Nearly 40% of Auditors Expect to Find Fraud At Their Clients in 2012. ow.ly/axryP
SEC Sues SinoTech Energy of China for Fraud. http://ow.ly/au9bb
Laws to protect credit card customers have been in effect for 2 years & the effects & consequences are becoming clear. http://ow.ly/9Xvob
Chicago Tribune article titled “An ounce of fraud prevention is worth a pound of cure”. http://ow.ly/9N0LV
We are all consumers. Consumer fraud is one of the most common problems for average people today. Car dealers, home improvement contractors, tele-marketers, financial "advisors", banks and loan officers, "alternative medicine" providers, sweepstakes/contest promoters and insurance companies are just a few of the many sellers which regularly mislead the consuming public. Most consumers mistakenly believe there is little or nothing they can do after having been taken advantage of by common consumer frauds.
Most lawyers do not practice consumer protection law. PinilisHalpern, LLP is a consumer law practice that concentrates on representing victims of consumer fraud. Their consumer protection practice is devoted to representing the common individual in the average consumer dispute. PinilisHalpern, LLP also regularly handles national class action litigation including securities fraud, price fixing, pharmaceutical marketing fraud, and large consumer sales practices cases. Many cases are referred by other lawyers.
PinilisHalpern, LLP is a faithful protector of consumer rights and believes that no consumer should be the victim of fraud—even if it is for a small amount of money. In New Jersey, the law almost always provides for enhanced awards and attorney’s fees; thus, NO CASE IS TOO SMALL.
If you believe that you have a claim or if you are a lawyer who has been consulted by a claimant, you owe it to yourself to speak with PinilisHalpern, LLP.
In New Jersey, if a consumer has been mislead, then that consumer has a viable lawsuit. This is because, unlike any other state and/or federal law, under the New Jersey Consumer Fraud Act, it is not necessary to prove that a seller or advertiser intended to mislead a consumer. To prevail in court, a plaintiff need only prove that she/he was deceived.
- Car Dealers
- Financial Advisors
- Insurance Companies
- Banking and Credit Cards
- Sweepstakes and Promotions
- Home Contractors
Deceptive advertising, misrepresentations concerning financing arrangements, damaged vehicles sold as "new," odometer fraud, unfair leases, use of inferior/used parts in repairs, misleading warranties, undisclosed fees, representing to purchasers that they must buy "gap" and/or health or disability insurance, and countless other fraudulent misrepresentations made to convince consumers to buy automobiles.
Insider trading, churning an investor’s account to generate fees, fraudulent limited partnerships, undisclosed fees and commissions, precipitous declines in stock value as a result of misleading statements to the investing public, financial planners who recommend investments in which they have an interest, accounting fraud, securities fraud, and other schemes limited only by the greed and ingenuity of unscrupulous advisors.
Failure or refusal to pay claims on time, refusal of health insurers to authorize treatment, listing doctors as "in-network" when they are not, changing the scope of coverage unfairly and/or without notice, failure to reimburse insureds for "out-of-pocket" payments, and far too many other unfair practices regularly engaged in by an industry which takes advantage of the vulnerability of its customers.
BANKING AND CREDIT CARDS
Undisclosed fees and interest on loans and credit, unreasonable collection practices for delinquent accounts, outrageous late fees and interest, refusal to honor buyer protection programs, failure to provide advertised promotional benefits (such as "travel points" and cash-back programs), unauthorized account administration, miscalculation of interest and/or fees, inaccurate credit reporting, and a myriad of other unfair advertising and promotional practices.
SWEEPSTAKES AND PROMOTIONS
A virtually limitless number of unfair practices engaged in by an industry which often thrives on bilking the elderly and hopeful by promising prizes and benefits which are never delivered.
Unfinished contracts, inferior workmanship, stolen deposits, misleading estimates, failure to build to code, unreasonable delays in completion, unauthorized changes to specs, dangerous electrical and plumbing work by unlicensed workers, infinite other illegal and deceptive practices.
