FDCPA Claims Upheld in 9th Circuit Class Action

The court held that the FDCPA unambiguously requires any debt collector – first or subsequent – to send a section 1692g(a) validation notice within five days of its first communication with a consumer in connection with the collection of any debt.

THE FOLLOWING ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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If anyone remembers the Grishom book “The Firm”, also in movies, you know that in the end the crooks were brought down by something they were never thinking about — mail fraud — a federal law that has teeth, even if it sounds dull. Mail fraud might actually apply to the millions of foreclosures that have taken place — even if key documents are sent through private mail delivery services. The end of month statements and other correspondence are definitely sent through US Mail. And as we are seeing, virtually everything they were sending consisted of multiple layers of misrepresentations that led to the detriment of the receiving homeowner. That’s mail fraud.
Like Mail Fraud, claims based on the FDCPA seem boring. But as many lawyers throughout the country are finding out, those claims have teeth. And I have seen multiple cases where FDCPA claims resulted in the settlement of the case on terms very favorable to the homeowner — provided the claim is properly brought and there are some favorable rulings on the initial motions.
Normally the banks settle any claim that looks like it would be upheld. That is why you don’t see many verdicts or judgments announcing fraudulent conduct by banks, servicers and “trustees.”And you don’t see the settlement either because they are all under seal of confidentiality. So for the casual observer, you might see a ruling here and there that favors the borrower, but you don’t see any judgments normally. Here the banks thought they had this one in the bag — because it was a class action and normally class actions are difficult if not impossible to prosecute.
It turns out that FDCPA is both a good cause of action for damages and a great discovery tool — to force the banks, servicers or anyone else that is a debt collector to respond within 5 days giving the basic information about the loan — like who is the actual creditor. Discovery is also much easier in FDCPA actions because it is forthrightly tied to the complaint.
This decision is more important than it might first appear. It removes any benefit of playing musical chairs with servicers, and other debt collectors. This is a core of bank strategy — to layer over all defects. This Federal Court of Appeals holds that it doesn’t matter how many layers you add — all debt collectors in the chain had the duty to respond.
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Justia Opinion Summary

Hernandez v Williams, Zinman and Parham, PC No 14-15672 (9th Cir, 2016)

Plaintiff filed a putative class action, alleging that WZP violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692(g)(a), by sending a debt collection letter that lacked the disclosures required by section 1692(g)(a) of the FDCPA. Applying well-established tools of statutory interpretation and construing the language in section 1692g(a) in light of the context and purpose of the FDCPA, the court held that the phrase “the initial communication” refers to the first communication sent by any debt collector, including collectors that contact the debtor after another collector already did. The court held that the FDCPA unambiguously requires any debt collector – first or subsequent – to send a section 1692g(a) validation notice within five days of its first communication with a consumer in connection with the collection of any debt. In this case, the district court erred in concluding that, because WZP was not the first debt collector to communicate with plaintiff about her debt, it had no obligation to comply with the statutory validation notice requirement. Accordingly, the court reversed and remanded.

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Innovative Lawsuits Test the Credibility of Securitized Loans

For further information or assistance please call 954-495-9867 or 520-405-1688.

———————————————

see http://dealbook.nytimes.com/2014/11/27/u-s-backed-mortgages-put-to-test-in-a-lawsuit/

If you ever saw the movie “The Firm” from the book by John Grisham, you know the ending. The whole system was rigged but what finally produced a result was mail fraud, which is generally off the radar screen for any lawyer combating powerful opponents. The lesson for the perpetrators of crimes, predatory loans and so forth is that they can’t cover everything. There are too many ways that they faked the deals from top to bottom. Mail fraud might be one of them. And as you will see, talking to the borrower might be another. One lawsuit against US Bank shows that anyone who really does their homework might be able to take down Goliath with just such an innocuous provision.

A word of caution here  — these strategies are predicated in part on the assumption that the entire loan process was fraudulent, where there were dozens of undisclosed entities taking undisclosed fees from a large pool of investor money used in part to fund mortgage that were not tied to any documents signed at closing. The documents that were signed had no connection to the actual lender and the entity identified as the lender was a pretender paid to act as though it was loaning money. The reason I mention this is not to hammer down on the reality of those mortgages, but to suggest that a judge who still thinks that the borrower is a deadbeat trying to get out of legitimate loan, is likely to find problems with “innovative strategies.” But it is also true that there are a variety of things that bother many judges more and more about these loans and the foreclosures.

