Consumer complaint received 2024-01-30
Company: PENTAGON FEDERAL CREDIT UNION
State: VA
Product: Debt collection
Sub-product: Other debt
Issue: Attempts to collect debt not owed
Sub-issue: Debt was already discharged in bankruptcy and is no longer owed

Complaint:
Pentagon Federal Credit Union ( PENFED ), including its affiliated entities such as PenFed Auto Funding LLC, XXXX XXXX XXXX XXXX  ( XXXX ) of XXXX, XXXX XXXX XXXX, XXXX XXXX XXXX, XXXX Financials, and all related partners and subsidiaries, is alleged to be engaging in fraudulent activities and tax evasion through substantial misrepresentations. These misrepresentations involve collusion, forgery, intentional omissions, and distortions related to consumers ' credit. 

PENFED is accused of falsely claiming that consumer ( me ) owes them money based on an auto loan extended. However, according to PENFED 's shareholder reports, the Credit Union explicitly states that they do not lend money. Instead, it asserts that it extends credit to its members by indirectly originating loans through third parties and by purchasing loans from other lenders. On XX/XX/XXXX, PENFED acquired my retail installment agreement from XXXX XXXX in a consumer credit sale transaction. The acquisition and securitization of my commercial paper securities ( application + retail installment agreement ) occurred for the purpose of obtaining an extension of credit from the United States. This process involved PENFED 's direct broker dealer partner submitting consumer 's credit application, promissory notes, and obtaining cash advances at an par value amount through Certificates of Indebtedness, using consumers ' social security numbers. PENFED exploited consumers ' security interests and continues to do so by mishandling consumer 's indebtedness, securitizing cash advances, in addition to consumer 's monthly receivables. 

Due to the Bankruptcy Act of 1933 and the Trust Indenture Act of 1939, all debts fall under the responsibility of the United States per Title 18 USC 8. The term " obligation or other security of the United States '' encompasses all bonds, certificates of indebtedness, national bank currency, FRNs, Federal Reserve bank notes, coupons, United States notes, Treasury notes, gold certificates, silver certificates, fractional notes, certificates of deposit, bills, checks, or drafts for money, drawn by or upon authorized officers of the United States, stamps and other representatives of value, of whatever denomination, issued under any Act of Congress. 

This account was intended for household primary goods. PENFED has inaccurately categorized the account as a retail installment agreement when, according to the law, it was a consumer credit sale. Additionally, PENFED has charged off the debt on its tax records. 

On both XX/XX/XXXX and XX/XX/XXXX, I, the consumer, sent correspondence via Registered Mail to PenFed Credit Union with the attention to the CEO, and XXXX XXXX, PenFed 's Indenture Trustee. This correspondence was Notice to formally withdrawal of consent to the Special Power of Attorney and the relinquishing of any security interest derived from U.S. marketable securities as well as secondary market exchanges. Additionally, I provided PenFed with an ORDER TO REPAY OUTSTANDING PRINCIPAL OF THE DEBT. This purpose of this Order, which was was indorsed and stamped per 31 CFR, to accurately reflect the credit on PenFed 's backend commercial book-entry system. 

In response, PenFed 's collection manager sent me a letter indicating their intention to dispose of my negotiable instrument/commercial paper, and did not return my original leading consumer to believe this was also deposited. According to XXXX XXXX XXXX Sections XXXX, the debt is discharged. PenFed 's is in Dishonor, per XXXX  Part 5, and also constitute a breach of their membership agreement covenants. The membership agreement explicitly states that any member can withdraw PenFed 's power of attorney, and any consent granted under the agreement, i.e., custodianship holding consumer 's dividends for safe-keeping. Their membership agreement also states that under the Master Account ( that they created on my behalf that I don't have access to ), the subaccounts will earn dividens. 

Furthermore, PenFed is alleged to be in violation of XXXX Article XXXX and XXXX XXXX XXXX. The Retail Installment Agreement specifically sates in paragraph 2 ( c ), that the purchase money loan agreement/credit sale " secured payment for all amounts owed in the contract. '' According to 16 CFR 433.1, a retail installment agreement is indeed a credit sale, especially since the consumer 's social security number was utilized in the transaction. Moreover, CONGRESS classifies this type of transaction as a credit card. It is noteworthy that PenFed 's shareholder reports explicitly state that the extensions of credit ( the collateral ) may take the form of " PROMISSORY NOTES '' and " Letters of Credit. '' Despite these facts, PenFed continues to pursue payment for the debt of a vehicle when the debt was already perfected. 

