Will RICO work?

I think it will be a difficult task to pin RICO charges against CAI. While I am not a lawyer, I believe that the elements are difficult to show and prove.

First, RICO requires intentional and repeated actions in violation of the law by an organization or persons in an organization. What laws were violated by whom? CAI, per se, doesn't manage HOAs. Neither do any of its chapter organizations. Its members, independently organized firms and businesses, do. So, you may have a case against the individual management firms.

I did call to CAI's attention their policy that member management firms were allowed to use the CAI logo without the word "member" and that it was really false and misleading advertising. It gave the false impression that the management firm was indeed a legal arm of CAI. In August I received updated logos, as part of their mailing to members, with the word "member" clearly shown and was advised that only this logo was official. Now this is a case against CAI, but is this RICO or just a FTC problem or an honest over-site?

How about BODs? Well, so long as they follow the advice of their attorneys they are not held liable. This is the business judgment rule. And again, this is a case-by-case issue.

What specific laws were repeatedly broken? Failure to provide proper notice of a meeting? Unlawful assessments? Intimidation? By CAI, Inc itself? What is needed is a specific issue that can be applied to many situations.

For example, not that this is the answer to everything or that it represents an ironclad case, is the role of the HOA attorney. Does the attorney represent the association or the BOD or the homeowners? Before everyone is quick to jump up and say that, "The association is a fictitious person under the law, dummy", here's the State Bar of Arizona's statement -- I'm sorry, the Rules of the Arizona Supreme Court, Rule 42, Rules of Professional Conduct [ethics], Organization As Client, -- about the role of the attorney: "A lawyer employed or retained by an organization represents the organization acting through its duly authorized constituents”.

They are supposed to act in the best interests of the association, their client. But this is an oxymoron that creates an inherent conflict of interests. Somehow, somewhere along the line attorneys lost the distinction between their client and the representatives of their client, the board of directors. It appears that "the best interests of their client" always means the BOD.

Now we have a strong argument that can be applied in any state and to almost any act by the BOD that violates either state law or the governing documents; that is, attorneys failing to represent the best interests of the client especially when it can be proven that the BOD has indeed violated its legal obligations. Now we can go to the attorneys and sue them individually for this violation and also against the State Bars for failing to enforce this ethical requirement against attorneys. Here we have a case for non-enforcement. Here we will set case law to be applied anywhere and force attorneys to do their job as required by their state's Rules of the Supreme Court. This is a much easier case to make.

Now back to RICO. Is it applicable? Maybe if we can show that these learned and knowledgeable attorneys, who must be mandatory members of State Bar organizations, have all deliberately looked the other way, then maybe RICO applies against each and every State Bar. In any event, maybe a class action suit would be more effective. Once a precedent is set, you know how powerful it can be!

Cut this leg off from CAI and we've made some progress. Attorneys will think twice and so will management firms and BODs. Will it do away with CAI? Or, common interest developments? NO! It will, if successful, ease the plight of homeowners and maybe weaken the influence of CAI and the attorneys so homeowners can go after the fundamental private government defect of CIDs. It worked for us with the IRS when it was told to back off. It's just one step at a time, and which one will lead to effective results rather quickly.

Why this issue? Because all states have the same basic ethics requirement regarding attorneys and organizations; and all states have the same violations by BODs, management firms and attorneys looking the other way.