The article in the New York Times by Peter Eavis goes into some detail, but the essence is in this quote:

Not engaging with borrowers who have missed payments may not seem like the strongest grounds for litigation against a bank. Yet that is the basis for an innovative lawsuit against U.S. Bank, a division of U.S. Bancorp, one of the largest banks in the country. The legal action could mean fresh legal problems for other big mortgage banks, as well. It is the latest threat to emerge from a barrage of cases that have forced big banks to pay tens of billions of dollars in recent months.

The lawsuit focuses on a popular type of government-guaranteed mortgage that in fact requires that banks take distinct steps — like trying to arrange a meeting — when borrowers stop paying.

The lawsuit is being brought by Advocates for Basic Legal Equality, a legal aid group. In a twist, the group is suing U.S. Bank in federal court in Ohio on behalf of the United States government, using the False Claims Act. This legislation, which dates to the Civil War, allows private citizens and groups to pursue legal action against companies and other entities for receiving payments from the government on false grounds.

The more you drill down on the existing laws, rules and regulations the more violations you will find. And when it comes to foreclosing, anyone watching this nightmare unfold must get to to wondering about why all of these deals went to foreclosure instead of workouts. The answer is that the foreclosure judgment and the foreclosure sale is part of a massive cover-up of massive fraud. And for the most part, the government has decided to (a) not prosecute real claims for real damages and real crimes and (b) not provide individual homeowners with information already obtained about their homes, their mortgages and their foreclosures that would shut the process down if known. The latter is what most irks Elizabeth Warren who now officially speaks for the average American and who seeks a level playing field in the Senate of the U.S. Congress.

People like Senator Warren, Sheila Bair, former FDIC chief, and others who have been outspoken about the out right fraud — i.e., nonexistence of the loans being used as a basis for foreclosure — keep getting stepped on, but the recent “promotion” of Warren is at least somewhat encouraging in that it shows that the leadership of the Democratic party recognizes they can no longer ignore her or the issues she speaks about. She speaks at gathering that attract voters from across the political spectrum and she is proving what I said years ago a constantly ever since — if you want to win by a landslide, run against the banks  and the people they own in our government.

DELAWARE TO MERS: NOT IN OUR STATE!

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Delaware sues MERS, claims mortgage deception

Posted on Stop Foreclosure Fraud

Posted on27 October 2011.

Delaware sues MERS, claims mortgage deceptionSome saw this coming in the last few weeks. Now all HELL is about to Break Loose.

This is one of the States I mentioned MERS has to watch…why? Because the “Co.” originated here & under Laws of Delaware…following? [see below].

Also look at the date this TM patent below was signed 3-4 years after MERS’ 1999 date via VP W. Hultman’s secretary Kathy McKnight [PDF link to depo pages 29-39].

New York…next!

Delaware Online-

Delaware joined what is becoming a growing legal battle against the mortgage industry today, charging in a Chancery Court suit that consumers facing foreclosure were purposely misled and deceived by the company that supposedly kept track of their loans’ ownership.

By operating a shadowy and frequently inaccurate private database that obscured the mortgages’ true owners, Merscorp made it difficult for hundreds of Delaware homeowners to fight foreclosure actions in court or negotiate new terms on their loans, the suit filed by the Attorney General’s Office said.

[DELAWARE ONLINE]

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MAIL FRAUD AND WIRE FRAUD, CHAPTER 18, USC AS A BASIS FOR DAMAGES AGAINST THE BANKS

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ROBO-SIGNING:  MAIL FRAUD AND WIRE FRAUD

Lots of people have discussed RICO as a basis for suing on a private right to damages resulting from all the fraudulent acts committed by the entire string of “securitization” participants. The focus of such a lawsuit should be, in my opinion, mail fraud and wire fraud, which is exactly what happened. If the loan, collection or foreclosure included fraudulent affidavits, or other forged or fabricated documents designed to deprive one or more persons of money or property or even valuable rights, then there is BOTH criminal and civil liability for MAIL FRAUD and WIRE FRAUD under RICO. Many states have similar statutes of their own with private right of action affirmed by the Supreme Court of that state, like North Carolina.

These treble damage rights exist and are far easier to prove than many lawyers would have you believe.

