RICO

In order to invoke RICO in this case, the Plaintiff must allege a violation of at least one violation from the laundry list of “racketeering activities” listed in 18 U.S.C. 1961(1).

Can emails constitute mail or wire fraud, in a RICO Claim?

In, Loop Production v. Capital Connections LLC, 797 F.Supp.2d 338 (S.D.N.Y. 2011), allegations of fraud in emails and internet postings were deemed sufficiently pled for purposes of a RICO claim.

Are the alleged predicate acts of mail and wire fraud pled with sufficient particularity to support a RICO claim?

When pled as RICO predicate acts, mail and wire fraud require a showing of:

  1. a plan or scheme to defraud,
  2. intent to defraud,
  3. reasonable foreseeability that the mail or wires will be used, and
  4. actual use of the mail or wires to further the scheme.

Wisdom v. First Midwest Bank of Poplar Bluff, 167 F.3d 402, 406-7 (8th Circ. 1999); See also Murr Plumbing, Inc. v. Scherer Bros. Fin. Servs. Co., 48 F.3d 1066, 1069 & n. 6 (8th Cir.1995) (noting that a RICO claim does not require proof of misrepresentation of fact).

When a party makes allegations of fraud, “the circumstances constituting the fraud … shall be stated with particularity.”Fed.R.Civ.P. 9(b). FN2 “Civil RICO claims, which are essentially a certain breed of fraud claims, must be pled with an increased level of specificity.” Ambrosia Coal & Const. Co. v. Pages Morales, 482 F.3d 1309, 1316 (11th Cir.2007). “To satisfy the Rule 9(b) standard, RICO complaints must allege:

  1. the precise statements, documents, or misrepresentations made;
  2. the time and place of and person responsible for the statement;
  3. the content and manner in which the statements misled the Plaintiffs; and
  4. what the Defendants gained by the alleged fraud. Id. At 1316–17.

In the plaintiff’s Complaint, the allegations are very precise in time, place and persons responsilbe and the manner in which Plaintiff was misled and what Defendants gained.

Did the Complaint sufficiently plead a “pattern of racketeering activity?

The pattern element “requires at least two acts of racketeering activity.” 18 U.S.C. § 1961(5); see also H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 237-38, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989). However, a mere allegation of two or more acts is insufficient to state a RICO claim; the predicate acts must be related and must “amount to or pose a threat of continued criminal activity.” See United HealthCare Corp. v. American Trade Ins. Co., Ltd., 88 F.3d 563, 571 (8th Cir.1996) (quoting H.J. Inc., 492 U.S. at 239, 109 S.Ct. 2893). The relationship prong of the pattern element is satisfied if the predicate acts ” ‘have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events.’ ” Handeen v. Lemaire, 112 F.3d 1339, 1353 (8th Cir.1997) (quoting H.J. Inc., 492 U.S. at 240, 109 S.Ct. 2893). The second prong, continuity, can be either closed-ended or open-ended. Closed-ended continuity involves “a series of related predicates extending over a substantial period of time;” open-ended continuity involves acts which, by their nature, threaten repetition into the future. See H.J. Inc., 492 U.S. at 241-42, 109 S.Ct. 2893. Multiple predicates within a single scheme are encompassed within the RICO statute as long as the relationship and continuity elements are met. See id. at 237, 109 S.Ct. 2893; Terry A. Lambert Plumbing, Inc. v. Western Sec. Bank, 934 F.2d 976, 981 (8th Cir.1991).

Mail fraud can be a predicate act, but mailings are insufficient to establish the continuity factor unless they contain misrepresentations themselves. Wisdom v. First Midwest Bank of Poplar Bluff, 167 F.3d 402, 406-7 (8th Circ. 1999). The court must look to the underlying scheme to defraud. See Primary Care Investors, Seven, Inc. v, PHP Healthcare Corp., 986 F.2d 1208, 1215 (8th Cir.1993) (refusing to consider a letter containing no indications of fraud as the beginning mail fraud predicate act); Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1414 (3d Cir.) (“[T]he continuity question should not be affected by the fact that a particular fraudulent scheme involved numerous otherwise ‘innocent’ mailings ….”), cert. denied, 501 U.S. 1222, 111 S.Ct. 2839, 115 L.Ed.2d 1007 (1991).

A pattern of racketeering activity requires either a closed-end or open-ended pattern. A closed-end pattern is one which has a definite beginning and ending point. In mail or wire fraud, predicates used to establish a pattern must contribute to the fraudulent scheme. Wisdom v. First Midwest Bank of Poplar Bluff, 167 F.3d 402, 406-7 (8th Circ. 1999). The pattern must have continued for a substantial amount of time, generally longer than a year. Primary Care, 986 F.2d at 1215 (holding that eleven months is insufficient to satisfy the closed-ended continuity requirement and noting that other Circuits consistently hold that schemes less than one year are too short). Note: There is also some 8th Circuit case law where less than 11 months is sufficient.

Has Plaintiff sufficiently alleged the existence of a RICO enterprise?

Some circuits require that a RICO enterprise possess a structure distinct from the pattern of racketeering activities. United States v. Goldin Indus. ., Inc., 219 F.3d 1271, 1274–75 (11th Cir.2000) (noting that the Eleventh Circuit Court of Appeals has rejected other circuits requirements that a RICO enterprise possess a structure distinct from the pattern of racketeering activities). What is the “stringent ‘operation and management test’ for RICO liability? See Dahlgren v. First Nat. Bank of Holdrege,533 F.3d 681, 690 (8th Cir.2008)).

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