Second Circuit Rules Liability for Only RICO conspiracy Not Inconsistent

Ruocco v. Hemmerdinger Corporation, 2017 WL 4387184 (2d Cir., Oct. 10, 2017)

The Court affirmed the denial of Defendants Ruocco and Tomicic’s post-trial motions for judgment as a matter of law or a new trial after a jury had found the Defendants liable under RICO conspiracy.

Hemmerdinger sued the Defendants for state law fraud (“Claim One”), a substantive claim under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962(c) (“Claim Two”), and a claim for conspiracy to violate RICO, § 1962(d) (“Claim Three”). The jury found Tomicic and McCambridge liable for fraud (Claim One), and concluded that Ruocco, ETI, Tomicic, and Recycle Technology had participated in a RICO conspiracy (Claim Three), but NOT Claim Two. The court entered judgment on June 6, 2016. Ruocco, ETI, and Tomicic then filed post-trial motions for judgment as a matter of law and a new trial. When these motions were denied, Ruocco and Tomicic filed a timely notice of appeal.

On appeal, Ruocco and Tomicic argued that the jury verdict was inconsistent, and that the district court’s jury instruction as to the RICO conspiracy claim (Claim Three) was flawed because the jury did not find on Claim Two (1962(c)) that a civil enterprise existed among the defendants. The jury had found there was an agreement among two or more persons to participate in an enterprise that would affect interstate commerce through a pattern of racketeering activity and thus had found liability as to Claim Three (RICO conspiracy).

Defendants also asserted that a jury may not find defendants liable for a RICO conspiracy after it has expressly found that a RICO “enterprise” does not exist. Ruocco and Tomicic argued, in addition, that a RICO conspiracy claim cannot succeed unless at least one defendant is found liable for a substantive RICO offense, so finding liability for Claim Three (§ 1962(d), RICO conspiracy) but not Claim Two (§ 1962(c), a substantive RICO offense) is inconsistent. This claim was rejected.

The trial judge had answered a question during deliberations in the affirmative that

“are claim two and claim three independent of each other as in the defendants can be found guilty of claim three, irrespective of the outcome of claim two?”

Even Ruocco’s attorney had agreed that the answer was yes, and no other party objected.

Ruocco and Tomicic both acknowledged that the instruction to which they object is taken from Leonard B. Sand, et al., Modern Federal Jury Instructions, CIVIL, # 84–35 (Lexis 2016), and that they did not raise this challenge either during the district court’s charge conference or in their post-trial motions.

Thus, the court found the district court did not err in setting aside the verdict as
inconsistent, and that “endorsement [of a jury charge] might well be deemed a true waiver, negating even plain error review.” The Court did not find the verdict to be inconsistent, and Defendants/Appellants’ second attack on the consistency of the jury verdict was waived.

The Court stated that it has held that when, as here, a trial court based jury instructions on pattern jury instructions that reflect current law, there is no plain error. The Modern Federal Jury Instructions supplied the very language that Ruocco and Tomicic now object to, and they have not cited any authority that plainly shows the Modern Federal Jury Instructions were incorrect.

Ed Note: This case importantly stands for the proposition, even without considering waiver by Defendants/Appellants that a defendant can be found liable under RICO conspiracy irrespective of the outcome of substantive RICO claim.

 

 

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Second Circuit States Position Regarding Legal Entity RICO Persons and “Distinctness;” Reaffirms Kushner when RICO Person/Defendant is An Individual

U1it4less, Inc. v. Fedex Corporation, ___ F.3d ___, 2017 WL 4103869 (Sept. 18, 2017)