N.J Division of Consumer Affairs Announces Top 10 Consumer Complaint Categories for 2011. http://ow.ly/9Jf62
OCC Probing JPMorgan Chase Credit Card Collections
Tuesday, March 13, 2012
By Jeff Horwitz
First in a Series
JPMorgan Chase & Co. took procedural shortcuts and used faulty account records in suing tens of thousands of delinquent credit card borrowers for at least two years, current and former employees say.
The bank’s errors could call into question the legitimacy of billions of dollars in outstanding claims against debtors and of legal judgments Chase already has won, current and former Chase employees say.
For the banking industry at large, the situation at Chase highlights the risk that shoddy back-office procedures and flawed legal work extends well beyond mortgage servicing.
"We did not verify a single one" of the affidavits attesting to the amounts Chase was seeking to collect, says Howard Hardin, who oversaw a team handling tens of thousands of Chase debt files in San Antonio. "We were told [by superiors] ‘We’re in a hurry. Go ahead and sign them.’"
Hardin left the bank in 2010 to work in a different industry.
Company documents, court filings and interviews with seven current and former employees reveal that Chase’s credit card litigation operation allegedly was plagued by unreliable external attorneys, management’s disregard for accuracy and patchy technology.
The bank’s computer systems frequently disagreed about how much debtors actually owed, several of the Chase sources say.
The employees’ stories corroborate allegations made by Linda Almonte, a former midlevel business process executive in Chase’s San Antonio-based Credit Card Litigation Support Group. Dismissed in November 2009 after six months on the job, Almonte filed whistleblower complaints and a wrongful-termination suit claiming she was fired for objecting to the sale of credit card debts with erroneous balances.
Almonte’s complaints drew the attention of the OCC, former Chase employees say, and led to the April 2011 shutdown of a formidable collections operation that generated several billion dollars of legal judgments every year.
Few details of the OCC’s investigation are available, but current and former Chase employees confirm that staffers from the agency’s enforcement division spent two months gathering information in the San Antonio facility late last year. A person familiar with the OCC’s review says that the regulator is taking the situation very seriously.
The root of Chase’s card-collections failures was more machine than man. Chase maintains a patchwork of computer systems that don’t always communicate well, according to former employees who used them. Meet TSYS, TCSF and RMS.
TSYS offers what outsiders assume a global bank’s customer data system looks like. Licensed from Total Systems Services Inc. and managed by Chase, the modern and versatile system is what consumers ultimately talk to when they check their credit card balance online.
TSYS only handles current accounts, however. When customers stop paying credit card bills, their accounts are passed to TCSF for collections and litigation and eventually to RMS for charge-offs.
Each of Chase’s systems handles its own tasks just fine. The problem employees faced is that TCSF and RMS can only talk to each other through TSYS, and each of the systems operates by its own rules. This means that when presented with the question of how much a customer owes, each might spit out a different answer.
"I came across that on a regular basis," says Carole McGinn, who retired in 2010 from the credit card litigation support group in San Antonio. The discrepancies were usually minor, she and three other employees say, but payments by heavily delinquent borrowers would throw the records seriously out of whack.
"There was no way to reconcile those balances that I knew of," says McGinn, who worked at Chase for almost 15 years.
To overcome this problem, Chase’s business-process staff reviewed records in multiple systems and reconciled the accounts manually.
Chase’s relationship with outside debt collectors posed another potential glitch. In such populous as California, Illinois and Florida, the bank employed in-house attorneys who were wired into all of its relevant computer systems.
Elsewhere, it relied on what credit card litigation staffers referred to as "outhouse attorneys." Paid according to how much money they recovered, the outsiders were connected only to TCSF, the litigation system. Former Chase employees say some of the firms, such as the since-imploded Mann Bracken LLP, were known for poor recordkeeping.
Chase’s San Antonio crew was well-versed in dealing with their computer systems’ quirks and the outside firms’ foibles. They adjusted accordingly, monitoring outside law firms for errors and stripping inaccurate charges from accounts.
"We made it work," says a former employee.
‘Everything In Dollars Collected’
Things began to change in 2008, when Chase replaced the credit card division’s San Antonio management, current and former Chase employees say. The bank installed Edmond Helaire as the San Antonio operations director, and he hired Jason Lazinbat as his No. 2.
