SEC whistleblower complaint against Chase over credit card practices

Written by Biloxi

JP Morgan Chase has been hit with this latest scandal. It is not about the foreclosure fraud, robo-signing, or faulty paperwork process. It about JP Morgan Chase's credit card practices. Who is making this accusation? A former employee of JP Morgan Chase, Linda Almonte.

Ms. Almonte was a "mid-level executive" who "supervised employees across the litigation and post-judgment functions" of the credit card litigation department at JP Morgan Chase. Ms. Almonte no longer works for JP Morgan Chase because she was terminated from her position. In March of this year,  Ms. Almonte sued the bank for wrongful termination. She has claimed that she was fired because she had refused to participate in the sale of 23,000 credit card accounts Chase had packaged for sale. Ms. Almonte claimed that 5,000 of the credit card accounts were listed the wrong amount owed  and that thousands more had other problems according to her statement reported in Daily Finance. Now, Ms. Almonte filed a whistleblower complaint with the Securities and Exchange Commission (SEC) which adds more context and creditability to her lawsuit.

Ms. Almonte accuses JP Morgan Chase of illegal practices involving its credit card debt processes including robo-signing.


In. Ms. Almonte's November 30, 2010 letter to SEC, she alleged:

1. Chase Bank sold to third party debt buyers hundreds of millions of dollars worth of credit card accounts. . .when in fact Chase Bank executives knew that many of those accounts had incorrect and overstated balances.


3. Chase Bank executives routinely destroyed information and communications from consumers rather than incorporate that information into the consumer's 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

Ms. Almonte is the first whistleblower and the first in her position to allow her letter to made public and to make such charges against a large bank publicly. Why is Ms. Almonte now going public with her letter on JP Morgan Chase's credit card practices? According to Ms. Almonte's lawyer, George Pressly, Mr. Pressly said, "Her disclosures may bring into question Chase Bank's representations regarding Chase Bank's own securities but may also bear on certain asset-backed securities where the underlying assets are Chase Bank credit card accounts."


Ms. Almonte said that a large volume of documents in her possession as evidence that would be available for review to SEC and her 'first-hand' observations. These direct observations include "witnessing the head of Chase's pre-litigation group 'shred' material communications from borrowers, such as 'bankruptcy notices, settlement communications, and debt settlement company communications' rather than entering the information into Chase's database."  Also, Ms. Almonte alleged that "senior Chase Bank executives instructed Chase Bank employees remove important information and data from Litigation Accounts because the retention of the information would have resulted in increased computer hardware costs. Both types of record destruction rendered the accounts inaccurate."

What about the allegations of robo-signing? Mr. Pressly wrote:


"On numerous occasions, Ms. Almonte witnessed these Affidavit Signers work through at times 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 affidavits as busy work to be performed while the Affidavit Signers could focus on other matters."

In October, New York Times newspaper reported on robo-signing problems with credit card collections. but, Ms. Almonte provides more creditability as a former JP Morgan Chase employee to robo-signing issues with credit card collections.

Ms. Almonte's whistleblower complaint proves a full picture background on how so many credit card accounts could contain flawed data in JP Morgan Chase and opens the possibility probe of other illegal credit card practices involving other banks. As SEC expands their mortgage probe into investigating the early stages by the large banks of packaging up mortgages for sale to investors, SEC may want to broaden their investigation into whether JP  Morgan Chase executives knew that the mortgage loans weren't properly transferred to the trusts that issued the securities. If Ms. Almonte's allegation that the Chase bank executives knew of the illegal credit card practices is proven to be true, it leaves a bigger question to how much more illegal practices performed at JP Morgan Chase that Chase bank executives knew. It is my only hope that Ms. Almonte's complaint is not swept under the rug because her complaint [if proven true] may lead to charges against JP Morgan Chase. JP Morgan Chase denies her claims.

Here is Ms. Almonte's letter:

Almonte SEC Letter