In this important case, the Second Circuit affirmed the lower court’s granting of Defendant FedEx’s summary judgment motion which dismissed the Plaintiff U1it4less (BikerGear) substantive RICO claims because BikerGear failed to adduce evidence that FedEx Corp. and FedEx Services, corporate entities, the alleged RICO “persons,” are distinct from FedEx Ground, the alleged RICO “enterprise.”
BikerGear, an internet retailer of motorcycle gear, accused FedEx Corporation and its subsidiaries FedEx Corporate Services, Inc. and FedEx Ground Package System, Inc. of fraudulently marking up the weights of packages shipped by BikerGear and overcharging BikerGear for Canadian customs.
District Court
Judge Forrest held that the mere fact of separate incorporation was not enough to satisfy the requirement that the RICO “person” and “enterprise” be distinct. In addition, Judge Forrest concluded that BikerGear’s RICO claims required a showing that the separate incorporation of FedEx Ground facilitated the racketeering enterprise allegedly run by FedEx Corp. and FedEx Services. Because the evidence showed only that BikerGear “interacted with FedEx Ground and FedEx Services precisely as it would have had those sister subsidiaries in fact been divisions of a single FedEx corporation,” Judge Forrest concluded that there was “no genuine question as to whether FedEx Corp. and FedEx Services are distinct from FedEx Ground for purposes of the RICO claims.”
Second Circuit Analysis of Distinctness
Though Congress initially enacted the RICO statute to target organized crime, the Supreme Court in Cedric Kushner, 533 U.S. at 164, has since identified the statute’s basic purposes as “both protect[ing] a legitimate ‘enterprise’ from those who would use unlawful acts to victimize it and also protect[ing] the public from those who would unlawfully use an ‘enterprise’ (whether legitimate or illegitimate) as a vehicle through which unlawful activity is committed.” Id., at *4 (emphasis added). (the “victim” and “vehicle” criterions). Note: Usually, this means that a legal entity is the enterprise which is victimized, and the association in fact which is used as the vehicle.

BikerGear argued that the mere fact of separate legal incorporation satisfies the distinctness requirement under Section 1962(c). The court disagreed stating that because “a corporate person cannot violate the statute by corrupting itself,” Cruz v. FXDirectDealer, LLC, 720 F.3d 115, 120 (2d Cir. 2013) (citing Bennett, 770 F.2d at 315), so “if a corporate defendant can be liable for participating in an enterprise comprised only of its agents—even if those agents are separately incorporated legal entities—then RICO liability will attach to any act of corporate wrong-doing and the statute’s distinctness requirement will be rendered meaningless.” Id., at *5, citing to In re ClassicStar Mare Lease Litig., 727 F.3d 473, 492 (6th Cir. 2013) (citing Riverwoods Chappaqua Corp. v. Marine Midland Bank, N.A., 30 F.3d 339, 344 (2d Cir. 1994)).

Accordingly, a plaintiff [corporate entity] may not circumvent the distinctness requirement “by alleging a RICO enterprise that consists merely of a corporate defendant associated with its own employees or agents carrying on the regular affairs of the defendant,” Riverwoods, 30 F.3d at 344—that consists, in other words, of a corporate defendant “corrupting itself,” Cruz, 720 F.3d at 120.

The Second Circuit noted that the principle in Discon and Cruz has its limits and “does not foreclose the possibility of a corporate entity being held liable … where it associates with others to form an enterprise that is sufficiently distinct from itself.” Riverwoods, 30 F.3d at 344; Securitron Magnalock Corp. v. Schnabolk, 65 F.3d 256, 263–64 (2d Cir. 1995). Thus, among other things, because BikerGear presented no evidence showing that any FedEx entity operated outside of a unified corporate structure guided by a single corporate consciousness. See Cruz, 720 F.3d at 121.

BikerGear’s argument that Discon and Cruz are distinguished because the alleged RICO enterprises in those cases were associations-in-fact comprised of all the defendant corporations combined, while the alleged enterprise here is a discrete subsidiary was viewed as “immaterial.”

Cedric Kushner

This Supreme Court case was distinguished as the Second Circuit stated that in Cedric Kushner the Supreme Court emphasized that its holding was limited to the circumstances in which “a corporate employee unlawfully conducts the affairs of the corporation of which he is the sole owner—whether he conducts those affairs within the scope, or beyond the scope, of corporate authority.” Id. at 166, 121 S.Ct. 2087. As for both corporate employees and corporate entities, the Supreme Court suggested, Congress had in mind the “protect[ion of] the public from those who would run organizations in a manner detrimental to the public interest.” Id. at 165, 121 S.Ct. 2087 (quotation marks omitted).

