Third Circuit Affirms Treble Damages Award to Plaintiffs in Civil RICO Involving Bank Fraud Scheme

Liberty Bell Bank v. Rogers, 2018 WL 834197 (3rd Cir. Feb. 13, 2018)

The Third Circuit affirmed the granting of Appellee Liberty Bell Bank’s motion for summary judgment and the awarding of more than ten million dollars in damages.

In 2013, Liberty Bell Bank (LBB) filed a complaint against Rogers and various entities he owned and controlled (LGR), alleging violations of the federal RICO and the New Jersey RICO act. The complaint alleged that defendants developed a scheme through which they fraudulently obtained loans from LBB, and further defrauded it by making payments on the loans using a check kiting scheme.

The District Court had granted partial summary judgment to LBB on its federal RICO and breach of contract claims, holding that LGR and Rogers were liable for damages in connection with the check kiting scheme, and that these damages were subject to trebling under the federal RICO statute ($10,632,186.57 in damages for the RICO claim, plus attorneys’ fees and costs).

Rogers neglected to file a responsive statement of material facts, and thus the District Court was entitled to deem the statement of facts as admitted, i.e., Rogers unlawfully entered into multiple leases that were assigned to LBB as collateral for loans which did not exist either because the end user cancelled the lease or the equipment was never purchased. Also, Rogers established checking accounts at LBB, Susquehanna, and Roma on behalf of the LGR Entities which enabled Rogers to access funds on deposited checks before the funds were paid by the bank on which they were drawn. On April 11, 2013, Roma Bank, suspicious that defendants were engaged in a check kiting scheme, put a block on the LGR accounts. Despite being notified of the block, Rogers did not alert LBB. The next day, LBB received checks back from Roma that were unpaid. LBB and Susquehanna subsequently put a hold on the LGR Entities’ accounts. It was then discovered that defendants had “utilize[d] funds and replace[d] funds with ultimately uncollectible checks in a circular fashion” among the three banks. In the end, after LBB applied a series of chargebacks, the LGR accounts were overdrawn by over $2 million. Defendants had also overdrawn their accounts at Susquehanna Bank by $2,890,000, and at Roma Bank by $2,100,000.

The Federal RICO Claim

The District Court determined that Rogers and LGR committed the predicate crime of bank fraud, 18 U.S.C. § 1344, which makes it an offense to execute, or attempt to execute, a scheme or artifice (1) to defraud a financial institution or (2) to obtain money from it by false or fraudulent means. The District Court found that, to avoid defaulting on LGR’s bank loans, Rogers executed a check kiting scheme, defrauding LBB, Roma Bank, and Susquehanna Bank out of millions of dollars. A check kiting scheme violates the bank fraud statute.*3. The LGR Entities made more than $120 million of deposits and withdrawals across these bank accounts during the month of March 2013 alone, despite having an approximate average annual revenue of $7 million to $10 million.

Thus, the summary judgment record supports the conclusion that Rogers acted with knowledge and specific intent to use the check kiting scheme to defraud LBB. Therefore, that there is no genuine factual dispute that Rogers’ actions amounted to racketeering activity as Rogers had deposited multiple checks as part of the scheme and thus committed separate violations of the bank fraud statute. The Court thus held that each check deposit in a kiting scheme constituted a separate execution of the scheme to defraud the bank.

The Court also found continuity “is a temporal concept” but the district court made no definitive ruling on this temporal element of the claim, but the record showed the Defendant engaged in an overall scheme that extended from at least 2010 to 2013, a period of time sufficient to satisfy the continuity requirement of RICO. See Tabas v. Tabas, 47 F.3d 1280, 1294 (3d Cir. 1995) (holding scheme lasting over three years is “substantial period of time” for purposes of establishing pattern).

Finally, the Court found LBB sustained financial losses totaling $3,544,062.19 as a direct result of Rogers’ racketeering activity, and thus damages were properly awarded on that claim in the amount of $10,632,186.57 (trebled).

      Ed Note:   This case shows that when the Defendant engages in clear criminal activity, i.e., bank fraud though check-kiting, for a substantial period of time, with multiple victims, the Plaintiff will be able to show a successful civil RICO, and receive treble damages plus attorneys’ fees and costs.



