The “Sovereign Citizen Movement” is a term used to describe the growing number of individuals who deny the authority and / or legitimacy of the U.S. government. While the “SovCit” movement originated decades ago, there appears to have been an uptick in the movement’s popularity since 2020. With economic uncertainty at the forefront of the public conscience, lenders should be aware of SovCit beliefs and practices when originating new loans and when dealing with distressed accounts.
Followers are loosely organized in different subgroups under the umbrella of the SovCit movement, and individual beliefs and practices vary widely. However, the various iterations of the movement are linked by the core belief that the common law system of government created by the founding fathers has been covertly replaced with a “fake, illegitimate government.”[1] This fake government adheres to admiralty law and international commerce. Additionally, SovCits claim the U.S. government has been operating under commercial law since it abandoned the gold standard in the 1930s.
Finally, SovCits may also claim that this fake government somehow commercializes or commoditizes individuals at birth by requiring the issuance of birth certificates and social security numbers. SovCits deny they are subject to any laws or regulations born out of this illegitimate government and dispute courts’ jurisdiction over them.
SovCit Practices and Patterns
To insulate themselves from enforcement, SovCits often attempt to differentiate their “living, breathing human” selves from the fictitious legal entity, or “ens legis,” created for them by the government at birth. By making this distinction, some claim that any past actions taken by their “government self”—such as signing a promissory note—were taken without the consent of their “living, breathing” self; the actions are therefore void. Individuals will often seek to legitimize their claims through various—and often voluminous—writings and public record filings.
SovCit writings may include one or more of the following indicators:[2]
- Use of postage stamps in unnecessary places;
- Reference to “Organic Law” or Admiralty Law;
- Names spelled in all capital letters or interspersed with colons, hyphens, or other odd punctuation;
- Signatures followed by “under duress,” “Sovereign Living Soul” (SLS), or a copyright symbol (©);
- Personal seals, stamps, or thumb prints in red ink;
- References to the Bible, the Constitution of the United States, U.S. Supreme Court decisions, treaties with foreign governments, or a Uniform Commercial Code (UCC) number (UCC-201);
- The prefix “Noble” or the suffix “Bey” or “El Bey” with their name;
- Brackets around zip codes or other written oddities;
- Excessive or otherwise inappropriate notary blocks;
- The terms “accepted for value,” “without prejudice,” or “notice to agent is notice to principal.”
Lender Impacts
Individuals may enter into contracts with lending institutions and later deny the contracts’ enforceability under claims of sovereign citizenship. Although the risk of future default is inherent in financial contracts, SovCit practices may create unique challenges for lending institutions.
For example, individuals may make vague, ambiguous, and repetitious demands for documentation that verifies the existence of their obligation and / or default. They may assert that noncompliance with these impossible demands will result in a discharge of the obligation.
These attempts are calculated to frustrate lending institutions, increase costs, or otherwise “prove” the illegitimacy of the transactions at issue. If lenders institute legal proceedings, these practices—sometimes called “paper terrorism”—continue into the courts with excessive filings containing nonsensical claims and defenses.
Additionally, those making SovCit claims often represent themselves in court proceedings. However, unlike many pro se litigants, SovCit claimants have resources and support through other members, and are highly motivated to prolong litigation as long as possible.
And although adherents to the SovCit movement are not generally violent,[3] individuals holding extreme views may present potential safety risks to lending institutions and their employees. SovCit writings may contain veiled threats to person or property, and allude to treason or capital punishment.
Best Practices
Lending institutions can mitigate present and future issues presented by the Sovereign Citizen Movement by simply increasing awareness through education. Employees familiar with SovCit ideology and practices will be better equipped to identify potential safety risks. Once such risks are identified, managers may increase security measures. Additionally, institutions experiencing veiled or explicit threats to person or property may consider obtaining a protective order under North Carolina’s Workplace Violence Protection Act, N.C. Gen. Stat. § 95-260 et seq.
