Consumer complaint received 2024-11-01
Product: Checking or savings account — Checking account
Issue: Closing an account — Company closed your account
Company: FIRST MERCHANTS CORPORATION (MI)

First Merchants Bank XXXX : XXXX Background : Events Surrounding Account Closure : XXXX filed IRS Form 1099-A in anticipation of a deposit intended for his irrevocable trust account. In this filing, he designated First Merchants mailing address as the debtor, with the U.S. Treasury identified as the creditor, to notify the bank of the forthcoming deposit. The intent of this form was not to impose liability on First Merchants but rather to secure the deposit for the trust. The Department of the U.S. Treasury/IRS accepted the e-filed 1099-A and mailed the original acknowledgment for record to First Merchants mailing address.

Discriminatory Remarks : First Merchants initiated contact with XXXX, requesting his presence at their office for an in-person meeting with Branch XXXX XXXX. During this meeting, XXXX and XXXX convened in her office and placed a call to XXXX XXXX, the Chief Compliance Officer of First Merchants. During a phone call with Branch XXXX XXXX and XXXX XXXX, First Merchants representative, XXXX initially assured that the account would remain open. However, upon inquiring about the rationale for filing the 1099-A and questioning, What makes you think the government owes you money?, Brians demeanor changed after XXXX clarified XXXX status as a secured creditor and clarified his reasoning. Subsequently, XXXX indicated that the account would be closed, citing legal reasons without providing further details. 
Further Attempts to Resolve the Issue : XXXX later contacted XXXX directly via phone with a witness present on a recorded line, seeking clarification on the closure rationale. XXXX refused to provide clarification and made a prejudicial remark questioning whether XXXX identified as a sovereign citizen. When XXXX asserted that this was irrelevant, XXXX dismissively suggested he should file a complaint if dissatisfied. 
Involuntary Account Closure and Financial Harm : The abrupt closure of XXXX account and his prohibition from future banking services with First Merchants has resulted in significant financial hardship, impacting his ability to conduct transactions, causing emotional distress, and limiting access to essential credit services. 

Allegations of Discrimination and Legal Basis : Discriminatory Assumption of Sovereign Citizen Status : XXXX XXXX assumption regarding XXXX sovereign citizen status stemmed from financial terminology commonly utilized by secured creditors and financial instruments under the XXXX. This presumption led to XXXX unjust exclusion from banking services, indicating a discriminatory bias against customers managing assets and liabilities through secured creditor protocols. Such denial of service contravenes principles of equal treatment and may violate banking discrimination laws under the Equal Credit Opportunity Act ( ECOA ), which prohibits discrimination based on arbitrary characteristics.

Lack of Probable Cause for Account Closure : The closure of XXXX account lacked probable cause. The notification via the XXXX was a procedural measure for trust funding and imposed no liability on XXXX XXXX XXXX XXXX legal utilization of financial instruments and UCC filings is safeguarded under Michigan state and federal UCC regulations, which protect lawful notifications and creditor filings in relation to secured interests. 
Refusal to Provide Reasoning or Proper Due Process : Despite XXXX inquiries, XXXX XXXX and XXXX XXXX failed to provide a clear rationale or justification for the account closure. This absence of transparency, coupled with discriminatory remarks, denied XXXX procedural fairness. Under the ECOA and federal banking regulations, financial institutions are mandated to provide non-discriminatory services and furnish clear, valid justifications for denying or terminating banking services.

Impact on Livelihood and Access to Financial Services : The account closure and subsequent ban have severely hindered XXXX ability to manage his financial obligations and livelihood. Denial of banking access based on unfounded and prejudicial assumptions, devoid of legitimate cause, infringes upon his right to engage in banking and commerce, causing substantial detriment to his creditworthiness and future transactions. 

Vicarious Liability and Request for Financial Accountability : Vicarious Liability of First Merchants Bank : First Merchants Bank, through the actions of its employee XXXX XXXX, exhibited discriminatory conduct based on assumptions regarding XXXX financial protocols and status. This behavior represents a breach of equitable service standards and necessitates accountability for the resultant harm. 
XXXX and XXXX Signature Liability : Ruths Medallion Signature Guarantee on Form XXXX, along with the XXXX banking obligations, entitles XXXX to claim damages under the XXXX amount as delineated in applicable XXXX regulations. The obstructive actions taken by XXXX XXXX in impeding account access, disrupting financial transactions, and causing emotional and economic harm warrant compensation. 

