THE ARIZONA JUSTICE SYSTEM SHOWS THE WAY

Isn't it wonderful to be protected by your caring government regulators? They register liens but what steps do they take to see if they are justified? No significant steps it seems

A financial setup orchestrated by a convicted criminal has left more than a thousand homeowners in Arizona and California facing illegitimate liens on their homes. The liens are being used to force people to pay thousands of dollars to a California collection agency. In order to get the liens lifted, homeowners are told by the agency that they must pay credit-card debts that, in many cases, have already been paid, written off in bankruptcies or aren't actually owed. An Arizona Republic investigation found that Pacific States Credit Co. has filed more than 600 such liens in Maricopa, Pima and Pinal counties, as well as hundreds more in several counties in southern and northern California over the past two years.

The owner of Pacific States, Jeff McCoon, has a criminal record for defrauding businesses in Colorado, where he is wanted for arrest, accused of violating the terms of his probation. He also is awaiting trial in California on 148 felony counts of attempted extortion, forgery and filing false documents over liens he filed against homeowners in Orange County.

But authorities in Arizona were unaware that McCoon has been operating here since 2004, filing liens, threatening people with lawsuits, demanding payments for questionable debts and, in at least one case, forcing someone to sign over the deed to his home. Steve Wilson, spokesman for the Arizona Attorney General's Office, said the allegations raise serious concerns. "If they are true, we want to look into the case," he said.

McCoon, who lives in Oakhurst, Calif., a small farming community near Modesto, did not respond to repeated interview requests at his business. The phone number for Pacific States is answered by a message for another McCoon business, a corporation registered in the Bahamas as Sierra Consumer Acceptance.

John Brewington of Phoenix, who filed a complaint about McCoon with the attorney general this month, said authorities need to act fast. "I think anyone who has ever had a debt is at risk from this guy," said Brewington, whose friend was hit with a lien. "In fact, anybody in the community is at risk. . . . I would strongly suggest that every person check their credit and check their property records."

Liens, which can ruin credit and prevent owners from selling or refinancing, cloud title to property. Someone trying to sell or refinance a house is often required to pay off a lien before the transaction can be completed. Liens are traditionally filed in cases in which real estate was used as collateral but can also be filed against homeowners for failure to pay income taxes and by contractors who are owed money for work on a home.

McCoon, however, has been filing liens based on credit-card debt, records show, even though legal and financial experts say typical credit-card debt is not secured by real estate. County records, court documents and letters from Pacific States show that McCoon has filed liens and then demanded payment for credit-card debt, along with payments for penalties and interest.

Court records show that liens sometimes were filed against people who never owed debt or against people who had discharged the debt years earlier in Bankruptcy Court.

Phoenix homeowner Kim DeGeorge said she didn't learn that Pacific States had filed a lien against her home until she tried to sell it last month. "We had no idea. We didn't know until the first contract on our home was about to be signed," she said. The lien was based on a Bank of America Visa card, which had been written off when the DeGeorges filed for bankruptcy. The lien stalled the sale for a couple of weeks. "We called and called and called," DeGeorge said. "Finally, I left a message saying I was getting a lawyer." A few days later, the lien was terminated. "We didn't know what we were going to do. My husband wanted to pay it off and try to get it back later, just so we could sell the house," DeGeorge said.

Court records in Orange County, Calif., show that McCoon sent demand letters to escrow officers, offering to release the liens upon payment via wire transfer into his bank account. He also sent homeowners documents titled "summons and complaint," along with copies of the liens, giving some the impression that they were being sued. But records showed the "summons" was never filed with the court. "He doesn't give people an opportunity to prove the debts are valid. He files the liens as an opening salvo," said Leslie Young, Orange County deputy district attorney. "Eight of our victims never owed anybody any money in their lives." Young has charged McCoon with 148 felony counts stemming from liens he filed against 144 homeowners in Orange County from 2003 to 2005.

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