Fraudsters Get a Break- Ninth Circuit Affirms Dismissal of Civil RICO Finding Inadequate “Continuity”

Kan-Di-Ki v. Sorenson, 2018 WL 832865 (9th Cir., Feb. 13, 2018)

The Ninth Circuit affirmed the lower court’s dismissal of federal civil RICO claims.

The Plaintiff (DL) alleged that Defendants John Sorensen and Timothy Paulsen perpetrated a fraud scheme that lasted ten months, from January 2012 to October 2012, when they allegedly defrauded three x-ray and laboratory vendors. The Court stated it has declined to adopt a bright-line rule for how long an alleged scheme must last to establish closed-ended continuity. However, under the circumstances present here, which involved a limited number of participants and a limited number of alleged actual victims, the Court found the alleged scheme was too limited and short in duration to sufficiently establish closed-ended continuity.

Open-Ended Continuity

The Court stated that the district court properly concluded that the amended complaint does not adequately plead open-ended continuity, rejecting the claim that Sorensen and Paulsen’s conduct during 2012 was part of a regular way of doing business, and thus that their conduct stretches into the future with a threat of repetition. The court noted that the three vendors targeted provided the same types of services (x-ray and laboratory services), and all three were targeted in the same time period. The fact that DL does not identify any other vendors targeted during 2012 suggests that this was a one-time scheme that was aimed at cutting costs in those service categories (whether fraudulently or legitimately).

The Court rejected arguments that a spreadsheet prepared with the words “Total so far” permitted the inference that Sorensen and Paulsen were going to begin targeting new categories of vendors. They may merely have intended to seek further credits from the x-ray and laboratory vendors listed on the spreadsheet, whom they had already targeted. Thus, the allegations in the amended complaint are not sufficient to establish open-ended continuity.*1.

The Court also concluded that the amended complaint does not adequately plead post-2012 conduct that would bolster its arguments for closed-ended and open-ended continuity even though there were three internal emails sent in 2013, which the Court stated may simply reflect that Sorensen and Paulsen were lawfully working to negotiate with vendors. DL does not plausibly allege that these emails are more likely to reflect an intent to defraud than an intent to reduce costs through legal means. Nor has DL plausibly alleged that these emails were “incident” to a post-2012 fraud scheme, because there are no well-pled allegations that there was any scheme to defraud vendors after 2012. The amended complaint contains no specific facts about any fraudulent conduct toward any identifiable third parties after 2012. Thus, the post-2012 fraud allegations do not bolster DL’s arguments for closed-ended or open-ended continuity

Even if they were adequately pled, actions that merely shield defendants from liability for a past fraudulent scheme do not extend that scheme unless other circumstances suggest that the scheme is not yet complete. Thus, the post-2012 non-fraud allegations did not bolster DL’s arguments for closed-ended or open-ended continuity.*2.

Ed. Note:  This case shows that courts require specific facts about fraudulent conduct against other victims to show the “regular way of doing business” prong for threat of continuity (open-ended). The last part of the holding suggests that any actions after completion of the scheme to defraud do not extend its time or threat. This leaves open the question of whether “lulling letters” further the threat.

Magistrate Judge Rules Plaintiffs Can File Second Amended Complaint in Civil RICO Action

Church Mutual Ins. Co., Inc. v. Philip Marshall Coutu, et al., 2018 WL 822552 (D. Colo., Feb. 12, 2018)

The Judge granted the Plaintiffs’ motion to file a Second Amended civil RICO Complaint. The events giving rise to Plaintiff’s Complaint involved an appraisal award issued to one of Church Mutual’s policyholders for repairs completed to the policyholder’s roof following a hailstorm. [Id.]. Plaintiff alleged that Defendants conspired to unlawfully inflate the cost of repairs needed for their own economic gains, as each had a stake in a higher appraisal award.
Although Plaintiff had adequately alleged one instance of mail/wire fraud in its earlier pleadings, in this filing Church Mutual identifies six (6) predicate acts of mail or wire fraud (i.e., Defendants employing a similar fraudulent scheme to receive corrupt appraisal awards and damages from subsequent bad-faith lawsuits against other insurers.