“while the RICO plaintiff may need to show “that someone relied on the defendant’s misrepresentations” in order to satisfy the causation element of a civil RICO claim, under appropriate facts “third-party reliance” can suffice for that purpose.  Bridge reconfirmed the need to show a proximate causal link between the alleged mail fraud and the plaintiff’s claimed injuries but rejected the suggestion that this requirement could only be met by showing that the plaintiff had relied on fraudulent misrepresentations in the underlying mailing.” — Robert A Schwinger — see Schwinger NYLJ RICO-WIRE FRAUD-MAILFRAUD DAMAGES TO PRIVATE LITIGANTS

EDITOR’S NOTE: This has always been a powerful remedy on which the government and some lawyers have relied to achieve justice by scam artists who think they are one step ahead of the law — like the pretender lenders. If you look at the delivery of documents and movement of money, you will see that the pretenders faked the identity of the lender, faked the terms of the loans, and then filed false documents for the purpose of stealing a home in a fake foreclosure.

In Bridge v. Phoenix Bond & Indemnity Co., the Supreme Court of the Untied States concluded, “a person can be injured ‘by reason of’ a pattern of mail fraud even if he has not relied on any misrepresentations.” It cited the allegations of Bridge as a “a case in point,” holding that under those alleged facts “respondents clearly were injured by petitioners’ scheme.”

It appears as though you can even claim bank fraud and then get your own damages, if you prove the damages, which should not be too difficult.

For example, the satisfaction of mortgage. In the case of securitized claims on mortgages in which the transfers never occurred, the title has been clouded and the original mortgage, if it ever actually was perfected. The loan was allegedly subject to a satisfaction of mortgage or reconveyance executed by (a) an unauthorized and disinterested party who received the payoff amount even though they had no claim to it and (b) based upon false representations, affidavits and claims as we discussed ad nauseum on the pages of this blog. By my count there were at least 60 million such transactions on refinancing of the property or re-sale.

Because the definitions are broad under these Federal Statutes, getting behind the corporate veils and levels of plausible denial is easier under these rights of action. And because the the accompanying risk of criminal prosecution, you might find more people stepping forward to protect themselves and “Spill the beans.” Perhaps a few private actions under RICO for WIRE FRAUD and MAIL FRAUD might prompt the Department of Justice to get off its backside and bring claims against the entire chain of securitization participants.

There are actually attorneys who specialize in this area of the law. Bringing them up to speed on the whole fact pattern here will give them a Greek diner’s menu of dozens of points in the mortgage origination process, the mortgage funding process, and the foreclosure process in which mail fraud and wire fraud were committed. There is also the possibility of gaining an injunction because the fraud is on-going.

Since most states have their own version of RICO, you have the possibility of keeping the action in state court or at your election going into Federal court. The actions can be brought in adversarial proceedings in bankruptcy, and potentially a counterclaim in unlawful detainer and eviction, depending upon state law.

Try it — you’ll like it.

Title 18 of the United States Code, Chapter 63

Mail fraud is an offense under United States federal law, which includes any scheme that attempts to unlawfully obtain money or valuables in which the postal system is used at any point in the commission of a criminal offense. Mail fraud is covered by Title 18 of the United States Code, Chapter 63. As in the case of wire fraud, this statute is often used as a basis for a separate federal prosecution of what would otherwise have been only a violation of a state law. “Mail fraud” is a term of art referring to a specific statutory crime in the United States of America. In countries with nonfederal legal systems the concept of mail fraud is irrelevant: the activities are likely to be crimes there, but the fact that they are carried out by mail makes no difference as to which authority may prosecute or as to the penalties which may be imposed. In the 1960s and ’70s, inspectors under regional chief postal inspectors such as Martin McGee, known as “Mr. Mail Fraud,” exposed and prosecuted numerous swindles involving land sales, phony advertising practices, insurance ripoffs and fraudulent charitable organizations using mail fraud charges. — Wikipedia

18 U.S.C. 1341: Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, or to sell, dispose of, loan, exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use any counterfeit or spurious coin, obligation, security, or other article, or anything represented to be or intimated or held out to be such counterfeit or spurious article, for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service, or deposits or causes to be deposited any matter or thing whatever to be sent or delivered by any private or commercial interstate carrier, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail or such carrier according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, shall be fined under this title or imprisoned not more than 20 years, or both. If the violation occurs in relation to, or involving any benefit authorized, transported, transmitted, transferred, disbursed, or paid in connection with, a presidentially declared major disaster or emergency (as those terms are defined in section 102 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5122)), or affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.

