In response to false liens against public officials' property filed by so-called "sovereign citizens," the Illinois legislature upgrades false title-clouding from a misdemeanor to a felony.

In an apparent attempt to stifle a growing national trend of "paper terrorism" conducted by a self-described "sovereign citizen" movement, the Illinois General Assembly has upgraded the crime of unlawful clouding of title from a Class A misdemeanor for all offenses to a Class 4 felony for cases exceeding $10,000 in value and for all subsequent offenses.

News reports from around the country reflect a growing trend of people filing false liens against property owned by governmental officials as a form of harassment. These litigants call themselves "sovereign citizens" and expressly reject the legitimacy of federal, state, and local governments.

A New York Times article titled "In Paper War, Flood of Liens Is the Weapon" (Aug. 23, 2013) described a sheriff in Minneapolis who was attempting to refinance his home when the loan officer called to inform him that someone had placed liens totaling more than $25 million on his house and other properties.

The sheriff learned that the bogus liens were "just the earliest salvos in a war of paper" waged by a couple who had lost their home to foreclosure a few years earlier. The Times said this tactic, "with the spread of anti-government ideology known as the 'sovereign citizen' movement, is being employed more frequently as a way to retaliate against perceived injustices."

The report states that cases involving sovereign citizens are increasing in Minnesota and other states, "posing a challenge to law enforcement officers and court officials, who often become aware of the movement - a loose network of groups and individuals who do not recognize the authority of federal, state or municipal government - only when they become targets. Although the filing of liens for outrageous sums or other seemingly frivolous claims might appear laughable, dealing with them can be nightmarish, so much so that the F.B.I. has labeled the strategy 'paper terrorism.'"

Patrick Fitzgerald, a former U.S. attorney from Chicago, and other high-ranking federal court officials are currently experiencing these nightmares for themselves. According to news reports, a woman named Cherron Phillips is currently facing criminal charges in federal court for allegedly filing liens worth tens of billions of dollars against property owned by Fitzgerald, by federal Judge James Holderman of the Northern District of Illinois, and other federal judges, prosecutors and court officials.

The Chicago Tribune reported that veteran District Judge Milton Shadur is presiding over the criminal proceedings and strongly encouraged pro-se defendant Phillips to hire an attorney. In response, Phillips, who also goes by the name River Tali El Bey, filed several "unintelligible motions" questioning Shadur's loyalty to the Constitution and insisting that U.S. citizens could not possibly comprise a jury of her "peers."

Another local paper-terrorism case was recently heard by the Illinois Appellate Court, First District, which issued a scathing opinion rather than dismissing the case as it normally would with a simple unpublished order. The court also threatened sanctions of up to $10,0000 against the defendants-appellants in the matter of Parkway Bank & Trust Co. v. Korzen, 2013 IL App (1st) 130380.

Putting teeth in the penalty

Schaumburg-based attorney Ralph J. Schumann, who is an officer on the ISBA Real Estate Law Section Council, said the recent amendment to the Illinois Criminal Code is a big step in the right direction for giving prosecutors some real ammunition to fight against these frivolous filings.

Public Act 98-0098 becomes effective on January 1, 2014, at which time the crime of "unlawful clouding of title" will be elevated from a Class A misdemeanor for all offenses, to a Class 4 felony "if the cloud on the title has a value that exceeds $10,000, or for a second or subsequent offense."

Schumann also said the General Assembly's recent enactment of "fraud referral and review" statutes, which empower county recorders of deeds to investigate questionable filings and send them out for review by administrative law judges, is another valuable tool in the war against paper terrorism. (For a detailed discussion of Public Act 98-0099, which established the fraud referral and review procedures, see the July 2013 LawPulse.)

"The statute on fraud review and referral...is not to be interpreted as impeding the process of the homeowner, or the rights of the property owner, to seek the assistance and involvement of law enforcement officials when documents affecting title are believed to be fraudulent," Schumann said.

The fraud review and referral program automatically applies to Cook County, but must be adopted by recorders in all other counties before those laws will provide protection to property owners. The criminal statute, however, can and should be applied equally in all Illinois jurisdictions, Schumann said.

"Previously, the crime was just a misdemeanor, but now they have put some teeth in it," Schumann said. "Maybe now they have some leverage to start curbing this practice...This is something people in counties other than Cook can use as a tool for dealing with this problem even if their [county] recorder has not established the fraud referral and review process."