Case 1:15-cv-00293-LTS-JCF Document 166 Filed 04/20/17 Page 1 of 14

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

-------------------------------------- X
S&A CAPITAL PARTNERS, INC.,
MORTGAGE RESOLUTION SERVICING,
LLC; and 1ST FIDELITY LOAN
SERVICING, LLC,
Plaintiffs,
: No. 15 CV 293-LTS-JCF
-against-

JPMORGAN CHASE BANK, N.A., CHASE HOME

FINANCE LLC, and JPMORGAN CHASE & CO.,

Defendants.
-------------------------------------- X

REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF MOTION FOR

LEAVE TO FILE FOURTH AMENDED COMPLAINT AND
AMENDED RICO CASE STATEMENT

Tantillo Law PLLC

100 Church Street
8th Floor
New York, NY 10007
786.506.2991

Attorneys for Plaint(ffs

 Case 1:15-cv-00293-LTS-JCF Document 166 Filed 04/20/17 Page 2 of 14

TABLE OF CONTENTS

TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

THE PROPOSED AMENDED RICO CLAIMS ARE SUFFICIENT....... .... ... 2

The Complaint Properly Alleges a RICO Enterprise... ... ... .. . ... ... .. . ... .. .. 2

The FAC Satisfies RICO 's Continuity Requirement... ... .. . ... .. . ... ... ... ... .. . 6

Plaintifft Have Alleged a RICO Conspiracy Claim.. . ... ... ... ... ... .. . .. . .. . .... 6

PLAINTIFFS' CLAIMS OF CONVERSION, VIOLATIONS OF THE FDCPA, AND

OBSTRUCTION OF JUSTICE ARE SUFFICIENTLY PLED AND SUPPORT THE RICO
CLAIMS. .. ................. ........ .. ................. ...... ................. ........ .... .. 7

PLAINTIFFS' OTHER CLAIMS ARE DISTINCT FROM CONTRACT

CLAIMS...... ... ...... .... ...... .. ..... .... ... ... .. .. ............... ......... .. .... .. .... .. 9

CONCLUSION.... .. ..... .. .... .. ..... .......... ..... ........... ......... ... ... ........ .. 10
 Case 1:15-cv-00293-LTS-JCF Document 166 Filed 04/20/17 Page 3 of 14

TABLE OF AUTHORIT IES

Cases

Appley v. West, 832 F .2d 1021 (7 th Cir. 1987) .............................................................. .................. 7

Abbey v. 3F Therapeutics, Inc., 2009 WL 4333819 (S.D.N.Y. Dec. 2, 2009) .......................... . 1, 2

Aiu Insurance Co. v. Olmecs Medical Supply, 2005 WL 3710370 (E.D.N.Y. Feb. 22, 2005) ....... 5

Automated Teller Machine Advantage, LLC v Moore, 2009 WL 2431513(S.D.N.Y. Aug. 6,

2009) ······································································································································· 6, 8

Baisch v. Gallina, 346 F.3d 366 (2d Cir. 2003 ............................................................................... 7

Bias v. Wells Fargo & Co., 942 F. Supp.2d 915 (N.D. Cal. 2013) ................................................ 5

Brass v. Am. Film Techs., Inc., 987 F.2d 142 (2d Cir. 1993) ......................................................... 1

Carione v. United States,368 F.Supp.2d 186 (E.D.N.Y. 2005) .......................... ............................ 2

City of New York v. Bello, 579 Fed. Appx. 15 (2d Cir.2014) .................. .......... ............................. 7

Clevelandv. Caplaw Enters.,448 F.3d 518 (2d Cir. 2006) ............................................................. 2

CMG Holdings Group v Wagner, 2016 WL 4688865 (S.D.N.Y. Sept. 7, 2016) ........ ............. 7, 10

Cyberchron Corp. v. Calidata Systems Development, Inc., 47 F. 3d 39, 44 (2d Cir. 1995) ........... 8

