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The Department of Justice’s U.S. Trustee Program (USTP) has entered into a national settlement agreement with Citibank N.A. (Citibank), Department Stores National Bank (DSNB) (collectively Citi), and FDS Bank requiring Citi to pay $5 million to remediate robo-signed proofs of claim filed in consumer bankruptcy cases in connection with more than 71,000 Macy’s-branded credit card accounts, Director Cliff White of the Executive Office for U.S. Trustees announced yesterday. The proposed settlement has been filed in the U.S. Bankruptcy Court for the Northern District of Georgia, where it is subject to court approval. In the settlement, Citi acknowledges that its affiliate DSNB issued Macy’s-branded consumer credit card accounts. FDS Bank was responsible for account servicing activities and contracted certain bankruptcy-related services to vendors. Between 2012 and 2015, tens of thousands of proofs of claim were filed in bankruptcy cases across the country on DSNB’s behalf. These proofs of claim were improperly signed, under the penalty of perjury, by employees of a third-party vendor who had not reviewed and/or lacked knowledge of the contents of the proofs of claim. In some cases, the electronic credentials of the vendor’s employees were used to file claims where the employee did not review the claim. These improper practices were identified when Citibank took over the servicing of the accounts in late 2015 from the third parties. Citi self-reported the errors to the USTP. Click here to read the court filing. 

When the floodwaters from Hurricane Florence recede and rebuilding kicks into high gear, homeowners and businesses will face an additional burden as tariffs imposed by the Trump administration drive up the cost of construction materials, the New York Times reported. Homebuilders and contractors say that the administration’s trade policy will add to the price increases that usually follow natural disasters. In addition to materials like lumber, steel and aluminum, the United States will impose tariffs on $200 billion in Chinese imports this week, including countertops, furniture and gypsum, a key ingredient in drywall. All told, some builders estimate that construction costs could be 20 to 30 percent higher than they would have been without these tariffs. Perhaps the biggest impact will come from wood prices, which are up 40 percent from a year ago. The Trump administration imposed a 20 percent tariff on Canadian softwood lumber late last year, and supply shortages have also driven up prices.

New York’s attorney general yesterday sued 10 companies and two executives over their alleged roles in a scam to induce thousands of struggling borrowers into buying student loan debt-relief services that they could have received for free, Reuters reported. Barbara Underwood, the attorney general, said defendants typically charged more than $1,000 for their services, which often came with usurious interest rates, after luring borrowers with false claims such as being affiliated with the government, or that their help was needed. “It strikes me that the lawsuit has merit,” Mark Kantrowitz, publisher of Savingforcollege.com, said in an interview. “There are companies that can take advantage of borrowers’ lack of awareness of what they can do.” The defendants include Debt Resolve Inc. of Hawthorne, N.Y., Chief Executive Bruce Bellmare and his predecessor Stanley Freimuth. Hutton Ventures LLC, a Santa Ana, Calif.-based business partner of Debt Resolve, and Equitable Acceptance Corp, a Minnetonka, Minn.-based financing company, are also among the defendants.