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Phoney Lawsuits: Navient's RICO case against TCPA law firm to continue

By David Hutton | Jan 29, 2018

Law money 03

ALEXANDRIA, Va. (Legal Newsline) – Navient Solutions has successfully fended off a motion to dismiss its racketeering lawsuit against Krohn & Moss and others in the U.S. District Court for the Eastern District of Virginia’s Alexandria Division.

Judge Leonie M. Brinkema, of the U.S. District Court for the Eastern District of Virginia, denied the motions to dismiss by the defendants, including Krohn & Moss, Michael B. Biancone and MB Investments & Consulting LLC. Brinkema's order was entered on Jan. 12.

An order detailing Brinkema's decision-making was not issued.

As Legal Newsline reported in November, Navient Solutions (NSL) filed a racketeering lawsuit in Virginia federal court that alleges a “grave abuse of the law" bilked it out of millions of dollars owed to it.

Legal Newsline also reported at the time that the debt-relief counseling offered by the Krohn & Moss (K&M) was allegedly a tutorial on how to manufacture a lawsuit under the federal Telephone Consumer Protection Act, a 1991 law designed to punish telemarketers.

Navient is the nation’s largest student loan company.

In its opposition to defendants' motions to dismiss, Navient stated that in advertising materials, Doug Johnson, a recruiter for the defendants, described its scheme as the equivalent of “winning the lottery.”

Navient alleged that for more than three years, K&M operated a scheme to defraud it out of millions of dollars and to block it from collecting outstanding student loan debt.

The defendants claimed Navient did not plead fraud claims with particularity. Those defendants also included the Law Offices of Ryan Lee of Scottsdale, Arizona, and MB Investments & Consulting, a South Carolina company owned by Biancone.

Navient also alleges that the defendants hid the involvement of some of the recruiting defendants to prevent NSL from seeking discovery detailing the role of the "self-styled debt counselors."

Navient further maintained that it has made a realistic Racketeer Influenced Corrupt Organizations Act claim.

Citing H.J. Inc. v. Nw. Bell Tel. Co.Navient noted that in order to prove a pattern of racketeering activity, it must show that “the racketeering predicates are related, and that they amount to or pose a threat of continued ... activity.”

On that point, Navient argues that it demonstrates a pattern of key individuals and companies working together to create or inflate costly legal battles with NSL that are based on the defendants’ efforts to fuel the scheme, from their recruitment of debtors through the obstructionist testimony to conceal the scheme.

Similarly, Navient says it alleged acts of mail and wire fraud in connection with the scheme.

Citing Bridge v. Phoenix Bond & Indem. Co., the opposition motion notes that "while NSL did rely on the misrepresentations of the defendants and their clients (the predicate acts), the U.S. Supreme Court has held that a RICO claimant need not prove reliance in order to prove a violation of RICO predicated on mail fraud."

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Organizations in this Story

Navient Solutions Inc