** **

**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

----

**FORM 10-K**

----

 
| **(Mark One)** | ** ** | ** **                                                                                                                                                                  |
|----------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|           |       |                                                                                                                                                                        |
| **x**          | ** ** | **ANNUAL  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES**

**EXCHANGE  ACT OF 1934**                                                                   |
|           |       |                                                                                                                                                                        |
| ** **     | ** ** | **For  the fiscal year ended: December 31, 2007**                                                                                                                      |
|           |       |                                                                                                                                                                        |
| **OR**         |
|           |       |                                                                                                                                                                        |
| **o**          | ** ** | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES**

**EXCHANGE  ACT OF 1934**                                                               |
| ** **     | ** ** |                                                                                                                                                                        |
| ** **     | ** ** | **For  Transition period:                        ** |
|                |            |                                                                                                                                                                             |  |  |

 

**Commission File Number of issuingentity:  ****333-130862-01**

**CAPITAL ONE MASTER TRUST**

**(ExactName of Issuing Entity as Specified in Its Charter)**

**(Issuing Entity of the CollateralCertificate)**

 

**Commission File Number of depositor:333-130862**

**CAPITAL ONE FUNDING, LLC**

**(ExactName of Depositor as Specified in Its Charter)**

** **

**NewYork**

**(Stateor Other Jurisdiction of Incorporation**

**orOrganization of the Issuing Entity)**

** **

**c/oCapital One Funding, LLC**

**140 EastShore DriveRoom 1071-BGlen Allen, VA 23059**

**(Addressof Principal Executive Offices**

**ofIssuing Entity)**

** **

**(804)290-6959**

**(Telephonenumber, including area code)**

** **

**NotApplicable**

**(I.R.S.Employer Identification No.)**

** **

**NotApplicable**

**(Formername, former address, if changed since last report)**

 

----

 

Securitiesregistered pursuant to Section 12(b) of the Act:            **None**

 

Securitiesregistered pursuant to Section 12(g) of the Act:

 

**Class A6.310% Asset Backed Certificates, Series 1998-1Class B 6.356% Asset Backed Certificates, Series 1998-1**(Title of Class)

 

Indicate by check mark ifthe registrant is a well-known seasoned issuer, as defined in Rule 405 ofthe Securities Act.    Yes  o    No  x

 

Indicate by check mark ifthe registrant is not required to file reports pursuant to Section 13 or Section 15(d) ofthe Act.    Yes  o    No  x

 

Indicate by check mark whether the registrant (1) has filed allreports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90days.    x  Yes    o  No

 

Indicate by check mark ifdisclosure of delinquent filers pursuant to Item 405 of Regulation S-K isnot contained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated byreference in Part II of the Form 10-K or any amendment to this form10-K.    x  [Item 405 of Regulation S-K isnot applicable.]

 

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company. See the definitions of “largeaccelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2of the Exchange Act. (Check one):

 

| Large accelerated  filer  o |   | Accelerated  filer  o |
|---------------------------------------|--------|---------------------------------|

 

| Non-accelerated  filer  x            |   | Smaller reporting  company  o |
|------------------------------------------------|--------|-----------------------------------------|
| (Do not check if  a smaller reporting company) |   |                                    |

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theAct).    Yes  o    No  x

 

Registranthas no voting or non-voting common equity outstanding held by non-affiliates.

 

Documents Incorporated byReference.  None.

 

----

 

**INTRODUCTORY NOTE**

 

