Author Topic: Chain of Custody - the JDB's Achilles Heel in Court  (Read 52171 times)

0 Members and 1 Guest are viewing this topic.

Flyingifr

  • -DEAN EMERITUS-
  • Valued Member
  • Posts: 8529
  • Welcome to my Temper Tantrum
Chain of Custody - the JDB's Achilles Heel in Court
« on: July 20, 2006 09:28:31 PM »
When evidence is introduced in Court, one critical element that must be established is the authenticity of the evidence. When the evidence changes hands from one party to another, that is the beginning of a concept called "Chain of Custody", and that chain must not be broken. The reason the Chain of Custody must be intact is that it eliminates (or isolates) the possibility of altering or falsifying the evidence. The ideal Chain of Custody would be like this:

Q (to Mr Jones, President of OC): Are you the person who issued that invoice?
A. Yes.
Q: What did you do with the account?
A. I sold the account to JDB1 on July 15, 2004
Q (to Mr Doe, President of JDB1): Did your company purchase this invoice?
A. Yes, on July 15, 2004
Q: Is this a true and correct copy of what your company purchased?
A. Yes.
Q: What did your company subsequently do with the account?
A. We sold it on August 9, 2005 to JDB2.
Q (to Mr Roe, President of JDB2): Did your company purchase this invoice?
A. Yes, on August 9, 2005.
Q: Is this a true and correct copy of what your company purchased?
A. Yes.
Q: What did your company subsequently do with the account?
A. We sold it on January 11, 2006 to JDB3.
Q (to Mr Poe, President of JDB3): Did your company purchase this invoice?
A. Yes, on January 11, 2006.
Q: Is this a true and correct copy of what your company purchased?
A. Yes.
Q: What did your company subsequently do with the account?
A. We presently are the owners of that account and are suing to collect the balance.

This is a Chain of Custody. Notice the following:

1. The invoice is the evidence in question.
2. It takes a Human Being to testify as to the authenticity of that invoice.
3. The human being must have first-hand knowledge as to what is being testified to about that invoice.
4. That there are people there to testify as to the ownership and conduct around that invoice from its creation to the time of the trial. The "Chain of Custody" is unbroken.

Notice that the testimony did NOT go like this:

Q (to Mr Poe, President of JDB3): Do you recognize this invoice?
A. Yes. My company purchased it from JDB2 on January 11, 2006.
Q: Can you authenticate it?
A: I was told by Mr Roe of JDB2 that he was told by Mr Doe of JDB1 that Mr Jones of OC assured him it was authentic.
Q: So you have no first-hand knowledge on your own that this invoice is authentic, do you.
A. No.

In this instance the Chain of Custody has been broken. It was broken at JDB1, because there is the point where the ability to authenticate the evidence is lost - there is no person to testify to its authenticity. Merely being assured that it is authentic by someone else who has no first-hand knowledge of that authenticity is not sufficient. This is called "hear-say" evidence, and it is not admissible.

The Achilles Heel that the JDB's have in Court is the Chain of Custody. The burden is on the party introducing the evidence to establish its authenticity, and by attacking the Chain of Custody, you will force a JDB to bring in Officers of all previous owners of the debt to establish the authenticity of the debt. If they can't (because the company is out of business and no officers can be located) or won't (because of the cost of bringing these people to the Court) then there is no one to testify as to the authenticity of the evidence and the Chain of Custody is broken.

After establishing that the Chain of Custody is intact, the next question involves how the records were maintained and protected. This will necessarily have to be testified to by a Officer of the OC, since that is where the alleged debt was created and the books and records of the matter originated. What would this Office have to testify to? Generally, the following:

1. That the Officer testifying has personal knowledge of the methods used by the OC to maintain their accounts;
2. That the Officer testifying was employed by the OC ina  capacity to have the knowledge in #1 at the time the alleged debt was created and thereafter until it was sold, and
3. That the officer in question personally examined the books and records as to this exact matter and has personal first-hand knowledge (like when the debt was incured, in what dollar amount, at what place, what was purchased with the debt, etc....

