Capital One Caught With Its Hands In Your Wallet

by L. Jed Berliner

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Capital One violated the bankruptcy discharge thousands of times and got caught, as was recently reported by the Wall Street Journal.  It filed claims in second bankruptcy cases based upon debts which were already discharged in earlier cases.

As my colleague Andy Miofsky wrote, "There is a reason Capital One Bank portrays credit card banks as a horde of marauding invaders.  Merriam Webster's Dictionary defines maraud as ''to roam about and raid in search of plunder'.''  Here, it plundered bankruptcy estates.  It caused other creditors to receive lower payments and some debtors to pay more than they should have.

This credit card issuer files a great number of claims every month in bankruptcy cases.  In 2008 the United States Trustee filed suit against it in Massachusetts, stating that it had filed 5,600 illegal claims based on debts which were already discharged in bankruptcy. 

An independent auditor was appointed to review the results of Capital One's belated investigation – you know, like closing the barn door after the horses have escaped.  The auditor determined that about 15,000 illegal claims had been filed.  This figure used Capital One's own waiver of exclusions of claims otherwise included in the illegal claims category where it felt it was too burdensome to be accurate.  The auditor is now working on refunds of payments made to Capital One based on these bankruptcy-discharged and illegal claims, plus appropriate attorney fees.

This just burns me.  There's a legend at the bottom of every proof of claim form which states that the penalties for a false filing is up to a $500,000.00 fine and five years' imprisonment.  The United States Trustee did not seek a fine, much less any imprisonment.  But it regularly seeks to deny or revoke the discharge of a debtor caught filing false statements.   How about penalizing Capital One by prohibiting any claims for a period of time?  There's no lesson to be taught, or penalty to be incurred, if all it suffers is the return of its wrongful gains.

For more information on these matters,please call our office at 305 548 5020.

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