Introduction to ‘Paper Terrorism’
Texas real estate agent Tara Jarrett opened the online class with a prayer, bowing her head and closing her eyes. What followed was a lesson on revenge, specifically on how to file liens to punish public officials, such as politicians and judges, who they alleged aren’t upholding their oaths of office. These liens are recorded in state Uniform Commercial Code databases, public filings intended to alert creditors about business debts and financial obligations.
The Process of Filing Liens
Jarrett walked the attendees through the process of filing liens, stating that it can be used to "crush" the credit of government officials until they cooperate. She praises the tactic for being cheap and taking little time, comparing it to bomb-making, which demands precision. However, she also warned that handled the wrong way, it can blow up in your face.
The Impact of False Filings
Consumer credit expert John Ulzheimer said these liens can complicate a person’s ability to obtain a mortgage or a business’ chances of securing lines of credit. In some cases, he said, these filings can even derail job applications for positions that require thorough background checks. A Times investigation found that these claims, which were designed to be straightforward and quick to file, are inherently vulnerable to abuse, inflicting financial harm and costly legal battles.
Findings of the Investigation
Among the findings of the investigation:
- In California, it costs $5 to record a lien on the secretary of state’s website, but it can take thousands of dollars for the victim to remove a fake one from the public database.
- The state does not notify a person when a new filing lists them as owing a debt.
- Hundreds of UCC filings with no apparent legal basis listed the home addresses of government officials and prominent power brokers, turning the state’s public database into a doxing tool.
The Uniform Commercial Code System
The Uniform Commercial Code system was drafted in the 1950s to standardize interstate business transactions. One key feature is a public database run by secretary of state offices that records when a creditor claims a secured interest in an asset. The simplicity and speed of the filings are intentional: It helps keep credit accessible and prevent borrowers from using the same asset, such as a company’s inventory, multiple times without lenders knowing.
The Problem of Fraudulent Filings
Many UCC filings in California’s database reflect state tax liens or loans from the U.S. Small Business Administration listing what collateral was used. However, the vast majority of UCC filings are legitimate, according to the National Assn. of Secretaries of State. But, in a 2023 report, the association said “fraudulent or bogus filings” are a widespread and persistent problem across the country, warning that they “can create serious financial difficulties for victims.”
Sovereign Citizens and the UCC System
Mark Pitcavage, senior research fellow for the Center on Extremism at the Anti-Defamation League, said sovereign citizens first latched on to the UCC system in the late 1980s, but filings have increased over time as more and more conspiracy theories have revolved around commercial laws. Those fringe beliefs include claims that UCC filings can eliminate the need to pay car loans or credit card debt, which can plunge a person into financial ruin.
The Cost of Removing a Fake Filing
To remove a filing from the state’s database, victims must obtain a court order — a process that can cost thousands of dollars in attorney and court fees. The only other option in California is to record a new filing disputing or terminating the debt, which appears alongside the false claim rather than erasing it.
Laws Against Fraudulent Filings
At least 16 additional states have laws that make it a crime to knowingly submit a fraudulent UCC record, according to the National Assn. of Secretaries of State report from 2023. Last year, a federal jury found a woman guilty of filing a fake lien against a U.S. attorney in Florida. In West Virginia, a man was sentenced to five years in prison in 2022 after he filed a fake lien against an IRS agent, who then had to take “significant efforts” to clear it up when attempting to purchase a home.
Conclusion
The practice of filing false UCC liens, also known as "paper terrorism," has become a significant problem in the United States. These filings can inflict financial harm and costly legal battles on victims, and can even be used to intimidate public servants. It is essential for states to take action to prevent these fraudulent filings and to provide adequate protections for victims.
FAQs
Q: What is a UCC filing?
A: A UCC filing is a public record that shows a creditor has a secured interest in a debtor’s asset.
Q: How much does it cost to record a lien in California?
A: It costs $5 to record a lien on the secretary of state’s website in California.
Q: What is the process for removing a fake filing from the state’s database?
A: To remove a filing from the state’s database, victims must obtain a court order — a process that can cost thousands of dollars in attorney and court fees.
Q: Are there laws against fraudulent UCC filings?
A: Yes, at least 16 states have laws that make it a crime to knowingly submit a fraudulent UCC record.
Q: What is the impact of false UCC filings on victims?
A: False UCC filings can inflict financial harm and costly legal battles on victims, and can even be used to intimidate public servants.
