Published: Nov. 23, 2012 Updated: Nov. 24, 2012 1:02 p.m.

Sovereign citizens inspire rise in real estate filings

By JEFF COLLINS / THE ORANGE COUNTY REGISTER

Faced with foreclosure after falling $19,000 behind on his mortgage, an Anaheim man took matters into his own hands.

Sitting at his keyboard, he tapped out an official-looking, one-page document stating that his mortgage didn't exist.

"I have searched and inquired of your records and found that you have no such record," he wrote. "Therefore, I demand that you remove this recording immediately."

The homeowner then took his document to the county and attempted to file it at the Orange County Clerk-Recorder's Office.

Had he succeeded, more than $300,000 in debt would have vanished. His four-bedroom, 2.5-bath condo would be his free and clear.

Instead, the county rejected his filing as "unrecordable." His property is in the early stages of the foreclosure process.

Influenced by the "sovereign citizen" movement, the Anaheim homeowner is among a growing number of people filing liens and notices seeking to wipe out mortgages, eliminate car loans, cancel credit card debt and halt foreclosures, according to county and law enforcement officials.

The filings are worthless, officials say. But some sovereign citizen followers charge fees for seminars or foreclosure assistance and the FBI cautions that their approach amounts to foreclosure fraud.

Like other loan-modification and foreclosure-rescue scams, these operators make money by promising relief, but fail to deliver, the FBI says.

"Innocent members of the community who don't believe in the ideology can get sucked in and defrauded out of their money, and they end up getting foreclosed on because they're not paying their mortgage," said Lawrence Buckley, an FBI anti-terror supervisor in Northern California. " ... Due to the slow economic recovery and the challenging times for many, it's probably not surprising that this is a growing problem."

Sovereign citizens contend that the U.S. government is illegitimate and that the movement's followers aren't subject to U.S. laws – that each one is "sovereign" and a "flesh-and-blood" man or woman, as opposed to the government-created corporate shell, or "strawman." Sovereign citizens also believe that paying taxes is optional.

Some of the group's most extreme followers are known for ties to the 1995 Oklahoma City bombing, attacks on police officers and filing liens against judges and law enforcement officers. But the movement's influence also has seeped into real estate as rising economic despair created a receptive audience among underwater homeowners.

"They don't believe mortgages are legitimate because no money changes hands," said Ann Fulmer, co-author of the Atlanta-based Interthinx Mortgage Fraud Risk Report. "It's all electronic so (they believe) there's no enforceable debt."

The Southern Poverty Law Center estimated that the sovereign citizen movement has about 300,000 followers. At least one-third are hard-core members, said center senior fellow Mark Potok.

"At this time of financial hardship, an enormous number of people have become interested in this group and its false promises," Potok said. "The reason is this is something that promises something for nothing."

Bearing names like "Notice of Fraudulent Recording, Revocation of Deed of Trust and Full Release of Mortgage," some documents filed by followers seek to make mortgages disappear.

"Under the lawful powers of the TRUSTOR of this modern statutory Deed of Trust, I revoke said deed of trust," wrote a petitioner in a redacted document filed in Orange County in July. Attached was a "certificate" stating that the filer is "the living man created in the image of God."

Other filings seek to delay or halt foreclosures by clouding the title or adding new owners to the deed.

A Yorba Linda man who is $20,000 in arrears on his mortgage filed a "Deed Acceptance" with the county, acknowledging receipt of a deed to the home he already owns.

In an attached affidavit, the homeowner described himself as a "living, breathing, sentient being on the land, a Natural Person, and therefore is not and cannot be any ARTIFICIAL PERSON."

Government, he wrote, "is a fiction of the mind," adding that he is exempt from "any process, law, code, or statute." He declined to comment about his petition.

"It's all a way to get something for nothing. They're offering documents that have no real value," said Tom Reitz, the FBI's special agent in charge of white collar crime in Orange County. "It's a niche of loan-modification (scams)."

In August, a South El Monte man pleaded guilty in U.S. District Court to charging about 200 homeowners $15,000 apiece to eliminate their mortgages by filing sovereign citizen-inspired documents, according to the U.S. Justice Department.

Prosecutors alleged that Ernesto Diaz, 57, earned $2.5 million through this approach. He admitted his process never worked and even cost his brother his house, the Justice Department said.

In September, a federal grand jury in Alabama indicted James Timothy Turner, the self-proclaimed president of the sovereign citizen's "Republic for the united States of America," accusing him of paying taxes with fictitious bonds and holding seminars to teach his methods to others, the Justice Department said.

"There is a whole underworld out there of seminars and related events where this so-called knowledge is learned," said Potok of the Southern Poverty Law Center.

"Get out of your mortgage. Get out of debt. ... It's a money-making proposition for these people."

Contact the writer: 714-796-7734 or jcollins@ocregister.com

http://www.ocregister.com/articles/sovereign-378636-county-mortgage.html