§ 1342. Fictitious name or address

Whoever, for the purpose of conducting, promoting, or carrying on by means of the Postal Service, any scheme or device mentioned in section 1341 of this title or any other unlawful business, uses or assumes, or requests to be addressed by, any fictitious, false, or assumed title, name, or address or name other than his own proper name, or takes or receives from any post office or authorized depository of mail matter, any letter, postal card, package, or other mail matter addressed to any such fictitious, false, or assumed title, name, or address, or name other than his own proper name, shall be fined under this title or imprisoned not more than five years, or both.

§ 1344. Bank fraud

Whoever knowingly executes, or attempts to execute, a scheme or artifice—
(1) to defraud a financial institution; or
(2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises;
shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.

Chapters 1-10

  • Chapter 1: General Provisions
This chapter consists of General Provisions. §1 is repealed. §2 defines principals. §3 defines and provides punishment for accessory after the fact, while §4 defines and provides punishment for misprision of felony. §5 defines “United States,” §6 defines “department” and “agency,” §7 defines “special maritime and territorial jurisdiction of the United States,” §8 defines “obligation or other security of the United States,” §9 defines “vessel of the United States,” §10 defines “interstate commerce” and “foreign commerce,” §11 defines foreign government, and §12 defines “United States Postal Service.” §13 deals with laws of states adopted for areas within federal jurisdiction. §14 is repealed. §15 defines “obligation or other security of foreign government” and §16 defines “Crime of violence.”
§17 deals with the insanity defense, defining it as “an affirmative defense to a prosecution under any Federal statute that, at the time of the commission of the acts constituting the offense, the defendant, as a result of a severe mental disease or defect, was unable to appreciate the nature and quality or the wrongfulness of his acts,” that “mental disease or defect does not otherwise constitute a defense,” and that “the defendant has the burden of proving the defense of insanity by clear and convincing evidence.”
§18 defines “organization,” §19 defines “petty offense,” §20 defines “financial institution,” §21 defines “stolen or counterfeit nature of property for certain crimes,” § 23.1 defines “court of the United States.” §24 provides “definitions relating to Federal health care offense.” §25 deals with the “use of minors in crimes of violence.”
The crime of wire fraud is codified at 18 U.S.C. § 1343

Wire fraud, in the United States Code, is any criminally fraudulent activity that has been determined to have involved electronic communications of any kind, at any phase of the event. The involvement of electronic communications adds to the severity of the penalty, so that it is greater than the penalty for fraud that is otherwise identical except for the non-involvement of electronic communications. As in the case of mail fraud, the federal statute is often used as a basis for a separate, federal prosecution of what would otherwise have been a violation only of a state law.

The crime of wire fraud is codified at 18 U.S.C. § 1343, and reads as follows:

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both. If the violation affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.

In the case of United States v. LaMacchia (1994; text of opinion), a student of the Massachusetts Institute of Technology was charged with wire fraud when, because he had not profitted personally from online distribution of millions of dollars’ worth of illegally copied software, he could not be charged with criminal copyright infringement. The United States District Court, District of Massachusetts, dismissed the charges, noting they were an attempt to find a broad federal crime where the more narrowly defined one had not occurred. Congress then amended the copyright law to limit further use of this loophole.

According to Neder v. United States (527 U.S. 1, 23, decided in 1999), the alleged misrepresentation to support a conviction under 18 U.S.C. § 1343 must be a material misrepresentation; a misrepresentation is material if it is capable of influencing, or has a “natural tendency” of influencing.

To commit wire fraud, one must (1) devise, or intend to devise, a scheme or artifice to defraud another person on the basis of a material representation, and (2) do it with the intent to defraud, and (3) do it through the use of interstate wire facilities (i.e. telecommunications of any kind).

See 8th Circuit Pattern Criminal Jury Instructions, 242 & 250.

If a fourth element—that the alleged victim is a financial institution—also is present, the penalty is enhanced as provided in the statute.

