Dirty Debt Collectors Sued Under RICO Act

A judge has set an interesting precedent, allowing a pack of skeevy debt collectors get sued under the RICO act, the Racketeer Influenced Corrupt Organization law.

The RICO act allows for increased criminal penalties and civil action against members and entities working together in a criminal enterprise. It was created to prosecute the Mafia but has been expanded to be used against the Hells Angels, Major League Baseball, and health insurance.

In this case a debt-purchasing company, law firm and process-serving company are accused of working together to snag borrowers with “sewer service.” This is where the process servers tell the courts they’ve given notice to the clients, but actually haven’t. Because that would give them more of a chance to fight back.

Since the clients usually don’t show up, it’s easy to get default judgments against them.

The class action, Monique Sykes vs. Mel Harris, is a case to watch in the battle against robosigners of all stripes.

Judge Allows RICO Suit Over Debt-Collection Tactics To Proceed [Forbes]
A Lawsuit That Dirty Debt Collectors Should Be Worried About [Daily Finance] (Thanks to Don!)

Comments

Edit Your Comment

  1. Cheap Sniveler: Sponsored by JustAnswer.comâ„¢ says:

    The RICO act is seriously flawed and unconstitutional:

    To achieve its objective of preventing the infiltration of legitimate businesses by organized crime, RICO gave the government sweeping new powers, including the power to freeze a defendant’s assets at the time of indictment and confiscate them after conviction. Traditionally, criminal defendants are presumed to be innocent and face punishment only after conviction. RICO, by allowing the government to seize entire businesses connected even indirectly with a defendant at the time of indictment, before any proof of guilt, is a major exception to this general principle. The government is authorized, in effect, to act as prosecutor, judge, and jury in the same case. The government under RICO is also able to make it more difficult for the accused to wage a defense by, for example, seizing the funds that a defendant would have used to hire an attorney. And if a defendant is convicted, RICO provides for onerous criminal penalties.

    • Loias supports harsher punishments against corporations says:

      The only thing about that statement that gave me pause was being unable to pay an attorney. However, that does not mean you can’t hire an attorney.

      The rest wasn’t specific enough for me to make a sound judgment.

      • Firethorn says:

        How can you hire an attorney if you can’t pay said attorney? They generally don’t like working for free. At least the good ones don’t.

    • danic512 says:

      Awesome, mind citing the SCOTUS case that declared this law to be unconstitutional?

    • jayde_drag0n says:

      those all sound like awesome things to do to a debt collection agency! I am not shedding any tears

    • Nighthawke says:

      RICO has done more good than evil in keeping in check and cleaning up acts like the mob and domestic drug gangs. I’m not seeing anything in this diatribe that convinces me that RICO needs to be voided.

      • Zowzers says:

        Problem is its a tool that undermines a fundamental right; presumption of innocence. And as much as I like to see bad people punished, I’d be happier if the government didn’t subvert a basic right to do it.

        • Loias supports harsher punishments against corporations says:

          Do you have a better solution? Because without that ability, criminals would moved all their funds, and prosecution would be pointless from the perspective of trying to get stolen and rackateered money back.

      • Cheap Sniveler: Sponsored by JustAnswer.comâ„¢ says:

        So, what you’re saying is, “the ends justify the means”?

    • The cake is a lie! says:

      Thanks for citing your source for that bit. http://www.independent.org/publications/tir/article.asp?a=215

      The idea for the acronym RICO came from the character Rico played by Edward G. Robinson in the 1930s gangster movie Little Caesar. Nixon signed the bill into law on October 15, 1970, declaring that the new law would “launch a total war against organized crime, and we will end this war” (qtd. in “Nixon” 1970). Indeed, the new law empowered federal law enforcement authorities to engage in activities that seemingly deprived defendants of due process of law as guaranteed by the Constitution. Writes Daniel Fischel:

      To achieve its objective of preventing the infiltration of legitimate businesses by organized crime, RICO gave the government sweeping new powers, including the power to freeze a defendant’s assets at the time of indictment and confiscate them after conviction. Traditionally, criminal defendants are presumed to be innocent and face punishment only after conviction. RICO, by allowing the government to seize entire businesses connected even indirectly with a defendant at the time of indictment, before any proof of guilt, is a major exception to this general principle. The government is authorized, in effect, to act as prosecutor, judge, and jury in the same case. The government under RICO is also able to make it more difficult for the accused to wage a defense by, for example, seizing the funds that a defendant would have used to hire an attorney. And if a defendant is convicted, RICO provides for onerous criminal penalties. (1995, 122–23)

    • ShruggingGalt says:

      What does this have to do with this post?

      Private individuals can sue under RICO (seen it done for a towing from a fire lane!), but they don’t have their assets frozen at the time of the lawsuit. Criminal penalties =/= civil penalties.

    • sirwired says:

      1) I believe the assets are frozen, not seized. Big difference. Seized assets go into the treasury; frozen ones don’t go anywhere. Emergency asset freezes are a common tactic in financial cases (even outside of RICO), and are executed to enforce a wide variety of laws. Since the money may be long gone by the time the suit works itself out, a freeze makes sense. How could you possibly pursue a money laundering case otherwise?
      2) “… at the time of indictment, before any proof of guilt.”: If an indictment is filed, by definition there must be some proof of guilt.
      2) After the freeze, the defendant’s lawyer can file a request with the judge for money to be freed up for legal expenses. I think ordinary day-to-day business expenses can be pulled also.

