STATE OF SIEGE

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ON THE COLD, FLAT STRETCHES of Garfield County, Montana, the self-proclaimed Justus Township is a bump on the taut horizon. fbi agents wearing flak vests and side arms who kept watch on the place last week saw a farmstead sprawl of family houses, cabins, trailers and some outbuildings in the midst of 960 acres of open land. All of it once belonged to Ralph Clark and his brother Emmett, busted wheat farmers turned fringe ideologues. Visitors say that these days Ralph Clark sometimes wears a lawman's five-pointed star, to signify that he's the law. For him and the 10 or so other Freemen holed up inside, some of them for more than a year, the compound is sovereign territory, with its own courts, laws and officials. It's also their light armory, ministry of information, and--the most important thing--national bank.

Over the past year, the self-styled Freemen churned out more than $1.8 million in phony money orders and other financial instruments, according to federal indictments. They used those to defraud banks, credit-card companies and mail-order businesses. A favorite tactic was to use liens filed against the property of government officials and others, then issue worthless money orders or checks using that property as collateral. Some unwary businesses, car dealerships, even the irs, have accepted them. Meanwhile, the Freemen have allegedly harassed local officials and brazenly taught weekend seminars in fraud and larceny to hundreds of out-of-state visitors. The attendees then spread out to practice what the Freemen preached: that bank debts and other obligations are invalid because the banking system and the U.S. government are themselves illegal.

With the arrest last week of two of the group's leaders and an escalating fbi presence around the Clark farm, Justus Township is no longer merely the headquarters for the Freemen's crooked amalgam of extremism and thievery. It's also the first major testing ground for federal law enforcement in the nervous aftermath of two disasters--the deadly shootout with white separatist Randy Weaver at Ruby Ridge, Idaho, and the Branch Davidian inferno near Waco, Texas, in which more than 75 people were killed. In its handling of such standoffs, the Justice Department is at pains to re-establish the line between force and recklessness. The word this time is play it cool and play it down. Attorney General Janet Reno, who took heat for approving the final assault at Waco, summed up the order of the day for Montana: "No armed confrontation, no siege and no armed perimeter."

The irony is that for months local officials have been begging for the cavalry to arrive. The Freemen have spent much of the past year in a campaign of intimidation, confident they could outgun local law enforcement, which in those parts means Sheriff Charles Phipps and his deputy. Since April 1, 1994, when the Clarks first retreated to their farms, later to be joined by fugitives from other areas, the Freemen have posted $1 million bounties on the heads of Phipps, county attorney Nick Murnion and local bankers, threatened to kidnap and hang local judges, and put phony liens on the property of anyone who got in their way. Prosecutors say they used one bogus money order in a failed attempt to buy $1.4 million in arms and ammunition.