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Jan 31, 2018

440.7 Notice to the secretary of state when false financing statement filed

New York criminal procedure law § 440.70 requires the courts to communicate with the Secretary of State when the court has a false financial statement. The purpose of the law is to require the courts to share information with the Secretary of State that the Secretary of State is likely to find helpful. The Secretary of State can then use the information to make sure that businesses and individuals have justice by ensuring that debtors don’t pay creditors when the debtors do not actually owe anything to the creditor.

What is a financing statement?

A UCC financing statement is a document that a creditor files when they believe that a person or business owes them money, for example, a Los Angeles hard money loan. UCC stands for Uniform Commercial Code. The financing document comes from the Uniform Commercial Code which is a list of suggested rules for conducting business and commerce.

When a person files a UCC financing statement, they are saying that the debtor owes them something. With the filing, the creditor gives notice to the world that the debtor owes them money. The creditor claims their right to take certain property of the debtor in order to sell it to satisfy their debt.

The purpose of a UCC financing statement is to start the chain of events that needs to happen so that the creditor can collect what they deserve. The statement also gives the creditor a priority over other creditors. When a debtor can’t pay everyone, the law must establish a priority for who gets paid first. Filing a financing statement is kind of like getting a place in line. The financing statement must identify the property that the creditor wants to take.

What does § 440.70 require?

Rule § 440.70 of the New York Code of Criminal Procedure is a requirement for the court. The defendant doesn’t have any steps to take under § 440.70. The victim also doesn’t have anything they have to do in order to comply with § 440.70. Instead, it’s up to the court to provide notice to the Secretary of State.

When the court determines that a financing statement is false, the court must forward the information to the New York Secretary of State. It’s up to the court where the conviction is entered. That means the report doesn’t go to a higher court for dissemination to the Secretary of State. Instead, it’s the local court that handles the conviction that must make sure that the information goes to the Secretary of State.

Certified records

The court must send certified records to the Secretary of State. The records the court sends must state that the court entered a conviction against the person involved. The court must also include the date and location where the defendant originally filed the instrument. If there’s a filing number associated with the fraudulent filing, they must include that as well. They must also include the name of the creditor or victim and a description of the property that the defendant tried to seize because of the fraudulent filing.

How does a false financing statement involve the criminal court?

In New York, it’s illegal to try to file a financing statement if the claim isn’t true. If a person files a UCC financing statement claiming that someone owes them money when it isn’t true, they may be charged with a crime. Under NY Penal Law § 175.30, presenting a filing statement that’s false is a misdemeanor. In addition to the court’s obligation to forward the financing statement to the Secretary of State, the defendant also faces all of the other penalties that may come with a criminal conviction.

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