Can you sue robo-signing lenders under RICO? “Robo-signers” were villains in the mortgage foreclosure crisis. Some banks never learn and continue to use robo-signatures. Class actions inevitably follow.

At Foster PC, we believe that bad actors frequently can be sued for racketeering activity under RICO. But not every case rises to that level.

Plaintiffs in Aiwohi v. Bank of America (D. HI) are borrowers whose homes were foreclosed and now claim the Bank engaged in racketeering activity by various improprieties in state court including robosigning loan documents. But Federal courts have consistently held false statements made in court proceedings, either spoken or in filings, are protected from RICO.  The Noerr-Pennington doctrine provides that the First Amendment’s right to redress grievances gives people the right to file lawsuits make the contentions that go with them.  Some states, Hawaii included, according to the Complaint, have statutes essentially saying the same thing, that statements in court proceedings are privileged from later litigation. 

The Aiwohi plaintiffs will find it difficult to overcome this argument.  Maybe they can by showing the false statements they characterize as mail and wire fraud, RICO violations, took place both in court and out of court (before the foreclosure cases began). 

Causation will prove to be an even tougher problem for the plaintiffs.  RICO requires that the racketeering activity “proximately” cause the plaintiff’s damages.  But here it seems the damage to the plaintiffs, losing their homes in foreclosure, was not directly caused by the fraudulent documents.  Rather the damage was caused by state court judges who entered foreclosure decrees.  These decrees break the chain of causation between the bank and the plaintiffs. 

This is a tough case for the plaintiffs and will require creative lawyering to overcome a motion to dismiss.  But this is typical in almost all RICO cases. 

If you are thinking about RICO, call me, Howard Foster, “The RICO AuthorityTM” at 312-726-1600.  The initial evaluation is free. I’ve litigated RICO for 25 years both as plaintiff and defendant all over the country. I know the ropes. I can help you help your clients.