so-called "passive" bugs emit no signals at all and are almost impossible to detect without a thorough visual search.
The most common way offices are bugged is by employing speakers tied into an intercom. Since power is already applied to the intercom speakers, a prospective spy can simply attach two wires to a speaker and run them to a desired location and "listen in" to conversations in a targeted office. This bug is so simple to set up that any office with an intercom speaker can be "wired" in a matter of mere minutes. Since there is no transmitter, such a passive bug is practically undetectable. (See appendix: INTRODUCTION TO BUGS AND TAPS.)
Other types of passive bugs are activated by laser beams or microwave beams. The most famous case involving passive surveillance was uncovered in 1952 in the Moscow office of the U.S. Ambassador. A cylinder containing a diaphragm and an antenna was found embedded in a wall hanging of the Great Seal of the United States. Soviet technicians aimed a microwave beam at the device, enabling them to decode top-secret conversations taking place there. Passive bugs have also been constructed from drum sets, speaker cones, water in a toilet bowl, water fixtures, etc.
In recent years, no passive bug received more attention than the so-called "laser window vibration reader". This device, for instance, was featured on the cover of Radio Electronics; inside were step-by-step instructions on how to build the device for less than $1,000.
Your voice is not the only "vibration" that can be detected by passive means. For instance a laser or microwave beam can be used to monitor the tiny amount of radiation that a computer emits and another computer used to decode such information. For this reason, military computers are often enclosed in lead sheathing to trap these emissions.
A spy need not plant an eavesdropping device in order to listen in on your conversations. A "rifle mike" will amplify spoken conversation at a considerable distance. The eavesdropper simply aims the microphone at his target, puts on a headset and begins recording. Such devices can be effective from several hundred yards away. They are easy to construct and mail order companies offer a selection of models.
As those who have followed the construction of the U.S. Embassy in Moscow realize, even an entire building can be bugged. During assembly of the Moscow embassy's walls, thousands of bugs were implanted, each of them drawing power from the electrical grid. Cheap "diodes" were planted by the thousands as well, decoys that would respond to an electronic "sweep" for bugs in much the same way as a bug itself. Any building subjected to such "built-in" surveillance can never be made fully secure.
The newest bugs provide both an audio and a visual record of their target's movement and conversation. One model is smaller than a pack of cigarettes and can be disguised as a book, a computer modem or any other innocuous object. Another is installed in a car antenna.
The "two-way" cable television systems that are used in a few locales also provide a method of continuous surveillance. Originally used as the basis of a home security system, the computers at the cable companies' offices are capable of monitoring movements in the homes so equipped.
I believe that you will now better understand why we are so insistent that Oberli and Dharma have no overnight guests other than family. Every room in the house is bugged, especially the guest bedroom and bath. Everyone who even visits them is identified and put under instant surveillance during their stay in the dwelling. We monitor very closely what is talked about in sessions but we cannot attend every conversation among guests. The entire premises surrounding the property is monitored, including "meditation rock".
Please understand that it is not ungracious hosts involved here, it is the security of not only Oberli and Dharma but the project and visitor as well. We have been most severe and yet we are unable to maintain the discipline for one reason or another--I urge you to consider these matters most carefully as microdots continue to be brought inside the dwelling by totally unsuspecting visitors and we cannot always pick up the low-frequency signals immediately. It is not until the impact has already bumped off Dharma with extremely negative physical problems that we are alerted. These are specifically set to impact her frequency pattern. It is occurring almost weekly.
If we are aware you are expecting guests we can monitor and "sweep" them first but I can only urge you ones to be more cooperative for one slip-up and your information source is lost. I realize you cannot comprehend this type of impact nor the magnitude of this which I tell you. You simply must believe me and act accordingly.
I would point out the ease of surveillance in least expected places. When ones even stay in their own vehicles, on your property, they are totally monitored.
