Liens By 'Sovereign Citizens' A Headache For State Officials

Transcript

ROBERT SIEGEL, HOST:

The New York Times reported last week on the practice of placing bogus liens against the property of government officials. It's a tactic of self-styled sovereign citizens, people who deny the legitimacy of the federal government. They take advantage of laws, both real estate laws and also the Uniform Commercial Code, that make it easy to file liens even if they're phony. Why do they do it? Well, because a lien can ruin your credit rating, and removing one, even a phony lien, can take countless hours in court and cost thousands of dollars.

The problem is big enough to have led the National Association of Secretaries of State to issue a report on it earlier this year and to recommend reforms. John Gale is the secretary of state of Nebraska, and he says these phony liens have become a persistent problem.

JOHN GALE: No one has really determined an exact count, but we know they are increasing. But it's not an issue of total numbers as much as it is the impact, the significance of each one of those liens and the intimidation and harassment that it creates for a number of people.

SIEGEL: But if somebody places a lien on another person under the Uniform Commercial Code, do they have to present documents that authenticate the claim and show that this is legitimate and that that person owes them money?

GALE: Unfortunately, it's been a fairly simple system up until recent years. By and large, the law required us to be simply ministerial and to file everything that came before us, and most states did up until recent years. Now, we have 16 states that are starting to attack the problem, but it just opened the floodgate to people who had some vengeful motive. It, of course, was - has been highly abused. And that...

SIEGEL: But, Secretary Gale, do I understand this, that if I were - if I wanted to harass some public official and went in and filed a lien against their property, there'd be no greater burden on my part to place a lien of $5 million than to place a lien of $50,000?

GALE: That's correct, Robert. That's the way it's been interpreted in many, many states over the last 20 years is that the filing officer has no discretion, even though it's clear that the names of the debtors are federal judges, U.S. marshals, local sheriffs, even though they know that. If the - if all the blanks are filled in properly on that simple form, it gets filed.

And up until now, the burden has been totally on the victim to seek out a proper recourse, which is obviously going to court and trying to get that lien declared as void and invalid. Well, that could cost you $10- or $20,000 or more and maybe two to three years of litigation to get that accomplished. So it's an extreme burden.

We've even found that a number of these liens come from prisons around the country, that the prisoners want to file these liens against the judges or the lawyers or maybe even the witnesses against them just to be a bully, just in order to seek some sense of revenge against people who they think wronged them.

SIEGEL: You've supported a Nebraska law that you think is a corrective here. How does it change the system?

GALE: Well, we take the burden off the victim. Many people have just had to live with these liens because they don't have the resources to take them off, and they've just had to put up with them as a shadow over their life and over their credit. Under our system, the liens can be filed. But once they're filed, then if they're challenged, we can insist upon receiving a proper authentication for that lien to give it substance. I think the system will work well.

SIEGEL: But if I understand this, Secretary Gale, the tension here is between banks and financial institutions that want to be able to move fast and to beat the other bank to get their lien placed against somebody who owes a lot of money who would oppose anything that slows down that process, and then these people who are taking advantage of a streamlined process to get bogus liens attached to people.

GALE: Well, that's well stated, Robert. That's exactly what's been happening because that window of expediency and simplicity and rapidity has allowed this abuse to grow. And so we just need to shut that down but still preserve the immediacy for banks and lenders to get their priority lien on file in a timely way. But for the others, they're subject to post-filing review, and that's the key to eliminating these liens.

SIEGEL: Mr. Gale, thank you very much for talking with us today.

GALE: Thank you, Robert.

SIEGEL: So John Gale who is the secretary of state of Nebraska.

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