On August 24, 1995, Sears Receivables Financing Group, Inc., asoriginator of Sears Credit Account Master Trust II, was issued a no-actionletter (the “No-Action Letter”) by the Securities and Exchange Commission withrespect to certain of the registrant’s reporting requirements pursuant to Section 13or 15(d) of the Act.  This Form 10-Khas been prepared in accordance with the terms of the No-Action Letter.  Pursuant to the No-Action Letter, theregistrant is not required to respond to various items of Form 10-K. Suchitems are designated herein as “Not Applicable”. This Form 10-K is notsubject to Regulation AB promulgated by the Securities and Exchange Commissionbecause this Form 10-K does not cover any securities issued after December 31,2005. The Capital One Master Trust (the “Trust”) and the Capital OneMulti-asset Execution Trust have prepared a separate Form 10-K subject toRegulation AB covering securities issued after December 31, 2005. CapitalOne Bank (USA), National Association is the servicer for the Trust and theCapital One Multi-asset Execution Trust. As required by Item 1122 of RegulationAB with respect to the Trust and the Capital One Multi-asset Execution Trust,Capital One Bank (USA), National Association has prepared an assertion oncompliance with applicable Regulation AB criteria and Ernst & YoungLLP has examined such assertion and issued a report thereon, which have beenincluded in the Form 10-K for the Trust and the Capital One Multi-assetExecution Trust. The servicing platform to which such assertion relates isasset-backed securities transactions involving credit card receivablesconducted by the Trust and the Capital One Multi-asset Execution Trust wherethe related asset-backed securities were outstanding during the ReportingPeriod of January 1, 2007 through December 31, 2007. A copy ofCapital One Bank (USA), National Association’s report and Ernst &Young LLP’s examination thereon are included in this Form 10-K as Exhibit 99.4and Exhibit 99.5, respectively.

 

**PART I**

 

**Item 1.Business.**

 

This Annual Report on Form 10-K(the “Report”) is filed with respect to the Trust, a trust formed pursuant toan Amended and Restated Pooling and Servicing Agreement, dated as of September 30,1993, as amended and restated as of August 1, 2002, January 13, 2006and July 1, 2007, and as further amended by the First Amendment theretodated March 1, 2008 (as further amended and supplemented from time totime, the “Pooling and Servicing Agreement”), among Capital One Funding, LLC,as transferor, Capital One Bank (USA), National Association, as servicer, andThe Bank of New York, as trustee (the “Trustee”).  Capitalized terms not defined in this Reporthave the meaning assigned to them in the Pooling and Servicing Agreement.

** **

**RiskFactors.**

** **

Not applicable.

 
| **Item 1B.** | ** ** | **Unresolved  Staff Comments.** |
|-------------------|------------|---------------------------------|

 

Not applicable.

 
| **Item 2.** | ** ** | **Properties.** |
|------------------|------------|-----------------|

 

Not applicable.

 
| **Item 3.** | ** ** | **Legal  Proceedings.** |
|------------------|------------|-------------------------|

 

Over the pastseveral years, MasterCard International and Visa U.S.A., Inc., as well asseveral of their member banks, have been involved in several different lawsuitschallenging various practices of MasterCard and Visa.

 

In November 2004,American Express filed an antitrust lawsuit (the “Amex lawsuit”) againstMasterCard and Visa and several member banks alleging, among other things, thatthe defendants jointly and severally implemented and enforced illegalexclusionary agreements that prevented member banks from issuing AmericanExpress cards.  The complaint requestedcivil monetary damages.  Capital One FinancialCorporation (the “Corporation”), Capital One Bank (the “Bank”), and CapitalOne, F.S.B. (the “Savings Bank”) were named as defendants in this lawsuit.  On November 7, 2007, Visa and AmericanExpress announced that the Amex lawsuit had been settled and that the remainingbank defendants named in the lawsuit, including the Corporation, the Bank andthe Savings Bank, would be dropped as defendants and released from all claimsasserted in the lawsuit.  On December 12,2007, the Corporation announced that it would take a charge of approximately$80 million in the fourth quarter of 2007 in connection with the settlement ofthe American Express litigation. Discover Financial Services has filed a similar set of claims againstVisa and MasterCard.  The Corporation,the Bank, and the Savings Bank are not defendants in the Discover litigation.

 

 

 

2

----

 

                In2007, a number of individual plaintiffs, each purporting to represent a classof cardholders, filed antitrust lawsuits in the United States District Courtfor the Northern District of California against several issuing banks,including the Corporation.  Theselawsuits allege, among other things, that the defendants conspired to fix thelevel of late fees and over-limit fees charged to cardholders, and that thesefees are excessive.  In May 2007,the cases were consolidated for all purposes and a consolidated amendedcomplaint was filed alleging violations of federal statutes and state law.  The amended complaint requests civil monetarydamages, which could be trebled.  In November 2007,the court dismissed the amended complaint. Plaintiffs have indicated that they intend to appeal that order.

