The New York state court system is taking aim at "paper terrorism," the filing of unfounded tax liens that officials say are designed to harass judges, court officers and other court employees.
A bill filed with the Legislature by Chief Administrative Judge A. Gail Prudenti would elevate the offering of a false instrument for filing in the second degree, now a Class A misdemeanor, to a Class D felony if the filing is a knowingly fraudulent statement of the indebtedness of an officer of the courts under the Uniform Commercial Code (UCC).
The bill was among six measures unveiled last week constituting the court system's top priorities for the 2013 legislative session in Albany.
Others include a measure to reintroduce audio-visual coverage of trials in New York and changes, also promised in Chief Judge Jonathan Lippman's State of the Judiciary address earlier this month, to hold fewer low-level criminal defendants on bail while awaiting trial (NYLJ, Feb. 6).
While some of the legislative proposals have been around in various forms for years, court administrators said the "paper terrorism" bill is their first attempt to counter what they say is a growing concern.
"It is a significant problem," Prudenti said in an interview. "We are seeing it throughout the state and throughout the country and we have to redress it."
A 2012 study by National Association of Secretaries of State said there has been a "dramatic rise" in bogus filings under the UCC in recent years that have been mainly fueled by the "sovereign citizens" movement.
Brooklyn Housing Court Judge Marc Finkelstein (See Profile) noted in a ruling last year that phony filings by people in separatist groups or who believe they are not subject to government rules or control have ensnared, among other public officials, judges who have been hit with property liens or tax forms that have triggered unwarranted credit reviews and IRS scrutiny (NYLJ, Sept. 6, 2012).
Opponents of such "paper terrorism" say the UCC currently provides a way for creditors to record an interest in a debtor's property through filing notice to debtors' future creditors.
Court officials say the problem is that the UCC must accept each statement filed for recording and subsequently make it available for public viewing. Even though the statement may be later found to be fraudulent, modern-day electronics are such that the reports have already been entered into credit-reporting statements and could be used to unjustifiably characterize a target of a false filing as a credit risk, officials said.