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"Slavery to Sovereignty" scam targets immigrants, African Americans in Twin Cities
With the foreclosure rate in the metro area still soaring, struggling homeowners face a new and more sinister threat - unscrupulous scam artists. With ads claiming they can help you keep your home while eliminating your mortgage and property tax, a group calling themselves "Slavery to Sovereignty" is the latest in a long line to take advantage of residents who are desperate for help.
At least one ad from the group ran in a newspaper that reaches a largely-immigrant audience, but the small group that gathered at Sabathani Center on January 9 appeared to be a mix of local African American residents as well as recent immigrants. People listened eagerly and had many questions as Peter "PJ" Johnson, a retired Minneapolis Parks Police Officer, and his partner Abagail Conley spoke.
Johnson and Conley claimed they could eliminate participants' mortgages and all tax liabilities in return for $12,500. Mr. Johnson said the program would take anywhere from six months to three years, but was quick to point out that there were no guarantees.
Johnson and Conley claimed that by paying them to assist in filing a Financing Statement through the Uniform Commercial Code, homeowners would be free to disregard their mortgage and would still keep their home.
But according to Ed Nelson with the Minnesota Home Ownership Center - Minnesota's leading independent, non-profit provider of information and resources aimed at helping Minnesotans begin, and maintain, home ownership - the claims made by Mr. Johnson are "one of the most bizarre scams" he has heard of, and would do nothing to save homeowners from foreclosure if they followed his advice to not pay their mortgage.
"Even if there were some magic document that you could produce that would put you in first lien position, which doesn't exist, second, third, fourth, even fifth lien holders - however many liens you have on your property - can foreclose on you at any time," Mr. Nelson said. "This would not guarantee that the bank could not foreclose on you."
"Minnesota homeowners need to understand that there is a state-wide, certified, non-profit network of foreclosure prevention councilors that can be a resource for them - absolutely no charge for any of these services - where if someone comes to them with a bizarre, or for that matter a legitimate sounding explanation for how to avoid foreclosure, these counselors can be a resource to just say 'Is it valid? Should I sign on the dotted line? Should I pay these people for the help?'"
A check with the Minnesota Department of Commerce showed that neither Mr. Johnson nor Ms. Conley nor the group Slavery to Sovereignty was registered to provide foreclosure assistance. Minnesotans can check the license status of a loan modification company by contacting the Minnesota Department of Commerce or calling 651-296-2135 or 1-800-657-3602.
"Rather than making a bad situation worse," Mr. Nelson said, "use the resources that are already freely available. On our website, we have a listing of all the non-profit organizations that work within our network in Minnesota, with services available in every county."
Johnson also claimed he could advise participants on how to avoid paying property and income taxes. He said that anyone born in Minnesota is a "U.S. National" and not a U.S. citizen. He claimed that this subtle difference means that neither the U.S. government nor the state of Minnesota has the authority to tax you. Johnson claimed that changing your filing status from "U.S. Citizen" to "Non-Resident Alien," would relieve an individual of any tax liabilities. He said that he has done so since 2003, and despite a lien on his property by the IRS, has never been forced to pay any taxes.
While the Minnesota Department of Revenue said they couldn't comment on any individual's tax status or past filing history, nor whether or not they are currently auditing or investigating someone, spokesman Kit Borgman pointed out that, "The argument that a person who was born in Minnesota and lives in Minnesota is a 'U.S. National' rather than a U.S. citizen and therefore not subject to federal or state taxes is a variation of an argument that has been repeatedly rejected by courts throughout the United States. All residents of Minnesota, and anyone else earning income here must pay all applicable Minnesota income taxes and file all applicable returns. This is regardless of where they might have been born."
"We would advise taxpayers to exercise caution when considering the purchase of any product or service that claims to show them how to avoid paying taxes," Mr. Borgman said. "If taxpayers have questions about various products or services being promoted as being able to eliminate their state or local taxes, they are encouraged to contact the Minnesota Department of Revenue's taxpayer information line at 651-296-3781 or toll free at 1-800-652-9094 to verify the accuracy of the information."
Phone calls and emails to Johnson asking for comment on this article received no response by press time.
Slavery to Sovereignty advertised three more seminars in the Twin Cities during January. If you or someone you know were taken advantage of by Slavery to Sovereignty, we would like to hear from you. E-mail David Kaplan at daviderickaplan [at] gamil [dot] com
©2010 David Kaplan