Anatomy of a Sovereign Citizen Scam
The sovereign citizen movement is an anti-gov't extremist movement noted for violence & harassment. It's also heavily associated w/scams/frauds, from investment scams to immigration scams to ones so arcane they don’t have a category.
The sovereign citizen movement is an anti-gov't extremist movement noted for violence & harassment. It's also heavily associated w/scams/frauds, from investment scams to immigration scams to ones so arcane they don’t have a category.
In this thread, I’d like to show you how one particular type of sovereign citizen scam works, one that sovereigns have been using since the 1980s: the sovereign-style mortgage elimination scheme. Sometimes this scheme is also a semi-pyramid scheme as well. During 2003-2004 there
was a huge surge of such scams—IIRC, at one point I tracked at least 300 people associated with them. I’m going to use examples from these scams to illustrate my point—but such scams still go on today.
First, let me briefly explain a “standard” pyramid scheme (sovereign or otherwise). In such scams, the con artist promises huge returns to anyone who invests with him/her. The con artist does give money to early investors, who then can confirm to others that the scheme works
and often recruit others to invest. As time goes on, the con artist gets increasing amounts of money “invested,” but of course this cannot last, because there is no actual investment; the con artist is robbing Investor Peter to pay Investor Paul. The con artist begins offering
excuses for the “delay” in distribution of funds while continuing to collect money from new investors. A smart con artist would know when to stop and vanish, but many are arrogant and greedy and keep going until finally caught.
A sovereign citizen mortgage elimination scheme doesn’t offer investment returns. It promises desperate (or greedy) homeowners that it can simply eliminate their mortgage—make it, and all attendant problems, go away. The con artist uses sovereign citizen pseudolegal language to
convince victims they can do this. There are many ways by which sovereign scammers purport to be able to eliminate mortgage; a lot feature, in one way or another, the use of fictitious financial instruments (think of them as bogus money orders) that sovereigns are so fond of.
For several thousand dollars, the scammer will eliminate your mortgage. That’s the scheme at its simplest. Some go further and make it a semi-pyramid scheme in which early “customers” are told while they wait for the process to be completed—which can take several months—they can
recruit other customers. When those other mortgages are eliminated, the recruiter will get a percentage of the mortgage as a fee/reward. So early victims become recruiters for later victims.
So the key for the con artist is to stave off expectations as long as possible, while continuing to take in money from new victims. First, they typically announce delays. A new law was passed, mandating mortgages be reprocessed all over again. Or perhaps the scammer announces
they've switched to a new, more effective process that will take time to implement. Or perhaps something else. This satisfies people for a while, then a new excuse must be made (because no mortgage will ever actually be eliminated).
The 2003 mortgage scammers had to deal with two additional problems: 1) they were so numerous, they had to talk ill of their competitors, & 2) as regulatory agencies & banks eventually issued warnings, they had to explain those warnings did not apply to THEM, for reason X or Y.
Scammers are helped by victims themselves. Keep in mind many really want this to be real. Some will become “true believers” who defend the scam to the end. Others suspect it's not real, but they’ve already put so much money into it they want to ride it out just in case. Others
cycle between belief/doubt. All these people can be voices against those who are angry/skeptical. Also, in online spaces where these schemes are discussed, some scammers may plant “ringers” to endorse the scam, or make false claims of success.
Scammers will also hold victims off by promising individual victims different things. Meanwhile, scammers limit access to themselves. Often communication is only possible through weekly conference calls that the scammers control.
And finally the scammers will simply stop responding to victims. Often they will start the whole thing over again under other names. Instead of me being Bill Smith from Mortgage Associates, I am now Reginald St. Duff from Debt Salvation Inc.
During the 2003-04 surge, most scammers escaped prosecution. I don’t know how much money they managed to steal, but certainly quite a lot, and much from desperate people who might have subsequently lost their homes to foreclosure, Of course, that is of no concern to scammers.