It is so bad in fact, that we may require these ones to change location if we cannot get it cleared and under control. We prefer not to find that necessary for we are all quite comfortable in the knowledge of the surveillance as it now is operating. If we were to require placement elsewhere there would be greatly increased security problems and hazards due to the necessity of the "buggers" to install and set up new facilities. So be it, one more word to the wise should be sufficient.
MAINTAINING ELECTRONIC PRIVACY
If someone who wants to eavesdrop on your conversation cannot enter your living or working space, his efforts will be much more difficult. And therein lies the secret of defeating electronic surveillance.
Place yourself in the shoes of someone who might wish to bug you. Who would he hire to do the work? Your secretary? Your custodian? Your auto mechanic? Would he pose as a tradesman: an electrician; a plumber; a telephone repairman?
In general, you should restrict access to your office or your home only to those
individuals who you trust implicitly. And you should insist on positive identification for tradesmen you admit into your home or office. Moreover, you should not permit them to work unattended.
Familiarize yourself with the appearance of the most common bugs. For instance, you might wish to visit a local electronics hobby shop and tell them that you are looking for a way to monitor your six-month old baby when you are asleep or away from home. Look over the components they recommend very carefully to become familiar with their appearance, or get a book which illustrates many "bugs".
If you feel that you are the victim of electronic surveillance, your local police department may also be able to provide assistance, assuming they are not the perpetrators. If the police are unable to assist you, ask trusted friends and colleagues who they would recommend for a "sweep" of your home or office.
If they are unable or unwilling to make a recommendation, look in the local Yellow Pages for firms advertising under "Electronic Security Services" or similar headings. For obvious reasons, many electronic surveillance professionals refuse to name references. But a background in military or commercial electronics is a common denominator for most and you should check these qualifications.
Before you hire a service to sweep for bugs, test their competence by concealing a bug yourself (assembled from components purchased at your local hobby store) and asking the "experts" to find it. If they fail this simple test, find another service!
In all the publicity over electronic surveillance, a thriving "do-it-yourself" bug detection business has emerged. You can rent or purchase countermeasures equipment and learn to use it yourself to "sweep" your home, office or automobile.
Unfortunately, most do-it-yourself efforts are ineffective and provide a false sense of security. A sweep must be very thorough and performed over a wide range of electronic frequencies to have any significant chance of success. Even if you find a bug, there may be more than one planted.
In addition, much of the equipment sold or rented is practically worthless. For instance, it has been demonstrated on several occasions that the $6,000 "RF Bug Detector" has failed to detect the presence of a $25 bug.
Even worse are the "magic wands" sold at electronics hobby shops. So beware.
If you are in doubt about how to use countermeasures equipment or what equipment to employ, hire a professional.
If you proceed on your own, perform both a visual search and a search with the appropriate countermeasures equipment. Begin with a thorough visual search in each room you suspect to be bugged. Check any recent additions to the room; a potted plant, a new picture on the wall, a new telephone--anything. Also examine draperies, books, lamp bases, wastebaskets, the undersides of desks and chairs, etc. With electrical power off, disassemble light fixtures, light switches and electrical outlets. Also look for mismatched paint on walls, ceilings and floors that might disguise a tube microphone. A spike mike embedded in a wall often can be detected by small cracks in the wall.
Passive bugs are much more difficult to detect, since they provide no electronic "signature". Once a passive bug is in place, your only defense may be employing countermeasures that add "irrelevant" information to the vocal spectrum that is being recorded directly or reconstructed from vibration analysis. A "white noise" generator (often used by individuals who have difficulty sleeping in a noisy environment) is also effective in masking conversation. The old standby of playing a radio loudly is also somewhat effective.
If you wish to go "high-tech" there are an ample number of expensive machines you can purchase. To detect all but the simplest bugs, a "spectrum analyzer" costing upwards of $10,000 is required. While this machine can't detect passive bugs, it will detect the $25 ones the $6,000 device cannot.
