A New Jersey debt buyer, Vanz LLC, recently filed a lawsuit against Mattia & Associates alleging that Mattia misrepresented the quality of charged off consumer accounts which Vanz purchased from Mattia.
Vanz’s lawsuit arises from two separate portfolios that Vanz purchased from Mattia : (1) the “Chase Portfolio” consisting of 3,932 charged off Chase credit card accounts which allegedly had balances totaling $ 21,442,947.29; and (2) the “AAG Portfolio” consisting of charged off loans totaling $ 325,219.18 secured by motor vehicles. Although Vanz alleged that distinctly different systemic deficiencies involving these portfolios, both portfolios illustrate some of the havoc inflicted on consumers when courts accept debt buyer records at face value without allowing thorough discovery.
The inadequacy of JPMorgan Chase’s record keeping systems have been well publicized largely because Linda Almonte’s lawsuits against JPMorgan Chase arising from her lawsuit alleging that JPMorgan Chase terminated her employment in retaliation for opposing Chase’s sale of inaccurate, inadequately documented, or unenforceable charged off accounts and her administrative (SEC) complaint against JPMorgan Chase filed pursuant to the Dodd Frank Act’s whistleblower provisions.
Debt buyer records are often inadequate yet courts often place great reliance on original creditor records. Consumers and their counsel should not just assume that even a bank’s records are accurate. Although many original creditors maintain an adequate evidentiary chain, many do not.
Fortunately for consumers, some of the inadequate and sometimes even fraudulent practices of the credit card issuers have been exposed in the past couple of years including, for example, the JPMorgan Chase / Washington Mutual / Providian Bank affidavits allegedly signed by “Martha Kunkel”, a robo-affiant who was allegedly deceased while she continued to execute thousands of affidavits on the banks’ behalf. Nor is Vanz, a small debt buyer, unique in blaming the seller. Even after this fraud gained national attention thanks to the Wall Street Journal, Portfolio Recovery Associates replied to the WSJ insisting that it was the “victim” of JPMorgan Chase’s false affidavits. To the best of my knowledge, PRA did not voluntarily vacate the many judgments that PRA says it unwittingly obtained using the fraudulent “Martha Kunkel” affidavits.
According to Vanz, Vanz agreed to pay 2.65% of the total amount of the balances of the accounts on their respective charged off dates. Vanz paid Mattia $ 568,238.10 for the Chase Portfolio.
A list of the alleged accounts and their respective balances were apparently attached as an exhibit to the parties’ asset purchase agreement.
Vanz alleged that it :
“learned that post charge off interest added to the charge off balance of the accounts that were a component of the purchase price for the Chase Portfolio were inaccurate.
Not only were they inaccurate but also they were included as a component of the purchase price which was contrary to all industry practices and standards.”
Complaint, Paragraph 7. In other words, the Complaint alleges that Vanz paid too much for the portfolio because Mattia overstated the amount of the balances of the accounts it sold.
Vanz alleges that the correct amount of accounts in the Chase Portfolio totaled $ 15,382,271.02 or $ 6,060,676.00 less than the amount Mattia told Vanz it was selling to Vanz. That’s $ 6,060,676.00 that someone will likely be demanding that consumers pay a debt buyer.
Vanz allegedly overpaid Mattia by $ 173,238.10 because Mattia inflated the amount of the accounts by $ 6,060,676.
Relying on usual industry practices and Mattia’s representations as to the charge off dates and amounts, Vanz apparently was adding post-charge off interest to many of the accounts for a second time without knowing that Mattia had already “random[ly] and inaccurate[ly] post[ed] charge off interest”.
Vanz alleged that Mattia sold Vanz the AAG portfolio consisting of charged off loans secured by automobiles for the sum of $ 325,219.18. Although Vanz is only licensed to collect debts in New Jersey, Vanz agreed to purchase all of the accounts in the AAG Portfolio based upon Mattia’s assurances that Mattia would attempt to collect the non-New Jersey accounts and remit the proceeds to Vanz or would attempt to broker the non-New Jersey accounts by selling those accounts to another debt collector.
According to the Complaint, Mattia “did not attempt to market the non-New Jersey, Maryland and Virginia accounts and made little or no effort to collect these accounts on Plaintiff’s behalf despite their promises to do so.”
Anyone from Florida and possibly other states such as Maryland or Virginia who paid Mattia money should be concerned based upon Vanz’s allegation that :
“Although Plaintiff learned that Mattia and Associates had sold and/or collected Florida accounts and others, Mattia and Associates has not remitted the full amount of monies it collected to Plaintiff for same.”
Complaint, Paragraph No. 4. In my opinion, it is possible that many consumers are at risk of being asked to pay alleged debts that they have already paid. This article consists of my opinions. Mattia’s answer is not due as I write this article and I assume Mattia will deny many of the allegations in Vanz’s complaint.
Vanz’s buyer’s remorse illustrates some of the record keeping problems which plague the debt buying industry. The frequency and severity of such “errors” should be considered by courts and the courts should allow considerable latitude to defendant’s discovery efforts. Effective discovery requires extensive knowledge of the state rules of civil procedure and the rules of evidence. Judges can not tutor pro se litigants or make arguments on their behalf.
Fortunately, hiring an experienced lawyer to defend a collection lawsuit is often within a consumer’s means thanks to the laws of Florida and many other states which require (or allow) the court to require the plaintiff junk debt buyer to pay the defendant consumer’s legal fees if the consumer prevails.
ARE YOU A FLORIDA RESIDENT WHO IS BEING SUED BY A “DEBT BUYER”?
I encourage consumers to consult with a collection defense lawyer who practices in their local area before they surrender by entering into a stipulation for judgment withheld or by doing nothing which allows the credit card issuer or debt collector to obtain a default judgment against the consumer. The collection lawyers are counting on consumers continuing to be uninformed.
If you are a resident of central Florida and surrounding counties — Orange, Osceola, Lake, Marion, Seminole, Sumter, Volusia, Putnam, Duval, Polk, Hillsborough counties, who is being threatened with a lawsuit or has recently received a summons over a consumer debt, you are welcome to contact my office by completing the Collection Agency Harassment form in the right hand column or by calling my assistant, Kris Altizer, at (407) 403 – 6760.
I will contact you to discuss your situation and whether I may be able to assist you.
(C) 2014 Donald E Petersen
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