So, in a nutshell, here is the burden of proof the JDB has at trial:

1. They have to bring in as witnesses people who were officers of the OC at the time the alleged debt was created and at alltimes thereafter until it was sold who have first hand knowledge of the accounting policies, procedures and controls (no Marketing executives, please), plus
2. They have to bring in as witnesses people who were officers of each and every subsequent owner of the debt who were officers at the time each and every subsequent owner of the debt owned the debt to testify as to  their first-hand knowledge of what their company purchased, when and how its accounts were maintained (once again, no Marketing executives, please)

Then, each witness has to so testify (at the JDB's expense) as to their knowledge. You have the right to cross-examine each witness and impeach (bring into question) their testimony. How would you do that?

You can (and should) determine that they were in fact employed by the company they say they were at the time the alleged debt was with that company;

You can (and should) determine that they were employed in a position and capacity that would enable them to testify as to their own personal knowledge of their employer's recordkeeping and accounting practices;

You can (and should) determine that they in fact remember the matter at hand - not what they were told to say. If they are familar with the account, they should be familiar with all aspects of the account (and you will get all this in Discovery, which you have already put the JDB through). Not remembering one detail brings into question the memory of all details.

Q. Mr Jones - you testified that I allegedly purchased a sofa. What model and color?
A:........
Q. Don't your records or memory indicate that? If you remember to the penny what this alleged sofa cost, why can't you remember details like the date it was allegedly delivered, its model or its color, or to where it was allegedly delivered?
A:.......

This works not only on the OC's officers, but on the JDB's also.

Q. Mr Poe, you testified that your company purchased 1,750 accounts on January 11, 2006 and that this alleged debt was one of them. You also testified that you are familiar with all the debts purchased by your company on that date. Other than my name, address, social security number, amount allegedly owed and the company it is allegedly owed to, what else do you recall about this alleged debt purchase?

Once again, if they will testify that they are familiar with the matter, they should recall it. There probably will be nothing else because that is what the JDB typically purchases.

In summary, the concept of the Chain of Custody of a debt is a serious problem for a JDB in Court because of the trouble, time and expense of bringing the witnesses to Court who can establish the Chain of Custody. This weakness can be used to obtain a favorable settlement:

"You have a choice - settle with me for 5 cents on the dollar - knowing you paid 2 cents - and save yourself the expense of a long drawn out trial where you will have to fly witnesses from the OC and every prior JDB in to testify - or see ya in Court."
« Last Edit: July 21, 2006 08:58:56 PM by Flyingifr »
BTW-the Flyingifr Method does work. (quoted from Hannah on Infinite Credit, September 19, 2006)

I think of a telephone as a Debt Collector's crowbar. With such a device it is possible to pry one's mouth open wide enough to allow the insertion of a foot or two.

Debtors Exams are the perfect place for us Senior Citizens to show off our recently acquired Alzheimers.

Founder of the Credit Terrorist Training Camp (Debtorboards)

phoenix2ny

  • Valued Member
  • Posts: 395
Re: Chain of Custody - the JDB's Achilles Heel in Court
« Reply #1 on: July 21, 2006 04:44:46 AM »
I have to say that I've been getting a bit frustrated wading through many of the self-absorbed posts that have been showing up here lately. But the possiblity of finding little gems like this is what keeps me coming back. Excellent Flying. You are the best!

Hedwig

  • infinitecredit
  • Posts: 323
Re: Chain of Custody - the JDB's Achilles Heel in Court
« Reply #2 on: July 21, 2006 05:09:46 PM »
Great essay, Flyingifr!
The answer is 42!

ilovemydogs

  • Valued Member
  • Posts: 690
Re: Chain of Custody - the JDB's Achilles Heel in Court
« Reply #3 on: July 21, 2006 05:18:10 PM »
I have to say that I've been getting a bit frustrated wading through many of the self-absorbed posts that have been showing up here lately. But the possiblity of finding little gems like this is what keeps me coming back. Excellent Flying. You are the best!

You know what? YOU are SO RIGHT.
Thanks FF for the very informative post in laymans terms. : )
I have printed it out.
ILMD

GNVgirl

  • Valued Member
  • Posts: 15
Re: Chain of Custody - the JDB's Achilles Heel in Court
« Reply #4 on: September 21, 2006 02:07:44 AM »
What if the chain of custody is sent with an affidavit from the records clerk and it is all wrong? or should I say 'false'? I have that happening right now. The Plaintiff's MSJ was denied because of it. I know it is a FDCPA violation but what should I do about it?

proveit

  • Valued Member
  • Posts: 274
Re: Chain of Custody - the JDB's Achilles Heel in Court
« Reply #5 on: September 29, 2006 05:36:15 PM »
What if the chain of custody is sent with an affidavit from the records clerk and it is all wrong? or should I say 'false'? I have that happening right now. The Plaintiff's MSJ was denied because of it. I know it is a FDCPA violation but what should I do about it?

 I also would like to know.
This is only my opinion/I am not an Atty. nor claim to be

2 wrongs don't make a right. But, 3 lefts do.

Rottweiler

  • "SIT!" "Stay!" "Watch OUT!"
  • Valued Member
  • Posts: 6022
  • Talent does what it can; genius does what it must
    • Debtor Talk:  "Tough Love" for the Collection Industry.
Re: Chain of Custody - the JDB's Achilles Heel in Court
« Reply #6 on: September 29, 2006 07:11:30 PM »
If you cannot get leave to amend your answer and add the FDCPA violations, and fraud and fraud on the court as new counts, there is something you can do:  File an MSJ of your own, using as the central argument that the plaintiff lacks sufficient evidence to prove the case.  That's obvious,  since their key evidence was proven to be forged... in court!  Also bring up the fact that they tried fraud on both you and the court to support a case where they had no standing (no CoA) to bring it into court to begin with (again, needing bogus documents to try to win it).
“This is a court of law, young man, not a court of justice."
~ Olver Wendell Holmes

Flyingifr

  • -DEAN EMERITUS-
  • Valued Member
  • Posts: 8529
  • Welcome to my Temper Tantrum
Re: Chain of Custody - the JDB's Achilles Heel in Court
« Reply #7 on: September 30, 2006 02:54:08 AM »
What if the chain of custody is sent with an affidavit from the records clerk and it is all wrong? or should I say 'false'? I have that happening right now. The Plaintiff's MSJ was denied because of it. I know it is a FDCPA violation but what should I do about it?

You should not only move to have the case dismissed, but also for sanctions against the attorney and his client and file a Motioin to get them to pay your attorneys fees.
BTW-the Flyingifr Method does work. (quoted from Hannah on Infinite Credit, September 19, 2006)

I think of a telephone as a Debt Collector's crowbar. With such a device it is possible to pry one's mouth open wide enough to allow the insertion of a foot or two.

Debtors Exams are the perfect place for us Senior Citizens to show off our recently acquired Alzheimers.

Founder of the Credit Terrorist Training Camp (Debtorboards)

direred

  • Valued Member
  • Posts: 205
    • Dire Red's Pad
Re: Chain of Custody - the JDB's Achilles Heel in Court
« Reply #8 on: October 02, 2006 09:02:46 AM »
Actually, hearsay can be admissible, but the exceptions are huge holes you can drive semis through.

A classic example of hearsay (and the reason hearsay is problematic) can be seen in My Cousin Vinny, where the policeman reports that Billy said, "I shot the clerk," when really Billy asked, incredulously, "I shot the clerk?"

http://en.wikipedia.org/wiki/My_Cousin_Vinny

Rottweiler

  • "SIT!" "Stay!" "Watch OUT!"
  • Valued Member
  • Posts: 6022
  • Talent does what it can; genius does what it must
    • Debtor Talk:  "Tough Love" for the Collection Industry.
Re: Chain of Custody - the JDB's Achilles Heel in Court
« Reply #9 on: October 02, 2006 06:50:58 PM »
One of the exceptions is the "business exception to the hearsay rule", which is what we would be concerned with; this post is to expand on what Flyingifr has posted already.

