Problem.Certificate of title

     A modern day Harold Hill drove to River City, Iowa in his Jeep Cherokee Sports Utility Vehicle, purchased with a loan from the Pugent (Big Band) Sound Credit Union in Oregon.  The credit union holds the certificate of title to the vehicle issued by the Department of Motor Vehicles of the State of Oregon, and the certicate of title notes the credit union's security interest in the vehicle. 

     Harold decided that he wanted to move to Vienna, where he could take in daily concerts in the park.  To fund his move, he decided to sell his SUV to Marian Paroo, the River City librarian, without paying off the balance of the loan to the Pugent Sound Credit Union.  To accomplish this, he needed, of course, to convince Marian that he owned the SUV free and clear of any liens.  Thus, he went to the Iowa Department of Motor Vehicles and falsely completed a form under penalty of perjury stating that he had lost his certificate of title, that he was the owner of the SUV and that no other persons held any interest in the SUV, and requesting issuance by the Iowa Department of Motor Vehicles of a clean duplicate certificate of title.  (As noted in Official Comment 4 to former U.C.C. 9-103:  "[v]arious fraudulent devices based on allegations of loss of the certificate of title enable a dishonest person to obtain both an original and a duplicate of title; to have a security interest shown on only one thereof; and then to effect a transfer into a new state on the basis of the clean certificate, no matter how diligent the officers in the second state may be.")   After getting the clean duplicate certificate of title, he sold the SUV to Marian and left for Vienna.  Marian financed her purchase of the SUV with a loan from the Save-a-Little, Spend-a-Little Credit Union in Iowa, which took Harold's clean duplicate certificate of title and with it procured from the Iowa Department of Motor Vehicles issuance of a new certificate of title reflecting its security interest. 

     Upon leaving for Vienna, Harold stopped sending payments to the Pugent Sound Credit Union.  A few months later it traced the SUV to River City and figured out Harold's scheme through discussions with Marian and the Iowa Department of Motor Vehicles.  It called you, a local attorney, and said: "We've got trouble, terrible, terrible trouble."  What do you advise?  U.C.C. 9-311, U.C.C. 9-316(d), (e), U.C.C. 1-201(32), (33), U.C.C. 9-313(b), U.C.C. 9-337.