1. Color of Law Violations Definition of Color of Law : The term " color of law '' pertains to actions executed by government officials that appear to be carried out under legal authority. When public officials or private entities act in a manner that implies they are exercising official powers but are infringing upon rights or acting unlawfully, they may be held accountable for color of law violations. 
Brians Actions : If XXXX XXXX, as a bank representative, made determinations regarding XXXX 's accounts based on assumptions about his status as a sovereign citizen, he may be acting under the color of law, particularly if he is a state actor or if his actions are closely aligned with the enforcement of government policies. 
By denying XXXX access to banking services based on his national status, XXXX could be infringing upon XXXX 's rights under the Civil Rights Act of 1964 and 42 U.S.C. 1983, which provides a remedy for individuals whose rights have been violated under color of law.

2. Denial of Rights to be a National National vs. Citizen : U.S. law distinguishes between nationals and citizens. Under federal law, specifically 8 U.S.C. 1101 ( a ) ( 22 ), a national of the United States who is not a citizen retains certain rights and privileges, albeit limited compared to those of citizens. Under current law all U.S. citizens are also U.S. nationals, but not all U.S. nationals are U.S. citizens. 
By presuming that XXXX could not be a national due to a misunderstanding of legal terminology, XXXX XXXX have violated XXXX rights to recognize and exercise his status as a National. This assumption led to a denial of services, which can be construed as a violation of rights protected under federal statutes.

3. Emotional Distress and Injury Claims Emotional Distress : Emotional distress claims may arise from Brians actions if deemed extreme or outrageous. The psychological impact of being mischaracterized and denied access to services can result in significant emotional distress, justifying legal action.

4. Gift Claims Potential Claims Regarding Gifts : Under federal law, specifically the Gift Tax Regulations, provisions exist for gifts made to individuals, including stipulations about their value and implications. If the bank 's actions indirectly led to the denial of financial gifts or support to XXXX, he might contend that he was deprived of potential financial benefits due to discriminatory practices. 
Moreover, the XXXX XXXX XXXX defines gifts as transfers of property wherein the donor does not receive full value in return. If XXXX 's actions obstructed XXXX from receiving gifts ( financial assistance, loans, etc. ), this could infringe upon his rights to financial autonomy and support, potentially giving rise to additional claims under the Gift Tax provisions. 
A Customer Identification Program ( CIP ) ( 31 U.S.C. 5318 ( l ) ) Requirement : Financial institutions are required to implement a Customer Identification Program to verify the identity of customers when opening accounts. 
Potential Violation : If XXXX failed to ensure that XXXX XXXX adhered to its CIP requirements, such as not properly verifying the identities of new customers or failing to maintain adequate records, this could be considered a violation. 
B. Recordkeeping Requirements ( 31 U.S.C. 5311 et seq. ) Requirement : The XXXX mandates specific recordkeeping practices related to financial transactions, including maintaining records of certain transactions and customer information. 
Potential Violation : If XXXX neglected to maintain proper records of transactions as required by the XXXX, or if records were improperly destroyed or altered, this would constitute a violation. 
XXXX Confidentiality Requirements ( 31 U.S.C. 5318 ( g ) ( 2 ) ) Requirement : The XXXX prohibits disclosing the fact that a XXXX has been filed or that a financial institution is considering filing XXXX. This confidentiality requirement is crucial to ensure investigations are not compromised. 
Potential Violation : If XXXX disclosed information regarding a SAR to unauthorized parties, including customers involved in the reported transaction, this could lead to serious legal repercussions. 
Questions Regarding Account Closure and Discriminatory Actions Account Closure Justification : What specific legal reasons did you provide to XXXX for the closure of his account? Can you detail the rationale behind these reasons? 
Documentation Review : Are there any internal documents or communications that justify the decision to close XXXX account? Can these documents be made available for review? 
Discriminatory Remarks : Why did you make a prejudicial remark questioning XXXX 's identification as a sovereign citizen? What criteria do you use to evaluate customers ' financial statuses and needs? How do you justify this in light of non-discriminatory practices required by federal law? 
Impact of 1099-A Filing : How did XXXX filing XXXXf IRS Form 1099-A influence your decision-making process regarding his account? Was there a specific bank policy that prompted the closure? 
Questions Related to Insurance Claims Insurance Claims on Account : Were any insurance claims filed regarding Soteros account before its closure? If so, what were the reasons for these claims?

