Magistrate Says Dismiss the Case of Inmate Suing CU He Defrauded
A federal judge has recommended that the case of the prison inmate suing a Michigan credit union he defrauded be dismissed because, among other things, it “transcends the frivolous.”
U.S. District Court Judge Robert Bell designated Magistrate Judge Joseph Scoville to handle pretrial motions in the litigation brought by Michael Vorce, an inmate in federal prison who pled guilty to a fraud involving Lake Michigan Credit Union and subsequently sued the credit union “on behalf of its members” alleging they were harmed by the credit union's not detecting and preventing his fraud.
Vorce defrauded the credit union with falsified documents in personal and business loans relating to the purchase of boats.
He did not seek any money for himself but sought to have the $2.8 billion Grand Rapids-based credit union pay damages to its 202,000 members.
Bell designated Scoville to handle the pretrial motions on Feb. 13 and Scoville addressed the case in a report issued on Feb. 20.
In the report, Scoville recommended Bell dismiss Vorce's complaint on the grounds that Vorce lacked standing to have brought the complaint in the first place.
“Plaintiff, the admitted perpetrator of a massive scheme to defraud the Lake Michigan
Credit Union, lacks standing to assert the claims of the members of that credit union who suffered a loss as a result of plaintiff’s criminal conduct,” Scoville wrote in his report.
Further, Scoville wrote, even if Vorce had standing, he would not have the ability to represent the class of credit union members allegedly harmed.
“Consequently, even if plaintiff were deemed to have standing to assert claims on
behalf of the members of the Lake Michigan Credit Union, due process concerns, as embodied in Fed. R. Civ. P. 23, would prevent him from being an appropriate representative of those absent parties. Plaintiff alleges no claim of his own, and his attempt to sue as representative of those he defrauded transcends the frivolous,” Scoville concluded.
Lake Michigan CU issued a statement which praised the decision and decried that the complaint was allowed to be lodged in the first place.
“Lake Michigan Credit Union is very pleased that the court so quickly and clearly saw that the potential lawsuit filed by Michael Vorce is baseless and frivolous,” the credit union said in a statement.
“Michael Vorce is a confessed felon serving a sentence in federal prison for criminal fraud and deceit against a number of local financial institutions, including Lake Michigan Credit Union. Mr. Vorce defrauded these financial institutions of $27 million, of which LMCU lost $3.4 million. Lake Michigan Credit Union was one of his many victims. “It’s also important to note that this is old news. Michael Vorce was arrested for his crimes in 2007 and was sentenced in 2009.”