Re: [Maury_and_Baty] RICO, RALs and H & R Block!
- I still don't know why you didn't just send that PAMite 30 mil in blank money orders under $100 each ..... (sorry, couldn't resist)
The RAL industry is growing, and from what I can see regularly charges rates so high that they would fall under usury statutes. For that reason among others, I agree that this is worth watching.
The PAMites should also be watching, because they regularly assert civil RICO claims without even understanding what does and does not constitute such a claim. I find PAM's RICO assertions in the newest AOL case particularly amusing. In that suit, PAM is claiming $5 Billion RICO damages against each of thousands of defendants, any of whom he claimed could have settled for $25. That alone tells you that he doesn't have a case, ROFL! Well, that and the fact that the defendants could not constitute an organization (RICO does, after all, refer to Racketeering Influenced Corrupt Organizations), since they didn't even know one another .....
Plus, he claimed federal RICO violations, but filed it in state court. Any idiot knows that a state court doesn't have jurisdiction to determine violation of federal law.
Long story short, if the PAMites understood civil RICO, they wouldn't be claiming it because they'd know they didn't have a case. Oh, who am I kidding. All PAMite suits are nuisance suits that they hope will be settled as such. What they don't understand is that no one is going to settle a RICO suit unless there's a real chance that they'd lose. There's no chance the AOL defendants will lose, so where is their incentive to settle?
----- Original Message -----
Sent: Friday, April 02, 2004 7:41 AM
Subject: [Maury_and_Baty] RICO, RALs and H & R Block!
Since we have talked about RICO a bit here recently, and I had my own
little PAMite trying to use RICO to get me to pay him $30,000,000.00,
I thought the RICO suit against H & R Block might be of interest, as
well as the insight into the RAL industry.
Following my name below is a news item about that case.
Daily Tax Report
Tax, Budget & Accounting
April 1, 2004
TAX REFUNDS: JUDGE CERTIFIES NATIONWIDE RICO SUIT AGAINST
H&R BLOCK OVER LOAN PRACTICES
CHICAGO--A federal judge March 30 dismissed a portion of a consumer
class action against H&R Block Inc., but affirmed a racketeering
count alleging that the tax preparation giant operated a scheme that
steered customers into high-interest "refund anticipation loans"
(Carnegie v. Household International Inc., N.D. Ill.,No. 98 C
U.S. District Court Judge Elaine Bucklo threw out several counts
alleging violations of certain consumer fraud statutes. At the same
time, Bucklo found that the plaintiffs adequately stated a claim
under the racketeering and conspiracy provisions of the Racketeer
Influenced and Corrupt Organizations Act. The RICO claim also extends
to H&R Block's co-defendant in the case, Beneficial National Bank.
Since the litigation was originally filed in 1998, Beneficial has
been acquired by Household International Inc. and Household has
been acquired by HSBC Holding PLC.
The litigation stems from a scheme in which H&R Block steered its
clients toward refund anticipation loans (RALs) funded by Beneficial.
H&R Block benefited by collecting a referral fee from Beneficial.
Consumer groups criticized this practice, claiming that the loans
featured exorbitant fees and high interest rates. Plaintiff attorneys
said the size of the class is unclear but likely totaled in the
The litigation has taken numerous twists and turns over the last six
years. In 1999 an original plaintiff group reached a $25 million
settlement with the defendants. The settlement was approved by the
district court, but a group of objecting plaintiffs appealed the
matter to the U.S. Court of Appeals for the Seventh Circuit. Among
other things, the objecting plaintiffs alleged a "reverse auction" in
which the defendants chose an ineffectual group of lawyers to
negotiate a weak settlement that would bar other claims. While the
Seventh Circuit said there was no proof of collusion, it remanded the
case back to district court for further consideration (Reynolds v.
Beneficial National Bank, 7th Cir.,No. 00-3122,4/23/02).
On remand, Judge Bucklo rejected the settlement and ordered new
counsel be appointed to represent the class. An amended complaint was
then filed. The March 30 opinion comes in response to the defendants'
motion to dismiss the amended complaint.
Several Claims Dismissed.
In her ruling, Bucklo dismissed two breach of contract claims and the
plaintiffs' claims under the Truth in Lending Act. She also removed
several counts brought under state consumer fraud statutes. Bucklo
said these claims vary widely and "would be extremely difficult to
categorize." In this regard, Bucklo wrote that a nationwide
litigation class could not be certified for these state law claims.
Bucklo also ruled that arbitration clauses found in the contracts
signed by some RAL borrowers could be enforced. Attorneys working on
the litigation said they were unsure how many plaintiffs would be
compelled to arbitrate their disputes with the defendants.
H&R Block applauded the ruling as a "significant victory" in the
"We are very pleased that the ruling by Judge Elaine Bucklo threw out
all but one of the numerous claims made by the plaintiffs," Nicholas
Spaeth, H&R Block's senior vice president and general counsel, said
in a statement. "Going forward, the judge will require the plaintiffs
to present evidence to support the remaining claim, and we believe
there is not the evidence to support it."
But Peter S. Linden, who is representing the plaintiffs, said the
significant component of the opinion was language certifying a
nationwide class under two components of RICO. This portion opens the
defendants up to significant damages if and when the case goes before
"It is a significant win for the plaintiffs because now you have a
nationwide class in a RICO case and that exposes H&R Block to treble
damages,"Linden, a partner with Kirby McInerney & Squire LLP in New
York City,told BNA.
Linden said he will now be preparing for a trial on the RICO charges.
He added that certain portions of Bucklo's decision may be appealed.
By Michael Bologna
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