Morton knew he was being investigated by the SEC as early as 2007, Delphi newsletters show, and in 2009 he attempted to sue the agency, arguing that its agents were harassing him and Melissa so that they could go on taxpayer-funded trips to California where, he charged, they alternated between bullying the couple, visiting Disneyland, and making runs to In-N-Out Burger. The lawsuit was dismissed and the Mortons lost their SEC case as well. In February 2013, they were ordered to pay $11.5 million to the SEC within fourteen days.
They didn’t pay. Instead, Morton essentially wrote the government an IOU for $50 million, instructing them to withdraw the money from the Federal Reserve, another tactic favored by redemption theorists. He insisted that had taken care of the matter and successfully shaken the feds off his back. Life seemed to return to normal. He started hosting an Internet-based radio show every afternoon called Strange Universe, ruminating on taxes and UFOs with equal verve.
Meanwhile, Morton had dipped a toe into redemption theory and was heading deeper into those waters. The turning point was a lecture given by Brandon Adams at a New Age bookstore and event space in Los Angeles called the Living Temple where Morton heard about some novel methods for getting out of debt. Adams and his business partner, Gordon Hall, a brash, Trumpish real estate developer and gym impresario, had set up a company called Creditors In Commerce that drew up fake money orders for their clients to send to the IRS.
Adams comes from a family of redemption theorists, very prolific ones: they advanced far beyond Roger Elvick’s basic ideas of how to reclaim one’s straw man and started experimenting with their own ideas about how to eke money out of the federal government and avoid paying taxes. At one time, his father, Alexander, his brother, Garrett, and he were all in the business of preparing falsified tax returns using phony money orders. Then, through Creditors In Commerce, Adams and Hall sent the IRS fake payments amounting to a whopping $93 million. The money orders did not actually discharge anyone’s debt—surprise—and Hall, who already had previous fraud and racketeering convictions dating from financial entanglements with the mob, was sentenced to ninety-six months in prison while Brandon was given a forty-month sentence. In a press release, the Justice Department said the men had met at “various seminars associated with the sovereign citizen movement.”
You would think that seeing Adams troop off to prison would act as a deterrent, but it didn’t seem to work that way for Morton. He began to use a system to evade debt that relies on something called a 1099 OID form. OID stands for “original issue discount,” and a 1099 OID form is used to report to the IRS the interest expected on bonds or other financial instruments that won’t mature for at least a year. Redemption theorists believe that OID forms function something like an IOU from the government. If a person sends one to a creditor, such as a bank or a credit card company, in the amount that’s owed, the creditor can then reclaim the money from the Treasury. Redemption theorists also believe that a 1099 OID can provide direct access to a person’s straw-man account—by reporting huge expected earnings from future interest, a person filing taxes can claim a sizable tax refund from the IRS.
In the Mortons’ case, they had reported various kinds of income on 1099 OID forms, according to the IRS. In documents filed with the court, it looks as if they simply reported their credit card debt as income. They also reported large withholdings from income that they hadn’t earned to claim a refund from the IRS.
At least once, these schemes worked: in 2008, the IRS mistakenly issued Sean a refund of $480,323. According to the Justice Department, “the couple took immediate steps to conceal the money” on the same day the refund was deposited into their joint account, which involved “opening two new accounts, transferring over $360,000 to the two new accounts, and withdrawing $70,000 in cash.”
The Justice Department claimed that when the IRS tried to take back the mistaken refund “the Mortons began a campaign to thwart the government’s collection efforts.” Melissa, for example, claimed that the joint account was hers alone. (At various points, she also listed herself on Facebook as single; perhaps part of a plan or simply some unrelated marital tension.) The IRS was also reportedly presented with “various ‘coupons’ and ‘bonds’ that purported to pay off the Mortons’ debt.” In essence, Morton did what he’d done years before with the SEC: instructed the government to pull money out of the Treasury to pay what he owed. And he sold the same bond scheme to others who owed money to the IRS, the state of California, or credit card or mortgage companies, filing paperwork on their behalf that the FBI described as “useless.”
Morton, for his part, says he was just fighting gross injustice. “There’s a huge inequity in society,” he told me. “People are just being raped by the banks. If you really want to know why I got into it, I wanted to help kids with student loans.” And that the charges are all made up. “It’s all inchoate offenses. It’s all imaginary,” he insisted. “They will not be able to produce a single original piece of evidence,” he said confidently. “Nor will they be able to produce a single person that we’ve harmed.” He was fairly sure the case would never actually go to trial.