The Judge ruled that there was no undue delay or prejudice which could justify the denial of a motion to amend. The Judge addressed “futility” broadly stating ‘A proposed amendment is futile if the complaint, as amended, would be subject to dismissal.’ ” “If a party opposes a motion to amend […] on the grounds of futility, the court applies the same standard to its determination of the motion that governs a motion to dismiss under Fed. R. Civ. P. 12(b)(6).”
Futility- Pattern of Racketeering Activity
In addressing “futility,” the Judge found the SAC alleged a pattern of racketeering activity with particularity to meet Rule 9(b) even as the SAC merely expounded on the six (6)2 bad faith lawsuits identified in the FAC with the filing dates of said lawsuits and “other details about each case” that are public record, all involving other insurers. The Judge stated that rather than listing the additional bad-faith lawsuits as before, the SAC now provided factual allegations regarding the circumstances of such suits and Defendants’ underlying conduct. *6.
The Judge did not agree with Defendants’ arguments that the SAC contained only conclusory allegations of mail or wire fraud, that the SAC does not identify who sent the appraisal demands. The Judge ruled that “deceitful concealment of material facts may constitute actual fraud,” . . . “despite no duty to disclose that information” A perpetrator may be guilty of mail or wire fraud without personally effecting the mailing or wiring if she “does an act with knowledge that the use of mail [or wire] will follow in the ordinary course of business, or where such use can reasonably be foreseen,” though not actually intended.*7. The Judge also explained that “[t]he mailing requirement is interpreted broadly…and the use of the mails need not be an essential element of the scheme….Rather, the charged mailing need only be incident to an essential part of the scheme.” Accordingly, the Judge concluded that the SAC adequately pleaded a pattern of racketeering activity.

Futility- Enterprise

The Judge stated that allegations of two separate legal entities joining together, in addition to several other entities or persons, to conduct racketeering activity can be sufficient to establish an association-in-fact enterprise. The SAC also sufficiently alleged that the enterprise’s purpose was to defraud insurance companies, and details the involvement of each alleged enterprise member in that general scheme, including, but not limited to, searching for potential roofing projects through which Mr. Coutu or his companies and agents would be hired as public adjuster, nominating Mr. Bensusan as the insured’s “impartial appraiser, and then encouraging the insureds to initiate bad-faith lawsuits against the insurers based on the dispute between Mr. Bensusan’s appraisal and the insurers’ appraisals. The SAC also contained sufficient allegations as to the relationship among those associated with the enterprise, and that this conduct occurred over several years. Based on the foregoing, this court concluded that the SAC plausibly alleged an association-in-fact enterprise notwithstanding Defendants’ assertion that Plaintiff “has not alleged with any particularity the ‘organization’ by name or with any specificity regarding its existence.” *8.

Futility- Standing

The Judge stated that for Church Mutual to maintain a viable RICO claim its injuries must be proximately caused by the RICO violation. This may include economic injury or loss, property damage, or adverse business effects, among others. Defendants’ argued that Plaintiff’s allegations of paying an inflated appraisal award and unnecessary litigation fees is too speculative and indirect. Though true that a plaintiff cannot recover for injuries “flowing merely from the misfortunes visited upon a third person by the defendant’s acts,” Plaintiff alleged, because of the fraudulent scheme, it was required to pay an inflated appraisal award and had to incur fees and costs defending against a frivolous lawsuit. These out-of-pocket injuries are sufficient to allege an injury proximately caused by Defendants’ RICO violation. *9.
Other Victims– The Judge also agreed with Plaintiff that the SAC does not seek damages associated with the other bad-faith lawsuits Defendants were associated with but, rather, pleads such lawsuits to establish the necessary pattern of racketeering activity. Thus, this court concludes that the SAC adequately pleaded RICO standing.

Futility- Conspiracy

Although not raised by Defendants, Church Mutual must allege that Defendants “adopt[ed] the goal of furthering or facilitating the criminal endeavor” even if they did not commit or agree to commit two or more predicate acts. See United States v. Randall, 661 F.3d 1291, 1297 (10th Cir. 2011). Based on the SAC’s allegations recounted above, the SAC plausibly pleads RICO and COCCA conspiracy claims as it pleaded the necessary elements for violations of both RICO and COCCA. It also details an intricate relationship between all Defendants—one that Plaintiff alleges was designed to perpetrate a scheme whereby Defendants agreed to conceal material facts in an effort to defraud insurance companies. This court finds such allegations sufficient to state plausible RICO and COCCA conspiracy claims.

Ed Note: There are numerous takeaways here- (1) fraud can be based on concealment even without a preexisting duty; (2) pattern can be show, i.e., threat of continuity by conduct of Defendant to other victims, not only the plaintiff; (3) “several years” is sufficient for longevity in Boyle test; and (4) criminal RICO is used as a basis for determining civil RICO conspiracy, i.e., Randall case. This is a particularly useful case in the 10th Circuit.