Chase staffers who were interviewed for this story say they were never told the reason for the housecleaning, but several speculate that the bank was looking to increase recoveries. Even before the financial crisis made a shambles of consumers’ finances, Chase’s expanding credit card portfolio and growing propensity to sue for unpaid debts had dramatically increased the volume of cases it handled.
At the beginning of the last decade, Chase recouped $130 million a year from bad consumer debt of all stripes. By 2009, recoveries on credit cards alone exceeded $1.2 billion. Over the next two years, the bank would charge off more than $20 billion in credit card accounts. Litigation was the most profitable way to handle the bad debts.
Lazinbat was a Chase veteran with experience overseeing teams of debt collectors. He chafed at what he saw as the duplicative checks and balances that the old guard considered essential to ensuring the numbers were accurate, former employees say.
Lazinbat "measured everything in terms of number of dollars collected," says a former Chase employee who requested anonymity. "He did not understand that in the process world, that’s not what you look at. That’s not the metric."
Chase spokesperson Paul Hartwick responded to messages left for Lazinbat, who declined to comment.
Rank-and-file staff began complaining about orders to take shortcuts as part of the broader culture clash, current and former employees say. The conflict ended when Lazinbat and Helaire terminated several key midlevel officials in 2008 and early 2009, employees say.
‘Documents Were Trashed’
One of the replacements brought in was Linda Almonte, a congenitally upbeat former Washington Mutual process execution manager who gets excited about Six Sigma quality control.
By the time of Almonte’s May 2009 arrival, the rapidly expanding portfolio of delinquent accounts and the quirks in Chase’s systems had produced serious problems, she and others say.
The outside attorneys were one flashpoint. The records the law firms used to sue people sometimes differed from Chase’s own files at an alarming rate, according to a routine Chase presentation prepared by Almonte and later submitted to the Securities and Exchange Commission. Some law firms’ records disagreed with Chase’s in almost 20% of cases sampled, a rate far above what is regarded as an acceptable level of errors.
"That’s horrendous," says a former Chase attorney.
The outsiders’ lack of access to TSYS was one weakness. Another was that the law firms’ recovery-based pay encouraged slapdash work, says the former attorney and other former Chase employees.
"They did not make a meaningful review of what they had," the attorney says.
The staff of the Credit Card Litigation Support Group grappled with quality control and how to ascertain that customers did, in fact, owe the company money. In one Chase email, Almonte suggested to Lazinbat that the bank should negotiate with delinquent customers before suing them. Doing so, she wrote, would "weed out additional accounts that were settled or payments made that are not showing up in the system."
Other things were falling through the cracks. Borrower correspondence sent to the San Antonio facility, such as bankruptcy notifications, address changes and hardship requests were being dropped on an unmanned desk, according to a 2009 printout from Chase’s troubleshooting log.
"There is no existing … process in place that states what action should take place when … this correspondence is received," notes a log entry submitted by an employee.
(The emails and internal records cited in this story are pulled from Almonte’s whistleblower complaints. While Chase has declined to discuss them, former employees attested to the documentation’s apparent legitimacy.)
Documents weren’t simply misplaced: Chase shredded incoming correspondence such as records of borrower payments and counter-judgments extinguishing debts, Almonte alleges in her wrongful-termination suit.
While none of the people who interviewed for this story witnessed this, McGinn says she also heard colleagues acknowledge that some correspondence had been destroyed.
"I understand there were documents trashed, yes," she says. McGinn retired from the San Antonio facility in June 2010 after she says she became uneasy with how it was being managed.
"My mouth was going to get me in more trouble than I could live with," McGinn says.
Three Signers, Billions in Debt
Former Chase employees say they used to consider the mass production of affidavits by document signers to be at most a technical concern. This is because quality control staff traditionally vetted the files thoroughly for bankruptcies, identity theft and errors before passing the documents to signers.
But given their growing concerns about possible errors in underlying collections and litigation records, these procedural issues began to seem substantive.