Claim Handling Procedures : What procedures does First Merchants have in place for handling claims related to customer accounts? Were these procedures followed in XXXX case? 
Audit of Claims : Can you provide a record of any insurance claims made on XXXX 's account and the outcomes of those claims? Were there any claims denied, and if so, what was the basis for those denials? 
Relevance of Claims to Account XXXX : How did any existing insurance claims influence your decision to close XXXX account? Was the account closure linked to perceived risks associated with those claims? 
Questions About Compliance and Reporting Compliance with Regulations : Did you consult with compliance officers or legal counsel regarding the decision to close Soteros account, especially in light of the 1099-A filing? What guidance did they provide? 
SEC Reporting Obligations : Are you aware of any obligations First Merchants Bank had to report any issues related to XXXX account to the SEC or other regulatory agencies? Were those obligations fulfilled? 
Recordkeeping Compliance : Can you provide evidence that First Merchants Bank maintained proper records of all transactions and insurance claims associated with XXXX 's account, as required under federal law? 
Confidentiality of Claims : Were there any confidentiality violations related to the disclosure of information regarding any claims made on XXXX 's account? If so, what measures are in place to protect customer information? 
Questions Regarding Accountability Accountability for Actions : Who within First Merchants Bank is responsible for overseeing the handling of customer accounts and ensuring compliance with anti-discrimination laws? What accountability measures are in place for employees like yourself? 
Remediation Process : What steps are you willing to take to address the harm caused to XXXX as a result of the account closure and potential mishandling of insurance claims? 
Review of Discriminatory Practices : What actions will First Merchants Bank take to review and potentially rectify any discriminatory practices within the organization, particularly those exhibited in XXXX case? 


To elucidate how XXXX 's claim for compensation against First Merchants Bank is substantiated and valid for an order to pay, we must analyze the relevant legal frameworks, particularly 31 U.S. Code 3701 and associated regulations, as follows : 1. Understanding 31 U.S. Code 3701 ( Defining " Claim '' ) Under 31 U.S. Code 3701, the term " claim '' encompasses any sum of money or property owed to the United States, or any obligation that the United States is liable to pay. Specifically, subsection ( 1 ) articulates : " The term 'claim ' means any claim of the United States against a person, or of a person against the United States XXXX for the payment of money or for the delivery of property. '' In the context of XXXX situation, this definition supports the assertion that federal funds may be implicated in addressing claims against entities such as First Merchants Bank. The U.S. government may be obligated to intervene when losses arise due to actions taken by financial institutions, which can include compensation for individuals like XXXX. 
XXXX. Validity of XXXX 's Claim for Compensation Soteros claim for compensation can be characterized as a legitimate legal demand for financial restitution, predicated upon alleged wrongful conduct by First Merchants Bank, including discrimination and wrongful account closure. The validity of this claim is bolstered by the following components : Claim Recognition : By instituting a formal claim, XXXX establishes a legally recognized basis for restitution. This claim aligns with the statutory framework set forth in 31 U.S.C. 3701, recognizing that claims against financial institutions create debts owed to individuals under federal law. 
Obligation for Payment : Should the claim be substantiated with appropriate evidence, First Merchants Bank could be legally bound to fulfill it. The U.S. Treasury may facilitate this payment, especially in circumstances where federal programs exist to support such claims.

3. Payment Processing Under 31 CFR Part 240 31 CFR Part 240 outlines the endorsement and payment of checks drawn on the U.S. Treasury, playing a pivotal role in processing claims related to federal funds. The following provisions are relevant : Check Indorsement : The regulation mandates that checks be properly endorsed to ensure lawful processing and issuance of payments. If XXXX 's claim is validated, the bank would be required to complete necessary endorsements and forms, including Form 240, to facilitate payment.

