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Appendix E
Viacom Transcript
Page E - 1 of 12
The Federal Zone:
Reader's Notes:
Page E - 2 of 12
Appendix E
"Federal Income Taxes,
The IRS and
The Federal Reserve"
by
Mitch Modeleski, Founder
Account for Better Citizenship
c/o Post Office Box 6189
San Rafael, California Republic
Postal Zone 94903-0189/TDC
A Transcript of the Videotape
Pre-Recorded on December 10, 1991
in the Professional Studios of:
Viacom Cablevision
1111 Andersen Drive
San Rafael, California Republic
Postal Zone 94901/TDC
Page E - 3 of 12
The Federal Zone:
Hello, ladies and gentlemen.
My name is Mitch Modeleski.
I am the founder of the Account for Better Citizenship.
For the next 30 minutes, I will be talking to you about federal
income taxes, the IRS, and the federal reserve system.
If you have a VCR, you might want to insert a blank tape and
record the next half-hour. You are going to hear some things
that you might want to hear again, or to replay later on for your
family, friends, and neighbors.
If you don't have a VCR, at the end of this program we will tell
you how to obtain a transcript of this program.
Let me first introduce myself. Before founding the Account for
Better Citizenship, I studied to be a Catholic priest for almost
6 years.
I have a Bachelor's degree from UCLA in Political Science.
I have a Master's degree in public administration from the
University of California at Irvine.
I have also completed 5 of the required 7 courses for a Master's
degree in the Program in Social Ecology, also at the University
of California at Irvine.
I have more than 20 years of professional experience in public
policy, environmental planning, and computer systems development.
Now, before you get the wrong idea, I want you to understand that
I have always had to work for a living.
When I graduated from college, I was over $6,000 in debt to banks
for student loans and other financial aid.
I have always paid the taxes I owed. I have obeyed the law. And
I have never been arrested.
During those 20 years of experience, I came to tolerate the
normal shenanigans I witnessed in American politics ...
... until June of 1990, when I was presented with real material
evidence that the 16th Amendment to the U.S. Constitution was
never ratified.
You may already know that the 16th Amendment is the so-called
"income tax" amendment.
Page E - 4 of 12
Appendix E
I investigated and found that some 17,000 State-certified
documents have been assembled to prove that the 16th Amendment is
really a fraud.
The U.S. Secretary of State in the year 1913, a man by the name
of Philander Knox, simply "declared" it ratified, in the face of
serious problems which he knew existed with the ratification in
several of the States.
You should know that it takes three-fourths (3/4) of the States
to ratify an amendment to the Constitution for the United States.
Let me give you just a few examples of the obstacles which this
amendment encountered in some of the States.
In the State of Illinois, a State court ruled that "it never
became a law, and was as much a nullity as if it had been the
act, or declaration, of an unauthorized assemblage of
individuals."
In the State of Arkansas, the Governor vetoed the proposed
amendment and the State Legislature never overrode his veto. You
should know that the Arkansas Constitution does not exempt
amendments from requiring a Governor's signature.
In Kentucky, the Senate Journal contains a clear statement that 9
Kentucky Senators voted FOR the amendment, and 22 voted AGAINST
the amendment. And yet, Philander Knox declared that the State
of Kentucky ratified the 16th Amendment.
This is obviously a serious matter, because we now have evidence
that one or more federal officials have actually tampered with
the supreme law of the land, contrary to their own sworn oaths of
office.
The year was 19131, an ominous year in the history of America.
In that same year, the Federal Reserve was established.
Look in your wallet for a moment, and pull out a Federal Reserve
Note. Already, you have a big problem in your hands.
First of all, the Federal Reserve is not "federal". It is no
more federal than Federal Express, or Federated Hardware Stores.
There is no government copyright or trademark on using the word
"federal".
Secondly, there is no "reserve". If we have time, we will
explain what is meant by "fractional reserve banking".
