SACRAMENTO – A California lawmaker introduced a bill Monday to crack down on fake links posted to politicians, court officials and businesses that could force victims to spend thousands of dollars in legal fees to clear their names and repair their debts.
The bill by Rep. Diane Papan (D-San Mateo) comes after a Times investigation in July found that loan applications filed with the secretary of state were being used by anti-government protesters, including those calling themselves “independent citizens,” to obtain conspiracy claims and vendettas. The US Department of Justice and the nonpartisan Congressional Research Service have called the fake links “paper terrorism.”
“This is not an outlandish or worrisome resolution,” Papan said Monday after the Legislature returned to the Capitol to begin a new session. “The reality is that someone can do irreparable damage to someone’s reputation and their ability to have good credit. And we can do better in California.”
Links are recorded in the database of the commercial code of the state throughout the country, with a public filing aimed at measuring the sales of the states and alerting creditors about business debts and financial obligations.
A Times investigation found that the country’s database of UCC links, designed to be straightforward and quick to file, is vulnerable to abuse. A single false filing can find a person or business in debt worth hundreds of millions or even billions of dollars. Some victims flood repeatedly making it appear as if they are involved in complex financial disputes.
In California, a link recorded with the secretary of state costs $5 to file, but removing a forgery from a public database requires a court order, which can cost thousands in attorney and court fees. The state doesn’t recognize a person when a lender calls them a debtor, which allows fake forms to sit on California public databases for years before the victim finds them. Many politicians and civil servants learned from the Times that they were the target of fake letters.
Under Assembly Bill 501, the clerk’s office will be required to notify individuals within 21 days if they are named as debtors in a credit file. The law will also delay court costs until the end of the proceedings.
In cases where the debt is found to be fraudulent, the bill would make the debtor liable to the tortfeasor for three times the amount of court fees paid. The bill would also increase the maximum civil penalty for entering a fraudulent bill to $15,000, up from $5,000. California law already makes it a crime to knowingly file a false lien.
“Victims of these fake letters often don’t know they’ve been targeted until the actual damage is done,” said Papan. “That damage may look like damaged credit, failed background checks, or failed housing applications while the people committing the fraud face little risk or consequence.”
The National Assn. The Clerk of State said most UCC filings are legal. But, in a 2023 report, the organization said that “false or fake documentation” is a widespread and ongoing problem across the country, warning that they “can cause serious financial problems for victims.”
One California public official who did not know he had been subpoenaed by the UCC until contacted by The Times said he was shocked to learn the subpoena included his home address. The Times identified hundreds of other UCC documents without an apparent legal basis that also listed the home addresses of government officials and key approvers, effectively turning the public domain into a tool for doxing.
In debt claims, individuals falsely claim that government officials owe them money or property, in some cases the victim’s homeowner. Some of the fraudulent filings refer to businesses that claim they owe money and cars. In some cases, people post dozens or even hundreds of fake links. Paid online classes associated with anti-government ideologies teach people how to record UCC liens, often promoting the filing as a way to pressure potential borrowers or falsely claiming the documents can clear debts.
Michael Rogers, a San Diego attorney who represents auto dealers targeted for fraudulent filings, said AB 501 would “greatly curb other organized abuses by private citizens’ organizations and others” who file unsupported or fraudulent notices.
Consumer credit expert John Ulzheimer said in July that the links could enable a person to get a loan or a company’s credit opportunities. In some cases, he said, filing applications can interfere with job applications for positions that require a full background check.
Papan said his bill would restore “balance and accountability” to the UCC system, ensuring it remains a reliable commercial tool while adding protections for Californians targeted for fraudulent filings.
“We cannot allow the Uniform Commercial Code to be used as a weapon,” said Papan. “The fact that these forms are being used to harm the integrity of commercial transactions is very troubling.”