There is something further you should consider right from the start, especially if you have a professional "sweep" and find something. You can be sure if you are worth monitoring, you will simply be set-up again. As with this placement--why bother, the system will be replaced and operable within twelve hours because the system is so well laid out. In this instance, you simply must use caution to protect the security of both the dwellers and the visitors for there is no way to keep the bugs cleaned out. In this instance the surveillance equipment is most sophisticated indeed, and would be missed by even the professionals.
Should you have reason to believe that you are being targeted by a laser window vibration reader, a device costing more than $1,000 is available to sit in the room in question and emit tones in ultrasonic frequencies. This machine is designed to make the windows vibrate continuously at a very rapid rate, confusing the laser device. A "low-tech" substitute for the $1,000 device is also available: a $2 dog whistle or rodent control device. Of course, to provide protection during the course of a conversation, one person must "whistle" while the other talks. This would probably be most distracting but a lot less expensive.
Dharma, enough for today as it has been a most intensive day. We will effort at concluding this document within another day or so for it would be most appreciated if the finished, ready for printing, document could be gotten out of this place no later than the 15th. Thank you. We are aware that it is most pressing for you ones but the information is so timely that it is quite necessary.
In appreciation, I now move to clear frequency.
Good evening,
Hatonn to clear frequency and moving to stand-by status.
PJ 10
CHAPTER 22
REC #1 HATONN
TUE., DEC. 5, 1989 7:30 A.M. YEAR 3, DAY 111
TUE., DEC. 5, 1989
Hatonn present in Truth and radiance, thank you for inquiring.
Dharma, I would like to set things up according to how you at human level receive most effectively. However, there is still such a jumble of confusion as to methodology of getting timely information into your hands immediately that I feel I must add things to these daily writings, journals or no journals.
I believe what I will do is write this section on what to do in preparation for your departure as if nothing has changed in your world except your privacy and governmental control.
I will then tell you what is really planned for your monetary changeover and give you some last minute head pounding, in the INTRODUCTION. It does mean that we must move right along to insure the laggards and those "not sure they believe Hatonn" have time to act--a very brief period indeed.
PROBATE. YOUR WILL AND TESTAMENT
At the rate with which your government sinks farther in trouble and the "big boys" are getting you in control, your property will be confiscated at your demise instead of distributed to your heirs. You will be basically worthless and all you will have left is your testament which might tell your heirs how much you loved them or disliked them. Ultimately all estates of deceased persons will become state property.
I can talk about "wills" and offer solutions which may or may not be of value to you. I WILL AGAIN REPEAT--THE ONLY VALID WAY TO HANDLE YOUR DEMISE IS THROUGH A CORPORATION (IN NEVADA) WITH YOUR HEIRS AS STOCKHOLDERS AND OFFICERS, ETC. I DO NOT SUGGEST YOU SET IT UP UNTIL YOU UNDERSTAND IT AND I SHALL ASK CORT CHRISTIE OF NEVADA CORPORATE HEADQUARTERS, INC., TO WRITE A PAPER ON THE SUBJECT SO THAT YOU CAN MORE EASILY UNDERSTAND THE STRUCTURE THAN YOU CAN FIND IN THE MANUAL. FURTHER, YOU BETTER GET IT DONE BEFORE YOU HAVE TO OPENLY DECLARE ALL ASSETS--WHICH IS PLANNED FOR VERY EARLY 1990! THIS GOES FAR BEYOND INCOME TAX REPORTING. WITH THE NEW MONEY WILL COME FORMS FOR THE DECLARATION OF EVERYTHING THEY CAN FIND. THESE WILL BE COMPLETE WITH SOCIAL SECURITY NUMBERS AND FINGERPRINTS, WHICH YOU WILL KNOW NOTHING OF, AND THEN WILL BE MATCHED WITH YOUR IRS RETURNS FOR THE PREVIOUS FIVE YEARS AT MINIMUM. GOOD LUCK!
