The Rat Pack

Dino Tsibouris dino@tsibouris.com

(614) 360-1160 www.tsibouris.com

• Must retain copies of electronic disclosures given to consumers

• Electronic loans must stand up in court

• Authoritative copies must continuously comply with system requirements

Electronic LendingRecords Management

• Sarbanes-Oxley is already pushing the issue

• The IT director will be the star witness if the loan is questioned in court

• Any certificates or tokens used to make the loan must be “unalterable”

Electronic LendingRecords Management

• Digital evidence is NOT the same as evidence generated in the physical world

• It is ephemeral by design

• Incapable of true forensic examination

Electronic LendingRecords Management

• Accuracy of a record depends on the process that produces it

• Your collection lawsuit may hinge upon:• The basic foundational components of accuracy

of the data, and

• The reliability of the system producing the result from the data

Electronic LendingRecords Management

• Standard factors to admit electronic records of a student loan into court:

• Qualified computer operators

• Computer equipment is standard and competent and in good working order

• Reliable software program was utilized,

• Proper procedures to obtain input/generate output of information

• Equipment programmed/ operated correctly, and

• The exhibit is properly identified as the output in question

Electronic LendingRecords Management

• (d) RETENTION OF CONTRACTS AND RECORDS.—

• (1) ACCURACY AND ACCESSIBILITY.—If a statute, regulation, or other rule of law requires that a contract or other record … be retained, that requirement is met by retaining an electronic record of the information in the contract or other record that—

(A) accurately reflects the information set forth in the contract or other record; and

(B) remains accessible to all persons who are entitled to access by statute, regulation, or rule of law, for the period required by such statute, regulation, or rule of law, in a form that is capable of being accurately reproduced for later reference, whether by transmission, printing, or otherwise.

Electronic LendingRecords Management - ESIGN

• ESIGN doesn’t change the law of evidence

• ESIGN doesn’t change record retention requirements in other areas of the law

• Must save even the ESIGN consent

• The records must remain accessible

Electronic LendingRecords Management - ESIGN

• Swinton v. State 847 A.2d 921 (Conn. 2004)

• “Indicia of Reliability” test for admissibility, distinguished between computer enhanced and computer generated images

Electronic LendingMaking it Enforceable

• Rodd v. Raritan Assoc., 860 A.2d 1003 (N.J.Super.A.D.,2004)

• Adopted the concept of “reliability” from Swinton

• Photoshop-generated image ruled not reliable and therefore inadmissible

• Distinguished “enhanced” from “generated”

Electronic LendingMaking it Enforceable

• Companies can create programs that create records that will not stand up in court

• Executives can alter records under their control

• Lawyers aren’t quite onto this yet…

…but judges are.

Electronic LendingMaking it Enforceable

• The legal “original” of information stored in a computer is the readable display of the information on the computer screen, the hard drive … as well as any printout or output that may be read, so long as it accurately reflects the data.

• FRCP 1001(3); WEINSTEIN at § 900.07[1][d][iv]

Electronic LendingMaking it Enforceable

• Unauthenticated e-mails are a form of computer generated evidence …. Given the pervasiveness today of electronically prepared and stored records … counsel must be prepared to recognize and appropriately deal with the evidentiary issues associated with the admissibility of electronically generated and stored evidence.

• Lorraine v. Markel American Insurance CIVIL ACTION NO. PWG-06-1893

Electronic LendingMaking it Enforceable

• In this case the failure of counsel collectively to establish the authenticity of [unauthenticated email printouts] … rendered [them] inadmissible, resulting in the dismissal, without prejudice, of their cross motions for summary judgment.

• Lorraine v. Markel American Insurance CIVIL ACTION NO. PWG-06-1893

Electronic LendingMaking it Enforceable

• … imagine wiping out a disk drive containing an account worth $38 billion. That’s what happened to a computer technician reformatting a disk drive at the Alaska Department of Revenue. While doing routine maintenance work, the technician accidentally deleted applicant information for an oil-funded account … and mistakenly reformatted the backup drive, as well.

• There was still hope, until the department discovered its third line of defense, backup tapes, were unreadable.

• ESIGN and UETA permit delivery of electronic loan disclosures and records

• The rules of evidence do also

• The systems that create the process and the databases containing the information must be reliable, accurate and secure or it affects the loan itself!

Electronic LendingSummary

QUESTIONS?