Fuji Photo Film US.A., Inc. v McNulty, 2009 WL 3334867 (S.D.N.Y. Oct. 14, 2009)................ 6

Fuji Photo Film US.A., Inc. v. McNulty, 640 F.Supp.2d 300 (S.D.N.Y.2009) .............................. 7

In re Trilegiant Corp., Inc., 11 F.Supp.3d 82 (D. Conn. 2014) ...................................................... 5

Kopec v. Coughlin III,922 F.2d 152 (2d Cir. 1991) ................. ... . ... ... ... .... .... . .. ... . .... .. ... .2

McCarthy v Dun & Bradstreet Corp., 482 F .3d 184 (2d. Cir. 2007) ............................................. 1

McCrory v. City ofNew York, 2001 WL 740483, at *2 (S.D.N.Y. July 2, 2001) ...................... 1, 2

Merex A.G. v. Fairchild Weston Systems, Inc. , 29 F.3d 821 (2d Cir. 1994) ............................ ....... 9

11
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Physicians Mut. Ins. Co. v. Greystone Servicing Corp., Inc., 2009 WL 855648 (S.D.N.Y. Mar.

25, 2009). ·················································································•·"·············•·"·•· .. ··············· .. ····· ... 6

Rosenthal v. Kingsley., 674 F.Supp. 1113, 1125 (S.D.N.Y. 1987), ................................................ 9

Rothstein v GMAC Mortgage, LLC, 2013 WL 5437648 (S.D.N.Y. Sept. 30, 2013), rev'd on other

grounds, 794 F.3d 256 (2d Cir. 2015) ........................................................................................ 6

Stillman v. Townsend, 2006 WL 2067035 (S.D.N.Y. July 26, 2006), ............................................ 9

Sykes v. Harris and Associates, LLC, 757 F. Supp.2d 413 (S.D.N.Y. 2010) ................................. 8

United States v. London, 66 F .3d 1227 (1 st Cir. 1995) ................................................................... 5

Statutes and Rules

18 U.S.C. §1961(1) ......................................................................................................................... 8

18 U.S.C.§1962(c) .............. ... .... . ... .. .. ..... ... ... . . ... .... .. .. ... . . ..... ..... .. ... ... .. ... .. .... . ..... 2

18 U.S.C. §1962(d) ......................................................................................................................... 7

Federal Rule of Civil Procedure 8(d)(2) ........ .... . ... .. .. .... .. .... ...... .. .... . ..... . ......... .......... 9

Federal Rule of Civil Procedure Rule 12(b)(6), ..................... ....................... ............................. ..... 1

Federal Rule of Civil Procedure 15(a)(2) and 15(d), ..................................................................... 1

Other

Restatement (Second) of Contracts §90 ......................................................................................... 8

111
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Plaintiffs S&A Capital Partners, Inc. ("S&A"), Mortgage Resolution Servicing, LLC

("MRS"), and 1st Fidelity Loan Servicing, LLC ("1st Fidelity")( "Plaintiffs"), respectfully submit

this reply memorandu m oflaw in further support of their motion, pursuant to Federal Rule of Civil

Procedure 15(a)(2) and 15(d), to amend and supplement the operative complaint and RICO Case

Statement in this action by filing (1) the proposed Fourth Amended Complaint ("F AC") and (2)

the proposed Amended RICO Case Statement ("Am. RICO St.").

The well-pied allegations of the FAC properly state causes of action under applicable law.

If Defendants ' response is construed as a motion to dismiss pursuant to Rule 12(b)(6), a plaintiffs

factual allegations must be accepted as true, and all reasonable inferences are drawn in plaintiffs

favor. Abbey v. 3F Therapeutics, Inc., 2009 WL 4333819 at *4 (S.D.N.Y. Dec. 2, 2009). As set

forth above and in Plaintiffs' motion, the facts alleged sufficiently support Plaintiffs' causes of

action and the motion for leave to amend.