In this, Morton’s prediction was wrong. The trial began on an unremarkable sunny April day in Los Angeles in Judge Stephen V. Wilson’s courtroom. The Mortons silently took a seat at a long table with Melissa’s attorney, Steve Brody. Sean had chosen to represent himself, filing dozens of motions before the trial began that the judge called “utterly devoid of merit” and “frivolous.” He refused to attend a pretrial conference or call any witnesses in his own defense, and on day one he also objected to the jury hearing the full indictment against him and his wife.
“It would be prejudicial for them to hear that many lies all at once,” he told the judge. Morton chuckled. No one else did.
Over the course of the trial, Morton looked cocky, exasperated, infuriated, and, by the end, in a state of shock and close to panic. Watching him was a surreal experience: it took him, in my view, a startlingly long time to realize how much trouble he was in. He was in weirdly good spirits, singing “King of Pain” by the Police as he took the stand until he was reprimanded by a bailiff. At various points he laughed as he watched himself in YouTube videos shown to the jury. Melissa appeared blandly pleasant and impassive. In fact, she was mild and near-silent most of the time. In contrast to her husband’s colorful peacock persona, Melissa reminded me of a Sunday school teacher or, frankly, a sister-wife in a sunny fundamentalist fantasy. In their free time, I know from social media, the two of them raised show cats, pampered longhaired creatures with their own bedroom, which the IRS raided in an attempt to find various tax documents.
One morning, as the trial was getting under way, Melissa stopped in front of me, resplendent in a puffy pink sweater. I looked up in surprise. “You do not have permission to use my name or likeness,” she said very sweetly, in an even tone. “And no comment.” As she walked away, I called after her with something like “Ms. Morton, that’s not how it works!” She didn’t turn around.
Melissa remained a mystery to the judge and jury, too. The prosecution focused most of its case on Sean, but noted that Melissa had certainly participated, sending out paperwork and talking to clients by phone. Brody, her lawyer, wanted to separate Melissa’s actions as much as possible from her husband’s. It seemed difficult to do. “Is your argument that she was the dutiful wife and he was the decision-maker?” Judge Wilson asked him at one point, outside the presence of the jury. During his testimony, Morton let drop that Melissa previously worked for a bank, which would—you would think—mean that she knew just how foolhardy the OID form scheme was. Brody moved for a mistrial at that moment, arguing that the tidbit was impossibly prejudicial to the jury, but Wilson denied it.
Over five days of testimony, a string of witnesses—bank and credit card company employees, mostly—explained that the Mortons, on behalf of themselves and their clients, tried filing 1099 OID forms as well as exotic financial instruments they weren’t permitted to use, like Treasury offset forms. Also testifying was Ted Lepkojus, a retired IRS agent whose job is pursuing what he gently terms “unpaid tax cases,” who also admitted that he and other IRS agents use aliases to investigate people like the Mortons. (The IRS declined to answer questions about that. For years, much of Morton’s income was derived from giving workshops, first in ESP, and later in straw man and redemption theory tactics. I’d been present at a few of his seminars, and while the information presented ranged from nonsense to flatly illegal, they were usually full of people busily taking notes. After the trial concluded, it occurred to me that some of them might have been undercover agents from the IRS.)
The agents’ use of an alias only reinforces the redemption theorists’ sense of taxes as an illicit enterprise. Although redemption theory targets desperate people, it also takes advantage of two facts: the tax code is impossibly, impenetrably hard to understand; and there is always someone, somewhere who has found a way to beat it. Anyone who knows that corporations and millionaires often end up paying very little in taxes is primed to find that argument persuasive. In court, Morton himself tried to tap into Americans’ fundamental distrust of financial institutions. “We’re swimming in debt,” he told the courtroom. “All of us. We’re being crushed by two organizations. Look who we’re going up against today: it’s the banks and their surrogates, the Internal Revenue Service.” He described the banking system and the IRS as “two of the most malicious and pernicious organizations on the planet,” which is not, honestly, an unreasonable or unsympathetic argument.
Morton’s logic was persuasive: Barbara Lavender, a victim of his scheme, had paid the Mortons $2,500 to help get her out of debt. Lavender and her husband had debts amounting to $48,000 when she was laid off from work; the amount ballooned to $70,000, and they were getting desperate. Her husband saw Morton speak at a conference and came home with one last-ditch idea. Lavender didn’t think what she was doing was illegal: “I thought the bank would accept the OID form as a method of payment.”
