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Court Invalidates BOP Prisoners' UCC Liens Against Judges and Officials

A Virginia federal district court has entered a permanent injunction against two federal prisoners who filed liens under the Uniform Commercial Code (UCC) against judges and prison officials. The United States government brought this action against Lorenzo Grade Martin and Reginald Anthony Falice, prisoners serving life sentences at the United States Penitentiary in Lee County, Virginia.

On October 8, 2003, Martin and Falice filed financing statements with the Virginia State Corporation Commission (SCC), claiming Falice was a secured party for a debt of $8 million allegedly owed by Patricial Conner, Clerk of the Fourth Circuit Court of Appeals, and Robert Bruce King, Karen Williams and Clyde Hamilton, judges of the same court who had served on the panels that affirmed Falice and Martin's criminal convictions.

The same day, Falice and Martin filed another UCC statement claiming Falice was the secured party for a $100 million debt owed by Troy Miller, Jerry Jones and David Haas, all current or former Bureau of Prisons employees. Martin was named as the person to whom acknowledgment of filing should be sent. In response, the U.S. government filed correction statements with the SCC, incurring a cost of $140 in the process. The government then filed this action.

Martin and Falice moved to dismiss. First, they argued the government lacked standing to sue. Because the defendants had filed the liens based upon the alleged debtors' actions in pursuit of their official government functions, the court held the government had standing.

The district court then turned to the validity of the liens. When confronting such claims, the courts have consistently refused to recognize liens based upon a claimed breach of contract or fraud by federal officials in the performance of their official responsibilities.

Because the evidence showed the purported liens were not filed on the basis of any genuine commercial obligation owed to the defendants, they were held to be false and fraudulent in that they were without any basis in law or fact, entitling the government to judgment as a matter of law. The court further held the government made the requisite showing necessary for the imposition of a permanent injunction.

Additionally, the district court held that Martin and Falice were liable for the $140 in actual damages that the government had incurred, plus the fees and costs the government had incurred for the guardians ad litem appointed them. The government, however, was not entitled to an award of attorney fees under 28 U.S.C.A. § 2412(b), for it does not qualify as a party under that statute.

Accordingly, the court denied the defendants' motion to dismiss and granted the governments motion for summary judgment. See: United States v. Martin, 356 F.Supp.2d 261 (W.D. Va. 2005).

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Related legal case

United States v. Martin