Last week, Governor Christie signed into law A-2481 that provides remedies to victims of fraudulent financing statements filed pursuant to the Uniform Commercial Code and certain other fraudulent filings. This practice has escalated due to certain groups including “Sovereign Citizens” who refuse to recognize the authority of our courts and file fraudulent claims against members of law enforcement, judges, and prosecutors. Assemblyman Sean T. Kean, R-Monmouth and Ocean, is a primary sponsor of this bipartisan bill.
This legislation was drafted to deal with individuals filing false legal statements such as fake liens, false tax documents, or fake deeds as a way to harass or retaliate against another person. This practice is becoming more common and many of these false filings involve a tremendous amount of paperwork that clogs up the courts. When fraudulent financing forms are filed, a victim’s credit can be damaged, the victim may have trouble selling or refinancing a property, and they may have to pay thousands of dollars to correct the problem.
“Hopefully, this law which imposes harsh penalties on someone who files fraudulent financing statements and makes filing more difficult will send a message that this type of harassment will not be tolerated,” remarked Assemblyman Kean. “It has been reported that these actions were taken in retaliation against judges, police officers, federal Internal Revenue Service (IRS) officers, and attorneys.”
Kean continued, “Someone could file a false lien against you and you may not know about it until you go to sell your house. Then you have deal with this messy situation that could potentially take months and thousands of dollars to rectify.”
Under current law, financing statements are forms filed by creditors with the state or local government to perfect a security interest in property held by a debtor, which is used as collateral against the loan. While the majority of financing statements are filed for valid purposes with authorization from the parties to the loan, it has become increasingly common for financing statements to be filed fraudulently as retaliatory measures meant to harass individuals.
Under the new law, the filing of a financing statement does not occur and the filing office may refuse to accept the statement if:
-the filing office reasonably believes that the filer is attempting to file under a fictitious name with the intent to harass or defraud the person identified as the debtor
-the filing office reasonably believes that the record is materially false or fraudulent because the record asserts a claim against a current or former officer or employee of any federal, state, county, or other local governmental unit, including members of the Legislative Branch, Executive Branch, Judicial Branch, and for which the filer does not hold a properly executed security agreement or judgment from a court of competent jurisdiction
This law makes it a crime of the second degree to file a fraudulent financing statement with the intent to harass, hinder, defraud, retaliate against, or in any way impede the performance of a public employee’s duties. In addition, a court may order a defendant to pay a sum of not less than $2000 for each fraudulent filing or, the actual damages caused by the filing or recording, whichever is greater.
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