U.S. Office of the Comptroller of the Currency
Idaho Department of Finance

Dallas Police Officer Under FBI Investigation

Feb 19, 2004 9:09 pm US/Central
By Robert Riggs
CBS 11 Chief Investigative Reporter
and Todd Bensman
CBS 11 Investigative Producer

The FBI is investigating a Dallas Police Officer for possible bank and mail fraud, CBS 11 has learned.

Officer Arthur James Jordan, a six-year veteran of the Dallas Police Department, was placed on paid administrative leave last September. Police department leave records briefly explain why Officer Jordan was put on paid suspension.

“The Department has been notified by the Federal Bureau of Investigation that Police Officer Jordan is the subject of a felony investigation,” according to a Sept. 11 complaint referral to the department’s Public Integrity Unit.

But Jordan, in a brief telephone interview with CBS-11, and a confidential law enforcement source, confirmed that the FBI was investigating him in connection with a highly unusual bank fraud scam now spreading across the country.

The scam is being promoted on the Internet and in underground anti-government publications as “Redemption” or “Mortgage Elimination,” but is so new and loosely marketed it has provoked only a few scattered federal prosecutions over the past couple of years.

Jordan told CBS-11 he had done nothing illegal, and expressed surprise that the FBI was investigating what he did at all. He declined to elaborate.

FBI officials declined to confirm or deny the existence of an investigation.

Law enforcement experts say the bizarre new scheme playing out around the country has homeowners believing they can use bogus financial instruments, including checks called “sight drafts,” to pay off mortgages they have become convinced are fraudulent.

“It sounds pretty. Looks pretty. It’s kind of like a mathematical formula you put on the board and when you get to the very end, it doesn’t compute,” said Special Agent B.J. Flowers of the U.S. Secret Service’s Dallas office. The Secret Service and Flowers were unaware of the FBI investigation of Officer Jordan and are not involved.

Agent Flowers says promoters are selling the scam to financially desperate people and those who belong to fringe groups with anti-government ideology. Some of those groups have white supremacist leanings, while others have included militant black separatists, according to a smattering of news reports about local problems with the scheme.

That a Dallas police officer might fit such a profile was surprising, Agent Flowers said.

“Personally, I would say yes, I’d be surprised someone in that position would get engaged in this activity,” he said. “If you look and listen to most of the information they provide, it really doesn’t make sense. It doesn’t connect.”

Authorities are just now trying to learn who is pushing the scam and how organized it might be. Local state prosecutors scattered around the country have brought charges against a handful of apparently unrelated individuals for attempting mortgage elimination. U.S. Treasury Department officials concede they have no idea how often the scam is attempted because the government has established no central clearinghouse of information.

Only in recent months have a few government agencies - independently - begun posting warnings on their websites. One such warning at treasuryscams.gov/cc/ccphony8.htm describes how a mortgage elimination scheme works.

“A stripped-down version of this theory is as follows: When the United States went off the gold standard in 1933, the federal government somehow went bankrupt. Then with the assistance (somehow) of the Federal Reserve Bank, the government converted the bodies of its citizens into capital value, supposedly by trading the birth certificates of U.S. citizens on the open market.

“After following a complicated process of filing UCC documents with either the Secretary of State of the person’s residence or another state that will accept the filings, each citizen is entitled to redeem his or her "value" by filling out a sight draft drawn on their (non-existent) Treasury Direct account.

“The theorists assert that their social security number is also the number of their Treasury Direct account. As a part of the scheme, participants also file false IRS Forms 8300 and Currency Transaction Reports in the name of law enforcement officials and other individuals they seek to harass.”

The U.S. Attorney’s office in Boise, Idaho, one of several states where various versions of “debt elimination” scams has cropped up, has prosecuted several cases in which suspects went to jail for creating fictitious financial documents.

Assistant U.S. Attorney Wendy Olsen said most of those cases involved efforts to eliminate auto loans and credit card debts and, while similar, were not about eliminating mortgages.

“We have not seen much of this latest alliteration,” she said.

One alert posted in December by the Comptroller of the Currency’s Administrator of National Banks warns the industry to be on the lookout for “worthless instruments entitled ‘Bond for Discharge of Debt,” “Bill of Exchange,” “Due Bill,” and “Redemption Certificate…” The alert goes on to list five web sites currently promoting “these fraudulent schemes.”

The website owners cash in by selling their “knowledge” at private seminars where they charge between $1,500 and $7,500, one mortgage elimination marketer told CBS-11.

One website warns customers to expect telephone calls from bankers challenging the technique - and referrals to “an investigative body such as the FBI.”

“DO NOT worry…” the web site assures. “And do NOT, under any circumstances, carry on a conversation with the caller or respond in writing to the lender…There is a script in your application packet for you to use if contacted by phone.”
It remains unclear just what the FBI suspects Officer Jordan of doing. In one brief interview, the officer told CBS-11 he was involved in a dispute with his homebuilder about whether the builder properly informed him about the construction of a nearby apartment complex.

County records show he moved into a new construction home in Desoto last year.

He said he did not want to pay for the home after construction of the apartment complex began. During the dispute, Officer Jordan said he learned about mortgage elimination at a seminar. He would not provide details or talk further.

The officer did try a legal way to eliminate his $150,000 mortgage debt last year. He filed for federal bankruptcy protection in early September, just days before the FBI contacted the police department about their investigation.

In October, after Officer Jordan was placed on paid leave, the petition was dismissed because he failed to attend a meeting of creditors, court records show.