The Court's review on a motion to dismiss is limited to the facts asserted within the four

comers of the complaint, the documents attached to the complaint as exhibits, and any documents

incorporated by reference. McCarthy v Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d Cir. 2007).

The court may also consider "matters of which judicial notice may be taken" and "documents

either in plaintiffs' possession or which plaintiffs had knowledge and relied on in bringing suit."

Brass v. Am. Film Techs., Inc., 987 F.2d 142, 150 (2d Cir. 1993). Considering all of the allegations

in the light most favorable to Plaintiffs, Defendants ' motion to dismiss should be denied.

This Court has rejected, on a motion to amend, Defendants ' contention that the proposed

allegations "are not supported by the evidence thus far adduced in discovery". McGrory v. City of

New York, 2001 WL 740483 at *2 (S.D.N.Y. July 2, 2001) (Swain, District J.). There this Court

held:

1
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Indeed, unless the complaint as proposed to be amended would clearly fail

to state a cause of action, the likelihood of success on the claim is not an appropriate
factor in the Rule 15(a) analysis. An amendment should be permitted ifthere are at
least colorable grounds for relief... The adequacy of proof to support the allegations
can be raised at a later stage, such as a motion for summary judgment.

McCrory at *3.

This Court has the option to exclude matters outside the pleadings on a motion to

dismiss:

Rule 12(b) gives district courts two options when matters outside the
pleadings are presented in response to a 12(b)(6) motion: the court may exclude the
additional material and decide the motion on the complaint alone or it may convert
the motion to one for summary judgment under Fed. R. Civ. P. 56 and afford all
parties the opportunity to present supporting material.

Kopec v. Coughlin III, 922 F .2d 152, 154 (2d Cir. 1991 ).

If this Court were to consider matters outside the four comers of the FAC, it may only

consider a "written instrument attached to the Complaint or any statements or documents

incorporated by reference". Abbey, at *4. However, if matters outside the pleadings are presented

to and not excluded by the court, the motion must be treated as one for summary judgment under

Rule 56. Id., citing Carione v. United States, 368 F.Supp.2d 186, 191 (E.D.N.Y. 2005) and

Cleveland v. Cap/aw Enters., 448 F .3d 518, 521 (2d Cir. 2006). If this Court were to consider the

unusual procedure of converting Defendants' response to a motion for summary judgment, "[t]he

court must provide notice that the motion is to be converted and permit the parties to submit

additional evidence and briefing pertinent to such a motion." Abbey, at *5.

THE PROPOSED AMENDED RICO CLAIMS ARE SUFFICIENT

The Complaint Properly Alleges a RICO Enterprise

This Court held that the Third Amended Complaint ("TAC") did not "suffice to identify a

RICO enterprise under 18 U.S.C. §1962(c); as described, these entities 'are no more united in an

2
 Case 1:15-cv-00293-LTS-JCF Document 166 Filed 04/20/17 Page 7 of 14

enterprise than any vendor and its customers .... Nor do Plaintiffs identify any 'common purpose'

of the alleged enterprise ... " DE 140.

The FAC directly addresses this issue by providing specific details regarding the united

conduct of the third parties necessary to the fraud. Plaintiffs have recently discovered that the

Monitor and his Professionals were an integral part of the scheme to defraud and help Defendants

evade their legal obligation to properly service mortgage loans 1: by agreeing with Chase to

improperly exclude thousands of non-compliant RCVl loans from required metrics testing and

servicing by releasing all of the liens without proper evaluation or validation of ownership of the

liens. The Monitor deliberately failed to determine the impact of Chase's lien releases on third

parties such as Plaintiffs or community blight. The Monitor, independently and through his

Professionals, had a duty to review Chase's systems of record, including RCVl and ensure

compliance with the Settlements. The Monitor failed in his duty to implement the terms of the

Settlements, instead he conspired with Defendants to do an end-run around them. FAc,r,r 61, 70, 75-