Quick recognition and preparedness within the loan underwriting process may help to decrease costs associated with collection and litigation. If not already standard practice, lending institutions should encourage loan officers to verify the following before extending new credit:
- No delinquent taxes / tax liens
- Current insurance on real and personal property
- Current and active driver’s licenses
Additionally, lenders may consider supplementing their current loan-underwriting processes by paying special attention to certain public records.
Court Records
Review of court summaries and pleadings may alert loan underwriters to previous SovCit claims.
- Collection Actions. Though recent collection activity might already disqualify a potential borrower, SovCit indicators might be included in answers to prior complaints.
- Claimed Rights Violations. In the past, many SovCits have preemptively filed suit in federal courts, accusing lenders and government actors of violating individual rights by attempting to enforce contracts and laws. Additionally, SovCit theories are often raised in civil rights lawsuits filed by incarcerated individuals against government officials / entities.
- Traffic Filings. Filings may evidence past interactions with law enforcement and resistance to police demands to present identification, license, or proof of insurance.
UCC Filings
Similarly, underwriters should review the secretary of state’s website for UCC filings by a prospective borrower. SovCits will sometimes file multiple UCCs as a creditor. These filings often contain the indicators and buzzwords described above, and typically fall into one of the following three categories:[4]
- (1) Harassment Filings. Often filed against judges, prosecutors, public defenders; government officials, corporations; banks, bank employees.
- (2) Strawman Filings. Often include the same name for debtor and creditor.
- (3) Authentication Filings. Often indicate the debtor is transmitting a utility, i.e. “any person who is primarily engaged in the railroad, street, railway or trolley bus business, the electric or electronic communications transmission of electricity, steam, gas, or water, or the provision of sewer service.” Under UCC § 9, utility filings do not lapse, which may increase the appeal of these types of filings for SovCits.
Register of Deeds
Individuals seeking to distinguish themselves from their “fictitious, government-assigned identity” may file unusual documents in the registers of deeds.
- Quitclaim Deeds to Self. May contain attempts to quitclaim property from their “government self” to their “living, breathing self.”[5]
- Power of Attorney. May declare their living, breathing self to have power of attorney over their government-assigned, fictitious entity. Under this theory, the living, breathing self may act on behalf of their “ens legis” to dispute liability.
- “Affidavit of Truth.” May contain references to individual sovereignty, assert lack of consent to past contractual agreements, or declare new identities, tribal, or ecclesiastical affiliations.
Conclusion
In the midst of the current economic uncertainty, lending institutions are likely to experience increased utilization of SovCit tactics to disclaim financial responsibility. Lenders should familiarize themselves with these tactics in order to mitigate future costs while preserving the rights of their borrowers and the safety of all.
[1] Mellie Ligon, The Sovereign Citizen Movement: A Comparative Analysis with Similar Foreign Movements and Takeaways for the United States Judicial System, 35:2 Emory Int’l L. Rev. 297, 300-01, (2021) (available at https://scholarlycommons.law.emory.edu/cgi/viewcontent.cgi?article=1257&context=eilr).
[2] US Dept of Housing and Urban Development; Office of Inspector General, Integrity Bulletin; Attention HUD REO Contractors, Property Inspectors, Section 8 Administrators, and Realtors Watch out: Sovereign Citizen Scams 1, 4 (Summer, 2015) [Hud Report]; https://www.hudoig.gov/sites/default/files/2019-04/Sovereign_Citizen_Scams.pdf.
[3] Though the FBI has classified the Sovereign Citizen Movement as a domestic terrorist threat, it appears these concerns center around law enforcement agencies. For more information, visit https://domesticpreparedness.com/articles/a-violent-surge-sovereign-citizens-vs-government-authority.
[4] National Association of Secretaries of State, State Strategies to Subvert Fraudulent Uniform Commercial Code (UCC) Filings; A Report for State Business Filing Agencies 1, 4-5 (Updated July 2023), https://www.nass.org/sites/default/files/reports/updated-ucc-fraudulent-filing-report-july2023.pdf.
[5] Hud Report at 2.