“Did it seem strange to you that you could get rid of $70,000 in debt by paying $2,500?” a prosecutor asked Lavender. “I suppose when you put it that way, it does,” she said, sounding a little abashed. “But I honestly thought he’d found a loophole. You hear it all the time, that wealthy people have their tax loopholes. I was heading into retirement, and I was willing to give it a try.”
As his own lawyer, Morton got to question and cross-examine witnesses, a task he clearly relished. At one point, he was face-to-face with Luke Yoo, an IRS agent who had raided his home. The IRS seized computers, tax documents, and the Mortons’ marriage license. Sean maintained that they kicked in the couple’s door, entered with guns drawn, and dragged Melissa, recovering from knee surgery, out of bed. (The IRS says they knocked.)
“How many on your team were dressed like jackbooted Nazis?” he asked Yoo, raising his voice. “Did you witness them assault my wife, take her wheelchair, and throw it across the room? Did you photograph the physical assault on my wife?” (Yoo responded that he’d been covering the operation from outside and hadn’t witnessed anything in particular.)
When it was his turn to testify in his own defense, Morton took the stand with tiny glasses perched on his nose and a thick sheaf of notes and delivered a long monologue—his version of the magic words—meant to stop the trial in its tracks. “Be seated and answer questions,” Judge Wilson ordered him, cutting through Morton’s declamations of “in good faith I do move” and “in violation of rights.” Reluctantly, Morton sat.
Crucially, the trial sought to determine whether the Mortons knowingly broke the law, whether they genuinely believed that OID forms could be used in the way that they tried, and whether Morton chose selectively to avail himself of US citizenship, which would undercut the sincerity of his positions.
As Judge Wilson told the jury, “ultimately, one of the things you’ll have to decide is whether or not Morton had a good faith belief in what he did. Crimes require a specific intent and bad faith, a bad motive. Good faith is a defense. So, I’m not going to allow him to tell you what the law is or how the banking system works because he hasn’t established—at least in my view—his qualifications to do that. But he can, if he wishes, tell you what he believes the system involved and what the law was when he did the things he did.”
And Morton did. He knew nothing about the 1099 OID process before meeting Adams, he testified. “I was a spiritual guy who was writing spiritual newsletters.” He truly believed that Adams’s system was “a legitimate process under the law.” He added, “I never, ever, ever in any of this thought that I was breaking the law. I thought this was the law. I thought everything we were doing was absolutely legal.”
But Morton’s own picture of himself shifted, from insisting he knew nothing—a spiritual, naive innocent—to painting himself as nothing less than a financial freedom fighter. “I still firmly believe,” he told the jury, “even though I have all this evidence to the contrary, that there’s hope for us. There’s got to be some kind of system to offset the crushing debt that the banks put us all under—that there’s some way to stand up to them and be a hero.”
It got worse for Morton when Assistant United States Attorney Valerie Makarewicz started to ask her questions. Makarewicz, who was in the Tax Division of the Southern District of California, was personally sued in civil court by Morton before the criminal trial began, along with another government attorney, James Hughes. The two were accused of a battery of very strange things: fraud was the most legible accusation, followed by “malicious legal processes.” A few other things were thrown into a voluminous thirty-nine-page complaint: accusations that the attorneys acted as foreign agents, that they failed to post photographs of their bar cards as required by law, and probably ten or twenty other items I missed. Every paragraph is a logical and grammatical and punctuational adventure. Morton identifies himself and Melissa as “of the Morton hacienda,” and every page was inscribed with the words “In the Name of Our Heavenly Father.”
Makarewicz intended, as quickly as possible, to get Morton to admit that he behaved like a citizen of this country when it suited him.
“Are you a citizen of the United States?” she asked him directly.
“That’s a hard question to answer,” he told her placidly. “Under the Fourteenth Amendment, I consider myself a citizen of California and an American national.”
The Fourteenth Amendment is the one that says anyone born or naturalized in the United States is a citizen of the United States and the state where they reside. It holds a special place in the cosmology of sovereign citizens: many believe they can formally renounce the first part, that which makes them a federal citizen, while keeping their state allegiance intact.
The jury didn’t know of any of this: they just watched, brows furrowed, as Morton declined to respond to something that probably looked simple.
