Don’t Leave a Paper Trail: How a Group of Sovereign Citizens Used a Fake Credit Repair Business to Amass a Real Estate Empire

Bad credit? No problem.

A group of alleged scam artists have been accused of running a fraudulent credit repair business and then using their customers’ identities to obtain mortgages on millions of dollars worth of properties in order to collect rental fees.

When the crew — which included a mortgage broker, a real estate agent and a notary public — were indicted earlier this year, several flooded the court with absurd testimony claiming they were sovereign citizens and that American courts had no jurisdiction over them.

Followers of the sovereign citizen movement deny the legitimacy of the US government and often refuse to pay taxes and cheat the legal system through endless and obstructive court filings.

Three of the alleged co-conspirators were on the run for several months but were taken into custody last week on charges related to what federal prosecutors in Texas described as a multi-layered mortgage, credit repair and government loan fraud scheme.

Heather Ann Campos and David Lewis Best Jr. of Texas were indicted in January and scheduled to be turned over to face charges, but then stayed for months, prosecutors said. Stephen Laverne Crabtree of Utah was later charged and then fled after posting bond.

Messages left with attorneys for Campos and Crabtree were not immediately returned. Best’s lawyer said: “It is too early to draw any conclusions in this case.”

The alleged ringleaders of the scheme, Steven Tetsuya Morizono and Albert Lugene Lim, who are brothers-in-law from California, were arrested in March after investigators said they had turned up at a hotel in a relative’s name with bags full of cash and appeared to be preparing to leave the country.

Morizono is a citizen of Japan and Lim has ties to Mexico.

Messages left with attorneys for Morizono and Lim were not immediately returned.

If convicted, they all face up to 30 years in federal prison and a possible maximum fine of $1 million.

At the center of the fraud was a credit repair business operating under the names KMD Credit, KMD Capital and Jeff Funding, among others, according to court documents.

The group would submit applications on behalf of customers who had bad credit, falsely stating that they had been victims of identity theft. The applications, to the Federal Trade Commission and credit bureaus, would be accompanied by false documents and would often be approved, giving customers improved credit scores, prosecutors said.

The group would then use their customers’ identities — sometimes without their knowledge — to apply for mortgages, credit cards and, most recently, for COVID-19 relief. The fake mortgages would be used to buy homes in Texas and beyond, and the group would collect the rental income the homes generated, according to prosecutors.

In all, the group acquired dozens of homes worth millions of dollars, prosecutors said.

Prosecutors say Morizono insisted that everyone working on the scam use fake identities — Jeff Lucian told him — and kept as little paperwork documenting the scheme as possible.

“Morizono didn’t want a paper trail because those documents could ‘get them in trouble,’ and a shredder entered the office,” prosecutors wrote in court documents, citing one of Morizono’s co-conspirators.

Morizono’s lawyer said in court documents that while her client had initially argued that he was a sovereign citizen and that US courts had no jurisdiction over him, he later renounced the philosophy and acknowledged the court’s authority.

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