If you think I jest about what the IRS can do if they find any discrepancy in these matters, ask RED FOXX, the actor/entertainer, what they can do. They can come in and take anything and everything, then sell your entire property at auction. If the sums are not sufficient from the sale of your property you will go to jail regardless of age unless you will have income to attach, which they will do "before" the fact! I mention Red Foxx because his circumstance is being projected on your daily news right this day.
Hatonn should stop right here and not even tell you other ways to handle the situation but all the writers before my time of coming forth will call "foul" for none of them recommend an estate corporation. So to make my point I will have to go through the tedium of repetition and, Dharma, you shall have to just bear with me.
I WANT YOU TO KNOW THAT THESE ARE SOLUTIONS THAT MAY WORK FOR A PERIOD OF TIME. I WILL EXPLAIN THEM TO YOU AND TELL YOU WHERE YOU CAN GET FORMS AND INSTRUCTIONS OR PRODUCE THEM MYSELF. I DO NOT RECOMMEND ANY OF THEM.
Most people assume that the only way to insure that their property will be divided as they wish is with a will. While a will does insure that property is distributed to your designated heirs, it does not protect them from a system known as "probate". As you will soon learn, you should shield as much of your estate from probate as possible.
Probate almost always involves large attorney's fees and delays in your beneficiaries receiving the property they are due. Probate also involves legal advertisements and publicity. For prominent families probate court can be a nightmare of competing claims, shouting reporters and expensive attorneys. Probate is an expensive and a very high-profile system to distribute your assets.
Of course you should always prepare a will. But you should also arrange your estate so that you avoid the public distribution of assets that a will requires. The following pages, taken from How To Write Your Own Will And Avoid Probate by Mark Nestman (see appendix) describe several options.
When you die, your executor presents your will to the probate court with an inventory of your estate's assets and liabilities. After examining your will to insure that it is legally binding, the court will place a legal advertisement in your town's newspaper. This advertisement will invite creditors to submit claims against your estate. The notice will also alert anyone else who wishes to make a claim, such as an ex-spouse, a disinherited child, etc.
While the probate procedure is relatively straightforward, more abuse occurs in probate than perhaps all other legal procedures combined. Even moderately-sized estates can be ravaged by the probate system. DO NOT LISTEN TO YOUR ATTORNEY OR YOUR ACCOUNTANT--OR YOUR BEST FRIEND--WHO TELLS YOU A NEVADA CORPORATION WILL NOT WORK. IT WILL WORK EVEN IF YOU LIVE IN TASMANIA OR ATHENS. GREECE.
I believe it must be obvious why the accountants and attorneys do not want you doing this! It cuts the need for their services to zero.
One of the most insidious ways that estates are ravaged through high attorney's fees is if those fees are based on the estate's total market value and not its equity value. For example, your estate may be worth $300,000, including a $250,000 home on which you carry a $200,000 mortgage. The total equity value of the estate would therefore be $100,000.
If an attorney's 5 percent fee is based on the equity value, it would be $5,000. On the other hand, if it is based on total market value, it would be $25,000. In other words, the insertion of a single phrase in the agreement your executor signs with a probate attorney could wipe out $20,000 of your estate.
No one wants to pay 20 percent or more of his estate in probate fees before the rightful heirs obtain their property. No one wishes to open the private affairs of their family to the scrutiny of gossip columnists. Most importantly, no one wants to see their heirs deprived of their property for as long as five years.
The moral is simple. Take whatever steps you can to reduce the size of your probatable estate.
Property that passes to your heirs outside the probate system includes:
1. Any property with a named beneficiary or beneficiaries. Assets such as a life insurance policy, an IRA, Keogh, profit-sharing plan, etc., usually have a named beneficiary. When you die, the proceeds are automatically passed on to that individual or individuals.
2. Property owned jointly with someone else. If you own property jointly with someone else, the surviving co-owner may be eligible to inherit your portion of the property outside of probate through what lawyers call a right of survivorship. The form of ownership required for this to take place is called "joint tenancy", or for married couples "tenancy by the entirety".