Utilization of Treasury Forms : The forms 232, 233, and 234 address specific aspects of claims and payments : Form 232 : Generally used for claims concerning lost or stolen Treasury checks.

Form 233 : Addresses claims for payment due to wrongful denial or delays.

Form 234 : Pertains to other relevant transactions to guarantee the proper tracking of payments.

These forms are essential for the Treasury to accurately process any claims for funds potentially owed as a result of First Merchants actions.

4. 18 U.S.C. 8 - Definition of Obligation or Other Security of the U.S.

18 U.S.C. 8 defines " obligation or other security of the United States '' as any instrument evidencing a promise to pay money issued by the federal government. The relevance of this provision to XXXX 's claim is as follows : Legal Foundation for Claims : If XXXX claim is corroborated, it XXXX be construed as a claim on an obligation or security issued by the XXXX, particularly if it seeks damages in relation to federal statutes. 
Payment from U.S. Treasury : Should funds be deemed necessary to satisfy the claim, they can be processed as payments against obligations owed by the U.S. to its citizens. This reinforces the mechanism for First Merchants Bank to remit payment through established Treasury channels.

Conclusion By comprehensively understanding how 31 U.S. Code 3701 and related regulations, such as 31 CFR Part 240, apply to his claim, Sotero can effectively position his demand within a legal framework that facilitates compensation through federal processes. Once a validated claim is established, First Merchants Bank may find it straightforward to discharge its financial obligations to XXXX, potentially alleviating liability through payments processed via the XXXX Treasury in compliance with federal regulations. This establishes a clear pathway for XXXX to secure compensation for his losses while adhering to the legal standards governing claims and payments. 

To assert the validity of XXXX claim, particularly regarding the U.S. Treasury 's designation as a debtor in his UCC filing, and XXXX 's position as a creditor holding collateral for all future debts in trust, it is imperative to analyze the relevant principles of the Uniform Commercial Code ( UCC ) in conjunction with applicable Michigan and U.S. laws. This analysis remains valid despite the U.S. Treasurys failure to respond within thirty days from the filing. Below is a structured explanation framed in legal terminology.

1. UCC Framework and Definitions The Uniform Commercial Code ( UCC ) serves as a foundational legal framework governing commercial transactions across the United States. Key components relevant to XXXX 's situation include : Debtor and Creditor Roles : The UCC defines a debtor as a party obligated to repay a financial claim. In this context, the U.S. Treasury is identified as the debtor, indicating a legal responsibility to address any claims asserted by XXXX, the creditor. The creditor is recognized as holding a superior interest in the collateral. 
Collateral for Future Debt : Under UCC 9-204, a secured transaction allows a creditor to establish a security interest in collateral that secures both existing and future debts. This provision is critical, as it enables XXXX to leverage his claim against the Treasury for both current and prospective obligations that may arise. 
XXXX. Collateralization of Claims XXXX 's XXXX filing fortifies his status as a creditor through the following elements : Identification of Collateral : By naming the U.S. Treasury as a debtor in the UCC filing, XXXX has established a security interest in collateral that may cover claims for compensation related to financial losses incurred due to First Merchants Banks actions. This collateralization is essential, as it provides a tangible basis for asserting claims against the Treasury.

Trust Arrangement : The assertion that XXXX holds collateral in trust further enhances the legitimacy of his claim. Trust structures indicate that assets or collateral are managed for the benefit of the creditor, thereby solidifying XXXX legal standing and ensuring protection of his interests. 
XXXX. Applicability to Future Debts The UCC provisions ensure that XXXX claims extend beyond past obligations : Coverage of Future Claims : UCC 9-204 ( 2 ) permits a creditor to secure future claims. Consequently, XXXX claim can encompass both historical losses and potential future debts, affirming its validity under UCC provisions. Any obligations the U.S. Treasury incurs in the future could be satisfied using the collateral designated in the UCC filing.