      • mythago says:

        Exactly. Seizing assets is civil forfeiture. Freezing assets so the defendant doesn’t ship them to the Cayman Islands is very different, and can be undone.

      • Zowzers says:

        Indictment is simply a a formal accusation, synonomus with being brought up on charges, it implies no assumed guilt.

        Within the confines of the RICO act, the accused is punished (to some degree) before being found guilty. That’s what Cheap Sniveler is commenting on.

        • Cheap Sniveler: Sponsored by JustAnswer.comâ„¢ says:

          Exactly.

        • sirwired says:

          I didn’t say it implied guilt. I merely was countering his statement that an indictment was rendered and assets frozen (NOT seized) “before any proof of guilt.” That statement is incorrect.

          Proof of guilt (usually sworn affidavits) must be tendered in order to secure an indictment. Is that standard of proof sufficient to convict? No. The standard to secure an indictment is fairly light. But that is a very long way from no proof at all.

      • Papa Bear says:

        Indictments do not require a proof of guilt. All they require is probable cause to believe a crime may have been committed and that the party under indictment may have committed it.

    • mythago says:

      RICO did not give the government “sweeping new powers”. Those powers, which are called civil forfeiture, have been around for centuries. The government dusted them off and started using them again with enthusiasm in the War On Poor Peoples’ Drugs.

      Civil forfeiture means that the government only has to meet a CIVIL burden or proof (more likely than not), and the action is brought against the asset, not the person. (So you get all these court cases with titles like People of the United States of America v. A 1975 Dodge Dart.) They don’t have to have a conviction to bring the civil forfeiture, although it helps.

      http://www.cato.org/pubs/journal/cj16n1-10.html

  2. Donathius says:

    Just as an aside – this is the law they used to charge all of the mobsters in The Dark Knight.

  3. c!tizen says:

    RICO… muy suave.

  4. TheGreySpectre says:

    Harvey Dent approves.

  5. Nighthawke says:

    Hoo Hoo Hoo…. go RICO! That’s one hell of an Ace in the hold that the feds should be using more often to clean up scum like these debt collectors.

    The judge was more than justified in dismissing the RICO lawsuits against the individuals working for said companies; after all, they are just line animals, trying to pay their bills. They were pretty much coerced into doing the boss’s dirty deeds. Perhaps they could sue for a few bills too…

  6. MedicallyNeedy says:

    Go after pharmacies next!

  7. alternety says:

    And of course the movie, sound studios, and assorted supporting lawyers that essentially force submission (read send us significantly excessive money) by threatening vastly excessive punishment through courts that no one can afford to participate in. Guido used to call it “protection”.

  8. Blueskylaw says:

    Bank of America, I’m thinking of you during this new year.

  9. Minj says:

    RICO: The Patriot Act of the 70s. Started off as something well intentioned and sold as a law that would only be used against the really bad people…until it was used against everyone.

    • Cheap Sniveler: Sponsored by JustAnswer.comâ„¢ says:

      I agree: Both acts are well – intentioned, but can, and have been, abused. Both RICO and the Patriot act need to be cleaned up.

      • Loias supports harsher punishments against corporations says:

        The Patriot Act was clearly a bad idea to begin with. Everyone saw the writing on the wall on that one.

        • Cheap Sniveler: Sponsored by JustAnswer.comâ„¢ says:

          Everyone, but the government officials who created and voted for it.

  10. ALP5050 says:

    “The RICO act is seriously flawed and unconstitutional” So it Obamacare.

    • Cheap Sniveler: Sponsored by JustAnswer.comâ„¢ says:

      Perhaps. I think the health care bill is flawed on many levels, and we’ll have to let the courts decide the constitutionality issue.

      My issue with the health care bill is that it provides relief for the non – working poor at the expense of the working poor – me – while providing me – the person paying for it – absolutely nothing but a guarantee of higher health care premiums.

      But it has nothing to do with RICO.

    • Evil_Otto would rather pay taxes than make someone else rich says:

      Obvious troll is obvious.

  11. coren says:

    If they’re being sued under RICO, could they also face criminal charges? I like that idea a whole ton

  12. Cheap Sniveler: Sponsored by JustAnswer.comâ„¢ says:

    My apologies, I thought I provided the link but I must have posted without adding my source. I always try to provide a source if I quote one.

    My point remains, that RICO contributes to the gradual erosion of our rights that continues to this day with asset forfeitures (read this story: http://www.pbs.org/wgbh/pages/frontline/shows/drugs/special/forfeiture.html ) and that piece of trash doublespeak “Patriot Act”

    • YokoOhNo says:

      how dare you question der fuhrer and the motherland!!! if you don’t like the patriot act you must hate america and americans and freedom and the free market and puppies!

  13. jason in boston says:

    Rico’s Roughnecks?

  14. YokoOhNo says:

    Can’t wait until they go after banks and wireless….

    how is that an inordinate number of banks came upon the same 20%-1000% APR for overdraft fees and that wireless decided that a markup of 9000% for text messages was coincidental.

    nevernmind, those companies have bought and bribed congress so we’re stuck with them…unless….