David J. Stander is a RICO Attorney who focuses on civil RICO cases.

When Refiling a Civil RICO Claim After Dismissal Without Prejudice, Plaintiff Must Still Refile Within the Applicable Limitations Period

Crowe v. Servin, 2018 WL 555446 (10th Cir., Jan. 25, 2018)

The Tenth Circuit affirmed the lower court’s dismissal of Plaintiff’s second RICO action against the same defendants concluding that Crowe’s claims were time-barred. The district court discussed that statute of limitations for civil RICO claims is four years from either the discovery of the injury or the date the injury occurred. The district court reasoned that Crowe must have discovered her injury no later than May 2011, when she filed her first RICO action against these defendants. So it concluded that the claims in this case—filed more than six years later—fell well outside the four-year statute of limitations.

Crowe, who was imprisoned during that six year time period, argued for equitable tolling. But the district court concluded that she hadn’t shown (1) that she’d been affirmatively misled by the court or (2) that any other grounds for equitable tolling existed. Since Crowe’s challenge to the district court’s decision focused entirely on the equitable-tolling question, the Court reviewed a “district court’s refusal to apply equitable tolling for an abuse of discretion.”

The Court discussed that a litigant seeking equitable tolling must show “(1) that [s]he has been pursuing [her] rights diligently, and (2) that some extraordinary circumstances stood in [her] way.”. A litigant can satisfy the extraordinary-circumstances requirement by demonstrating that a district court affirmatively misled him or her by, for example, providing the litigant with inaccurate instructions. The district court concluded that Crowe’s incarceration didn’t excuse her failure to prosecute.

Nor did the district court direct Crowe to refile at a later time simply by dismissing the case without prejudice. A dismissal without prejudice just means that the plaintiff isn’t barred “from refiling the lawsuit within the applicable limitations period.” Dismissal, Black’s Law Dictionary (10th ed. 2014) (emphasis added). It doesn’t absolve Crowe of the legal requirement of filing within the applicable statute of limitations. Cf. AdvantEdge Bus. Grp. v. Thomas E. Mestmaker & Assocs., Inc., 552 F.3d 1233, 1236 (10th Cir. 2009) (“This court has recognized that a dismissal without prejudice can have the practical effect of a dismissal with prejudice if the statute of limitations has expired.”).

The Court concluded that Crowe hasn’t shown that the district court affirmatively misled her. Nor has she either argued or shown (1) that she has diligently pursued her rights or (2) that other extraordinary circumstances stood in her way. Instead, more than four years elapsed between the date on which the district court dismissed her initial claims and the date on which she filed the instant complaint. And while she was incarcerated for much of that time, there’s nothing extraordinary about litigating from prison; on the contrary, courts routinely process cases brought by prisoners. Thus, the district court didn’t abuse its discretion in refusing to equitably toll the statute of limitations.

Ed Note: Since many civil RICO cases are dismissed without prejudice, the civil RICO plaintiff must be aware the Statute of Limitations continues to run and can bar a subsequent Second Amended Complaint, or subsequent Complaint.


Dismissed Civil RICO with State Court Claims Must Be Without Prejudice To Allow Refiling in State Court

Vibe-Macro v. Shabanets, 878 F.3d 1291 (11th Cir., 2018)

The court held that the district court did not abuse its discretion in dismissing with prejudice federal civil RICO claims in amended complaint on shotgun pleading grounds, but in dismissing amended complaint on shotgun pleading grounds, District Court should have dismissed state law claims without prejudice as to refiling in state court.

The Court held that when all federal claims are dismissed before trial, a district court should typically dismiss the pendant state claims as well. Id., at 1296, citing cases stating “that in the usual case in which all federal-law claims are eliminated before trial, the balance of factors to be considered under the pendant jurisdiction doctrine—judicial economy, convenience, fairness, and comity—will point toward declining to exercise jurisdiction over the remaining state-law claims.”

Although it is possible for the district court to continue to exercise supplemental jurisdiction over these pendant claims, if the district court instead chooses to dismiss the state law claims, it usually should do so without prejudice as to refiling in state court, particularly where, as here, the dismissal occurs without any analysis of the merits of the state claims. Therefore, the Court remanded for the limited purpose of clarifying the order in this respect.