80, 85-86

The Monitor also violated his duty of independence by meeting jointly with all of the

settling banks, including Chase, to discuss what the banks, and not the Monitor, would consider

compliance with the Settlements. This included whether each bank would release liens on all of

their charged-off second lien portfolio whether they would forgive debt at the time of a lien release

or continue collecting on the loan, and the procedures for lien releasing first mortgages. The

Monitor and his Professionals knew of Chase's scheme to evade metrics testing and penalties for

1
Chase admits at footnote 8 of their Opposition to Plaintiffs' Motion for Leave to Amend (DE 157 at p. 20) to
Plaintiffs' primary allegations: that the Monitor and his professionals agreed with Chase to fraudulently release non-
complying RCVI liens to avoid appropriate review under the Settlement. ("By its terms, the servicing standards of
the NMS apply only to 'loans secured by owner occupied properties"'.)
3
 Case 1:15-cv-00293-LTS-JCF Document 166 Filed 04/20/17 Page 8 of 14

non-compliance when releasing liens on non-compliant loans. The Monitor and his Professionals

never reported to governmental agencies or the court the nature or extent of Chase's violations.

Their participation in Chase's scheme promoted the interests of the Monitor, his law firm and the

other Professionals by guaranteeing continued lucrative employment under the Settlements and

the prestige that such employment would provide. FAC 1182-87, 376,382.

Similarly, Chase's relationship with the title clearing agencies and collection agencies was

not merely a "routine business relationship". In furtherance of the overarching scheme to evade

compliance and mortgage servicing laws, Chase needed to record the fraudulent releases of liens

to provide notice to claim they had properly released the liens for settlement credits and to rid itself

of the costly legal responsibility for maintaining and servicing low value properties in blighted

neighborhoods. Chase relied on the title clearing companies to avoid the deadline for metrics

testing by quickly preparing and recording in bulk the fraudulent lien releases and other documents

affecting Plaintiffs' and other third parties' interests. FAC 1158-59.

Chase chose title clearing companies such as Nationwide Title Clearing, Inc. ("NTC"),

which became notorious for fraudulent mortgage recording practices, to prepare and file false lien

releases without properly validating and determining if the liens were properly serviced or owned

by Chase. FAC ,i274. These disreputable title clearing agencies knowingly disregarded their

independent and separate legal duty to file all relevant documents only after proper validation of

the liens to obtain business from Chase and line their own pockets with ill-gotten gains. FAC 11

88, 274-282, 286.

The collection agencies chosen by Chase were also not innocent vendors as their fraudulent

conduct was necessary to improperly continue the scheme to derive undeserved benefits from loans

that did not belong to Chase. The collection agencies agreed to participate in the fraud by

4
 Case 1:15-cv-00293-LTS-JCF Document 166 Filed 04/20/17 Page 9 of 14

knowingly engaging in illegal debt collection practices, communicating with Plaintiffs' borrowers,

misrepresenting that Chase or the collection agencies owned the loan at issue and/or was the

authorized servicer of the loans after Chase had already released the liens or sent debt forgiveness

letters. FAC ~~ 24, 45, 90, 92 ,161, 191 , 224-236, 289; Am. RICO St. at 3, 45. The debt collectors

knew that the debts were defaulted mortgage loans yet, in violation of the law, could not provide

servicing as they did not possess the proper licensing, software or data from Chase. Am. RICO St.

at 41. The Settlements could not have envisioned that Chase would tum around and try to collect,

through the agencies, from borrowers whose loans really belonged to Plaintiffs, thereby irreparably

damaging Plaintiffs' relationships with their borrowers.

The complaint alleges that all of the participants had a common purpose to benefit Chase

and themselves in the continuous scheme. If the Monitor and his Professionals and the title search

and collections agencies were removed from the enterprise, the fraud could not have succeeded. 2

Defendants argue that all Plaintiffs have alleged is a mere "hub and spoke" conspiracy.