____________________
1. On the pre-recorded video tape, Mr. Modeleski erred by
stating that the year was 1916. The correct year was 1913.
Page E - 5 of 12
The Federal Zone:
Thirdly, Federal Reserve Notes are not real promissory notes,
because they do not promise to pay anything, like gold, or
silver, or any real substance.
The Federal Reserve System was conceived by a conspiracy of
bankers and politicians who met secretly off the coast of Georgia
to create the Federal Reserve Act.
This Act of Congress was designed to remove the Constitution as a
constraint on the financial operations of the U.S. government.
It created a private credit monopoly which Congressman Louis T.
McFadden once called "one of the most corrupt institutions the
world has ever known". Congressman McFadden was Chairman of the
House Banking and Currency Committee from 1920 to 1933.
The operations of the Federal Reserve are complicated and
secretive. For example, this huge syndicate of private banks has
never been publicly audited.
I will do my best to simplify the operations of the Federal
Reserve for you.
The Federal Reserve System is set up to encourage Congress to
spend money it doesn't have -- lots of it.
Rather than honestly taxing Americans for all the money it wants
to spend, Congress runs up a huge deficit which it covers by
printing ink on paper and calling it bonds, or Treasury Bills.
Some of these T-bills are purchased by hard-working Americans
like you and me, with money that we obtained from real labor,
something that has real value.
But the deficits have become so huge, the wage earners do not
have enough money to purchase all these bonds every year.
So, Congress walks across the street, and offers these bonds to
the Federal Reserve. The FED says, "Sure, we'll buy those bonds.
Your interest rate is 8.25, or 9 and a half. Take it or leave
it."
Congress always takes it, because there's nobody else with that
kind of money. Remember, the Federal Reserve is a private credit
MONOPOLY.
Now, what does the FED use to purchase those bonds?
They CREATE money OUT OF THIN AIR, using bookkeeping entries to
manufacture credit out of nothing. They used to use pen and ink,
then typewriters, now computers do the job.
Page E - 6 of 12
Appendix E
This artificial money would normally create very rapid inflation.
This happened in Germany just prior to World War II, when Louis
McFadden was a Congressman. It eventually took a wheel barrow
full of Deutsche marks to buy one loaf of bread. Can you imagine
that?
The bankers realized that a mechanism was needed to withdraw this
artificial money out of circulation as quickly as it was put into
circulation.
Enter the Internal Revenue Service.
The IRS is really a collection agency for the Federal Reserve.
The FED pumps money into the economy, and the IRS sucks it out of
the economy.
This has the effect of artificially maintaining the purchasing
power of this "fiat money", as it is called by monetary experts.
This is one of the PRIMARY PURPOSES of the income tax.
We know this to be true, because a man named Beardsley Ruml
explained it clearly in an essay he published in 1946. Beardsley
Ruml was chairman of the Federal Reserve Bank of New York, so he
was in a position to know.
The shocking fact is that Federal income taxes do not pay for any
government services; they are used to make interest payments on
the federal debt. These interest payments are now approaching 40
percent of the federal budget.
Now, the Federal Reserve Act is unconstitutional for many
reasons, foremost among which is that Congress delegated to a
private corporation a power which Congress never had, that is, to
counterfeit money.
It is unlawful for Congress to exercise a power which is not
authorized to it by the Constitution. The People (you and I) and
the States reserve ALL powers not expressly delegated to the
federal government.
Congress got hooked on this sweetheart deal and started spending
money so fast, it quickly bankrupted the Federal Government.
This may also come as a shock to many of you. And you might feel
that what we are about to say is paranoid or crazy. We felt this
way too when we first discovered it. We couldn't believe it. So
we investigated.
Our research discovered that the bankers foreclosed on the United
States Treasury no later than the year 1933. They called the
loans and confiscated all the gold then held by the U.S.
Treasury.
