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Old debts place homes at risk

The Arizona Republic


The Arizona Republic

A financial setup orchestrated by a convicted criminal has left more than 1,000 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 on an arrest warrant and 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.”

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 and interviews indicate McCoon buys credit-card debt from a company called Unifund in Cincinnati.

Unifund buys bundles of debts at auction from banks and sells them to outside collection agencies. It pays pennies on the dollar for a chance to collect money from debtors that banks have written off as uncollectible.

Owner loses home

Joe Peck, who owned a modest home in Chandler, said McCoon contacted him in 2004 over a Providian Visa card that he had stopped paying in 2001. Although the original debt was for $2,600, McCoon demanded $7,000 in penalties and interest.

“I begged him not to take my house. I told him, ‘My daughter was born in this house,’ ” said the 31-year-old Peck, choking back tears. “He offered to put me on a payment plan.”

In order to qualify for McCoon’s payment plan, Peck said he was required to sign a series of documents that McCoon provided him, one of which was a deed to his house.

A year later, Peck filed bankruptcy and stopped making payments. That’s when he said Pacific States initiated foreclosure proceedings.

“(McCoon) said, ‘That paper you signed says you can’t file bankruptcy, and you still owe me,’ ” Peck said. “He said I signed away the rights to my house and he was going to take it.”

Peck said his bankruptcy included the Providian Visa credit card, which was not secured by real estate. But instead of fighting McCoon, Peck said he quickly deeded his house to a real estate agent, who agreed to assume the mortgage and pay off Pacific States.

“(McCoon) got $7,000, and I lost my house,” said Peck, who now lives in an Ahwatukee apartment with his wife and daughter.

“I’m just an average guy. I didn’t know any better,” Peck said. “He scared me into thinking I was going to lose everything. He did a good job of it, too.”

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