JPM Fraudclosure Whistleblower Emerges

Tyler Durden's picture

The one main thing missing from the recent escalation in charges against the major banks in regard to the fraudclosure scandal has been an internal whistleblower who can corroborate that all the charges against the various illicit mortgage practices. After all, it is one thing to lay allegations, and totally different for a court of law to find that these are validated. So far it is precisely the latter that has been missing as no court is willing to escalate an issue that could potentially unwind decades of mortgage securitization. Yet all that may be about to change. Daily Finance's Abigail Field presents the case of one Linda Almonte, a former employee of JPM, who is not only suing the bank for wrongful termination, but has now also filed a whistleblower complaint with the SEC. Filed says: "The core allegations add context to her lawsuit, and they charge Chase
with grotesque and illegal practices involving its credit card debt
processes, including robo-signing." Sure enough, JP Morgan is denying everything. Yet a close look at the details presented by Almonte indicates that either she is blatantly lying, or JPM may be in water just as hot as Bank of America.

Per the formerly confidential statement, Almonte's 5 main allegations regarding JP Morgan are as follows:

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.

Almonte's lawyer, George Pressly operates the http://www.secwhistleblowerprogram.org/ website, which is how she reached him. It is reasonable to expect that now that the first whistleblower has emerged from the crowd, many other former employees will soon follow, making the legal headache for JPM's general counsel only comparable to the fees about to be charged by the firm's outside counsel. Furthermore, should this case come to court, it will become a public spectacle that will likely make JPMorgan be perceived in the same utterly fraudulent light in which Brian Moynihan's bank is currently basking: the preliminary evidence, if proven to exist, is very damning:
To support her claims, Almonte says she has "a large volume of documents in her possession available for review by the SEC" and offers her first-hand observations as well.

Those direct observations allegedly 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. She also claims 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, she says.

Concerning robo-signing, 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."

According to Almonte, determining the amounts owed wasn't easy: Chase had a number of "legacy" databases from its various acquisitions that were not well integrated. So, perhaps the executives should have looked more closely at the documents. "Indeed, Ms. Almonte determined that as many as 20% of the Judgment Accounts to be sold failed an internal test to check for accuracy."

As for the background on Almonte, here is what field dug up on the former employer:

During her time at Chase, Almonte was a "mid-level executive" who "supervised employees across the litigation and post-judgment functions" of the credit card litigation department.

In March, she sued the bank, claiming that she was fired for refusing to participate in the sale of 23,000 credit card accounts Chase had packaged for sale. Almonte says 5,000 of the accounts listed the wrong amount owed, and thousands more had other problems. By going forward with the sale after being informed of the problems, Almonte says, Chase was breaking the law.

Almonte's whistleblower complaint provides big-picture context for the sale she refused to participate in, providing background on how so many credit card accounts could contain flawed data.

To be sure, there may be some prior animosity which has only bubbled to the surface due to the termination, which may serve to diluate Almonte's claims somewhat, which may be perceived as retaliation. What will be far more useful is finding a whistleblower who is still in good standing and employed by either JPM or any of the other large mortgage lenders. We are confident that following this important example, many more far more credible cases will soon emerge. The result will be another major push against the auditors and FASB in general, to make even legally mandated price discovery irrelevant when it comes to the trillions of "assets" held on the bank books. Either that, or a prompt settlement with the various AGs who are currently investigating the bank and its peers, so as to remove any future legal standing of new claims to the bank's mortgage practices.

Full Almonte whistleblower complaint:

 

h/t Deadhead