Page E - 7 of 12
The Federal Zone:
An Act of Congress caused all that gold to be transferred to the
Federal Reserve banks. Remember, those are private banks. And
the Treasury Department is NOT the U.S. Treasury Department.
To secure the rest of their debt, Congress then liened, in
effect, on the future property and earnings of all the American
people, through Social Security taxes, payroll withholding taxes,
inheritance taxes, and the like.
Congress mortgaged the American people, using our labor and our
property as collateral.
What Congress did was analogous to this: I walk into a large
department store and see a new toaster I want. I tell the sales
person to ship it to my home tomorrow, and to send the bill to
Willie Brown.
Now, when Willie Brown gets the bill for this toaster, he's going
to be pretty mad, and rightly so. He didn't order the toaster;
he doesn't own the toaster; he wasn't a party to the transaction.
In fact, he didn't even know about it. And yet, I am holding
him responsible to pay for the toaster.
In this example, I am Congress; the department store is the
Federal Reserve; and Willie Brown represents the American
people.
This is fraud, because Congress did not openly and freely
disclose the real reasons for its actions.
Lack of full disclosure is grounds for fraud in any contract.
The Uniform Commercial Code says so.
And yet, all Americans are being unlawfully enslaved by this
fraud, to help discharge the debt which Congress has tried to
impose upon all of us.
Now, at this point, we will show you how to contact us to obtain
more information about this fraud. If you're not recording this
program, get a pencil and write down our mailing address:
Account for Better Citizenship
c/o Post Office Box 6189
San Rafael, California Republic
If you will send us a stamped, self-addressed envelope, we will
be happy to send you a free reading list, and also a list of
organizations which you can contact to obtain more information
and to get yourself more involved.
Page E - 8 of 12
Appendix E
We will also send you a list of other documents which you can
purchase directly from us.
For example, we have already filed several formal complaints with
the Congress of the United States concerning the 16th Amendment
fraud. These complaints include a request for a Grand Jury
Investigation right here in Marin County.
Another document is a formal letter to all the Governors of the
50 States, putting them on notice of the great fraud and
deception under which the American people now suffer. This
letter includes a series of attachments which fully document the
fraud and deception.
Now, I want to talk a little bit about the law itself, the
Internal Revenue Code, and the IRS administration of that law.
The law and its administration are two completely different
things.
Under the Constitution, federal direct taxes on private property
must be apportioned. Your wages are private property.
Apportionment means that California pays 10 percent of the bill,
if California has 10 percent of the nation's population. This is
one of the reasons why we have a census every decade.
In its administration of the internal revenue laws, the IRS is
now imposing income taxes as direct taxes without apportionment,
and cites the 16th Amendment for its authority to do so. Well,
you now know that the 16th Amendment never happened.
Another big problem is the legal definition of "income". Believe
it or not, the term "income" is not defined anywhere in the
Internal Revenue Code. All by itself, this renders the law null
and void for vagueness.
On numerous occasions, the U.S. Supreme Court has already decided
that "income" means profit or gain, and wages are not income. In
one of the most famous of cases to decide this question, the case
of Eisner versus Macomber, the Supreme Court said:
... it is essential to distinguish between what is and what
is not income, and to apply that distinction according to
truth and substance, without regard to form.
And, in what must have been one of its finest hours, that same
Court also said:
Page E - 9 of 12
The Federal Zone:
Congress cannot by any definition it may adopt conclude the
matter [of defining income], since it cannot by legislation
alter the Constitution, from which alone it derives its
power to legislate, and within whose limitations alone that
power can be lawfully exercised.
Now, the law is something entirely different from the IRS
administration of that law. In order to understand the law
itself, we have consulted with legal investigators, attorneys,
professors, and paralegals. With their expert help, we have come
to conclude the following:
The citizens and residents of the United States are required to
pay income taxes. But what is meant by the term "United States"
in the Internal Revenue Code?