The Second Circuit stated that the Court in Kushner described its earlier decisions relating to the distinctness issue (for example, Discon) as “significantly different”—a strong signal that it was not addressing cases in which, as here in BikerGear, a corporate person conducts the affairs of an enterprise consisting only of corporate members of its wholly-owned corporate family. Id. at 164, 121 S.Ct. 2087; see also Ray v. Spirit Airlines, Inc., 836 F.3d 1340, 1356 (11th Cir. 2016); ClassicStar Mare, 727 F.3d at 492.

Finally, the Second Circuit noted that in analogous contexts the majority of its sister circuits appear to agree that the fact of separate incorporation alone fails to satisfy RICO’s distinctness requirement. Id.,at *7 , citing cases.

Ed Note:   David J. Stander is an Attorney who focuses his practice on civil RICO. It is important to note that the holding only addressed RICO persons who are “corporate entities,” while the court distinguished the holding of Kushner in which the Supreme Court emphasized that its holding was limited to the circumstances in which “a corporate employee unlawfully conducts the affairs of the corporation of which he is the sole owner—whether he conducts those affairs within the scope, or beyond the scope, of corporate authority.” Id. at 166, 121 S.Ct. 2087. Clearly, such a “corporate employee” who operates his P.C. through fraud is running the “an organization in a manner detrimental to the public interest.”

 

District Court Ignores Supreme Court in Boyle Dismissing a Civil RICO Complaint

Illinois Farmers Ins. Co. v. Guthman et al., 2017 WL 3971867 (D. Minn. 9/7/17)

The court dismissed the Plaintiff’s civil RICO claims finding that the alleged association in fact enterprise was not “separate and apart” or distinct from the pattern of racketeering activity.  Here, plaintiffs allege that Defendants Guthman, Steiner, their clinics, and the runners violated RICO by associating with each other to achieve the purpose of billing and receiving improper no-fault benefit payments.

In relying on, principally, case law prior to the Supreme Court’s 2009 decision in Boyle v. United States, 556 U.S. 939 (2009), the court completely misconstrued the law regarding “separateness.” The court cites to case law which in part is correct that the enterprise is a separate element which must be proved. But, incorrectly, the court relies on pre-Boyle law citing to Stephens, Inc. v. Geldermann, Inc., 962 F.2d 808, 815–16 (8th Cir. 1992) (holding that plaintiff failed to prove the existence of an enterprise under RICO because “[t]he only common factor that linked all these parties together and defined them as a distinct group was their direct or indirect participation in [the] scheme to defraud [plaintiff].”)

Boyle overruled existing Eighth Circuit cases and specifically held that the existence of an enterprise may be inferred from the evidence showing that persons associated with the enterprise engaged in a pattern of racketeering. As a basis for the decision, the Boyle court referenced the Court’s decision in Turkette that the evidence proving racketeering activity and evidence establishing an enterprise, “may in particular cases coalesce.” Id., at 947. The proof to assert an enterprise must merely show the “three structural features,” a purpose; relationships, and longevity. Id., at 945.

For this court to ignore Boyle is mind-blowing. The Plaintiffs correctly argued that the enterprise independently exists without the fraudulent acts because the clinics are otherwise legitimate is also a strong argument of “separate and apart,” and which is evidence of the “three structural features.”  The courts continued reliance on the 1992 decision in Stephens is just wrong, and completely contrary to the liberal construction of RICO espoused by the Supreme Court in Boyle and other cases. Boyle itself was a group of four or five bank robbers who associated together to commit predicate crimes; nothing else. For the Supreme Court to find this an enterprise shows the liberal breadth.  In fact, the Court in Boyle summed up in the conclusion, that

“the point we made in Turkette that proof of a pattern of racketeering may be sufficient in a particular case to permit a jury to infer the existence of an association in fact enterprise.”

