SO ORDERED.

SIGNED this 10 day of February, 2012.

James D. Walker, Jr.

United States Bankruptcy Judge

UNITED STATES BANKRUPTCY COURT

MIDDLE DISTRICT OF GEORGIA
ALBANY DIVISION

IN RE: ) CHAPTER 7
) CASE NO. 12-10199-JDW
DENISE FACHINI, )
)
DEBTOR. )

BEFORE

JAMES D. WALKER, JR.

UNITED STATES BANKRUPTCY JUDGE

COUNSEL
For Creditor: James Robert Rogers, pro se
4600 Fulton Mill Road
Macon, Georgia 31208
 MEMORANDUM OPINION

The Court considers the matter of this involuntary petition sua sponte. This is a core

matter within the meaning of 28 U.S.C. § 157(b)(2)(A), (O). After considering the pleadings, the

evidence, and the applicable authorities, the Court enters the following findings of fact and

conclusions of law in conformance with Federal Rule of Bankruptcy Procedure 7052.

Findings of Fact

On February 9, 2012, James Robert Rogers filed an involuntary Chapter 7 petition against

Denise Fachini. On the petition, Mr. Rogers listed a claim against Ms. Fachini in the amount of

$10 million. He attached to the petition a UCC-3, which is an amendment to a UCC financing

statement, and three documents addressed to the Secretary of the United States Treasury

Department. In summary, the documents first demand the Secretary to pay Ms. Fachini $10

million from Mr. Rogers’ U.S. Treasury trust account and then demand a chargeback of that

amount to be deposited back into Mr. Rogers’ trust account. The UCC filing cites dishonor of the

chargeback.

The three documents addressed to the Secretary are dated September 10, 2011, and all

reference HJR-192. First is an “International Bill of Exchange” labeled with invoice number JRR

9102011 8758 1919 9741. It names the Treasury Department as the Drawee, Ms. Fachini as the

Payee, and Mr. Rogers as the Drawer/Maker. In the document, Mr. Rogers directs the Secretary

to pay Ms. Fachini $10 million “from my UCC CONTRACT TRUST ACCOUNT NO.

[redacted].1 This is in accord with PUBLIC POLICY 73-10 and HJR-192.”

1
The Court has redacted the account number because it appears to be Mr. Rogers’ Social
Security Number.

2
 Second is a “Charge Back” that provides as follows:

I have accepted for value all related endorsements in

accordance with U.C.C. 3-419 and HJR-192. Please charge my
UCC Contract Trust Account ... for the registration fees and
command the memory of account number [redacted] to charge the
same, to the debtors Order, or your Order.
The total amount of this Bill of Exchange in the enclosed
filing is $10,000,000 (Ten Million Dollars) and attached to said
Birth Certificate instrument is the Birth Certificate Bond for Set
Off for deposit into the UCC Contract Trust Account Number
[redacted].

Third is a letter to the Secretary regarding the chargeback. The letter states:

Please “Charge-Back (deposit) into my

“UCC Contract Trust Account, [redacted],
$10,000,000.00 (Ten Million Dollars) and charge
my account for the fees necessary for securing and
registration for the priority exchange for the tax
exemption to discharge the public liability of my
personal possessions, and command memory of
account no. [redacted] to charge the same to the
debtors order or your order.
...
With this POSTED transaction the
“CHARGEBACK” documented by the enclosed
forms are for use by the Republic and is complete.

Finally, Mr. Rogers filed the UCC-3 with the Clerk of the Superior Court of Crisp

County, Georgia, on February 6, 2012. In Box 8, titled “AMENDMENT (COLLATERAL

CHANGE),” he wrote the following:

This Statement is an assignment of Collateral or Product of

Collateral ... in which debtor holds all interest. This amendment
partially releases and Partially assigns the value of the DISHONOR
of the Invoice/Actual and Constructive Notice by DENISE
FACHINI, ... INVOICE NO. JRR 9102011 8758 1919 9741[.]

At issue in this case is whether or not the involuntary petition was properly commenced.

3
Because the Court finds that Mr. Rogers does not hold a valid claim against Ms. Fachini, the case

will be dismissed.

