Minnesota Attorney General Lori Swanson is suing a Florida debt collection firm. The company was a major buyer of overdraft debt from Minnesota banks.
According to the Star Tribune, United Credit Recovery LLC is accused of creating fake bank affidavits to use in its collection from individuals and businesses. The newspaper reports the company allegedly created computer-generated affidavits with bank logos, cutting and pasting supposedly notarized signatures of bank officials onto the documents to make them look authentic.
The criminal complaint says the documents were used for years to not only persuade people that they owed money, but also to convince courts to award judgments and to hike the value of portfolios for resale later.
“This lawsuit is about protecting the integrity of the legal system,” said Attorney General Swanson. “Because these affidavits were resold to other debt buyers, we need the involvement of the court to contain their usage.”
United Credit Recovery is a major buyer of debt from charged-off checking and savings accounts. The company acquired more than 2 million accounts nationally from Wells Fargo and U.S. Bank alone between 2007 and 2011. It also bought from Bank of America, Fifth Third Bank and Huntington National Bank.
"The numbers are really astronomical," Swanson told the Star Tribune in an interview. "
The paper reports that in one case, United Credit Recovery allegedly fabricated 1,600 affidavits in 2008 for debt supposedly owed by Minnesotans. The affidavits had the exact same signature of a U.S. Bank officer, however, the officer's signature was dated a month later than the signature of the notary who supposedly witnessed it being signed.
The Pioneer Press reports that last month, Wells Fargo sued United Credit in federal court in Florida for creating the fake affidavits. United Credit paid Wells Fargo about $19 million to purchase the overdraft debt with an estimated value of more than $700 million between 2010 and 2012. It also paid about $31 million to U.S. Bank between 2007 and 2011 for debt estimated at $820 million.
Both banks have informed Swanson that they have stopped selling overdraft debt to debt buyers last year.
Swanson said her office isn't sure how many Minnesotans were affected, but it's at least several thousand. The lawsuit, filed in Hennepin County District Court is seeking to stop United Credit from sending out computer-generated affidavits. It also seeks civiil penalties of $25,000 for each violation, and the state's costs for the investigation and legal action.
The state legislature, earlier this year, passed a law requiring debt buyers seeking default judgments in court to present evidence that they are suing the right person, for the right amount, and that the consumer has been notified of the lawsuit.