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Chase Bank Alleged to Not Be Able to Confirm Real Balances Owed While Shredding Documents

Chase Bank has recently become the subject of a whistleblower complaint to the SEC by Linda Altamonte, a described mid-level employee of the Chase Bank Credit Card Litigation Department.

Documentation on this case states:

  1. Chase Bank sold to third party debt buyers hundreds of millions of dollars worth of credit card accounts that were marked by Chase Bank as Judgment Accounts when in fact Chase Bank executives knew that many of the accounts had incorrect and overstated balances.
  2. As part of the sale of Judgment Accounts, Chase Bank executives knowingly mischaracterized delinquent accounts as already reduced to judgment, when in fact proof existed that no judgment existed or at the very least insufficient documentation existed to reach that conclusion.
  3. Chase bank executives routinely destroyed information and communications from consumers rather than incorporate that information into the consumers credit card file, including bankruptcy notices, powers of attorney, notice of cancellation of auto-pay, proof of payments and letters from debt settlement companies.
  4. Chase Bank executives mass-executed thousands of affidavits in support of Chase Banks collection efforts and those Chase Bank executives did not have personal knowledge of the facts set forth in the affidavits.
  5. When senior Chase bank executives were made aware of these systemic problems, senior Chase Bank executives — rather than remedy the problems — immediately fired the whistleblower and attempted to cover up these problems.

The documentation goes on to say that the Chase Bank computer system that employees rely upon is know as the System of Record. Apparently once an account goes into litigation with the Credit Card Litigation Department at Chase Bank the records of that action are kept in a separate database, the Litigation Database, with limited or different capabilities for being able to maintain cardholder data.

Altamonte says in her review of 11,472 Judgment Accounts of Chase Bank customers living in California, 44% of the accounts did not have the judgment on file or if the file did have a copy of the judgment it was not properly signed or date-stamped by the court. In some cases even though the consumer had won a judgment against Chase Bank the judgment was recorded incorrectly in the Chase Bank records and reflected Chase had actually won a judgment against the consumer.

Multiple accounts were found that Chase claimed were still owed but it is said the internal survey found it had in fact already been paid in full.

Linda Altamonte in her claims made the following assertions to the SEC regarding Chase Bank.

  1. The Pre-Litigation Group in the Credit Card Litigation Department routinely destroyed material, inbound communications from borrowers including bankruptcy notices, settlement communications, and debt settlement company communications. To the extent the Pre-Litigation Group did not destroy these inbound communications, the group failed to timely incorporate the information contained in these communications into the Litigation Database. In one instance, Ms. Altamonte witnessed the head of the Pre-Litigation Group shred such documents before incorporation into the Litigation Database. Failing to properly record the information and data contained in these inbound communications to the Litigation Database rendered the information therein inaccurate.
  2. Senior Chase Bank executives instructed Chase Bank employees remove important information and data from Litigation Accounts, as the retention of the information would have resulted in increased computer hardware costs. Removing important consumer information rendered the information in the Litigation inaccurate and unreliable.
  3. The information and facts set forth in a Judgment Affidavit required a meaningful reconciliation among the System of Record (including at times multiple legacy databases that compromise the System of Record), the Litigation Database and at times third party law firms’ own databases. At no time did the Affidavit Signers perform this reconciliation, relying on hourly workers to perform this process. Hence the Affidavit Signers did not have personal knowledge of the facts set forth in the Judgment Affidavits.
  4. The Affidavit Signers in a cavalier fashion almost flaunted their lack of personal knowledge of the facts contained in the Judgment Affidavits. On numerous occasions, Ms. Altamonte witnessed these Affidavit Signers work through at time 3 feet tall stacks of Judgment Affidavits at once during weekly multi-hour long, non-related company meetings. The notaries were not present at these meetings. The Affidavit Signers simply relied on hourly workers to reconcile amounts owed and then treated the actual execution of the affidavit as busy work to be performed while the Affidavit Signers could focus on other matters.
  5. The reconciliation process itself was manual in nature, cumbersome at best and prone to significant errors. Chase Bank failed to properly integrate its computer systems and databases so the underlying facts of these affidavits required the reconciliation of information from multiple databases. The diligence performed by Ms. Altamonte in late 2009 uncovered errors in the actual amount owed by a borrower and the amount Chase Bank claimed to be owed in the Judgment Affidavit. Indeed, Ms. Altamonte determined as many as 20% of the Judgment Accounts to be sold failed and internal test to check for accuracy. Such errors could be the result of systemic errors in the reconciliation process, which Chase Bank could have resolved if it unified its databases onto one platform.
  6. Chase Bank failed to properly maintain records and documents that supported the status of a Judgment Account. For example, a Chase Bank required practice was to maintain a copy of a judgment secured in Chases Bank’s favor in the account file. In late 2009, Ms. Altamonte audit work found that in a large percentage of the files, Chase Bank did not have record of obtaining such a judgment and in fact in some files the records indicated that the borrower had the judgment against Chase Bank.
  7. Chase Bank sold to third party debt buyers hundreds of millions of dollars worth of credit card accounts that were marked as Judgment Accounts when in fact Chase bank knew many of those accounts had material defects, were not in fact Judgment Accounts and had incorrect and overstated balances.
  8. As part of the sale of Judgment Accounts, Chase Bank executives knowingly mischaracterized delinquent accounts as already reduced to judgment, when in fact proof existed that no judgment existed.
  9. As part of the sale of Judgment Accounts, Chase Bank executives knowingly mischaracterized delinquent accounts as Judgment Accounts when insufficient documentation existed to reach that conclusion.

