Bank of America, the second largest bank in America, is likely dismayed to find their request for a dismissal of a RICO class action suit has been denied by a federal judge. The banking giant argued the claims by plaintiffs were time-barred due to the 4 year RICO (Racketeer Influenced and Corrupt Organizations Act) statute of limitations. Bank of America officials claim the statutes had run when the mortgages closed in 2006 and 2007. Plaintiffs filed the class-action lawsuit against Bank of America in January 2015. The plaintiffs say they were unaware of the Bank of America’s fraud until 2012, therefore the statutes had not run when the case was filed. The judge agreed with the plaintiffs, denying the dismissal motion by Bank of America.
Bank of America Claims Plaintiffs Should Have Known About the Fraud
The class action suit was filed against Bank of America by home mortgage borrowers under Weiss v. Bank of America. The allegations in the class action lawsuit claim Bank of America directed borrowers to private mortgage insurance providers. In return, Bank of America received kickbacks in the form of private mortgage insurance payments. These payments were funneled through affiliate Bank of America Reinsurance Corporation.
Bank of America claims the plaintiffs should have read the fine print in their loan documents which contained a “risk sharing mortgage insurance disclosure,” stating the lender is allowed to enter into other risk-sharing contracts either directly or through a reinsurance company. In other words, Bank of America is claiming the plaintiffs should have known about the bank’s scheme, due to news articles which were publicly available, as well as from reading their purposefully complicated loan documents.
Judge Agrees Plaintiffs Exercised Due Diligence Through Loan Participation Process
The judge agreed that the burden was on the plaintiffs to show they heeded the available information with due diligence but were still injured. The plaintiffs did so by pointing to a 2015 U.S. Court of Appeals decision which held that “when a wrongful scheme is perpetrated through the use of common documentation…participation in the loan process alone is sufficient to establish the due diligence element.”
Bank of America Says No Elements of Racketeering Exist
Bank of America also challenged the plaintiffs’ right to bring RICO charges, claiming the plaintiffs established no elements of acts of racketeering. The judge, once again, sided with the plaintiffs, stating the plaintiffs allege the existence of a “continuous unit,” and had met the burden for RICO charges. The RICO charges essentially held because it appears Bank of America conspired with Bank of America Reinsurance Corporation and a group of private insurers to receive a “cut” of the private mortgage payments paid by customers who had been referred to the private insurers by Bank of America.
Other Banks Facing RICO Charges
As a result, Bank of America Reinsurance Corporation collected some $284.7 million from private mortgage insurers between 2004 and 2011. The original complaint called the arrangement an illegal kickback scheme which was in violation of the RICO statutes. Other banks have faced similar charges in the past few years; Flagstar Bancorp Inc., beat the charges as time-barred, while Citibank, PNC and others are still facing lawsuits.
It appears it is becoming more and more common for huge corporations to bury language in their agreements which significantly benefit the corporations, and hurt consumers. When the consumer cry foul, the corporations point to the tiny print, buried in pages and pages of legal-speak, asserting they are not responsible for any harm to consumers which led to financial gain to the corporations. This latest decision by the judge may indicate a trend toward siding with consumers who suffer injury.
National Class Action Lawyers
If you or someone you love has suffered financially because of a fraudulent or deceptive banking practice, you may be able to file a lawsuit. To learn more about your rights and legal options, call the Philadelphia class action lawyers at Golomb Legaltoday at 1-800-355-3300 or 1-215-985-9177 or fill out our confidential Contact Form.
The national class action lawyers at Golomb Legalhave successfully represented individuals throughout the United States in their quest for justice.