Conclusions of Law

Section 303 of the Bankruptcy Code governs involuntary petitions. An involuntary

petition may be commenced by an entity that “is either a holder of a claim against [the debtor]

that is not contingent as to liability or the subject of a bona fide dispute as to liability or amount,

or an indenture trustee representing such a holder.” 11 U.S.C. § 303(b). A “claim” is defined as

follows:

(A) right to payment, whether or not such right is reduced to

judgment, liquidated, unliquidated, fixed, contingent, mature,
unmatured, disputed, undisputed, legal, equitable, secured, or
unsecured; or
(B) right to an equitable remedy for breach of performance if such
breach gives rise to a right to payment, whether or not such right to
an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured, or unsecured.

11 U.S.C. § 101(5).

On the petition, Mr. Rogers alleges he holds a “commercial” claim against Ms. Fachini in

the amount of $10 million. The documents filed by Mr. Rogers to support his claim only serve to

undermine it by revealing it to be a sham. Mr. Rogers purported to write Ms. Fachini the

equivalent of a check (the bill of exchange) for $10 million drawn on his account with the U.S.

Treasury. There is no indication that he ever tendered the check to Ms. Fachini or that she ever

presented it for payment. Nevertheless, Mr. Rogers sought a chargeback of the $10 million

dollars on the same date that he issued the bill of exchange. He then filed a UCC-3 statement

indicating the chargeback had been dishonored. Nothing in the documents indicates why Mr.

4
Rogers issued the bill of exchange to Ms. Fachini or why she was obligated to return the funds to

him.

More importantly, the bill of exchange had no legal effect. Other courts have found bills

of exchange purporting to be drawn against a trust account at the U.S. Treasury to be “nothing

more than a string of words that sound as though they belong in a legal document, but which, in

reality, are incomprehensible, signifying nothing.” McElroy v. Chase Manhattan Mortg. Corp.,

134 Cal. App. 4th 388, 393 (Cal. App. 4 Dist. 2005). See also Bryant v. Washington Mutual

Bank, 524 F. Supp. 2d 753 (W.D. Va. 2007); Hennis v. TrustMark Bank, No. 2:10CV20-KS-

MTP, 2010 WL 1904860 (S.D. Miss. May 10, 2010) (collecting cases). Even the Treasury

Department has issued an alert about fraudulent bills of exchange. See “Bogus Sight Drafts/Bills

of Exchange Drawn on the Treasury,” available online at http://www.treasurydirect.gov/instit/

statreg/fraud/fraud_bogussightdraft.htm (noting that “bills of exchange drawn on the U.S.

Treasury Department ... have been used in an attempt to pay for everything from cars to child

support. ... All these Bills of Exchange drawn on the U.S. Treasury are worthless.”).

In Bryant, the plaintiffs were homeowners who attempted to use a bill of exchange drawn

on a “contract trust account” to pay off their mortgage. The mortgage company refused to accept

the draft and foreclosed on the home. The court found the bill of exchange was not a legitimate

negotiable instrument. Id. at 758. The court attempted to summarize the argument for these so-

called trust accounts as follows:

Supposedly, prior to the passage of the Fourteenth Amendment,

there were no U.S. citizens; instead people were citizens only of
their individual states. Even after the passage of the Fourteenth
Amendment, U.S. citizenship remains optional. The federal
government, however, has tricked the populace into becoming U.S.

5
 citizens by entering into “contracts” embodied in such documents
as birth certificates and social security cards. With these contracts,
an individual unwittingly creates a fictitious entity (i.e., the U.S.
citizen) that represents, but is separate from, the real person.
Through these contracts, individuals also unknowingly pledge
themselves and their property, through their newly created
fictitious entities, as security for the national debt in exchange for
the benefits of citizenship. However, the government cannot hold
the profits it makes from this use of its citizens and their property
in the general fund of the United States because doing so would
constitute fraud, given that the profits technically belong to the
actual owners of the property being pledged (i.e., the real people
represented by the fictitious entities). Therefore, the government
holds the profits in secret, individual trust accounts, one for each
citizen.