Id., at 951.

 

 

First Circuit Reverses RICO and RICO Conspiracy Convictions- Sets Forth RICO Conspiracy Analysis

United States v. Burhoe, __ F.3d ___, 2017 WL 3047056 (1st Cir., Sept. 8, 2017)

The Court reversed Hobbs Act and RICO convictions in a case which involves union members/defendants who allegedly extorted property from nonunion companies when they threatened to take certain actions, including picketing, if those companies did not give union members jobs. The government further obtained convictions under the Hobbs Act and RICO that the defendants extorted wages, benefits, and rights to democratic participation within the union from their fellow union members.
The court vacated the conviction for extortion of a nonunion company on count 4 and remanded for a new trial because the jury instructions allowed the jury to convict upon a finding that the work performed was merely unwanted, and on all other counts, the court reversed the convictions.

The court underwent a detailed analysis to find that the defendants did not commit or conspire to commit the Hobbs Act violations. As a result, it failed to find that Count 1, which alleged racketeering and count 2, which alleged racketeering conspiracy were proven. The government contended that Local 82 itself was a racketeering enterprise. Because the court reversed all but one of the extortion count convictions, the court was left with at most one racketeering act by defendant Burhoe. Because the government was required to prove a “pattern of racketeering activity,” which has been defined as requiring at least two predicates, it found insufficient evidence to support Burhoe’s and Perry’s convictions on count 1.

Regarding the conspiracy conviction, the court found insufficient evidence to meet the government’s burden.   The court stated that-
“While it is unnecessary to prove that the defendants committed two predicate offenses in order to prove a racketeering conspiracy, the government does have to prove that the defendants “agreed with one or more others that two predicate offenses be committed.” Id. at 1562.   Because we find that only one of the predicate acts might constitute extortion, we find that the government provided insufficient evidence that the defendants agreed to engage in a pattern of racketeering activity. We therefore reverse Burhoe and Perry’s convictions on count 2.”
Id. at *22.

Editor Analysis – The court is correct that the government does not have to prove that the defendants committed two predicate offenses in order to prove a racketeering conspiracy. The Court’s statement that “the government does have to prove that the defendants “agreed with one or more others that two predicate offenses be committed’” is also correct under a Salinas analysis. However, the application is puzzling. Is the Court saying that the proof of a RICO conspiracy when defendants “agreed with one or more others that two predicate offenses be committed’” is nullified when the actual commission of the offense (here, Hobbs Act) is legally impossible? Doesn’t this focus the onus on the actual commission of the predicate offense when the “agreement” that a conspirator would commit a violation of RICO is sufficient proof for RICO conspiracy?

Under this analysis, practitioners must be able to prove that the object predicate offenses which defendants agreed conspirators would commit are in fact actual predicate offenses. In civil RICO, but not criminal RICO, this is somewhat consistent with Beck v. Prupis, in which the commission of at least object predicate offense which causes an injury is required to prove RICO conspiracy.

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

 

Court Addresses When “Litigation Expenses” Constitutes RICO Injury

Sasmor v. Meisels, __ Fed. Appx. ___, 2017 WL 395768 (2d Cir., Sept. 8, 2017)

The Second Circuit affirmed the District Court’s grant of summary judgment concluding that Sasmor’s civil RICO claims failed because he failed to demonstrate that he suffered a cognizable RICO injury.

Sasmor contended that he suffered two RICO injuries: first, he asserted that he made a rental payment in May 2010 because of Defendants’ acts of wire fraud, mail fraud, and extortion; second, he asserts that he incurred litigation expenses during the eviction proceedings that Defendants pursued against him, and that those proceedings (and thus, the related expenses) resulted from Defendants’ acts of mail fraud and extortion.