The Court further held that the Plaintiff was not entitled to another chance to replead. The district court sua sponte gave him an opportunity to correct the shotgun pleading issues in his complaint, and provided him with specific instructions on how to properly do so. Therefore, although the Court remanded for the limited purpose of clarifying that the dismissal of the state law claims is without prejudice as to refiling in state court, the Court affirmed on all other issues. Id., at 1297.

Ed Note: This is consistent with the law regarding tolling- the Supreme Court has held that to prevent the limitations period on those claims from expiring while they are pending in federal court, section 1367(d) requires state courts to toll the period while a supplemental claim is pending in federal court and for 30 days after its dismissal unless state law provides for a longer tolling period. Jinks v. Richland County, S.C., 538 U.S. 456 (2003).

David J. Stander is a RICO Attorney who focuses on civil RICO litigation.


SDNY Dismisses Another Civil RICO Action; Finding One Securities Transaction(s) Dooms an Otherwise Sufficiently Pleaded Civil RICO Action Alleging Non-Securities Related Wire and Mail Fraud

Zohar CDO 2003-1, Ltd. v. Patriarch, 2017 WL 6628609, __ F. Supp.3d ___ (SDNY, Dec. 28, 2017)

In the above case, Judge William Pauley III granted the Defendants’ motions to dismiss a civil RICO action for being in violation of the PSLRA Amendment to RICO which bars any civil RICO claim that is actionable as fraud in the purchase or sale of securities. See 18 U.S.C. section 1965(c) (“no person may rely upon any conduct that would have been actionable as fraud in the purchase or sale of securities to establish a violation of section 1962.”)

This dismissal was issued on the same date as Judge Pauley’s dismissal of another civil RICO action, Dotan Newman v. Jewish Agency for Israel, et al., 2017 WL 6628616 (SDNY, Dec. 28, 2017), and follows a long line of dismissals of civil RICO actions in the SDNY where complex civil RICO cases find themselves on the proverbial chopping block. See e.g., Zamora v. JPMorgan Chase, 2015 WL 4653234 (SDNY, July 31, 2015) (J. Pauley). Judge Pauley’s decisions are well-researched, coherent, and detailed, but the dismissal of the subject Zohar case based on a stringent view of the PSLRA Amendment is concerning.

In Zohar, the Plaintiffs asserted a dozen claims against Defendants predicated on a massive racketeering conspiracy involving the illegal investment and mis-management of Zohar’s assets. Defendants exploited their fiduciary status to expropriate Zohar’s equity in its portfolio companies, pay themselves dividends, and deceive Zohar and its investors into paying exorbitant fees by misreporting the value of Zohar’s collateral.

The legal issue is whether the alleged scheme is actionable as fraud in the purchase or sale of securities, and if any one predicate is so barred, the entire claim is foreclosed by the securities fraud bar codified in the RICO statute.

Judge Pauley discussed precedent that if the alleged conduct could form the basis of a securities fraud claim against any party—be it against, or on behalf of, the plaintiff, defendants or a non-party—it may not be fashioned as a civil RICO claim. To best define what constitutes conduct actionable as fraud in the purchase or sale of securities, courts have consulted an obvious source in Section 10(b) of the Securities Exchange Act of 1934, which—while not identical to the language of the RICO Amendment—covers a broad range of securities fraud. Judge Pauley stated that If even “one predicate act alleges breaches of duty coincident with securities transactions then the whole scheme is subject to the [RICO Amendment].”

This pillar is the death knell for Zohar’s claims. Although finding that two of Defendants’ schemes did not coincide with the purchase or sale of securities as they involved fraud which occurred separate and apart from the sale of Zohar’s CLOs, the court found the because the Complaint alleges a single, ongoing fraudulent scheme, all of Defendants’ alleged acts must be considered together. Thus, while two schemes (the OC Test and Monthly Report allegations) escaped the RICO bar, the allegations relating to Defendants’ theft of Zohar’s equity interests and distributions were fatal to the RICO claim as these equity transactions, tendered as common stock, preferred stock, and LLC membership interests, were governed by the federal securities laws.

