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GM hit with racketeering charges.

Byline: Rich Steeves

The problems that General Motors (GM) has faced in the wake of revelations about faulty ignition switches have been piling up like, well, crashed cars slamming into each other on a busy highway. GM reportedly first noticed problems with ignition switches in 2001, and customers began complaining about problems in 2003. In the next decade, GM settled lawsuits over crashes that resulted from the switches and, in 2014, the automaker finally began recalling vehicles.

The results have been disastrous. In addition to the fact that up to 90 people were killed as a result of the faulty switches, GM has faced regulatory scrutiny, a rash of lawsuits, reputational distress and a shakeup of their c-suite. Now, the lawsuits hammering GM have taken a decidedly more sinister tone, as plaintiffs have accused the automaker of racketeering.

The lawyers representing the plaintiffs in suits against GM claim that the company conspired with an outside law firm and a claims manager in order to conceal the ignition switch defects. The firm mentioned in this matter is King & Spalding and the claims administrator is ESIS, and the plaintiffs allege that GM colluded with these two entities to hide the truth about the defective switches, which would violate RICO (the Racketeer Influenced and Corrupt Organizations Act).

The plaintiffs made the new filing in a New York federal court on June 13, and the new complaint seeks over $10 billion in this matter, piling allegations of mail and wire fraud on the heap of GM wrongdoing. None of the entities mentioned in the RICO allegations has made a comment on the matter thus far.

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Publication:Inside Counsel Breaking News
Date:Jun 15, 2015
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