Regarding the first alleged injury, Sasmor argued that his rental payment in May 2010 was an injury caused by a RICO violation when he “would not have moved in or paid any money” if Defendants had not misrepresented that his room was “legitimate, legal housing”—a misrepresentation that Sasmor argues constitutes “wire fraud.” But, Sasmor did not present any evidence suggesting that he would have paid lower rent, however, had Defendants not misrepresented the legal status of the room and, as a result, he had chosen to live elsewhere.

Regarding the second injury, similarly, the court found the record did not support the existence of a causal link between any alleged RICO predicate act and Sasmor’s litigation expenses. He argues that the eviction proceedings against him in state court constituted mail fraud and extortion, pointing primarily to the success of his technical defense during those proceedings. But, Sasmor did not present evidence sufficient to transform Defendants’ assertion of a losing legal position in state court into mail fraud or extortion. These “misrepresentations” during the eviction proceedings are no more than litigation positions taken on legal questions. Thus, the record did not support an inference that Defendants’ design was to defraud Sasmor by taking incorrect legal positions during eviction proceedings pursued by them when he refused to pay rent or vacate the premises.

Nor did Sasmor present evidence sufficient to establish that the very act of pursuing the eviction proceedings amounted to extortion stating improperly brought litigation without more, however, does not constitute the kind of “wrongful use of force” required for the offense of extortion. See, e.g., Deck v. Engineered Laminates, 349 F.3d 1253, 1257–58 (10th Cir. 2003) (“[M]eritless litigation is not extortion under § 1951.”) (collecting cases holding same). Accordingly, Sasmor did not incur these litigation expenses as a result of a RICO violation and in this respect, too, Sasmor has not shown that he suffered a RICO injury.

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

Seventh Circuit Addresses Association in Fact Enterprise Consisting of Defendant and Legal Defense Team

Sabrina Roppo v. Travelers Commercial Ins. Co., __ F.3d __, 2017 WL 3695205 (7th Cir., Aug. 28, 2017)

For various reasons, the court affirmed the district court’s dismissal of this civil RICO claim. However, in dicta, the Seventh Circuit followed the Ninth Circuit and made an important statement regarding the feasibility of an association-in-fact enterprise comprised of the Defendant and its legal defense team. This could be an important way to find “distinctness,” although the Boyle and Turkette tests would still have to be satisfied.

In this case, the Plaintiff failed to connect the legal dots between Travelers (the Defendant) and the association in fact enterprise consisting of Travelers and its outside counsel. But, the Seventh Circuit stated that:

the possibility that those players, together, could form a RICO enterprise is not without support in case law. One of our sister circuits has recognized that a corporation and its outside counsel can constitute an enterprise under RICO. See Living Designs, Inc. v. E.I. Dupont de Nemours & Co., 431 F.3d 353, 362 (9th Cir. 2005) (observing that “[j]ust as a corporate officer can be a person distinct from the corporate enterprise, DuPont is separate from its legal defense team” and holding, therefore, that “the district court erred in concluding that Plaintiffs failed to allege a distinct RICO enterprise”). Moreover, the Supreme Court recently clarified what is required to show an “association-in-fact” enterprise: “a purpose, relationships among those associated with the enterprise, and longevity sufficient to permit these associates to pursue the enterprise’s purpose.” Boyle v. United States, 556 U.S. 938, 946, 129 S.Ct. 2237, 173 L.Ed.2d 1265 (2009). Nothing in these requirements forecloses a RICO enterprise comprised of a corporation and its outside counsel.

Id., at *12, emphasis added.

The court thus could not conclude that Plaintiff’s allegations of a RICO enterprise, although lacking in detail, were wholly insubstantial or frivolous.

Ed Note:    This is the first post-Boyle decision addressing whether a legal defense team can be part of the association in fact enterprise. This decision that attorneys who are merely representing the Defendant can be part of the enterprise appears to be contrary to established law on distinctness in which the attorneys are functionally no different than corporate employees acting on behalf of the employer within the scope of their duties. But, those who function with Defendants to commit fraud, could fit in as part of an enterprise which would be distinct of the corporate employer or an association in fact enterprise consisting of the corporation and the attorneys. Of course, the facts and circumstances of each case need to be examined.
David J. Stander is a civil RICO Attorney who focuses his practice on civil RICO litigation and consulting.

