Leave no paper trail: how a group of sovereign citizens used a fake credit repair company to build a real estate empire

Bad credit? No problem.

A group of suspected scam artists have been accused of running a fraudulent credit repair business and then using the identities of their clients to obtain mortgages on millions of dollars worth of real estate in order to pocket the costs rent.

When the crew – which included a mortgage broker, real estate agent and notary – were indicted earlier this year, several flooded the court with nonsensical documents claiming they were sovereign citizens and that US courts would not had no jurisdiction over them.

Followers of the sovereign citizens movement deny the legitimacy of the US government and often refuse to pay taxes and clog the legal system with lengthy and obstructive legal proceedings.

Three of the alleged co-conspirators disappeared and fled for several months, but were arrested last week on charges related to what Texas federal prosecutors described as a multi-level mortgage, credit repair and scheme government loan fraud.

Heather Ann Campos and David Lewis Best, Jr., of Texas, were indicted in January and had planned to turn themselves in to face charges, but then went on the loose for months, prosecutors said. Stephen Laverne Crabtree of Utah was later charged but then fled after posting bond.

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

Suspected ringleaders of the scheme, Steven Tetsuya Morizono and Albert Lugene Lim, brothers-in-law from California, were arrested in March after investigators said they were found at a hotel under a relative’s name with bags full of money and seemed to be preparing to leave the country. Morizono is a citizen of Japan and Lim has ties to Mexico.

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

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

At the heart of the scam was a credit repair company operating as KMD Credit, KMD Capital and Jeff Funding, among others, according to court documents.

The group was submitting claims on behalf of customers who had bad credit, falsely claiming they had been victims of identity theft. The applications, made to the Federal Trade Commission and credit agencies, are allegedly supported by false documentation and are often approved, giving customers better credit scores, prosecutors said.

The group then used the identity of its customers – sometimes without their knowledge – to apply for mortgages, credit cards and, more recently, emergency COVID-19 aid. The bogus mortgages would be used to buy homes in Texas and beyond, and the group would collect rental income generated from the homes, prosecutors say.

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

Prosecutors say Morizono insisted that everyone working on the scam use false identities — he went by Jeff Lucian — and kept as few documents documenting the scheme as possible.

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

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

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