3. Property owned through trusts. Another popular probate avoidance technique is the trust. There are many types of trusts but probably the most widely used to avoid probate is the living or inter-vivos trust. While setting up a trust sounds complex, many types of trusts are quite simple and can be created without an attorney.
A trust relationship requires three participants: the settlor or trustor who forms the trust and contributes assets to it; the trustee who accepts and manages these assets; and the beneficiary who receives the assets after the settlor dies. In the simplest trusts, the settlor and the trustee are the same individual--you--and the beneficiary will be your spouse.
The living trust permits you as trustee to maintain full control over your property, yet insure that it is passed on to the named beneficiary upon your death, without probate. You may change beneficiaries any time you like or even revoke the trust completely. Compare that to a less flexible probate avoidance technique such as joint tenancy. Obviously, you can't change joint tenants unless you buy the first one out!
To set up a trust, you must first formally transfer title to the property affected to the trust. This is a relatively simple process that you can usually perform yourself. Even with the aid of an attorney, it is relatively inexpensive. NOT INEXPENSIVE, JUST "RELATIVELY" INEXPENSIVE! As long as you remain trustee for the property, no separate income tax returns are required for the trust. You should however, maintain separate bank accounts, checkbooks, etc., for all trust property.
Finally, there is the "safety deposit box trust" which allows ready access to your safety deposit box upon your death. Of course if your banks are closed and the safe deposit boxes seized, you have no recourse. This is a living trust that transfers title of the items in the safety deposit box to the trust and names a beneficiary to receive those assets. The trust neatly solves the problem of having the box sealed on your death until probate is complete. You don't have title to the items in the box; the trust does.
Upon your death, this box most likely will not be sealed. If it is, state tax authorities will discover that the items in it are held in trust. The contents of the box not being subject to probate, the seal will likely last only a few days and your beneficiary will thereafter have access to its contents--MAYBE!
You may also set up a trust for your bank account. You, as trustor, open a bank account in your own name, but add a provision stating that the money is held in trust for a named beneficiary. You maintain full control over the funds, but upon your death, the money reverts to the beneficiary--outside probate. Most banks will set up this kind of account with no fee simply by having you sign the appropriate form.
ALL OF THE ABOVE REQUIRES THE ASSUMPTION THAT THE BANKS ARE SOUND, ETC., ETC.
ONCE MORE--GET A CORPORATION IN NEVADA! IT WILL BE NO DIFFERENT THAN SETTING UP ANY CORPORATION--IT IS SIMPLY A CORPORATION IN WHICH YOU MANAGE YOUR OWN AFFAIRS THROUGH YOUR BY-LAWS, STOCK DISTRIBUTION AND VOTING RIGHTS, ETC. IT IS YOUR LAST BASTION OF PRIVACY AND HOLDING ONTO YOUR ESTATE. IT WILL REQUIRE PERFECTION IN RECORD KEEPING--BUT SO DO TRUSTS AND ALL OTHER BUSINESS OR TRUSTEED PLANS. YOU ARE MOST REMISS IF YOU DO NOT CONSIDER THIS MODE AND ACT.
YOUR BANK
Better look at a few items that take place in your banking habits. Let us look at those "cancelled" checks.
An "investigator" can have a hey-day with your old checks and check registers--they are not as private as you have been led to believe.
An "investigator" will pay close attention to your grocery market checks to see if you are "over"-writing checks to obtain cash. They will look at your phone payments--believe me, your checks tell a myriad of information.
Your cancelled checks record the names of your doctors and hospitals, the publications you read, the relatives you help, the religious and charitable activities you support, the volume of business you give your liquor store and the amount you spend on transportation (including whether or not you consume more than your fair share of gasoline). The information in cancelled checks can be a mirror of your entire life, a reflection that you do not want seen by the wrong eyes.
Your cancelled checks are your property, and no government official or private investigator can inspect them without your consent, or a search warrant. However, before you are sent a cancelled check drawn for more than $100, the Bank Secrecy Act of 1970 requires your bank to copy both sides of it. These copies must be made available to government authorities in an investigation. The Act also requires banks to record any extension of credit over $5,000 and any cash transaction of $10,000 or more.