 

Plaintiff’s RICO Claims Alleging Wire Fraud Apply Extraterritorially as Two-Part Test Was Satisfied [Corrected Copy]

Drummond Company Inc. v. Collingsworth, 2017 WL 3268907 (N.D. Ala., Aug. 1, 2017)

The court denied the Defendants’ motions to dismiss the civil RICO claims and found sufficient personal jurisdiction over the Defendants Van Bilderbeek and Ramirez. Also, in a case of first impression in the Eleventh Circuit, the court ruled that the wire fraud statute has extraterritorial reach provided there is domestic injury.
Personal jurisdiction Found Over Non-Resident Defendants
The court first stated that Plaintiff has alleged that defendant van Bilderbeek, a Dutch non-resident perpetrated intentional, tortious and/or criminal acts that were intended to cause, and actually caused, injury in Alabama. Plaintiff has alleged, and cited to evidence of, intentional acts by van Bilderbeek directed at Plaintiff, an Alabama resident. Where intentional acts are at issue, “ ‘the defendant may be held to have expected its conduct to have an effect in that state, and further to have expected that the victim will bring suit for redress there.’ ”
Van Bilderbeek is alleged to have intentionally paid witnesses for their testimony in a case that was being litigated in Alabama and it is further alleged he intended to cause harm to an Alabama business and this court (each located in Alabama). Licciardello, 544 F.3d at 1286; see also Calder, 465 U.S. at 791 (“jurisdiction over petitioners in California is proper because of their intentional conduct in Florida calculated to cause injury to respondent in California”).
The court ruled that because Plaintiff has established the relatedness and purposeful availment prongs of the specific jurisdiction inquiry, the burden shifts to van Bilderbeek to present a “compelling case” that the exercise of personal jurisdiction over him in Alabama would be unreasonable. The court concluded that van Bilderbeek’s argument failed to acknowledge that Plaintiff has alleged that his activities were “purposefully directed” at an Alabama resident and allegedly caused injuries to a resident in this forum. Therefore, van Bilderbeek had “fair warning” that his activities could subject him to jurisdiction in Alabama.
There was also personal jurisdiction over non-resident Ramirez as “‘[u]nder the “effects test,” even a nonresident defendant’s single tortious act can establish purposeful availment, without regard to whether the defendant had any other contacts with the forum’ if the intentional conduct has a direct impact on [an Alabama] resident.”. Ramirez is alleged to have been involved in more than one tortious act directed at an Alabama resident and causing damage there.

The court denied the Defendants’ motions to dismiss the civil RICO claims and found sufficient personal jurisdiction over the Defendants Van Bilderbeek and Ramirez. Also, in a case of first impression in the Eleventh Circuit, the court ruled that the wire fraud statute has extraterritorial reach provided there is domestic injury.
injuries to a resident in this forum. Therefore, van Bilderbeek had “fair warning” that his activities could subject him to jurisdiction in Alabama.
There was also personal jurisdiction over non-resident Ramirez as “‘[u]nder the “effects test,” even a nonresident defendant’s single tortious act can establish purposeful availment, without regard to whether the defendant had any other contacts with the forum’ if the intentional conduct has a direct impact on [an Alabama] resident.”. Ramirez is alleged to have been involved in more than one tortious act directed at an Alabama resident and causing damage there.
Plaintiff’s RICO Claims Alleging Wire Fraud Apply Extraterritorially