 

                In 2005, a number of entities, each purporting torepresent a class of retail merchants, filed antitrust lawsuits againstMasterCard and Visa and several member banks, including the Corporation and itssubsidiaries (including the Bank and the Savings Bank), alleging among otherthings, that the defendants conspired to fix the level of interchangefees.  The complaints seek injunctiverelief and civil monetary damages, which could be trebled. Separately, a numberof large merchants have asserted similar claims against Visa and MasterCardonly.  In October 2005, the classand merchant interchange lawsuits were consolidated before the United StatesDistrict Court for the Eastern District of New York for certain purposes,including discovery.  Discovery isproceeding in these cases. The Corporation believes that it has meritoriousdefenses and intends to defend these cases vigorously. Given the complexity ofthe issues raised by these lawsuits and the uncertainty regarding: (i) theoutcome of these lawsuits, (ii) the likelihood and amount of any possiblejudgments, (iii) the likelihood, amount and validity of any claim againstthe member banks, including the Corporation and its subsidiary banks, (iv) changesin industry structure that may result from the lawsuits and (v) theeffects of these lawsuits, in turn, on competition in the industry, memberbanks, and interchange fees, the Corporation cannot determine at this time thelong-term effects of these suits.

 

                In connection with litigationpending against Visa, the Corporation has initiated a legal reserve ofapproximately $60 million for estimated possible damages, reflecting CapitalOne’s share of potential damages as a Visa member.

 

                In addition, the Corporation is commonly subject tovarious pending and threatened legal actions relating to the conduct of itsnormal business activities.  In theopinion of management of the Corporation, the ultimate aggregate liability, ifany, arising out of any such pending or threatened legal actions will not bematerial to its consolidated financial position or its results of operations.

 
| **Item 4.** | ** ** | **Submission  to Matters to a Vote of Security Holders.** |
|------------------|------------|-----------------------------------------------------------|

 

 

None.

 

**PART II**

 
| **Item  5:**      | ** ** | **Market  for Registrant’s Common Equity, Related Stockholder Matters and Issuer  Purchases of Equity Securities.**                                                                                                                                                                                                                                                                                                                                                                                                                           |
|-------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|              |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| ** **        |       | To the best  knowledge of the registrant, there is no established public trading market  for the Investor Certificates.                                                                                                                                                                                                                                                                                                                                                                                                                            |
|              |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|              |       | Each  publicly-offered class of the Trust’s Investor Certificates is delivered and  held in book-entry form through the facilities of The Depository Trust  Company (“DTC”), a “clearing agency” registered pursuant to the provisions of  Section 17A of the Securities Exchange Act of 1934, as amended. Each  publicly-offered class of the Trust’s Investor Certificates is represented by  one or more certificates registered in the name of Cede & Co. (“Cede”),  the nominee of DTC. |
|              |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **Item  6:**      | ** ** | **Selected  Financial Data.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|              |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|              |       | Not applicable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|              |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **Item  7:**      | ** ** | **Management’s  Discussion and Analysis of Financial Condition and Results of Operation.**                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|              |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|              |       | Not applicable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|              |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **Item 7A:**      | ** ** | **Quantitative  and Qualitative Disclosures about Market Risk.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|              |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|              |       | Not applicable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|              |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **Item  8:**      | ** ** | **Financial  Statements and Supplementary Data.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|              |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|              |       | Not applicable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|              |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **Item  9:**      | ** ** | **Changes  in and Disagreements with Accountants on Accounting and Financial Disclosure.**                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|              |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|              |       | None.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|              |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **Item 9A:**      | ** ** | **Controls  and Procedures.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|              |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|              |       | Not applicable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|              |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **Item 9B:** | ** ** | **Other  Information.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|              |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| ** **        |       | None.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

 

 

3

----

 

