Bank of America Accused of Racketeering in Federal Lawsuit
Bank of America accused of racketeering in lawsuit
A lawsuit in federal court in Colorado accuses Charlotte-based Bank of America of racketeering, in what amounts to more fallout for the bank stemming from a federal mortgage-modification program.
The suit, filed Wednesday, claims violations of the federal Racketeer Influenced and Corrupt Organizations Act, also known as RICO. It cites statements that former Bank of America employees made last month in a separate, ongoing federal lawsuit in Massachusetts. Those former employees, including at least one who worked in Charlotte, claim the bank awarded cash and gift cards to them if they denied mortgage modifications to homeowners through the Home Affordable Modification Program.
Pointing to those statements, Wednesday’s lawsuit alleges that the bank and a contractor ran a “scheme” to deny the modifications. The Colorado lawsuit, brought by three homeowners who sought HAMP modifications from Bank of America, names as a co-defendant Urban Lending Solutions, a Broomfield, Colo., contractor to whom the bank sent HAMP work.
The lawsuit echoes claims made in the Massachusetts case, alleging that Bank of America pushed homeowners to accept costlier in-house modifications, because those were more profitable for the bank than HAMP modifications. The latest lawsuit claims those activities constituted racketeering, using “interstate mails and wire communications.”
Bank of America, in a statement, said Thursday that it intends “to provide conclusive evidence that these allegations are demonstrably false and devoid of any factual support. Our practice is to foreclose as a last resort when other available options to help keep people in their home have been exhausted.”