First, the legal definition of "hearsay":

http://www.lectlaw.com/def/h007.htm

Quote
HEARSAY - Secondhand information that a witness only heard about from someone else and did not see or hear himself. Hearsay is not admitted in court because it's not trustworthy, as well as because of various constitutional principles such as the right to confront one's accusers, however, there are so many exceptions that often times hearsay is admitted more than excluded.

A statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted. -- 28 USC

Hearsay is any statement made outside a hearing or trial which is presented at the hearing or trial to prove the truth of the contents of the statement. All evidence rules begin with the premise that hearsay cannot be used in court because secondhand testimony is considered unreliable and because the person who made the original statement is often unavailable for cross-examination. Statements in the forms of letters, affidavits, declarations, diaries, memos, oral statements, notes, computer files, legal documents, purchase receipts and contracts all constitute hearsay when they are offered to prove that their contents are true.

The rule here?  A document cannot testify...the person must be available for cross-examination on the records' contents.

Quote
Testimony during a hearing or trial is not hearsay unless the witness tries to repeat something someone else said or wrote. In addition, a statement introduced to prove something other than its truth is not hearsay. For example, testimony may be offered to show the speaker's state of mind.<<snip>>

A witness's earlier out-of-court statement may be presented at a trial or hearing if it contradicts his in-court testimony because the statement is being used to cast doubt on the witness's credibility rather than prove the statement's truth or falsity.

A great many exceptions to the hearsay rule exist.... Evidence which qualifies as exceptions is usually statements which are reliable and believed to be unfabricated. Some common exceptions are:

    * Utterances made at the time of a startling event which provoked the observer into speaking (for example, seeing one's spouse in bed with someone else);
    * Statements describing a current condition (for example, "I feel sick.");
    * Prior testimony from a hearing, trial or deposition;
    * Religious records, family records and marriage certificates;
    * Property documents (for example, deeds);
    * Statements made against one's own monetary or penal interest (that is, an admission of a crime);
    * Declarations made by someone who believes his death is imminent;
    * Business records made in the regular course of business;
    * Official records;
    * Ancient documents, and;
    * Court judgments.

Note the one I emphasized:  The records must have been made in the regular course of business.  That means, for us, that the OC made them while the account was still open and active.  The JDB can never claim that; the records made in the course of collection are for their business, a separate entity, who was not involved, and could never have been involved, in the creation and maintenance of the original account. 

For the JDB to be able to use the OCs records as evidence in court, they have to get affirmation, usually via. affidavit, from someone at the OC who was involved in creating and maintaining the original account.  This  OC's affiant has to be a live person, so they can be deposed/give testimony...the affidavit itself, without that supporting testimony, can be barred as evidence with the right argument.

This case from the Missouri Court of Appeals Western District ("In the Estate of Samuel G. Graham, Deceased; Missouri Department of Social Services, Division of Medical Services, Appellant, v. Connie Kirkweg, Personal Representative, Respondent.", Case Number: WD58839, Handdown Date: 09/04/2001) 
points out the requirements that testimony must meet to fall under the business exception to the hearsay rule.

http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=mo&vol=/appeals/092001/&invol=7090401_2001

The key points:

