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 and the certicate of title notes the credit union's lien. 

     Harold decided to sell his SUV to Marian Paroo, the River City librarian, to fund a permanent move to Vienna where he could take in daily concerts in the park.  First, he went to the Iowa Department of Motor Vehicles and completed a 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 the issuance of a 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 theofficers in the second state may be.")   After getting the duplicate, "clean" 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 certificate of title and procured issuance of and held a new certificate of title reflecting its lien. 

     After leaving for Vienna, Harold stopped sending payments to the Oregon credit union.  A few months later they traced the SUV to River City and learned of Harold's machinations from Marian.  They called you, a local attorney, and said: "We've got trouble, terrible, terrible trouble."  What do you recommend?  U.C.C. 9-311(c), U.C.C. 9-316(d), (e), U.C.C. 1-201(32), (33), U.C.C. 9-313(b).