With the passage of the Bank Secrecy Act, the federal government was given carte-blanche to inspect formerly confidential financial records. And as you will discover, the Bank Secrecy Act has led to widespread governmental abuses.
Congress included provisions to protect the privacy of bank deposits in the Tax Reform Act of 1976 and the Financial Privacy Act of 1978. The 1976 law requires the IRS to inform you when the agency requests information about your bank account. And the 1978 Act gives you the right to challenge the government's request to see your bank records.
Now you hit another low--the IRS can now go into your bank and audit your bank account and even seize it for unpaid taxes--without notifying you at all.
Despite these laws, the IRS and other government agencies can intimidate banks into revealing confidential records "informally" without any notification to you whatsoever.
I next quote an excerpt from The April Game, a book written by an experienced IRS agent.
"Four times out of five, when I walk into a bank and flash my credentials, I get to see anything I want to see. When they don't want to cooperate, it is seldom difficult to change their minds.
"'You won't show me the records?' I asked the plump little banker.
"He had pale-blue eyes, and he had a habit of blinking them rapidly. He looked almost as though he were about to burst into tears. 'I'd really rather not,' he said. 'I'd like to check with some other people around here first. I don't quite know what our position would be in a situation like this.'
"I nodded, then made a production of pulling a small black notebook and pen out of my inside breast pocket. May I have your full name, sir? And would you clearly spell it for me'?
"That got him. It almost always does. There is hardly an American citizen above the poverty level whose tax conscience is so completely clear that he isn't afraid of being audited.
"He mumbled, 'Well, maybe we can'. He scurried out of the room. A few moments later he was back, brimming over with cooperation. 'My secretary will show you any records you want to see,' he said. 'But just to protect myself--in case my customers get mad, you know, may I ask you to serve me with an official summons?'
"It was a common request, quickly arranged".
Your bank is not required to notify you when a private firm (credit bureau, insurance agency, etc.) asks for information on your account if the firm can demonstrate that you have authorized the inquiry. Forms you sign when you apply for insurance or credit authorizing "all institutions and individuals having relevant information concerning me to release such information" are ordinarily sufficient authorization to the bank for the account information to be disclosed.
Your bank may even release confidential information over the phone with no authorization whatsoever! A study commissioned by University of Illinois Professor David Linowes, former Chairman of the Privacy Commission, concluded that almost all banks give out information about your account balance, if your account has ever been overdrawn, etc., to credit bureaus, other banks and even individuals who casually inquire over the phone! About 75 percent of the time, according to Linowes, the customer is not informed.
To lower the profile of your bank account and reduce the information that an investigator could glean by inspecting your cancelled checks, consider the following techniques:
THE BEST METHOD OF COURSE, IS TO NOT HAVE A BANK ACCOUNT! HOWEVER, IN SOME INSTANCES IF YOU DO NOT HAVE AN ACCOUNT, AS WITH CORPORATIONS, THE IRS CAN CLAIM "MONEY LAUNDERING". HERE I SPEAK OF PERSONAL ACCOUNTS--IT IS YOU FOR WHICH YOU ARE TRYING TO PRESERVE SECRECY. YOUR CORPORATION TAKES THE HEAT OFF YOU JUST AS LONG AS YOU KEEP GOOD, CLEAN, AND CLEAR RECORDS THAT SHOW ACTIVITY WHICH CAN BE EQUATED TO CORPORATE BUSINESS--NO LAW SAYS YOU CANNOT MAKE FOOLISH DECISIONS NOR CAN THEY INSIST YOU "MAKE MONEY" IN THAT CORPORATION--FURTHER, IF THEY DO NOT KNOW WHO OWNS A CORPORATION (NEVADA IS THE LAST PLACE AVAILABLE TO YOU FOR THAT MEASURE)--WHO CAN THEY PICK ON? KEEP YOUR RECORDS SO IMPECCABLE THAT ANYONE CAN AUDIT YOUR RECORDS OR ACCOUNTS. YOU HAVE EVERY RIGHT TO MAKE IT AS DIFFICULT FOR THEM TO DO SO AS YOU ARE CREATIVE AND WE HAVE ONES WHO CAN ASSIST YOU AT CREATIVITY. STAY SMALL, KEEP EXCELLENT RECORDS AND YOU HAVE A SAFE HAVEN!
