Massive Credit Card Corp Makes Nearly 1 Billion Dollar Mistake, Judge Slaps Them Down Hard

From Rightwingnewshour.com:

Judge Jesse Furman had no sympathy at all for Citibank. One of their employees made one of the “biggest blunders in banking history.” The credit card megalith thought their lawyers could wriggle out of the honest mistake. They didn’t. Someone is going to have a hard time explaining this one away on their resume.

A big mistake

If you had a hard day then this should help make it seem a little brighter. Someone at Citibank accidentally paid off Revlon’s loans. Somewhere around $900 million worth. Citibank screamed as soon as they realized the massive mistake and some of the companies they wired money to wired it back. Not all of them.

Thanks to a ruling by the District Court, the Credit Card megalith can kiss almost half a billion bucks goodbye. They won’t “be allowed to recover the almost half a billion dollars it accidentally wired to Revlon’s lenders.”

Citibank holds the contract to act as Revlon corporation’s loan agent. They were supposed to make regular interest payments of around $8 million. Basically, the minimum payment due. By mistake, someone hit the wrong check-box and they paid the full balance instead.

Citibank accidentally wired a total of $900 million to Revlon’s lenders, including $175 million to a hedge fund. They put that “are you sure” popup there for a reason but someone was chatting that day instead of concentrating on the screen.

Some of the lenders laughed and sent it back but others did not. Citibank filed suit against them to get their money back.

Not so fast, the judge decided. Just who’s money is it in the first place anyway? Citibank claims it was a “mistake” but it didn’t look like one. As any 80’s videogame “Lemmings” fan knows, “careless clicking costs lives.”

Accidental deposits not the same

If the average person were to spend the money that popped up in their account like a mushroom overnight, they get punished by the law for it. One Pennsylvania couple was hit with felony charges.

In today’s digital age the electrons occasionally get misdirected and “accidental transfers” are common. Wire transfers made by mistake can be paid back instantly. But, they don’t have to be. New York State has an exception to the law and Citibank got burned by it. The “discharge-for-value-defense.”

If the beneficiary, in this case the various creditors owed money by Revlon, “is entitled to the money and did not know it was accidentally wired, they can keep it.” Whether the transfer was a mistake or not. The lenders all thought that “Citibank was wiring prepayments for a loan.”

People and corporations do that all the time. One of the things that supports their claim is the amounts transfered were the exact amounts to the penny owed on each account. Just because nobody was expecting it to be paid off doesn’t mean a thing.

The court couldn’t believe it took a full day for Citibank to realize the error. “To believe that Citibank, one of the most sophisticated financial institutions in the world, had made a mistake that had never happened before, to the tune of nearly $1 billion — would have been borderline irrational.”

One employee of Revlon creditor HPS joked “I feel really bad for the person that fat fingered a $900mm erroneous payment. Not a great career move.” The chat reply came back “certainly looks like they’ll be looking for new people for their Ops group.” That prompted the classic response, “How was work today honey? It was ok, except I accidentally sent $900mm out to people who weren’t supposed to have it.”

mistake

The post Massive Credit Card Corp Makes Nearly 1 Billion Dollar Mistake, Judge Slaps Them Down Hard appeared first on Right Wing News Hour.

Click this link for the original source of this article.
Author: Mark Megahan


This content is courtesy of, and owned and copyrighted by, https://rightwingnewshour.com and its author. This content is made available by use of the public RSS feed offered by the host site and is used for educational purposes only. If you are the author or represent the host site and would like this content removed now and in the future, please contact USSANews.com using the email address in the Contact page found in the website menu.

Visit our Discussion Forum at Libertati.com.

Follow us:
WP Twitter Auto Publish Powered By : XYZScripts.com