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They think that by trying to concocted this extra disposable entity they can have the disposable entity take all the blame/punishment while they walk away scot-free.

It goes a bit deeper. They'll insist that, no, actually it is the federal government that has created this fictitious entity and the secret cheat code to sneak past a judge is to never acknowledge your legal identity references your personal identity.

This is, of course, all bullshit

We have a legal system that absolutely does function differently for different people. And the process by which we apply these competing standards is so confusingly arcane that it's not inconceivable to believe SovCit bullshit could be real. After all, so much of law boils down to what the judge agrees with when adjudicating the case, with an opportunity to appeal to a different judge(s) who apply their own rules.

The delusion is, ultimately, that this system is fair and equitable. That you really do just have to say the correct set of magic words and the judge will nod and smile and send you on your way. In reality, so much of a case is decided before you ever step into a courtroom - firstly based on matters of fact, rather than law, but secondly (and more frustratingly) based on the political inclinations of the prosecutor and the judge with respect to your identity.