Continuing Security Interest : The security interest established is continuous, allowing XXXX to assert claims arising from ongoing or future transactions without the necessity of re-establishing his claim for each new obligation. 
4. Implications for Claim Against First Merchants Bank The legal framework arising from the UCC filing confers several advantages to XXXX in pursuing compensation : Substantiation of Claim : Identifying the U.S. Treasury as a debtor in his UCC filing substantiates XXXX 's claim for compensation against First Merchants Bank. This documentation serves as credible evidence of the Treasurys obligation to fulfill claims arising from the financial losses he sustained. 
Facilitation of Payment : The identification of the Treasury as a debtor streamlines the payment process. Upon validation of XXXX 's claim, First Merchants Bank may more readily comply, as payments can be processed through the Treasury, consistent with the pre-established security interest under UCC regulations.

5. Legal Considerations of Non-Response Under UCC 9-404, the lack of response from the U.S. Treasury within the statutory period of thirty days does not invalidate XXXX security interest or claims. The UCC protects the rights of secured parties, allowing them to assert their claims irrespective of a debtor 's response. Additionally, under Michigan law ( MCL 440.9501 et seq. ), the effectiveness of a security interest is not contingent upon acknowledgment by the debtor. 
Conclusion In conclusion, XXXX XXXX filing, which identifies the U.S. Treasury as a debtor while establishing his role as a creditor with collateral for both present and future debts, forms a robust legal foundation for his claims. This arrangement facilitates the assertion of his rights under the UCC and applicable Michigan laws, enabling him to seek compensation for past losses and any future obligations that may arise. The interplay of these legal concepts not only solidifies the validity of XXXX claim against First Merchants Bank but also enhances the prospects for successful resolution and payment through the established legal channels. 

Fifth Amendment : Due Process Clause : This clause guarantees that individuals can not be deprived of their property without due process of law. XXXX 's account closure without a clear and justifiable reason may constitute a violation of this right.

Fourteenth Amendment : Equal Protection Clause : This clause prohibits states from denying any person within its jurisdiction the equal protection of the laws. If XXXX was discriminated against based on assumptions about his status as a " sovereign citizen, '' this could represent a violation of his right to equal protection under the law. 
Substantive Due Process : This protects against arbitrary denial of fundamental rights, suggesting that any financial institution, as a state actor, must respect individuals ' rights to engage in lawful financial transactions. 
Civil Rights Act of 1964 ( particularly Title II and Title VII ) : These provisions prohibit discrimination based on race, color, religion, sex, or national origin in public accommodations and employment. While these are not constitutional provisions, they extend protections that could apply in cases of financial services discrimination.

42 U.S.C. 1983 : This statute allows individuals to sue in civil court for constitutional violations committed by state actors. If First Merchants Bank is considered a state actor through its actions, XXXX might claim violations of his constitutional rights under this statute. 
Equal Credit Opportunity Act ( ECOA ) : While not a constitutional law, the ECOA prohibits discrimination in any aspect of a credit transaction based on race, color, religion, national origin, sex, marital status, age, or because the applicant receives public assistance. If XXXX was denied banking services based on discriminatory assumptions, this statute may provide grounds for legal action.

First Amendment : Freedom of Speech : If XXXX characterization or the remarks made during the banks interactions are construed as retaliation against his speech regarding financial protocols or legal status, it XXXX invoke protections under the First Amendment.

Fourth Amendment : Protection against Unreasonable Searches and Seizures : This amendment may apply if the actions taken by the bank are seen as an unwarranted intrusion into XXXX XXXX affairs without probable cause or justification. 


Requested Action : Reinstatement of Banking Services : Restore XXXX access to First Merchants accounts or authorize alternative options, accompanied by an apology for the biased conduct exhibited by XXXX XXXX. 
Release of Bond for Damages : Initiate bond releases or payments to compensate for punitive damages arising from discriminatory treatment, financial impediments, and reputational harm. Evaluate the full surety amount of the Medallion Guarantee as documented on Form 5444 and compensate for related punitive damages.

Provide Transparency and Reasoning : Require First Merchants to furnish detailed reasoning for the account closure, including an audit of any insurance or securities claims made on the account and full disclosure of the legal grounds cited.

This complaint articulates allegations of financial discrimination, unjust denial of services, and seeks remedies for the economic and emotional distress caused by the actions of First Merchants Bank. Compliance with applicable federal and Michigan laws governing financial services and the fair treatment of secured creditors is anticipated.