Holding Lawyers and Banks Accountable for Presenting False Claims

In the Case of OBDUSKEY v. MCCARTHY & HOLTHUS LLP, decided yesterday, March 20, 2019, a unanimous but ambivalent Supreme Court of the United States decided that lawyers are not debt collectors in non judicial states. In doing so, they undermined the due diligence requirement in the bar rules of every jurisdiction that require a lawyer to perform enough investigation to assure that the client is real and has at least an arguable claim.  Several justices opined that Congress should clear up the ambiguity that they perceived in the law. The case was seen as fundamental challenge to the non judicial statutory scheme adopted in 32 states in which property subject to a Deed of Trust could be sold privately without judicial process. We have called out the problem as a substantive and procedural one.  What is more important and least understood is that the virtual immunity granted to lawyers provides banks with an impenetrable vehicle through which they continue to commit widespread fraud --- to the detriment of borrowers, investors, taxpayers, the financial system and society at large