Well, this term has three different meanings, depending on the
context. First, it may mean the name of a sovereign nation
occupying the position of other sovereigns in the family of
nations.
Secondly, it may mean the collective name for the 50 States which
are united by and under the Constitution.
Thirdly, it can also mean the territory over which the federal
government has exclusive jurisdiction. This territory includes
only the District of Columbia, and the limited territories and
possessions which belong to the Congress of the United States.
These are places like Guam, Midway, and the Virgin Islands; they
do NOT include the 50 States of the Union. Congress does not own
California, for example.
When the law states that citizens and residents of the United
States are required to pay income taxes, the law is using the
term "United States" in this third sense.
The law says that if you're not a "United States citizen", then
you're an "alien". Also, the law says that if you're not a
"resident of the United States", then you're a non-resident.
Accordingly, most American Citizens, born free in one of the 50
States, living and working in one of the 50 States, are therefore
NONRESIDENT ALIENS according to the Internal Revenue Code.
I know it sounds strange, but the law is not referring to
creatures from outer space. The law is referring to the
creations of lawyers. You are "alien" with respect to the
federal government's areas of exclusive jurisdiction, if you were
born outside those areas.
Page E - 10 of 12
Appendix E
You are a "citizen" of the federal government if you were born in
the District of Columbia or in one of these limited other areas,
or if you elected to become a "citizen" through a process known
as naturalization.
There are only 2 reasons why NONRESIDENT ALIENS must pay federal
income taxes:
(1) They either have income that is effectively connected
with a trade or business inside the United States
(using the third, limited definition of the United
States), and/or
(2) They have income from a source inside the United States
(again, using this third, limited definition).
Aside from these exceptions, nonresident aliens pay no taxes on
their earnings.
So, talk with your CPA or tax attorney, and be sure to clarify
your status. You may want to consider filing IRS Form 1040NR
next April 15. If you have no income which falls into these two
categories, then you can put ZERO on line 23, the income total.
Be careful about attaching any W-2 or 1099 forms. Section 6065
of the Internal Revenue Code requires that such documents be
certified. If they are not certified, they are not valid.
Now, if you have ever filed one or more 1040 forms in the past,
the government is entitled to presume that you are a person who
is required to file a return and to pay federal income taxes.
This is called the "law of presumption", and your 1040 forms can
be used as evidence to prove that you are required to pay, even
when you are not. So, you may need to reverse this presumption
on their part, to prevent this from happening.
Thus, you should consider setting the record straight by sending
a formal AFFIDAVIT to the Secretary of the Treasury, which will
clarify your actual status and leave no doubt about their lack of
jurisdiction over you.
On the list of organizations we will send to you, there are
several groups around the country who can assist you in preparing
and executing this affidavit.
Enough of these details for now.
To summarize, chances are, you have been volunteering federal
income taxes in the past, and there is actually no legal
requirement for you to continue doing so in the future.
Page E - 11 of 12
The Federal Zone:
If you would like me to speak with your CPA or tax attorney, I
will be happy to share the results of our research with them.
In the meantime, get yourself involved, and study the
Constitution. Find out how interesting and exciting it can be.
You have often heard that we get the government we deserve.
Let's do everything we can to deserve the very best government
that any nation has ever had.
I say these things because I hold these truths to be self-
evident:
That all of us are created equal;
That we are endowed by our Creator with certain unalienable
rights;
That among these, are the rights to life, liberty, and the
pursuit of happiness;
That, to secure these rights, governments are instituted among
us, deriving their just powers from our consent;
And that, whenever any form of government becomes destructive of
these ends, it is our right to alter or abolish it, and to
institute a new government, laying its foundation on such
principles, and organizing its powers in such form, as to us
shall seem most likely to effect our safety and our happiness.
And to this end, I dedicate my life, my fortune, and my sacred
honor.
Thank you very much.
# # #
Page E - 12 of 12