However, "[t]here has been no authoritative decision in the Second Circuit offering guidance as to

how to interpret the enterprise requirement." In re Trilegiant Corp., Inc. , 11 F.Supp.3d 82, 97 (D.

Conn. 2014) (cited by Defendants at 13). A hub and spoke conspiracy, under the alleged facts,

could constitute a RICO enterprise where all participants were necessary for Chase to improperly

benefit from fraudulent lien releases and contributed their own fraudulent acts to the achievement

of the fraudulent scheme.

2
Even if this Court were to find that the allegations were not sufficient as to the outside agencies, the specific facts
alleged in the FAC regarding the Monitor's involvement are voluminous. This is sufficient. See United States v.
London, 66 F.3d 1227, 1243 (l81 Cir. 1995) (noting that two or more legal entities can form an association in fact
RICO enterprise), Bias v. Wells Fargo & Co., 942 F. Supp.2d 915,941 (N.D. Cal. 2013) ("[The] [p]laintiffs allege
conduct specifically between and among ... [the] [d]efendants and at least one other entity .. .which supports the
requirement that the enterprise members have 'associated together for a common purpose." ')
5
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Courts have upheld RICO claims where the alleged participants cooperated and were

interdependent and necessary to the overall scheme. See Aiu Insurance Co. v. Olmecs Medical

Supply, 2005 WL 3710370at *9 (E.D.N.Y. Feb. 22, 2005) (RICO claim upheld where defendants

were alleged to be "key participants" who made "critical misrepresentations", "created false

documents" and served as a point of contact with Plaintiffs' clients and thus played necessary

roles in the achievement of a common purpose); Rothstein v GMAC Mortgage, LLC at *17

(S.D.N.Y. Sept. 30, 2013), rev'd on other grounds, 794 F.3d 256 (2d Cir. 2015) (allegations that

NMC was an integral part of the overall scheme and enabled the scheme to function; it was not

simply an ' outside purveyor[]' who was 'providing services as part of its routine and legitimate

business operation."'(citations omitted.) See also Fuji Photo Film U.S.A ., Inc. v McNulty, No. 05

Civ. 7869 (SAS), 2009 WL 3334867 at *3 (S.D.N.Y. Oct. 14, 2009). (Noting that the enterprise's

success was attributable to the extensive cooperation among the vendor defendants [the

'spokes']"); Automated Teller Machine Advantage, LC v Moore, 2009 WL 2431513 (S.D.N.Y.

Aug. 6, 2009) (court found defendants were united in a common purpose to defraud plaintiff).

The FAC Satisfies RICO's Continuity Requirement

This Court held that the TAC failed to plead facts demonstrating closed or open-ended

continuity of a RICO enterprise, finding it alleged only a 15-month period of Settlement-related

activity. DE 140. However, the FAC alleges that the Settlement-related misconduct and wrongful

release of liens continued from 2012 through at least 2016. FAC i!i\54, 61-62, 86. To date, Plaintiffs

are aware that Defendants issued debt forgiveness letters and lien releases on properties owned by

Plaintiffs between September 2012 and 2016. However, Plaintiffs continue to learn of more

wrongful collections and lien releases which did not stop in 2013. FAC ,i,i 191-193, 197. A period

of two years is "typically required" to establish closed-ended continuity. Physicians Mut. Ins. Co.

6
 Case 1:15-cv-00293-LTS-JCF Document 166 Filed 04/20/17 Page 11 of 14

v. Greystone Servicing Corp., Inc., 2009 WL 855648 at *7 (S.D.N.Y. Mar. 25, 2009). Due to

Defendants' misconduct, the threat of continued harm continues. FAC ,r,r 75, 191-193, 197. The

fraudulent activity, even if attributable only to conduct related to the Settlements, exceeds four

years and is continuing.

Plaintiffs Have Alleged a RICO Conspiracy Claim

Plaintiffs have stated a claim for the underlying violation of RICO, and Defendants admit

that having done so is a basis for stating a RICO conspiracy. '"[T]he requirements for RICO's

conspiracy charges under §1962(d) are less demanding' than those for substantive violations. City

of New York v. Bello, 579 Fed. Appx. 15 (2d Cir.2014)(citing Baisch v. Gallina, 346 F.3d

366,3 76(2d Cir. 2003)). In the civil context, a plaintiff must allege that the defendant knew about

and agreed to facilitate the scheme."' Id. The FAC details the agreement, and the participants'

knowledge of and participation in acts in furtherance of the agreement. See, e.g. , FAC ,r,r 82, 83
85-86, 88,92, 191,224-230, 274, 286,289.

This is sufficient. See CMG Holdings Group v Wagner, 2016 WL 4688865 (S.D.N.Y. Sept.

7, 2016) (upheld RICO conspiracy claim where allegations plausibly allege an agreement by

describing numerous communications about the alleged scheme among defendants). See also

Automated, at *8 (plaintiffs alleged defendant "adopt[ ed] the goal of furthering or facilitating the

criminal endeavor."); Fuji Photo Film US.A ., Inc. v. McNulty, 640 F.Supp.2d 300, 321 (S.D.N.Y.

2009) (conspiracy claims are sufficient where defendants were aware of the general scope and

nature of the conspiracy which extended beyond their individual roles.)

7
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PLAINTIFFS' CLAIMS OF CONVERSION, VIOLATIONS OF THE FDCPA, AND

OBSTRUCTION OF JUSTICE ARE SUFFICIENTLY
PLED AND SUPPORT THE RICO CLAIMS

Plaintiffs' well-pied claim of conversion supports the predicate acts of mail and wire fraud,

where mail and wires were allegedly used to record fraudulent lien releases that deprived Plaintiffs'

of their ownership in the loans, and also wrongfully collected on Plaintiffs ' debt without disclosing

this conversion to Plaintiffs. FAC ,r,r287, 312-331 , 381. This use of mail and wires and

concealment of illegal collection supports Plaintiffs' claim of racketeering activity. Appley v. West,

832 F .2d 1021 (7 th Cir. 1987). Similarly, Plaintiffs' claim for violation of the FD CPA (F AC ,r
i!191-198, 200, 224-236, 256-266, 278, 283, 288-294, 382,385; Am. RJCO St. at 32), including

the collection of an unlawful debt, supports the alleged predicate acts of mail and wire fraud. See

Sykes v. Harris and Associates, LLC, 757 F. Supp.2d 413 (S.D.N.Y. 2010) (court denied motion

to dismiss RICO claims when violation of FDCPA alleged).

Defendants concede that obstruction of justice is a RICO predicate act under 18 U.S.C.

§1961(1). Plaintiffs have alleged that Defendants and their co-conspirators deliberately interfered

with the intent and purpose of the Consent Judgments by refusing to comply with the Settlements'

requirements. (FAC ,r,r380-381).

PLAINTIFFS' OTHER CLAIMS ARE DISTINCT FROM CONTRACT CLAIMS

In the FAC, Plaintiffs have pied distinct claims for breach arising out of promises made by

Defendants, separate from the breach of the Master Loan Purchase Agreement.3 Plaintiffs have

factually pied (FAC ,r 38, 100-101, 104, 113-120, 363) instances of reasonable reliance on the

3
To pursue a promissory estoppel claim, Plaintiffs must allege "a clear and unambiguous promise; a reasonable and
foreseeable reliance by the party to whom the promise is made; and an injury sustained by the party asserting the
estoppel by reason of his reliance" Cyberchron Corp. v. Calidata Systems Development, Inc., 47 F. 3d 39, 44 (2d Cir.
1995) See also Restatement (Second) of Contracts §90.
8
 Case 1:15-cv-00293-LTS-JCF Document 166 Filed 04/20/17 Page 13 of 14

unambiguous promises made by Defendants. Plaintiffs have also pied factual allegations (F AC ,r,r

38, 42-44 121-140, 365) of how Defendants intended for Plaintiffs to rely on said promises.

