RICO Credit-Card|Machine Case Survives


     SAN FRANCISCO (CN) – A federal judge refused to dismiss a RICO lawsuit from business owners who say they were fraudulently induced to lease credit card swiping equipment at exorbitant prices.
     Joseph Cream et al. sued Northern Leasing Systems et al. in March, accusing them of running “a racketeering scheme to fraudulently entrap small businessmen … into equipment leases with undisclosed charges and onerous terms.”
     Their complaint, filed in San Francisco, claimed the defendants, “through their own representatives or third party salesmen, deceptively sold these leases to plaintiffs through what appeared to be a standard-form, one-page lease complete with signatures and a personal guaranty.”
     But, signed leases hand, the defendants ratcheted up the charges and “foisted several other liabilities on the unsuspecting plaintiffs,” the business owners said.
     They say they later discovered they could buy the same equipment for around $500, instead of leasing it for $3,840 to $4,800.
     Defendants included Northern Leasing Systems, Lease Finance Group LLC; CIT Financial USA, Lease Source, and three people. The plaintiffs sought damages for fraud, negligent misrepresentation, concealment, money had and received, unjust enrichment, RICO violations, and violations the Electronic Funds Transfer Act and the Fair Debt Collection Practices Act.
     The defendants filed a motion to dismiss on May 1, 2015.
     U.S. District Judge Marie-Elena James on July 31 denied the motion to dismiss but granted transfer based on forum-selection clauses in the leases.
     Of the 14 leases at question, 13 require adjudication in New York. The remaining lease requires adjudication in Cook County, Ill. James stayed transfer of one claim.
     She found that the plaintiffs cannot show the defendants incorporated the forum-selection clauses as a result of fraud or concealment.
     “Because the court finds it imprudent to engage in a merits-based analysis of plaintiffs’ fraudulent inducement claim, and plaintiffs have not otherwise shown that defendants incorporated these forum-selection clauses as a result of fraud, the court finds that plaintiffs’ concealment and fraudulent inducement arguments fail to make the forum-selection clauses unenforceable,” she wrote in a 13-page order.
     “Plaintiffs provide no argument as to whether the forum-selection clauses contravene public policy.”
     James stayed transfer, however, pending supplemental briefing on whether to sever the lease with forum-selection in Illinois or allow it to proceed with the other claims in New York.
     Attorneys for the plaintiffs were not available for comment after hours Tuesday.

%d bloggers like this: