Welcome

On October 2, 2008, the United States Trustee for Region 1 (the “UST”) filed a Complaint (the “Complaint”) against Capital One Bank (USA), N.A. (“Capital One”) in the United States Bankruptcy Court for the Eastern District of Massachusetts (the “Bankruptcy Court”). The Complaint alleged, among other things, that Capital One had filed approximately 5,600 proofs of claim to collect on debt that had been discharged in a prior bankruptcy case, and that it improperly collected approximately $340,000 from numerous bankruptcy estates in violation of Section 524(a)(2) of the United States Bankruptcy Code.

After the filing of the Complaint, Capital One and the UST negotiated and agreed to a settlement, the terms of which are described in the Stipulated Final Judgment and Order entered by the Massachusetts Bankruptcy Court on November 20, 2008 (the “Stipulated Judgment”). A copy of the Stipulated Judgment and all amendments is available for review on this website.

Pursuant to Section II of the Stipulated Judgment, Capital One retained Melanie Cyganowski (the “Auditor”), former Chief Bankruptcy Judge for the Eastern District of New York and current partner in the law firm Otterbourg, Steindler, Houston and Rosen, P.C. (“Otterbourg”), to oversee the implementation of the procedures set forth in the Stipulated Judgment. The Auditor subsequently retained Otterbourg as her legal counsel in connection with the duties required under the Stipulated Judgment.

In accordance with Section II. I. of the Stipulated Judgment, the Auditor is required to direct and supervise Capital One’s Corporate Audit Services team (“CAS”) in CAS’s review of Capital One’s business records to determine those Capital One account holders that filed a bankruptcy case in which Capital One filed a proof of claim on debt that was discharged in a prior bankruptcy case. Pursuant to Section III of the Stipulated Judgment, CAS is required to prepare, and the Auditor is then required to certify the accuracy of four separate reports: (1) the Master Claims Report; (2) the Prior Case Report; (3) the Erroneous Claims Report; and (4) the Distributions and Refund Report (each a “Report” and collectively, the “Reports”).

The Auditor has or is in the process of certifying the required Reports that cover the period from January 1, 2005 through November 20, 2008. Pursuant to Section IV of the Stipulated Judgment, CAS will also prepare, and the Auditor will certify, two additional sets of Reports that cover (i) November 21, 2008 through November 20, 2009; and (ii) November 21, 2009 through November 20, 2010. The Reports reflect, among other things, those instances in which Capital One filed a proof of claim in the bankruptcy case of a Capital One account holder for a debt that had been previously discharged (the “Erroneous Claims”). The Reports, the Auditor’s certifications of the Reports, and various related documents are available on this website.

Capital One has withdrawn the Erroneous Claims identified in the Erroneous Claims Report covering January 1, 2005 through November 20, 2008 in all bankruptcy cases that were still open as of May 13, 2010. Capital One is in the process of refunding the distributions received on such Erroneous Claims. The Auditor recently filed with the Court a series of recommendations regarding a process to deal with Erroneous Claims filed in cases that were closed or dismissed as of May 13, 2010. On January 4, 2011, the Court entered the Order Approving the Auditor’s Recommendation for Withdrawal of Claims in Closed Cases [Dkt. No. 98]. Among other things, the Auditor recommended that Capital One be required to re-open cases in which it had received distributions exceeding $2,000 or more based upon the prior filing of erroneous proofs of claim.

Pursuant to Section V of the Stipulated Judgment, if there are any Erroneous claims against which a debtor or a trustee of the debtor’s estate filed an objection or initiated a proceeding to disallow the Erroneous Claim prior to Capital One’s filing papers for the withdrawal of such Erroneous Claim, Capital One is required to pay the actual, out-of-pocket costs and expenses incurred for the filing of such objection or adversary proceeding, including any actual, out-of-pocket costs and expenses incurred by trustees to re-administer the funds returned by Capital One to the estate.

Pursuant to Sections V.D. and V.E.3. of the Stipulated Judgment, the Auditor is required, as to both debtors and trustees, to review actual, out-of-pocket expenses and determine if such expenses were reasonable and necessary to effectuate the withdrawal or denial of an Erroneous Claim. All such reasonable and necessary expenses, once approved by the Auditor, will be submitted to Capital One under the terms of the Stipulated Judgment for reimbursement.

Telephone inquiries can be made at (800) 873-4813

Email inquiries can be sent to CapOneAudit@oshr.com