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Another Abuse of Power? Consumer Financial Protection Bureau Under Fire... Again

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WASHINGTON, Sept. 10, 2013 (GLOBE NEWSWIRE) -- Already under fire for its sweeping data mining program, the Consumer Financial Protection Bureau is facing fresh criticism after a news report revealed the agency may have recruited the U.S. Trustee Program to obtain private consumer bankruptcy documents from Morgan Drexen (http://www.morgandrexen.com).

Reporter Richard Pollock of the Washington Examiner detailed the allegations in a story entitled "Consumer Agency Threatens Independence of Bankruptcy Office." In May of 2012, United States Trustee attorney J. Steven Wilkes demanded that Morgan Drexen produce millions of bankruptcy files related to financially distressed consumers across the country, well beyond the scope of Wilkes' regional 21 district -- Florida and Georgia. A federal bankruptcy judge sided with Morgan Drexen, limiting the U.S. Trustee's access to only seven Florida bankruptcy cases.

The reason for the unusually broad demand may have been revealed in a July 2012 email from Wilkes to Steven Berman, a Florida attorney representing Morgan Drexen in the state. The email read:

"It is likely that my client will be anticipating your clients to provide our office with copies of the information, documents, and discovery that have and will be produced to the CFPB in its ongoing investigation."

"That's pretty unusual," Berman told the Washington Times of the CFPB reference. "I've been a bankruptcy lawyer for 23 years. I don't think I've ever had that experience."

The U.S. Trustee's office was created as a strictly neutral agency designed to serve as a watchdog over the bankruptcy process. As reported by Pollock:

"If USTP is aiding CFPB's data-mining program in any manner, bankruptcy authorities argue it would constitute an 'unprecedented' violation of the organization's reason for being and destroy its independence."

"We were pleased to read in Richard Pollock's article that disinterested experts in the bankruptcy field reacted with the same aghast we had regarding the shocking abuse of the US Trustee's Office in its data-mining efforts," said Jeffrey Katz, Morgan Drexen's General Counsel.

Morgan Drexen is currently challenging the constitutionality of the CFPB in federal court in Washington, DC. The complaint alleges, among other things, that the CFPB is grossly overreaching its authority by attempting to data mine sensitive bankruptcy documents protected by attorney-client privilege. The CFPB responded by suing Morgan Drexen across the country in California.

"This is an agency that has proven it will stop at nothing to get its hands on the private, privileged details of struggling American consumers," said Walter Ledda, Morgan Drexen CEO. "It amazes me that given this agency's already massive powers, it would attempt to use the U.S. Trustee Program as a side door to gain access to even more data that it has no right to obtain."

About Morgan Drexen

Morgan Drexen provides integrated software systems and administrative support services to small businesses and attorneys nationwide. The company is chronicling its legal battle with the CFPB on a special website: MorganDrexenvsCFPB.com.

CONTACT: Karen E. Carlson Morgan Drexen 800-868-1458 x212 karen.carlson@mdrexen.com

Source: Morgan Drexen Integrated Systems