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Life Without Debt Leaves Jimmy Phipps Owing Society

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As government scrutiny intensified, Phipps shifted his program emphasis from positive mental attitude/self-help platitudes to history, law and taxes laced with diatribes on government corruption. The heat forced him to frequently shut down his programs and resurrect them under new names with new policies that he says were instituted to address government concerns. In 1994, the post office put him on notice that he was in breach of the 1988 injunction he signed by operating another illegal pyramid scheme under a different name. Between 1993 and 2001 Phipps was slapped with cease-and-desist letters from various state and local government agencies in California, Georgia, Oklahoma, Florida and Michigan. Phipps fought back. In a fit of temerity, he sued Michigan Assistant Attorney General Robert Ward in federal court for violating his constitutional rights by threatening to shut down his Paymaster Profit Systems program in that state. He demanded $1 million in damages. The suit was tossed.

Enter the IRS. They sent agents to Phipps' house in an attempt to audit his records. Phipps held his ground here too. "I told them to get the hell off my property," he says, fuming. "I told them that I'm a private citizen and that they didn't have any jurisdiction to audit anything."

To officially buttress his claims, Phipps penned letters to President George W. Bush, Supreme Court Justice William Rehnquist and IRS Commissioner Charles O. Rossotti in October 2001 renouncing his citizenship in "the corporate United States" and repatriating to the "Republic of the Several States." Through such letters, Phipps reasoned, he was reclaiming his original citizenship rights enumerated in the Constitution, in effect exempting him from federal and state laws and taxes. Phipps had immunized himself. The feds were powerless to act. Or so he thought.

Phipps animated his vindictive streak through his program materials, essentially tendentious derivations of the works of others. Chief among them was G. Edward Griffin's Creature From Jekyll Island, a book exploring the skullduggery surrounding the founding of the Federal Reserve System. The grist of Griffin's book is a shadowy, secret meeting in 1910 of some of world's most powerful bankers at an exclusive private hunting resort at Jekyll Island, Georgia. Here these powerbrokers sketched the basic contours of what would become the Federal Reserve Act, which passed a skeptical Congress in December 1913.

Phipps says his program members were dumbfounded to learn the Federal Reserve and its network of regional banks is not a federal agency but a private institution acting as the fiscal agent of the U.S. Treasury. Its member banks, though federally chartered, are independent, privately owned and locally controlled corporations.

Griffin characterizes the Federal Reserve System as a pernicious cartel in direct conflict with the public interest, generating currency out of nothing but debt and federal borrowing, a system that essentially renders the dollar worthless over the average American's lifetime through incremental inflation.

Phipps swallowed Griffin's teachings whole, excerpting bits and pieces of his works—along with the writings of tax protesters such as the late Howard Freeman and Lynn Meridith—in his program manuals. These ideas formed the bedrock of his own self-published books and pamphlets such James Ray Phipps' Political Science for Surviving the New Millennium and Exposing the Federal Reserve System and the International Bankers.

Phipps disdained money, his program members say, often referring to it as paper trash. "[S]ince 1913 the laws of our nation, as per the Constitution and Bill of Rights have been perverted on behalf of the central bank, which turned our nation's Constitutional Republic into a Socialist controlled so-called democracy," Phipps writes. Americans are being robbed of their property, financial resources and liberties by politicians and bureaucrats who generate great gobs of debt "in the people's name."

Phipps is equally disdainful of the income tax. He believes the 16th Amendment establishing the income tax never authorized taxes on wages but was applicable only to passive investment income. He believes Supreme Court precedents have firmly established that income tax compliance is strictly voluntary and that Americans are not required to file tax returns. He believes the tax code was devised as a tool to hook Americans on an endless cycle of borrowing to fatten bankers and empower politicians and bureaucrats.

"I am the worst nightmare that a crooked, bully politician or public official can have," writes Phipps from prison, "because I am honest and I have a big mouth and I am not afraid of them."

It's this megaphoned fearlessness that Phipps seems incapable of curbing, even when it puts him at risk. During his weekly conference calls, some secretly recorded by the IRS, Phipps drips with contempt.

"Most people living in the individual states are under the wild assumption that they have to give up 30, 35, 40 percent of their paycheck to the federal government who has basically been lying, cheating and thieving them ever since they took out their little Social Security card at age 18," he says. "...They force people into doing things that they're not legally obligated to do...bully them to death as long as the individual is stupid enough to let them do it. And I can understand that, you know, when you got a wife and kids, you don't want to spend too much time down at the fed hotel."

Strangely, the victimized American public—the very people Phipps claims he's tasked with saving—are not spared the bite of his vindictive streak. Phipps often drives his points in language dripping with condescension. He lambastes people for their general stupidity, for their refusal to open their eyes to the corruption of the financial and political systems that are robbing them blind.

When challenged on the mechanics of his networking programs, he bristles, insisting any third-grader can grasp it. "I don't have much patience with adults [who] are dumb as a rock and refuse to open their mind," he writes from prison. "Do you think Bill Gates or any other math- or science-oriented person would have any more patience with stupidity of those who are responsible for [the] design of their products than I do?"

In 1996, Phipps met Ora Lee Calloway at a Glenn W. Turner "Dare to be Great" conference in Georgia and was immediately smitten. She had only a suitcase to her name, he says. Calloway, 61, was a poor little Alabama girl, he says, a working woman who never had a life or an opportunity to do anything or go anywhere. "She liked me at the conference, and she decided to see what Texas was about," he says. So he brought her to Colleyville. He taught her how to use a computer. He showed her how to work his mailroom. "I just done whatever it took to help James get his day's work done," she says, from her home in Alabama. "If he needed help, I was there."

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