Van Bilderbeek argued that Plaintiff’s RICO claims should be dismissed because RICO does not apply extraterritorially. In RJR Nabisco, Inc. v. European Community, 136 S.Ct. 2090, 2102 (2016), the Supreme Court determined that, because some RICO predicates “plainly apply to at least some foreign conduct,” Section 1962 was intended to apply and, so long as a private RICO plaintiff alleges and proves a domestic injury to its business or property, does apply to racketeering conduct abroad “to the extent that the predicates alleged in the particular case themselves apply extraterritorially.” RJR Nabisco, Inc., 136 S.Ct. at 2102, 2106. The Court concluded that “[t]his unique structure makes RICO the rare statute that clearly evidences extraterritorial effect despite lacking an express statement of extraterritoriality.” Id. at 2103. That is, “the domestic and extraterritorial reach of the RICO statute is coterminous with that of the underlying predicate offenses in a given case.” United States v. Hawit, 2017 WL 663542, at *10 (E.D.N.Y. Feb. 17, 2017).

The Complaint alleges that van Bilderbeek paid Blanco on at least three separate occasions for his testimony and participation in cases filed in Alabama. Based on those allegations, it further asserts that “the Enterprise’s conduct with respect to Blanco violates 18 U.S.C. § 1343 (wire fraud), 18 U.S.C. § 201 (witness bribery), 18 U.S.C. § 1956(a)(2)(A) (money laundering), 18 U.S.C. § 1503 (obstruction of justice), and 18 U.S.C. § 1512 (witness tampering).” The Complaint further alleges that the “adverse effects” of van Bilderbeek’s witness bribery, witness tampering, money laundering, obstruction of justice and wire fraud were felt by Plaintiff here in Alabama, and thus asserted a domestic injury. Therefore, RICO may apply extraterritorially, depending on the underlying predicate offense.

The court ruled that all of the predicate offenses for Plaintiff’s RICO claims have extraterritorial application. “Congress expressly provided for extraterritorial application of jurisdiction in the obstruction of justice statute.” The money laundering statute also specifically provides for extraterritorial application where the alleged conduct is by a United States citizen. 18 U.S.C. § 1956(f) (“There is extraterritorial jurisdiction over the conduct prohibited by this section if—(1) the conduct is by a United States citizen.”). The Complaint alleges that van Bilderbeek is a United States citizen. Although his affidavit addresses his residence, it does not contradict the allegation regarding his citizenship. There is also authority for the proposition that the witness bribery statute (section 201) applies extraterritorially.

The key question is the extraterritorial application of the wire fraud statute,
While the Second Circuit has held that 18 U.S.C. § 1343 does not have extraterritorial application, European Cmty. v. RJR Nabisco, Inc.(RJR Nabsico, Inc. 2d Cir.), 764 F.3d 129, 140–41 (2d Cir. 2014) (finding the wire fraud statute does not overcome the presumption against extraterritoriality), rev’d on other grounds, RJR Nabisco, Inc., ––– U.S. ––––, 136 S.Ct. 2090, 195 L.Ed.2d 476, other courts have held to the contrary. Here, the First and Third Circuits, in recent year 2014 and 2015 decisions state “the wire fraud statute punishes frauds executed in ‘interstate or foreign commerce,’ ” and therefore can be applied extraterritorially because Congress did not have “only ‘domestic concerns in mind.’ ”) (quoting Pasquantino v. United States, 544 U.S. 349, 371–72 (2005), in turn quoting 18 U.S.C. § 1343).
The Eleventh Circuit has not ruled on this issue, but based on the case authority the court concluded that the First and Third Circuits have the better side of the debate. Therefore, van Bilderbeek’s argument that Plaintiff’s RICO claim fails due to its extraterritorial application is without merit.
Accordingly, based on the above, and finding that Plaintiff’s RICO claims are not conclusory and sufficiently pled, the RICO defendants’ motions to dismiss the civil RICO claims were denied.

Ed Note: Two subsequent SDNY decisions have followed this decision, i.e., Dandong Old North East, and Drummond Company, each of which involved fraud and money laundering cases but only addressed the “domestic injury” argument. Thus, given the Second Circuit decision on wire fraud not having extraterritorial effect may no longer be valid given the S.Court decision, it appears the two-part test of (1) domestic injury and (2) whether Congress expressly provided for extraterritorial application of the predicate offense need to be met.