The purchase of stock was integral to the scheme to defraud since, without it, Defendants would have lacked the position to claim dividends and exercise control over the portfolio companies. *11. The Judge concluded that while certain allegations here may fall into that category of exempted conduct, there was clearly another component to Defendants’ overarching scheme that involved activity forming the basis for an actionable claim under the securities laws. Here, the post-investment looting involved the purchase and sale of securities.
Therefore, the Judge ruled that a single securities transaction that coincides with the fraudulent scheme can be the death knell of a RICO claim, Zohar’s civil RICO claim was dismissed.
Ed Note: This conclusion severely limits civil RICO plaintiff suits when there may exist just one “single securities transaction” coinciding with the fraudulent scheme despite many other instances of mail and wire fraud which themselves do NOT fall within the PSLRA exception. It will be interesting to see how the Second Circuit views this decision (which would assuredly be appealed).

David J. Stander, Esq. is a civil RICO Attorney who regularly maintains his blog for all to follow recent civil RICO court decisions.


District Court Finds Sufficient “Threat of Continuity” From Alleged Predicate Violations of 18 U.S.C. Section 1832 (Trade Secrets Act Violations)

Bartlett v. Bartlett, 2017 WL 5499403 (S.D. Ill., Nov. 17, 2017)

The court granted the motion to dismiss civil RICO claims alleging “Garden-Variety” wire and/or mail fraud, but denied the motion to dismiss the civil RICO claims based on trade secrets violations. in violation of 18 U.S.C. § 1832.

Mail/Wire Fraud
The court stated that courts in this circuit have been hesitant to allow RICO claims predicated on wire and/or mail fraud alone to proceed, when they are mere garden-variety disputes. See McDonald v. Schencker, 18 F.3d 491, 499 (7th Cir. 1994) (referring to a RICO claim predicated on mail fraud as “nothing more than a garden-variety business dispute recast as mail fraud”); Cmty. Ins. Servs., Ltd. v. United Life Ins. Co., No. 05-CV-4105-JPG, 2006 WL 2038652, at *5 (S.D. Ill. Mar. 24, 2006) (dismissing a RICO action predicated on wire and mail fraud as a “garden-variety fraud case concerning what is best described as a business dispute”); Faith Constr. 4, Inc. v. Girouard, No. 14 CV 2886, 2014 WL 6679118, at *3 (N.D. Ill. Nov. 21, 2014) (dismissing a RICO action that was predicated on mail fraud because the act of mailing was too remote to be the proximate cause of a RICO injury); Wankel v. S. Illinois Bancorp, Inc., No. 06-cv-0619-MJR, 2007 WL 2410328, at *10 (S.D. Ill. Aug. 21, 2007) (“it seems that Plaintiffs’ cause of action constitutes precisely what the Supreme Court and Seventh Circuit courts hope to forestall: ‘RICO’s use against isolated or sporadic criminal activity [such that] RICO [becomes] a surrogate for garden-variety fraud actions properly brought under state law’ ”).

Trade Secrets
Section 1832 was recently added as a predicate offense and it is based on theft of trade secrets, a serious federal offense. The court found that at this stage in the proceedings, the plaintiff has adequately pled that the defendants engaged in theft of trade secrets. The complaint also repeatedly asserts that the defendants intended to convert the trade secrets for their own personal gain and to the detriment of Plaintiff (Mark) and this was enough to satisfy the Twombly pleading standards.

The issue therefore involved whether the plaintiff met the continuity requirement in order to state a valid “pattern of racketeering activity” under RICO. Although only one scheme was involved, the court found that, assuming the plaintiffs allegations were true, the plaintiff adequately pleaded an open-ended scheme predicated on theft of trade secrets as plaintiff has alleged past conduct that “by its nature projects into the future with a [specific] threat of repetition” that satisfies the Twombly pleading standards.

Proximate Cause

The court stated that if the theft of trade secrets allegations are true, the diversion of financial and business data from American and B&B to Quick Cash would directly harm Plaintiff Mark’s financial interests in his holdings. Accordingly, the proximate cause standard was found met.

Ed Note:  The court’s opinion further places nails in the coffins for finding “garden-variety fraud” allegations to be successfully alleged under civil RICO.  Courts focus on the nature of the violation and when more serious criminal-like crimes are alleged, such as extortion, bribery, Trade Secrets Act violations, the courts can find the continuity from the “nature itself of the racketeering activity.”

In a fraud case only, the saving grace would appear to be to find facts to support that this was the “defendant’s regular way of doing business.”  This could include finding other victims which would infer that the activity is not short-term limited, but carries with it the threat of continued activity.

David J. Stander is a civil RICO Attorney who focuses on civil RICO consulting and litigation.