A federal judge in Idaho ruled that Credit Suisse can be sued by property owners over loans the international banking giant made to luxury resorts that went broke. The judge also dismissed a racketeering claim against Credit Suisse in the multibillion-dollar case.
The ruling Thursday by Judge Edward Lodge in Boise, Idaho, means plaintiffs would not be eligible for triple damages as allowed in civil racketeering lawsuits. Lodge allowed the plaintiffs to proceed on claims for $8 billion in alleged damages.
The lawsuit claims Credit Suisse set up an offshore branch to skirt U.S. rules, appraise resorts at inflated prices, provide loans the properties could not repay then ultimately foreclose on the resorts.
The properties included Idaho's Tamarack Resort, Montana's Yellowstone Club, Nevada's Lake Las Vegas resort and the Ginn Sur Mer Resort in the Bahamas.
Attorneys for the plaintiffs issued a statement in response to Lodge's ruling, saying the actions by Credit Suisse were an example of the greed that drove the country into the recession.
"We're looking forward to hearing how these folks explain their behavior," said John Flood, a Houston attorney for the plaintiffs.
Credit Suisse spokesman Duncan King pointed out that the judge dismissed more than half the claims against the firm, including allegations of fraud, negligence and the RICO claim.
Counts of conspiracy, interference and breach of fiduciary duty were not dismissed, although Lodge said the breach of fiduciary duty claim "barely survives."
"We remain confident that those (counts) that remain are without merit and intend to vigorously defend them," King said.