Chase Bank Alleged to Not Be Able to Confirm Real Balances Owed While Shredding Documents
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Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • m.s.

    Hi there –

    I am in this boat right now. I can’t believe I found this letter and the time I did. I have been talking with Chase for almost 7 months now, trying to come to a settlement agreement. I never denied that any of the debt was valid – it is definitely valid. I was always a good customer, but they raised rates across the board, I was late ONE month and my rate went up to 29%. I tried to pay it, but became unemployed and it all went downhill. On several occasions, Chase offered a settlement, but at an amount I couldn’t afford (85% of the balance). I told them I would pay a certain amount, which was 50% of the debt. They agreed to the amount, but only if I paid a ‘down payment’ over the phone, right then and there. I told them I was not comfortable to entering into a new agreement without something in writing. They said they could absolutely not do that, and if I didn’t pay them over the phone, they would send me to the litigation department. Now, i know this is a bunch of bull, because just a week earlier, my husband got an offer in writing from them to settle. Why would my account be treated so differently when both cards had been delinquent for the same amount of time? On top of that, my husbands card’s balance was 3x that of mine? It didn’t make sense to me. Every time I talked to a representative, NOTHING seemed to be in the notes on file. No verbal offer, nothing. So I had to start the process from square one every time I called them. I finally got so tired of it that I sent them a cease and desist.

    The second to last time I spoke with them, I talked to a woman who seemed very understanding of the whole situation. But she informed me that once the account is in the litigation department, there is no option to settle the account. WHAT?!? Wait a minute…what the heck happened here? Last week it was ‘make a payment over the phone and we’ll settle’ and now it is completely off the table? So, all of a sudden I am in litigation and freaking out…who wants to get sued??? I am not sure what to do now. I was sent a Summons and Complaint (COPY only – not been served yet) and with it, a Stipulation for Judgement. I am not signing it. Now they want to charge me MORE interest and their court fees. I know that the stipulation is basically a confession that I will pay them all the money.

    I can’t afford an attorney and don’t know what to do. I have been trying to avoid bankruptcy at all costs and I know that may be the road in which to take. But after reading this letter above, I feel like I have been duped by Chase and sent to litigation for something I tried to resolve with them, but due to their lack of diligence, it has escalated. Is there any defense I have against them? I don’t want money out of them, but I absolutely want to defend myself and reduce the balance to what I can afford. Will a judge ever reduce the amounts due?

    Thank you.

    m.s.

  • m.s.

    Hi there –

    I am in this boat right now. I can’t believe I found this letter and the time I did. I have been talking with Chase for almost 7 months now, trying to come to a settlement agreement. I never denied that any of the debt was valid – it is definitely valid. I was always a good customer, but they raised rates across the board, I was late ONE month and my rate went up to 29%. I tried to pay it, but became unemployed and it all went downhill. On several occasions, Chase offered a settlement, but at an amount I couldn’t afford (85% of the balance). I told them I would pay a certain amount, which was 50% of the debt. They agreed to the amount, but only if I paid a ‘down payment’ over the phone, right then and there. I told them I was not comfortable to entering into a new agreement without something in writing. They said they could absolutely not do that, and if I didn’t pay them over the phone, they would send me to the litigation department. Now, i know this is a bunch of bull, because just a week earlier, my husband got an offer in writing from them to settle. Why would my account be treated so differently when both cards had been delinquent for the same amount of time? On top of that, my husbands card’s balance was 3x that of mine? It didn’t make sense to me. Every time I talked to a representative, NOTHING seemed to be in the notes on file. No verbal offer, nothing. So I had to start the process from square one every time I called them. I finally got so tired of it that I sent them a cease and desist.

    The second to last time I spoke with them, I talked to a woman who seemed very understanding of the whole situation. But she informed me that once the account is in the litigation department, there is no option to settle the account. WHAT?!? Wait a minute…what the heck happened here? Last week it was ‘make a payment over the phone and we’ll settle’ and now it is completely off the table? So, all of a sudden I am in litigation and freaking out…who wants to get sued??? I am not sure what to do now. I was sent a Summons and Complaint (COPY only – not been served yet) and with it, a Stipulation for Judgement. I am not signing it. Now they want to charge me MORE interest and their court fees. I know that the stipulation is basically a confession that I will pay them all the money.

    I can’t afford an attorney and don’t know what to do. I have been trying to avoid bankruptcy at all costs and I know that may be the road in which to take. But after reading this letter above, I feel like I have been duped by Chase and sent to litigation for something I tried to resolve with them, but due to their lack of diligence, it has escalated. Is there any defense I have against them? I don’t want money out of them, but I absolutely want to defend myself and reduce the balance to what I can afford. Will a judge ever reduce the amounts due?

    Thank you.

    m.s.

  • Andy Faria

    This video captures exactly how the Chase executives feel…
    http://www.huffingtonpost.com/

  • http://northeast-properties.com Andy Faria

    This video captures exactly how the Chase executives feel…
    http://www.huffingtonpost.com/2010/04/14/jpmorgan-executive-mobbed_n_537508.html

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