Wire Fraud, Mail Fraud? Possible Cause of Action Against Pretenders and Attorneys

Editor’s Comment: This reminds me of the end of Grisholm’s Book “The firm”. It’s not sexy but it has lots of teeth. The quote below is from Wikipedia. I was talking to an old friend of mine about the securitization scam which continues as an on-going process, first in the form of “closing” alleged loans and now in the form of foreclosures. It seems that the use of electronic media sent through the internet, like spreadsheets with misinformation on it, and which is part of a scheme wherein money is wired and illicit profits are earned, may be a crime and a cause of action for private individuals.

My friend, who shall remain anonymous, basically puts it this way. This is an oversimplification of the way he analyzed it. Money is wired into a “pool account.” That came from “investors. Then money is wired into an escrow account which in turn is wired into the accounts of third parties to close the transaction. Sometimes some of the wire proceeds are converted to checks. The procedure is perfectly legal unless the purpose of the or goal of the transaction was illegal, and more specifically fraudulent. The diversion of funds that were wired into undisclosed accounts for undisclosed parties in transactions that were misrepresented on the facts (appraisal fraud on the property and ratings fraud on the securities) makes the deal susceptible to wire fraud allegations.

Since we have now determined that at the time of “sale”of the “loan product” to the “borrower” the actual transaction papers were rarely if ever transmitted to anyone, and since we have now determined that the general practice was to send electronic spreadsheets with loan data on it which substantially misrepresented the content of the actual transactions, and since we we have determined that the ratings were at least wrong and probably fraudulent, the scheme fits neatly into the wire fraud and mail fraud infrastructure. If that is the case, there is a rather mundane cause of action with a lot of teeth in it which could bring the investment bankers and all their affiliates to task. You see, says my friend, they not only did it to each other, the borrowers and the investors, but they employed the same means with the Federal government when they took TARP money, went to the Fed window and participated in other Federal programs. In his opinion, this is a far simpler case to make than securities fraud or predatory lending.

Mail fraud is an offense under United States federal law, which refers to any scheme which attempts to unlawfully obtain money or valuables in which the postal system is used at any point in the commission of a criminal offense. Mail fraud is covered by Title 18 of the United States Code, Chapter 63. As in the case of wire fraud, this statute is often used as a basis for a separate federal prosecution of what would otherwise have been only a violation of a state law. “Mail fraud” is a term of art referring to a specific statutory crime in the United States of America. In countries with nonfederal legal systems the concept of mail fraud is irrelevant: the activities listed below are likely to be crimes there, but the fact that they are carried out by mail makes no difference as to which authority may prosecute or as to the penalties which may be imposed. In the 1960s and ’70s, inspectors under regional chief postal inspectors such as Martin McGee, known as “Mr. Mail Fraud,” exposed and prosecuted numerous swindles involving land sales, phony advertising practices, insurance ripoffs and fraudulent charitable organizations using mail fraud charges[1][2]

Wire fraud, in the United States Code, is any criminally fraudulent activity that has been determined to have involved electronic communications of any kind, at any phase of the event. The involvement of electronic communications adds to the severity of the penalty, so that it is greater than the penalty for fraud that is otherwise identical except for the non-involvement of electronic communications. As in the case of mail fraud, the federal statute is often used as a basis for a separate, federal prosecution of what would otherwise have been a violation only of a state law.

The crime of wire fraud is codified at 18 U.S.C. § 1343, and reads as follows:

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both. If the violation affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.

In the case of United States v. LaMacchia (1994; text of opinion), a student of the Massachusetts Institute of Technology was charged with wire fraud when, because he had not profitted personally from online distribution of millions of dollars’ worth of illegally copied software, he could not be charged with criminal copyright infringement. The United States District Court, District of Massachusetts, dismissed the charges, noting they were an attempt to find a broad federal crime where the more narrowly defined one had not occurred. Congress then amended the copyright law to limit further use of this loophole.

According to Neder v. United States (527 U.S. 1, 23, decided in 1999), the alleged misrepresentation to support a conviction under 18 U.S.C. § 1343 must be a material misrepresentation; a misrepresentation that is capable of influencing, or has a “natural tendency” of influencing, a decision is material.

To commit wire fraud, one must (1) devise, or intend to devise, a scheme or artifice to defraud another person on the basis of a material representation, and (2) do it with the intent to defraud, and (3) do it through the use of interstate wire facilities (i.e. telecommunications of any kind).

See 8th Circuit Pattern Criminal Jury Instructions, 242 & 250.

If a fourth element—that the alleged victim is a financial institution—also is present, the penalty is enhanced as provided in the statute.

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