**PART III**

 
| **Item  10:** | ** ** | **Directors, Executive Officers  and Corporate Governance.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|---------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ** **    |       | Not applicable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|          |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **Item  11:** | ** ** | **Executive  Compensation.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|          |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|          |       | Not applicable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|          |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **Item  12:** | ** ** | **Security  Ownership of Certain Beneficial Owners and Management and Related Stockholder  Matters.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|          |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ** **    |       | Each publicly-offered class of Investor Certificates is represented by  one or more certificates registered in the name of Cede, the nominee of DTC,  and an investor holding an interest in such class of Investor Certificates is  not entitled to receive a certificate representing such interest except in  limited circumstances set forth in the Pooling and Servicing Agreement.  Accordingly, Cede is the sole holder of record of such Investor Certificates,  which it holds on behalf of brokers, dealers, banks, and other direct  participants in the DTC system. Such direct participants may hold the  investor certificates for their own accounts or for the account of their  customers. The name and address of Cede is Cede & Co., c/o The  Depository Trust Company, 55 Water Street, New York, NY 10041. |
|          |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|          |       | Capital One Funding, LLC owns 100% of the Transferor Certificate, which  represents beneficial ownership of a residual interest in the assets of the  Trust as provided in the Pooling and Servicing Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|          |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **Item  13:** | ** ** | **Certain  Relationships and Related Transactions, and Director Independence.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|          |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|          |       | The registrant knows of no transaction or series of transactions during  the most recently completed fiscal year, or any currently proposed  transaction or series of transactions, in an amount exceeding $60,000,  involving the Trust in which any Investor Certificateholder identified in  Item 12 above or any other beneficial owner of more than five percent of  Investor Certificates known to the registrant had or will have a direct or  indirect material interest.                                                                                                                                                                                                                                                                                                                                                        |
|          |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|          |       | The Trust does not have any directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|          |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **Item  14:** | ** ** | **Principal  Accountant Fees and Services.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|          |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|          |       | Not applicable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|          |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

**PART IV**

 
| **Item 15.** | ** ** | **Exhibits,  Financial Statement Schedules.** |
|-------------------|------------|-----------------------------------------------|

 
| (a)(1) |   | Not applicable.                                                                                     |
|--------|--------|-----------------------------------------------------------------------------------------------------|
|   |   |                                                                                                |
| (a)(2) |   | Not applicable.                                                                                     |
|   |   |                                                                                                |
| (a)(3) |   | The exhibits filed in response to Item 601 of Regulation S-K are listed  in the Exhibit Index. |
|   |   |                                                                                                |
| (b)    |   | The exhibits filed in response to Item 601 of Regulation S-K are listed  in the Exhibit Index. |
|   |   |                                                                                                |
| (c)    |   | Not applicable.                                                                                     |

 

 

 

4

----

 

**SIGNATURES**

 

Pursuant to therequirements of Section 13 or 15(d) of the Securities Exchange Act of1934, the registrant has duly caused this report to be signed on its behalf bythe undersigned, thereunto duly authorized.

 
|   | **Capital  One Master Trust** |
|--------|-------------------------------|
|   |                          |   |   |
|   | By:                           | Capital One Funding, LLC,  as depositor |
|   |                          |   |   |
|   |                          |   |   |
|   |                          |   |   |
|   |                          | By: | /s/ Stephen Linehan |
|   |                          |   | Name: Stephen Linehan* |
|   |                          |   | Title: President |
|   |                          |   |   |
|   |                          |   | Date: March 25,  2008 |
|   |                          |   |   |
|   |                          |   | *Stephen Linehan is the  senior officer in 

charge of  securitization of Capital One 

Funding, LLC. |

 

 

 

5

----

 

EXHIBIT INDEX

 
| **Exhibit  Number** | ** ** | **Description**                                                                                                                                                   |
|---------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1                |       | Certification pursuant  to Section 302 of the Sarbanes-Oxley Act of 2002 and relevant  rules and regulations of the Securities and Exchange Commission. |
|                |       |                                                                                                                                                              |
| 99.1                |       | Capital One Master  Trust Aggregated Data for 2007.                                                                                                               |
|                |       |                                                                                                                                                              |
| 99.2                |       | 2007 Annual  Certificateholders’ Statements prepared by the Servicer                                                                                         |
|                |       |                                                                                                                                                              |
|                |       | (a) Series 1998-1                                                                                                                                       |
|                |       | (b) Series 2001-1                                                                                                                                       |
|                |       | (c) Series 2001-6                                                                                                                                       |
|                |       | (d) Series 2002-1                                                                                                                                       |
|                |       |                                                                                                                                                              |
| 99.3                |       | Servicer Compliance  Statement of Capital One Bank (USA), National Association.                                                                                   |
|                |       |                                                                                                                                                              |
| 99.4                |       | Report on Assessment of  Compliance with Servicing Criteria for Capital One Bank (USA), National  Association.                                                    |
|                |       |                                                                                                                                                              |
|  99.5          |       | Attestation Report of  Ernst & Young LLC on Assessment of Compliance with Servicing  Criteria relating to Capital One Bank (USA), National Association.  |
|                |       |                                                                                                                                                              |

 

 

 

6

----