One of Chase’s most prolific affidavit signers was Ruben Alcaraz, one of three San Antonio liaisons with the in-house collections attorneys, court filings indicate. By law, collection affidavits require the signer to be familiar with the bank’s pertinent records.
(The failure to follow similar procedures in the mortgage market is what created the industry’s foreclosure robosigning problems.)
"Based upon my review of the plaintiff’s books and records of defendant’s account(s), I have personal knowledge of the facts set forth in the attached pleading," states one Pennsylvania card-debt affidavit signed by Alcaraz. "This verification is made subject to the penalties of [Pennsylvania law] relating to unsworn falsification to authorities."
Numerous former employees say that Alcaraz and his colleagues rarely if ever reviewed such files. They routinely signed stacks of affidavits on flights and in meetings, which in some cases were attended by Helaire, Lazinbat and Chase compliance staffers. Nobody objected, Almonte and others say.
Alcaraz also describes himself in the court documents as an "officer of the bank" and an "assistant treasurer." High-level Chase management had instructed the staff to stop signing documents using such titles around the middle of the last decade, four Chase sources say. But Lazinbat ordered them to do it anyway. An operator for Chase’s internal switchboard identified Alcaraz as a "business analyst."
"Hardly, if ever, was anything verified," Almonte’s SEC complaint states. "There was constant complaining by the attorney liaisons about having to manually sign these affidavits; … they always questioned why they could not have them digitally signed in bulk."
"Each and every one of those [affidavits] should have been manually checked," says Hardin, framing the issue as one of basic quality control. "There was a lot of need for diligence, and sometimes that just didn’t happen."
A message left for Alcaraz was returned by Chase spokesperson Hartwick, who said that Alcaraz declined to comment.
‘A Huge Cleanup’
Almonte says she initially limited her criticism of Chase’s operations to pushing internally for improvements.
"I have a lot of areas where the ball was dropped, … and now we have a huge cleanup," she wrote in an email to Lazinbat in October 2009.
While Almonte says her relationship with Helaire and Lazinbat initially was excellent, it fell apart when she began questioning how the bank was handling the sale of $200 million of legal judgments to an outside debt collection company.
Nearly half of the files her team sampled were missing proofs of judgment or other essential information, she wrote to colleagues. Even more worrisome, she alleged in her wrongful-termination suit, nearly a quarter of the files misstated how much the borrower owed.
In the "vast majority" of those instances, the actual debt was "lower that what Chase was representing," her suit stated.
Among the files Chase was selling, Almonte said, were former Providian Financial Corp debts that had previously belonged to the failed Washington Mutual. (Chase acquired WaMu’s assets from the Federal Deposit Insurance Corp. in 2008.) The Providian files had been labeled with a code that that the credit card litigation group used to signal "toxic waste," she says.
Another person familiar with the files confirmed that the Providian accounts were commonly referred to with that term. The debt had long been considered unreliable and lacked documentation. It was never supposed to be sold, this person says.
A review of state court records shows that second-hand debt buyers are suing people who allegedly owe money on the Chase-WaMu-Providian accounts, however. Informed that the files have surfaced in court, the former Chase employee who confirmed the files’ "toxic" status was appalled.
"That’s crazy," the person says. "I can’t believe they [Chase officials] did that."
Almonte called for the bank to halt the debt sale, but Lazinbat warned her that "she had better go along with the plan to sell the misrepresented asset," she later wrote in her employment lawsuit.
Almonte says she refused Lazinbat’s order and escalated her concerns to his boss, Helaire. Chase fired her on Nov. 30, 2009.
Carole McGinn was not a party to discussions about the debt sale but confirms the thrust of Almonte’s claims. "I know she [Almonte] was looking into things that they didn’t want her looking into," McGinn says.
The following March, Almonte filed her wrongful-termination suit. First reported by the San Antonio Express-News, the case brought Chase’s alleged problems into public view.
"This is not an accident anymore," Almonte now says. "The same people who created this problem at Chase are still in charge. They aren’t going to fix it unless they’re forced to."
NEXT: Almonte sues. The OCC gets interested. Chase fires in-house collections attorneys and the reliability of its judgments comes into question.