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
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
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 & Honik, P.C. today at
1-800-355-3300 or 1-215-985-9177 or fill out our confidential
The national class action lawyers at Golomb & Honik, P.C. have successfully
represented individuals throughout the United States in their quest for justice.