The borrower had a troubled financial history, says his loan officer. He had a longstanding gambling problem and even missed mortgage payments one year because of a bad bet on the Super Bowl.

So when he showed up at American City Mortgage Corp.'s Carson, Calif., headquarters to notify servicing manager Stephanie Kohatsu that he was paying off his $140,000 mortgage, she was surprised. When she saw the check he was going to use, she was suspicious.

"I told him, 'This check is bogus, please don't give it to us,'" she said. The check in question stated it was redeemable at the U.S. Post Office, and was signed by M. Elizabeth Broderick. "We need a cashier's check, a title check, or a suitcase full of cash to pay off your mortgage," Ms. Kohatsu told the borrower.

But a week later, the borrower submitted the suspicious check. Ms. Kohatsu turned it over to the Federal Bureau of Investigation.

Last week, the FBI indicted Ms. Broderick and four others on counts of mail fraud, counterfeiting, obstruction of justice, and conspiracy.

Ms. Broderick, who calls herself the Lien Queen, had been holding seminars in Southern California, advertising that she could help the financially troubled rid themselves of thousands of dollars worth of debt for a $125 fee. Seminar attendees receive one faux check for their admission fee, while additional checks cost $100 each.

Ms. Broderick learned her check-fraud skills from Leroy Schweitzer, leader of the anti-government militia dubbed the Montana Freemen, the FBI reported. His arrest in March of this year helped lead the bureau to Ms. Broderick and others like her.

Since November 1995, Ms. Broderick has conducted a seminar every two weeks in the Los Angeles area.

"We've gotten thousands of Broderick checks," said U.S. Attorney Aaron Dyer. "Really, you have to be incredibly stupid or incredibly greedy to use one of these. And sometimes it's hard to tell which is which."

The attorney's office may not prosecute all individuals who tried to use the Broderick checks, Mr. Dyer said, because of the overwhelming number of cases. He could not comment on the status of the American City borrower.

Numerous fraudulent checks have also shown up at Bank of America's mortgage branches in the area, a company spokesman reports.

Ms. Broderick earned her nickname by instructing borrowers to file liens against judges who attempt to foreclose on their homes.

This particular type of check fraud is not new to the mortgage industry, said Sheila Green, senior director at the Mortgage Bankers Association of America. "These parties conduct seminars from time to time, then you'll see a wave of people trying to pay off their mortgages with bad checks."

The association has only received a few letters this year on the subject, Ms. Green reported, in part because lenders have wised up after a spate of similarly fraudulent checks two years ago.

As the American Banker reported in April of 1994, an antigovernment, anti-Semitic organization named the Posse Comitatus submitted more than a hundred fake money orders to pay off residential loans.

Now lenders are a lot more cautious when processing checks, Ms. Green said. They also have new processes in place to prevent the inadvertent release of a property if a check is not discovered immediately, she added.

The home owned by American City's borrower is now in foreclosure, according to the bank. Unless the borrower files bankruptcy, American City expects to have possession of the house by September.

The borrower is also said to hold a second mortgage loan with Transamerica Financial Corp., but the finance company would not comment on the situation, stating that it would violate the borrower's legal rights.

Ms. Broderick and the four others arrested have "done a lot of damage," said Charlie J. Parsons, special agent in charge of the FBI. "The obvious victims are the banks, hotels, merchants ... and landlords who have been inundated with these worthless warrants. But perhaps more poignant are the thousands of desperate seminar attendees who she ripped off by creating the false dream that they could become debt free."

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