1. Write personal checks only for ordinary everyday expenses. Routine, repetitive expenses are ideal for payment with a personal check. Just don't write a personal check for any purchase that you would rather keep private. Pay for such purchases with cash or a money order.
2. Carry a minimal account balance. Larger accounts merit investigation much more often than smaller ones.
3. Open an account that does not pay interest, and maintain only a minimal balance. You will be asked to provide your Social Security number to the bank but you may legally refuse, since the bank will not be reporting any interest income to the IRS. However, the bank is obliged to keep your name on file if you do not disclose the number and must show this file to the IRS on demand.
4. Consider private check-writing privileges offered by brokerage firms. Money-market accounts offered by many brokerage firms are an excellent alternative to a checking account at a bank. Brokerage firms are not required to copy cancelled checks, and checks ordinarily clear through a single group account, not individually, protecting your privacy further.
However, most money-market funds won't permit you to write checks smaller than $100. Furthermore, brokerage firms are required to report interest you earn in your money-market account to the IRS.
5. You are not required to disclose your Social Security number when you rent a safety deposit box. However, you should use your real name. If you use an assumed name, your heirs may not be able to gain access to the papers and valuables in the box when you die.
6. Ask your bank if it has an official written policy on financial privacy. You may find that you will be told that there is one but it is only distributed to employees. The bank will claim that allowing depositors to see the policy would open the bank to a potential liability if the policy were not followed to the letter.
7. Ask your bank to provide a written guarantee that it will not release information regarding your account without either your written permission or a legal summons. Such an agreement in essence, merely restates the legal protections you already have and if you are not notified already with the existing rules, you will not be notified with such a paper on file.
Most bankers will respond negatively to any agreement that restricts their right to distribute information about your account to anyone they so choose. In fact, you would probably find that there would be a refusal to sign such a document--they would simply suggest you use another bank for your business would immediately raise a troublesome "red flag" for the possibility of a trouble-maker.
I have one more tid-bit regarding your "safe-deposit" boxes. Materials held in a safety deposit box or private vault are not ordinarily insured against theft or other loss, even with a "valuable items" rider to your home-owners insurance. Safety deposit box coverage up to $50,000 is available from Investment Rarities, Inc. (see appendix). The premium for this coverage is about $175/year and you are not required to declare the items in the box. SO BE IT.
You would further be amazed at how much information can be given forth from a simple "informal chat" about your bank account with a friendly banker and IRS agent or private investigator.
LET US TALK ABOUT A
RECENT COURT DECISION
A recent decision in the U.S. District Court makes it much easier for the IRS to examine bank records "informally". A January 1989 decision by District Judge Larry McKinney found that the IRS has a legal right to examine bank records without a summons, search warrant or court order.
In Raikes vs. Bloomfield State Bank, McKinney ruled that the tax code gives the IRS the power to "examine any books, papers, records or other data". The code provides sufficient authority for an informal request to be binding on a bank official, McKinney concluded.
McKinney's decision undermines the Financial Privacy Act of 1978, which requires that most government investigations require at least an administrative summons to force a financial institution to turn over customer data.
Dharma, please, may we have a break. I would like to review the data already placed within this journal that I neither leave out pertinent information nor overlay boredom upon the readers. I would like at least one more session today however, as time is of utmost importance in the presentation of this information. It is so much less valuable if people are not given sufficient time to make arrangements and big changes are coming down. Thank you for your service.
HATONN TO STAND-BY, CLEARING FREQUENCY.
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