Quote
At the hearing on its claim, the Department's first witness was Marsha Hickey, one of its income maintenance supervisors. She testified that she managed a group of employees of the Department who determine eligibility for public assistance programs. During her testimony she identified exhibit 1, which included an application for benefits on behalf of Samuel and Doloris Graham, an eligibility statement, and a notice of a Department case action sheet. She testified that she was the custodian of the records and that the documents were kept in the ordinary course of business. Hickey also described how individuals are identified in the system by departmental client numbers (DCN) which are assigned when an individual makes an application for benefits, and testified and identified Samuel's and Doloris' DCN numbers. The Estate's objection that Dickey was not the custodian of the records was overruled. Exhibit 1 was admitted.
James Lake also testified on behalf of the Department. He was employed by the Department's Division of Medical Services as a cost recovery analyst. He testified that he worked on the estate recovery program. When a deceased Medicaid recipient has an estate, he prepared the documentation and applicable claims history information in preparation for the Department to file a claim to recover Medicaid expenditures paid on behalf of that person. Lake brought claim documentation (exhibits 2 and 3) to substantiate the Department's claim that public assistance benefits were paid on behalf of the Grahams, which included a billing statement for both Samuel and Doloris Graham, remittance advices, and check registers. In essence, exhibit 2 contained bills from medical providers of the Grahams, and exhibit 3 contained check registers showing the State's payment on those bills. Lake described each item in exhibits 2 and 3 in detail, as well as the Medicaid claim process the Department follows in determining the amount of benefits that are paid to providers on behalf of a recipient. Lake testified, without objection, that the total amount of claims paid for both Samuel and Doloris Graham was $29,457.95. Lake also testified that he reviewed the claim documentation for accuracy by comparing Samuel's and Doloris' billing statements to their recipient history profiles.

In both cases, the State brought in people who had directly overseen the creation and maintenance of the record to testify.  These individuals were able to testify accurately and in detail about the introduced evidence, and their role in creating, and/or their use of the information.

A summary of the requirements (Emphasis mine.):

Quote
A document qualifies as a business record under section 490.680 if three conditions are met: (1) either the custodian of records or other qualified witness testifies to the identity and mode of preparation of the record; (2) the custodian or qualified witness testifies that the record was made in the regular course of business, at or near the time of the act, condition or event; and (3) the court finds admission of the record is justified by the sources of information and the method and time of preparation of the record. Section 490.680.

According to Estate of West v. Moffatt, supra:

                  Where a business regularly employs electronic computer equipment to enter and store its business records, printouts of the records are admissible under section 490.680 if, as the Act requires, the entries reflected are made in the regular course of business at or reasonably near the time of the occurrences of the events they record, and the trial court is satisfied that the sources of information and mode and time of preparation indicate trustworthiness, and hence justify admission. A witness is qualified to testify regarding a business record if he or she has sufficient knowledge of the business operation and methods of keeping records of the business as to give the records probity.

32 S.W.3d at 653 (citation omitted).

Note something here:  A printout CAN qualify under the rule IF the entries are made by the business on a timely basis.  In collections, the printouts produced by the JDB do not meet this requirement; they are made well after the fact.

Knowing the business methods of the organization is also acceptable, even if the involment of that particular individual was limited in the process of the records' creation:

Quote
In this case, Lake was qualified to testify about exhibits 2 and 3 because he had sufficient knowledge of the process and methods used by the Department when it filed a claim against a decedent's estate. Lake testified that after a deceased Medicaid recipient has been identified as having an estate, he prepares the documentation and applicable claims history information so the Department can file a claim. He described and explained the claim documentation in exhibits 2 and 3 which included a billing statement for both Samuel and Doloris Graham, remittance advices, and check registers, as well as the Medicaid claim process the Department follows in determining the amount of benefits that are paid to providers on behalf of a recipient. Lake also testified, without objection, that he was the custodian of the claim documentation and that he had reviewed the claim documentation for accuracy by comparing Samuel's and Doloris's billing statements to their recipient history profiles.

Lake also testified that the information used to prepare the claim documentation was maintained by the Division of Medical Services in the normal and ordinary course of business. Although he had no personal knowledge of the records until he gathered them to support the Department's claim, he testified that the entries reflected in the documents were made at or near the time claims are received and paid to providers.

Repeating what has already been said,  the individual testifying need not be the custodian of the record from start to finish, only that they were involved at some point.
“This is a court of law, young man, not a court of justice."
~ Olver Wendell Holmes

Bronco

  • Valued Member
  • Posts: 127
Re: Chain of Custody - the JDB's Achilles Heel in Court
« Reply #10 on: January 07, 2007 03:17:55 PM »
Check this case out(on a bank merger).