“Your honor,” Makarewicz said, a little exasperated. “Please ask the witness to answer the question.”
“Again, I’m a citizen of the state of California, the sovereign people of California and an American national,” Morton said.
“Do you reside in the United States, sir?” Makarewicz asked icily.
“There’s different definitions,” Morton said, smiling faintly. “Can you define the United States for me?”
Makarewicz looked at Judge Wilson, who verbally shrugged back at her. “I can’t go any further,” he said. “You’ve asked the question and he’s given the answer.”
Makarewicz got Morton to admit that he hasn’t filed a California state tax return since 2000. She also tried to get him to admit that he enjoyed the “benefits of being a US citizen,” as she put it.
“You enjoy the benefits of the US military, don’t you?” she asked.
“California has a national guard and local police,” Morton shot back. “I don’t know that I’ve ever been protected by the US military.”
Makarewicz got Morton to admit that he drove to court on a public road, that he used state water and sewer systems, and that he’s used the state court system.
“You sued me,” she reminded him.
“I did, because you wouldn’t answer my questions about what’s the jurisdiction you have under the Sixth Amendment,” Morton informed her. “And how come I’m not facing a plaintiff here today.”
Makarewicz also asked if Morton had a passport, an answer that perhaps gave her more than she anticipated.
“I’ve had diplomatic passports from countries and nation states that we’re attempting to start,” he told her. (One of them was called the Republic of New Lemuria; starting ersatz countries is another sovereign practice.) “As an ambassador I was immune from filling out tax ID numbers,” he added. Makarewicz almost imperceptibly shook her head, as if to get a gnat out of her ear.
Makarewicz came to the trial seemingly irate at Morton for having sued her, but in truth she and her co-prosecutor could have had it much worse than a tiny, easily swattable lawsuit in civil court. As noted, sovereigns and redemption theorists regularly file liens against court officers and law enforcement officials as a method of retaliation. In 2013, for example, a Minneapolis couple named Thomas and Lisa Eilertson filed a whopping $250 billion in liens against various government employees, an act of revenge after their home had been foreclosed in 2009. Their targets included the local sheriff, the county registrar, various court employees, and attorneys for the county. “It affects your credit rating, it affected my wife, it affected my children,” Sheriff Richard Stanek told the New York Times, referring to the liens. “We spent countless hours trying to undo it.”
The tactic is referred to as “paper terrorism” (and Morton himself has jocularly referred to himself as a “paper terrorist”). It takes advantage of the fact that anyone at all can file a lien under the Uniform Commercial Code. Though invalid liens can be cleared up, it can take a very long time. Some states have made it a felony to file fraudulent documents to retaliate against government officials, and some places give secretaries of state more discretion in whether to accept a lien filing, but the system remains pretty piecemeal.
Even though Morton didn’t file a lien, suing the attorneys who are prosecuting you seems like a good way to earn a specially heaping portion of their ire. But it also illustrates something fairly central about redemption theorists: they recognize the legitimacy of some institutions—like the court system—when it suits them, and try to use it to their advantage.
Morton can elicit fury and disgust for promoting a misleading set of promises to desperate and broke customers. Indeed, during her questioning, Makarewicz noted that at least twice, Morton had charged families $2,500 to get their loved ones out of prison using some version of his bond scheme. Both times he failed, and both prisoners were still very much locked up. Redemption theory can feel like a thin legitimation for greed and a desire to live outside the law, an unwillingness to follow rules the rest of us have agreed to live by. It’s not like I enjoy paying my taxes.
At the same time, though, Morton’s crimes are a tiny droplet in the vast, dark ocean that is American economic Darwinism and financial cruelty. Morton was correct that the system is stacked against ordinary Americans: the subprime mortgage crisis forced millions from their homes while the banks were assiduously bailed out; millionaires were allowed to flee from the mess they created with the sturdiest of golden parachutes. Our state protections are so weak, our safety net so threadbare, that it is hard to condemn people who seek a way out, even an illegal one.
Indeed, some people do believe in the redemption system: one witness stepped forward, Carol Lee Meyer, who insisted that Morton’s plan worked, that he saved her home from foreclosure. (Makarewicz gently pointed out that the bank was still trying to seize her home and that she had to file for bankruptcy. Morton’s bond process might have slowed and tangled the process, the way that phony filings sometimes do, but Meyer was almost certainly going to lose her house.)