Despite investing considerable time on the phone in attempts to resolve the issue with PenFed 's customer service, their wealth management partner XXXX XXXX XXXX XXXX, and XXXX XXXX  XXXX XXXX, my efforts have been in vain. PenFed continues to insist on payment for an alleged debt, yet they have not furnished me with a genuine FULL copy of the original agreement executed by all parties with wet-ink signatures. The copy provided was incomplete, with missing pages and the inclusion of additional pages that I had never seen before. Additionally, they have failed to grant me access to any master account/consumer account associated with the securitization of the credit sale agreement. 

PenFed has not provided consumer with official treasury forms that were filed under consumer 's social security number. Consumer reporting agencies ( XXXX, XXXX, and XXXX ) hard inquiries prove consumer credit was pulled. By the rules that govern PenFed and it's affiliates under the FCRA, FTC and 16 CFR 433.1, 16 CFR 433.2 and 16 CFR 433.3, PenFed is bound to follow all guidelines when offering retail installment agreements, and per the contract, as a consumer my rights can be asserted at any time. 

The debt securities, along with all associated rights, title, and interest, have been sold to other companies. PenFed, acting as a servicer, is not allowed to genuinely collect since it transferred the liability to its subsidiary, PenFed Auto Receivables Funding, LLC. According to PenFed 's annual shareholder report ( pg. 52 ), the credit union bundled consumer commercial paper securities, including all related rights, and sold them to PenFed Auto ReceivablesFunding, LLC as part of a securitization process. The latter then sold the portfolio of receivables to PenFed Auto Receivables Owner Trust XXXX ( XXXX XXXX ), an asset-backed securities issuer trust. 

XXXX XXXX utilized the purchased receivables as collateral for issuing notes and residual certificates. As indicated in PenFed 's shareholder report, the Credit Union serves as the sponsor and servicer of the underlying collateral, but it no longer owns the obligation resulting in PenFed having no rights to payment or to repossess vehicles. Additionally, SEC filings and Fitch Rating reports reveal that tranches of " auto loan receivables '' are being sold to numerous investors on public exchanges, and consumers have not received any value in return for this exchange. 

On XX/XX/XXXX consumer sent Notice to PENFED ( CEO, general counsel, and securitization agents ) again revoking their authority of consumer 's security and ordered to transfer the proceeds to consumer 's bank account with the U.S. Treasury. PENFED collection manager replied to this notice stating the debt is owed and that the vehicle is the collateral. Per the Securities Exchange Act, collateral can only be in the form of SECURITIES ( not vehicles ). 

The consumer, as the bona fide purchaser, holds the right to residual returns, as indicated by statements bearing consumer 's name detailing book-entry securities and residuals from derivative certificates apparently hedged with partner companies. In SEC filings, PENFED 's affiliated companies affirm that the consumer is entitled to claims and rights, being a bona fide purchaser for value or an actual secured party with a perfected security interest according to applicable state law. 

Under the IRS rules regarding 1099c,1099oid & 1099a, companies must provide consumer with a copy of appropriate 1099c for accurate IRS reporting for any debt over { {$600.00} }. PenFed has not provided copies of the IRS forms filed with the U.S. Treasury and it does not appear that they are filing the proper taxes with IRS. It appears from my consolidated statement this account may be classified as an IRA, which clearly it is not. According to PENFED 's shareholder reports the debt discharged amounts as gains on extinguishments, and the monthly receivables as GOOD WILL. 

Due to PENFED 'S non-compliance consumer will have no choice but to file Form 211 along with other applicable OMB IRS forms under filing IRS with the treasury to audit consumer 's account to make sure accurate reporting and taxes are rendered, along with all OMB IRS forms needed to conduct an audit on consumer account. 

Due to the recent change in consumer laws please serve this as NOTICE that upon a VALID PROOF OF CLAIM notarized under penalty of perjury, consumer refuses to remit any funds until all documentary evidence of the accounting on the public and private side of consumers account, i.e. PENFED 'S internal Master Account. PenFed is to immediately stop any reporting until said company provides all information under the penalty of perjury for documentation.

Company public response: Company has responded to the consumer and the CFPB and chooses not to provide a public response
Company response to consumer: Closed with explanation