Garden State Bank v. Graef, 2001 N.J. Super. LEXIS 252 (App. Div. 2001) (Computer printouts in a bank merger are adequate proof of debt and are not hearsay).

Rottweiler

  • "SIT!" "Stay!" "Watch OUT!"
  • Valued Member
  • Posts: 6022
  • Talent does what it can; genius does what it must
    • Debtor Talk:  "Tough Love" for the Collection Industry.
Re: Chain of Custody - the JDB's Achilles Heel in Court
« Reply #11 on: January 07, 2007 05:51:02 PM »
Not as simple as you make it sound, as even a summary of the case indicates:

http://www.oz.net/~cfi/resources/discoverability.htm

Quote
Garden State Bank v. Graef, 2001 N.J. Super. LEXIS 252 (June 19, 2001).

The Superior Court of New Jersey, granted promissory note holder banks’ motion for summary judgment against defendant guarantors and ordered guarantors to pay the outstanding principal balance, interest, and attorney’s fees. Guarantors appealed. The bank’s computer printouts detailing the loan history from the last renewal date qualified as a business record exception to the hearsay rule. The bank laid a proper foundation for the record. The printouts were admissible because they appeared perfectly regular on their face and were issued in the regular course of business prior to the inception of any controversy between the parties. There was no reason to believe that the computerized business record was not trustworthy unless the guarantor had come forward with some evidence to question its reliability; and the guarantor failed to do that. The authenticity of the note contained in the record was never disputed and guarantors admitted that monies were due on the loan. The computer record established a reliable basis for finding that guarantors owed the bank the amounts determined by the trial court. The appeals court affirmed the summary judgment.

Note what I underlined:  The bank was able to show the court that the electronic record had NOT been tampered with and there had been nothing submitted to bring into question their reliability.  In other words, the chain of custody was established and the bank could produce the evidence (and presumably a witness) to prove it.  That's all that's needed from EVERY business that owned the account...and JDBs can't do this because the conditions of sale of debt do not allow for the calling of the necessary witnesses, if they even can be found (in many cases, it's probable that not even all the previous owners of the account can be found, never mind witnesses).
“This is a court of law, young man, not a court of justice."
~ Olver Wendell Holmes

phoenix2ny

  • Valued Member
  • Posts: 395
Re: Chain of Custody - the JDB's Achilles Heel in Court
« Reply #12 on: January 18, 2007 06:47:31 AM »
They've since taken it down and changed up their website, but thank God nothing really disappears from the web forever. And oldie but goody: http://web.archive.org/web/20050208231132/www.narca.org/Newsletter/2003/1stquarter/challenges.asp

phoenix2ny

  • Valued Member
  • Posts: 395
Re: Chain of Custody - the JDB's Achilles Heel in Court
« Reply #13 on: January 21, 2007 05:43:48 PM »

This works not only on the OC's officers..."

So are you saying when an OC sues and introduces cc statements into evidence they should also be able to provide witnesses who
1) Were employed by the OC at the time the alleged debt was in existence
2) Were employed in a position and capacity that would enable them to testify as to their own personal knowledge of the OC's record keeping and accounting practices and
3) Are familiar with all aspects of the account?

Rottweiler

  • "SIT!" "Stay!" "Watch OUT!"
  • Valued Member
  • Posts: 6022
  • Talent does what it can; genius does what it must
    • Debtor Talk:  "Tough Love" for the Collection Industry.
Re: Chain of Custody - the JDB's Achilles Heel in Court
« Reply #14 on: January 21, 2007 10:49:32 PM »
Yes.  But with one caveat:  The witness need not have been familiar and handled ALL aspects of maintaining the account.  As long as the witness was part of the process overall and can confirm what they did as part of the account maintenance procedure, they are acceptable as a witness.  Why?  Few companies would have the same person responsible for all aspects of account oversight and maintenance.  In fact, to have only one individual responsible for everything would be poor fiscal control and security...poor business practices, in other words.  The courts recognize this and ask only that the witness be part of--or have been part of--the oversight  and control process.
“This is a court of law, young man, not a court of justice."
~ Olver Wendell Holmes