Id. at 758-59 (internal footnote omitted). In 1933, the government provided a means for citizens

to recover the profits held in their trust accounts through House Joint Resolution 1922 and the

Uniform Commercial Code. Id. at 759. Although the remedy is kept secret so the government can

retain the profits, a person “who learns of and is able to implement the remedy, can supposedly

use the debt owed to her by the government to discharge her debts to third parties with Bills of

Exchange that are drawn on her trust account.” Id.

The court dismissed this theory–known as redemption theory–as “nonsense in almost

every detail.” Id. at 760. It found no legal support for this argument and instead concluded that

the debtor had tendered to the mortgage company “a worthless piece of paper.” Id. Furthermore,

the court warned the debtor that “people frequently end up in prison” for passing bills of

exchange drawn against the U.S. Treasury. Id. at 763.

Based on the foregoing, the Court is persuaded that Mr. Rogers’ UCC Contract Trust

2
As noted in the Findings of Fact, all the documents Mr. Rogers addressed to the
Treasury Department referred to HJR 192. HJR 192 “addresses nothing more than the U.S.
monetary shift away from the gold standard[.]” 524 F. Supp.2d at 760.

6
Account is completely fictitious. Therefore, the bill of exchange drawn on the account and the

subsequent chargeback have no legal effect and are not sufficient either to create a right to

payment or to create an equitable remedy for breach of performance that gives rise to a right to

payment. Consequently Mr. Rogers does not hold a claim as defined in 11 U.S.C. § 101(5)

against Ms. Fachini and does not meet the requirements to file an involuntary bankruptcy petition

against her.

An opinion of the Eleventh Circuit Court of Appeals raises some question about whether

the Court can consider the requirements of § 303(b) on its own motion. In Trusted Net Media

Holdings, LLC v. The Morrison Agency, Inc. (In re Trusted Net Media Holdings, LLC), 550 F.3d

1035 (11th Cir. 2008), the court said,

[t]here is no indication from the text of § 303 that Congress

intended bankruptcy courts to consider sua sponte at any point in
the proceedings whether the involuntary petition filing
requirements have been met. In fact, the statutory language
strongly suggests the opposite. Section 303(h) provides that if an
involuntary petition “is not timely controverted, the court shall
order relief against the debtor in an involuntary case under the
chapter under which the petition was filed.”

Id. at 1044 (quoting 11 U.S.C. § 303(h)) (emphasis in original). However, Trusted Net differs

significantly from this case.

The debtor in Trusted Net did not object to the involuntary petition until four years after

the petition was filed. Id. at 1037. At that time, the debtor argued the debt of the petitioning

creditor (who claimed to be the debtor’s only creditor) was subject to a bona fide dispute, and

because the petition was not filed by the holder of an undisputed noncontingent claim, the

bankruptcy court had no subject matter jurisdiction over the case. Id. at 1037-38. Thus, the issue

7
under consideration by the circuit was whether § 303 implicates the court’s subject matter

jurisdiction. Id. at 1038. The circuit court held that it does not. Id. at 1043. The lack of a statutory

mechanism for sua sponte review of involuntary petitions was a factor in support of the court’s

holding on jurisdiction. Id. at 1045. However, it does not necessarily preclude a sua sponte

inquiry in all circumstances. Here, there is no dispute over the validity of the debt that requires a

factual inquiry. On the contrary, petition is invalid on its face because the petitioning creditor’s

claim is founded on a financial instrument that has been ruled illegitimate as a matter of law by

multiple state and federal courts and has been declared worthless by the Treasury Department. To

assume such a claim is valid would give dignity to Mr. Rogers’ efforts to fabricate a debt and

invoke the bankruptcy process for an improper purpose (or at least some purpose that has no

relationship to collecting a legitimate debt). In these circumstances, any delay in the disposition

of this case would constitute a manifest injustice to Ms. Fachini and would transform the ideal of

due process into an instrument of chicanery. For the foregoing reasons, the Court will dismiss

this case.

An Order in accordance with this Opinion will be entered on this date.

END OF DOCUMENT