Northern Valley Beacon

Information, observations, and analysis from the James River valley on the Northern Plains----- E-Mail: Enter 'Beacon' in subject box. Send to: Minnekota@Referencedesk.org

Monday, September 12, 2005

 

Attorney General announces a little relief from MetaBank

S. D. Watch broke the news earlier today, but consumers are finally getting some attention in South Dakota from the Attorney General's office. For some 1,200 South Dakota buyers of cars from a Dan Nelson Auto store, MetaBank, the main creditor for the bankrupt firm, has agreed to provide some reduced interest and other benefits, according to a news release from the South Dakota Attorney General's office.

We trust that Erin from Iowa will provide an assessment of this agreement for the consumers involved.

Comments:
This is another pitiful attempt by Metabank to try and convince us they are doing something for consumers.
Lowering the interest rate to 18% does nothing for consumers whose principle balance on these loans is 2-3 times the value of the car. The $500 warranty pays for covered repairs up to $500, and that's it. After the $500 is used up, the customers are on their own. Wiping out the last $500 on these loans means nothing, since rarely do the cars make it that far in the process, so basically this agreement serves the purposes of Metabank, in that it makes these allegedly fraudulent contracts, legal and binding.

The agreement mentions the 1200 South Dakota consumers who have loans in the SDAC/CNAC consumer loan portfolio, who will be affected by the agreement. There may be 1200 consumer loans originated in South Dakota, but many of these may not be "active" loans.

I received financial documents from former employees last week, that contained information on about 90 consumer loans, that are part of this SDAC/CNAC portfolio. It was apparent that these accounts had been "edited", since not one of them was over 31+ days past due. However, if you looked closer, there were accounts where a payment hadn't been received for 321 days, 126 days, 118 days, etc., but these accounts were "current". If you looked at the last column on the reports, the true number of days past due was there, but it was just listed as "other". This "editing" was verified to me by several collectors who didn't do the actual "editing". The SDAC/CNAC management oversaw and did the "editing". The collectors told me that customer accounts would disappear as the number of days past due would get up to 31+, and then reappear a few days later with a #1 beside the account indicating 1 day past due. The "edited" version of the accounts would be shown to companies purchasing them individually or in bulk, in order to misrepresent their value and get top dollar for them. The overall value of this portfolio was listed at between $32-35 million dollars for several years, and was the centerpiece for the now notorious, unquestioned lending partnership, Metabank had with Dan Nelson Auto Group/South Dakota Acceptance Corporation/Car Now Acceptance Corporation.

The FBI, who I spoke with today, is very interested in information related to the "editing" practices, and I sent them the financials I had, illustrating how it was done.

According to former high level management personnel at DNA/SDAC, Metabank received all of these internal financial reports, and in no way can claim ignorance to the practices in question. A former Metabank employee who worked in the trust department indicated that it was a known fact in the bank that Dan Nelson Auto Group's lending practices were unquestioned, and ongoing, with the full knowledge of Tyler and Jim Haahr.

Another internal report talks about 512 "edits" in August 2004. That means that 512 customers didn't make a payment, but the "editing" says they did. That was about a month before Metabank panicked and engaged, or duped these other banks into assuming some this debt. Metabank was over the regulatory limits, and was desperate to dump some of it.

First Indiana/JD Byrider took over the operation of the SDAC/CNAC consumer loan portfolio in late 2004, when the collectors told me they received training from First Indiana personnel who came to Iowa and South Dakota to do it. First Indiana Bank is the largest bank in Indiana, with close to $2 billion in assets. They assumed $5 million of Dan Nelson Auto Group's debt, and are in control of this portfolio, according to the CEO at FSB, who has purchased quite a bit of bulk paper(retail installment contracts)from SDAC/CNAC.

On Friday, September 2, 2005, I filed a motion objecting to the agreement between Metabank and the Iowa Attorney General in the United States Bankruptcy Court in Sioux Falls South Dakota. A hearing on the motion was held on Wednesday, September 7, 2005. Keith Gauer, one of Metabank's Paid Liars, moved to strike my objection and further, he indicated my lack of standing in this case. Irving Hoyt the bankruptcy judge, asked Mr. Gauer how he was going to proceed. He indicated that my previous contract with SDAC was "paid in full", therefore, I wasn't a creditor, and had no standing. Judge Hoyt pushed Mr. Gauer further, and told him to put me on the witness stand. Keith Gauer's reluctance to do so, didn't prevent this from happening. When he asked me if I had received my "paid" contract back from SDAC/CNAC, I told him no, which surprised him. When he put on his witness, Rob Junso, in house legal counsel for Dan Nelson Auto Group/SDAC/CNAC, I was then able to question Rob about the contracts. I asked him if an account where a payment hadn't been received for 321 days would be considered "active"? He hesitated, so I went further to provide more information about the "editing" practices of this company. When the judge asked Rob Junso what was their ususual practice when a loan is paid off, do they return the "paid" contract, he hesitated, since that doesn't happen very often. The judge told them to send me my "paid" contract.

That was all secondary to the fact that this judge wanted to know what I had to say. His facilitating of my getting on the witness stand, allowed important facts to get on the record, and was a victory for consumers.
 
I neglected to address the issue of Metabank not pursuing the charged off loans that is included in the agreement.
Again, this provides no help to the consumer. Instead of Metabank promising not to pursue collection of the charged off loans, they should be wiping those out completely, since a charge off, or a repossession of a vehicle, can effective prevent you from financing a pack of gum for about 7 years. Their disengenuous promise means nothing. These charge offs have damaged and will continue to damage consumers, who in many cases had a perfect right to stop paying on these fraudulent loans.
 
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