According to a whistleblower lawsuit filed recently, J.P. Morgan Chase’s credit card services division sold nearly $200 million worth of supposed credit card judgments to collection agents. Each judgment was represented by Chase to be an enforceable court order against a Chase credit card holder to pay a certain amount of debt owed. But many of the judgments were apparently bogus. Some were not judgments at all and, in some cases, Chase reportedly owed the customer money!
Many others were missing proofs of judgment or other essential information and almost 25 percent misstated how much the credit card customer owed, according to the whistleblower. When Chase superiors were made aware of these problems, they allegedly insisted that employees sell the stuff anyway and robo-sign the bogus sales documentation. When one mid-level executive refused to do that, she was fired. Consequently, people who owed nothing were harassed and collection agents were also defrauded. (“J.P. Morgan Chase’s Ugly Family Secrets Revealed,” by Matt Taibbi, Rolling Stone).
Chase settled with the whistleblower on her wrongful termination claim. Unfortunately, the whistleblower was in dire financial straights and, for a modest amount of money, signed a confidentiality agreement. Arguably, however, moral turpitude damaging to the public should never be kept secret by a confidentiality agreement, so she spoke up anyway, at her peril. So far, the SEC has not indicated any interest but the Office of the Comptroller of the Currency is reportedly looking into the matter.
Matt Taibbi, who has met with the woman, sees this as a test case of the Dodd-Frank Whistleblower protection provisions. He expects Chase will sue the whistleblower for violating her confidentiality agreement so as to strike terror in the hearts of others who might come forward. If so, the court could find that the agreement is void and unenforceable as against public policy ? the policy that fraud against the public should not be concealed by agreement.
The opening paragraph of Taibbi’s blog at www.rollingstone.com provides a link to the full story by Jeff Horowitz in American Banker.
Page Perry is an Atlanta-based law firm with over 170 years of collective experience maintaining integrity in the investment markets and protecting investor rights.