• Pattern of Inaccurate Filings in Bankruptcy Cases Results in $15 Million OCC Civil Penalty for Financial Institution
  • September 22, 2017 | Author: Jason K. Wright
  • Law Firm: Weltman, Weinberg & Reis Co., L.P.A. - Cleveland Office
  • On April 25, 2017, in a proceeding before the Office of the Comptroller of the Currency (OCC), one of the largest financial institutions in the U.S. entered into a Consent Order for a Civil Money Penalty, which included a payment of $15 million to the Department of the Treasury, due to:

    (a) Untimely, not filed, or inaccurately filed Proofs of Claim;
    (b) Payment application inaccuracies resulting in overpayments by debtors or trustees;
    (c) Untimely and/or inaccurate Payment Change Notices;
    (d) Untimely, and/or inaccurate Post-Petition Mortgage Fees, Expenses, and Charges;
    (e) Inaccurate Notices of Final Cure;
    (f) Exposure of confidential customer information in court-filed documents; and
    (g) Inconsistent application of the Bank's fee waiver practices.

    The deficiencies discovered took place between 2009 and 2014. In addition to the Civil Money Penalty, the Bank also refunded an additional $29 million to approximately 22,000 account holders.

    For any national bank or federal savings association that is chartered, regulated, and supervised by the OCC, this action is a reminder that there is a federal enforcement system in place to protect the public and to provide accountability proportionate to the deficiencies discovered during examinations.

    For those entities which are not regulated by the OCC, it is still important to keep in mind that the Bankruptcy Courts have the authority to strike defective filings, issue sanctions, or hold parties in contempt, where it is demonstrated that a creditor's Proof of Claim was not filed in good faith. (See, e.g., Federal Rule of Bankruptcy Procedure 9011.) Furthermore, a motion for sanctions in a bankruptcy case can be filed by any party to the proceedings, including the Debtor and/or the U.S. Trustee; and the U.S. Trustee responsible for administering Chapter 13 cases acts as an arm of the U.S. Department of Justice.