ALBANY – The 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.
The court system’s bill would impose a Class D felony punishable by up to seven years in prison for making fraudulent UCC filings against "state or local officers" or a "judge or justice of the Unified Court System." The current Class A misdemeanor for a false filing under the UCC is punishable by up to one year in jail.
The measure also would allow the chief administrative judge to set up a special proceeding, to be initiated by public officials who contend they have been targeted by UCC-related fraud, under which a judge could order the "prompt redaction or invalidation of the financing statement" when it is "necessary to avert or mitigate prejudice to the petitioner or to the administration of government."
The bill would empower the court to enjoin a respondent from amending or filing new financial statements against individuals without leave of the court.
Joseph Amandola, chief court officer for the Unified Court System, said he did not know precisely how many judges have been caught in UCC-related false filings, but he said employees at all levels of the court system have complained of being victimized. They include court officers and clerks.
Amandola said the courts have compiled a list of about 150 people they believe have filed fraudulent notices about court employees under the UCC. In addition, he said court security officials are working with the State Police, state prison officials, district attorneys’ offices and court officers to track those making fraudulent filings and their victims.
State rules now make it a disciplinary violation for prison inmates to file fraudulent UCC reports.
Legislators were not immediately available on Feb. 22 to comment on the proposal.
Among other items on the courts’ legislative agenda:
• Foreclosures. The court system’s bill would require that the complaint filed on behalf of the lender in a residential foreclosure action must be accompanied by a certificate in which the plaintiff’s attorney attests that their client holds the instrument of indebtedness in the action.
The bill would codify a requirement the courts have had in place through an administrative order.
Court administrators said the requirement is aimed at eliminating the problem of "shadow dockets" where lenders file foreclosure actions that lack standing or merit because they do not have the accompanying proof of service, attorney affirmation, or requests for judicial intervention.
"Under this measure, the trial court would have reasonable assurance that all of the instruments of indebtedness underpinning these actions…are in place at the commencement of the action," the court system said in a memo in support of the bill.
Court officials said they were jointly filing the bill with the state Attorney General’s Office.
• Wrongful convictions. The bill would mandate that custodial interrogations of people suspected of serious felonies be videotaped and that photo array testing of eyewitnesses to a crime be under "double-blind" administration, meaning the person presenting the suspects’ pictures does not know who the accused is.
Both initiatives were among the recommendations made by Lippman’s Justice Task Force as ways of reducing wrongful convictions.
Lippman promised in his State of the Judiciary address that the proposals would be forthcoming (NYLJ, Feb. 6).
• Juvenile justice. The court system’s measure would increase the criminal age of responsibility to 18 from 16. The bill is a modified version of the chief judge’s plan announced yesterday to create a special "hybrid" youth court to handle the cases of 16- and 17-year-olds (NYLJ, March 2, 2012).
The bill contains the proviso for the first time that the court system will pay local governments for the increased probation costs the initiative would require.
@|Joel Stashenko can be contacted at email@example.com.