And Sean Morton, especially, belongs to a long and colorful tradition of American hucksters, seekers, and strivers, a traveling salesman with a paper blend of snake oil. When I looked at him, I could lower my blood pressure by thinking of medicine shows and quack cures as forms of national eccentricity. He was often hard to demonize, with his weird blazers and their pocket crests, his obvious joy when he talks about aliens (at other times, when I heard him make xenophobic jokes about Muslims, or used rape as a metaphor for what the courts were doing to him, he was far less sympathetic).
By the last day of his trial—when reality finally appeared to take hold—there was little but pity. Before closing arguments, Morton sat outside the courtroom, rocking gently, a sad Humpty Dumpty.
“Sit down,” he invited me, without preamble. “It’s so hard,” he said, looking at the ceiling. “Especially when all I set down to do is help people.” He seemed short of breath. “It all boils down to intentions, doesn’t it? We were following the letter of the law. We studied and studied. But they’re spending ten million dollars on this case. They want to give us jail time in amounts like Nazi war criminals or Jeffrey Dahmer.” When he was in the monastery in Nepal for eight months, he took a sacred vow to work for the enlightenment of all beings, he said. And now his rights were being violated because of his choice to shun corrupt systems.
“This is all about freedom,” he claimed. “We’re fighting the IRS and their mangled bastard child, the banks. People voted for Trump because they wanted to tear down the IRS.”
Jury deliberations took just two hours. Upon hearing the guilty verdict, Melissa reportedly collapsed to the floor and had to be revived by paramedics.
The judge set a sentencing date for Sean in June 2017, but he failed to show up. He filed a nonsense motion that same morning, directing that his case be moved to the Supreme Court. He also missed the taping of Strange Universe, his radio show, calling his cohosts from what sounded like a car on the highway.
“I’m fine,” he said, not quite convincingly. “I’m out and about here somewhere. It’s okay as far as everything goes.” He insisted that the case was indeed “with the Supreme Court” now.
In the days that followed, while still a fugitive, Morton created a GoFundMe fund-raiser titled “Future for Melissa,” asking for money to help her move. Where she planned to go, it wasn’t clear, given that she was facing her own sentencing date. (“I think she’ll get all the assistance she needs relocating to a bunk bed at FCI Dublin,” one Twitter follower said dryly.) The GoFundMe soon disappeared.
For her part, Melissa signed a presentencing agreement committing to avoid contact with Sean. “Does anyone know how to sell a whole lot of comic books that isn’t too time consuming?” she posted on social media one day. Another time she posted, “I’m not afraid to admit when I make mistakes—like the one time I got married!” But love isn’t the most rational of forces, and in August the Mortons were arrested together, at a hotel in Desert Hot Springs, California. According to the government, they’d checked in to watch the solar eclipse.
At their sentencing, Morton tried to change his plea to declare himself a Fourteenth Amendment citizen. Judge Wilson denied every one of his proposed motions, saying only, “Too late, Mr. Morton.” He was sentenced to seventy-two months in prison and five years’ probation and ordered to reimburse the $480,000 owed to the IRS, as well as a fine of $2,900, to be paid in quarterly increments of $25 from prison. He was also barred from working in any business related to debt relief.
At Melissa’s sentencing, according to the website UFO Watchdog, she entered the courtroom in a wheelchair and read an emotional letter of apology: she was taking responsibility for her actions, the experience had “kicked her in the behind” and “set her on the right path.” She added, “This would have never happened had I not met Mr. Morton.” Judge Wilson believed she had come under “some kind of Svengali-type influence” from her husband: she was sentenced to twenty-four months in prison and five years of probation, and fined $2,800.
The government was eager to set an example for other would-be redemption theorists. To Melissa’s sentencing memorandum, the prosecution added that the case presented a powerful need and opportunity for the court “to deter similar ‘sovereign citizen’ fraudsters,” as they put it. “Members of the tax-defier movement will take note of whatever sentences the Court imposes upon defendant in this case.”
But the sentence served only to strengthen Morton’s inherent belief that the American financial system is a stacked deck, impenetrable, unfair, a Minotaur’s lair built to ensnare people who enter into it without the proper weapons.
“The courts and the bar association are all protecting the banks,” he had said, months before his disastrous day in court. “Redemption should work, does work, legally works.” He looked troubled, as though he were getting a psychic twinge of what was to come. “But they just refuse to do any of it.”