Back in June, The Wall Street Journal reported a big scoop that press favorite Jamie Dimon’s JPMorgan Chase had dropped a bunch of debt-collection lawsuits in at least five states. It seemed, though the paper couldn’t quite nail it down, that there were foreclosure-scandal-style “irregularities” in the documents that press favorite Jamie Dimon’s bank had filed with the courts.

For seven months, the press did nothing else with this story. But today, American Banker follows up on it, advancing the ball quite a bit.

Since April, Chase has fired regional collections lawyers and completely stopped suing its customers to collect debts in at least five states. That may be costing it hundreds of millions of dollars in recoveries and it signals “trouble,” according to one of the Banker’s sources.

To get a look at Chase’s collection practices, the Banker’s Jeff Horwitz searched court documents in states that have digitized records and found that Chase has ceased lawsuits in five states, including California and New York, and dramatically dialed them back in another. The Journal reported in June that the bank had dropped lawsuits in at least one other state, New Jersey.

What’s going on?

The New York Times’s David Segal report in November 2010 showed how the robosigning scandal roiling the banks and the mortgage industry was likely to hit the debt-collection industry too. He scooped reported (see correction below) that a Chase whistleblower named Linda Almonte, a former assistant vice president at the bank, had found that 22 percent of Chase credit-card accounts being bundled for a sale were seriously flawed:

”We found that with about 5,000 accounts there were incorrect balances, incorrect addresses,” she said. ”There were even cases where a consumer had won a judgment against Chase, but it was still part of the package being sold.”

Ms. Almonte flagged the defects with her manager, but he shrugged them off, she says, and he urged her and her colleagues to complete the deal in time for the company’s coming earnings report. Instead, she contacted senior legal counsel at the company. Within days, she was fired. She has since filed a wrongful termination suit against Chase.

You read that right. Chase sold thousands credit-card accounts to collections agencies without the correct balances.

The Journal’s Jessica Silver-Greenberg, who has done excellent work this year, wrote in the paper’s June scoop that half the 23,000 accounts in this particular bundle were missing proof of court judgments.

The Banker reports today that Chase didn’t deny the whistleblower’s accusations on the errors and settled the case. This is a speculative quote, but I think it’s fair for the Banker to use it:

“Nobody told anybody anything. It was very traumatic,” says a former Chase attorney who asked to remain anonymous because of a nondisclosure agreement. “I think there were investigations by the [Office of the Comptroller of the Currency] and other government entities. If we’re not there, we can’t be interviewed.”

Horwitz writes that he examined a small sample of Chase claims to see if they had farmed them out to third parties, but found no evidence of that. Chase, for its part, declined to comment, saying that its debt-collection strategy is “proprietary.”

In June, the Journal quoted a judge who dismissed 150 Chase debt-collection suits that looked to be robosigned saying “‘It’s a significant problem…that’s widespread and yet given virtually no attention.’”

This is a big story, one that calls for some legwork from reporters in the states that the Banker didn’t check out.

UPDATE: The San Antonio Express-News’s Patrick Danner wrote about Almonte in March 2010, well before the NYT.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.