March 16, 2012
Chase's S.A. credit-card operation in spotlight
Allegations of wrongdoing at JPMorgan Chase bank's credit-card operations in San Antonio won't go away.
Current and former Chase employees in San Antonio told American Banker in a story posted on its website Monday night that the bank "took procedural shortcuts and used faulty account records in suing tens of thousands of delinquent credit card borrowers for at least two years."
The publication said the employees' stories corroborate allegations made two years ago by Linda Almonte, a former Chase assistant vice president in San Antonio. She filed a wrongful termination lawsuit and a whistleblower complaint claiming she was fired in November 2009 for refusing to participate in alleged fraud.
Almonte said she's subject to a gag order under the terms of a confidential settlement last April, but that hasn't stopped her from talking for the American Banker article and to other media.
"State and federal laws are still being violated," Almonte said Tuesday. Authorities "need to go back in and finish the job before I shut up."
American Banker reported that Chase's "process flaws" sparked an investigation by the Office of the Comptroller of the Currency, which regulates banks. Comptroller spokesman Dean DeBuck in an email declined to comment to the Express-News.
Chase responded to the probe by dropping lawsuits around the country to recover delinquent credit-card loans from borrowers, Almonte said, a development reported in June by the Wall Street Journal. Chase also dismissed five in-house attorneys, she added.
The comptroller, though, has taken little action against Chase, Almonte said.
"As soon as the OCC was out the door, (Chase was) collecting on the billions of dollars of judgments that they obtained illegally," she said. However, American Banker spoke to someone familiar with the comptroller's review who said it is taking the matter very seriously.
Almonte accused Chase of fraud relating to the litigation and collection of 23,000 delinquent credit card accounts with a value of more than $200 million. The accounts had been packaged for sale by Chase.
Almonte and her team found many were missing proofs of judgment, American Banker reported. Others misstated how much borrowers owed; in some cases, she said Chase owed the borrower.
Chase would neither comment for the American Banker article nor respond to questions about the story. But the bank issued this statement Tuesday:
"Following issues raised with mortgage documents, we conducted an internal review across the firm and found other procedural issues," Chase said. "We immediately alerted our regulators and worked to address them. We have since done a number of tests and found that in the overwhelming majority of cases, the amount collected from customers was correct." It declined to elaborate.
Chase employs about 1,800 people at its credit-card operations on Wiseman Boulevard on the far West Side.
The American Banker story is the first in a series of articles it says will detail "what allegedly went wrong in Chase's credit card litigation operation — and how those missteps could roil the banking and debt collection industries."
The bank's errors "could call into question the legitimacy of billions of dollars in outstanding claims against debtors and legal judgments Chase has already won," American Banker reported, based on interviews with current and former Chase employees.
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