Plaintiffs further allege specific facts throughout the FAC (FAC, ,r,r 130, 134, 149, 167, 177, 178,

183, 186, 191, and ,rs 194-197, 211-236, 249, 250-266, 271- 274, 278, 279-280, 283, 284, 289-

293, 366, 367) of action and/or forbearance from action on reliance of these promises, that these

actions or forbearance have been to their detriment, and that they have sustained injury. Moreover,

Plaintiffs allege in FAC ,r,r 99, 237-249 that 1st Fidelity purchased individual mortgaged note loans

between 2008 and 2010 in addition to the purchases by 151 Fidelity's MMLSA which begins in

2010. Unless Defendants unequivocally agree that each of the individual mortgaged note sales are

enforceable contracts, Plaintiffs properly alleges promissory estoppel as an alternative. See

Rosenthal v. Kingsley, 674 F.Supp. 1113, 1125 (S.D.N.Y. 1987), Stillman v. Townsend, 2006 WL

2067035 (S.D.N.Y. July 26, 2006), MerexA.G. v. Fairchild Weston Systems, Inc., 29 F.3d 821 (2d

Cir. 1994). Pleading a promissory estoppel claim despite assertions of contract theories of

recovery is appropriate in the instant case, in light of Federal Rule of Civil Procedure 8(d)(2)

allowing claims to be pied in the alternative. Claims of tortious interference, conversion, and

promissory estoppel are sufficiently alleged and non-duplicative of the contract claims because

they allege a duty or tortious conduct separate and apart from the breach of the MLP A. FAC ,r,r
312-331; 333-341; 363-372.

PLAINTIFFS WERE NOT DILATORY IN AMENDING THEIR CLAIMS

Defendants claim that Plaintiffs were aware of the Monitor's knowledge of RCVl for

years. Defendants cite to extrinsic evidence that should not be considered on this motion on the

pleadings. The mere fact of disclosure does not negate allegations of fraud absent an indication

that Plaintiffs should have been aware of the fraud itself. CMG, at *4. If this Court were to so

9
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convert the motion, Plaintiffs would ask that such a motion be entertained after discovery in this

matter, to give Plaintiffs a full and fair opportunity to controvert Defendants' arguments. 4

Plaintiffs only learned of the additional facts supporting the fraud of the Monitor in a

deposition with the Monitor, ~oseph Smith, Jr. on February 9, 2017. See Monitor's Deposition

attached as Exhibit A. Because it is often difficult to marshal the facts that a RICO claim requires,

some leniency is justified, particularly when Plaintiffs allege that Defendants "intentionally

deprive[ d] plaintiffs of access to facts supporting a claim." CMG, at *5.

Defendants improperly bootstrap Judge Collyer's decision to dismiss Laurence

Schneider' s Qui Tam action (now on appeal) to support their assertion that the RICO claims are

insufficient. As outlined in a letter to this Court on December 28, 2016 (DE 136), Judge Collyer's

dismissal was solely based on procedural grounds:

... the National Mortgage Settlement claims are barred because Mr. Schneider
failed to engage in the alternative dispute resolution process mandated by the Settlement
on which the claims are based.

CONCLUSION

For the foregoing reasons, Plaintiffs respectfully request that the Court enter an order

granting the motion for leave to amend the TAC and RICO Case Statement.

Dated: New York, New York. Respectfully submitted,

April 20, 2017 By: Isl Brent Tantillo
Brent Tantillo
Tantillo Law PLLC
I 00 Church Street
8th Floor
New York, NY 10007
786.506.299)
Attorney for Plaint[ffs

4
If this Court decides to consider Defendants' arguments as to matters outside the complaint without converting this
motion, as set forth in attached Exhibit A, the Monitor's Deposition and its accompanying documents actually support,
Plaintiffs' claims.