Ninth Circuit Reverses District Court Dismissal of RICO Indictment Finding Sufficient “Distinctness” Between RICO “Person” and “Enterprise”

U.S. v. Mongol Nation, 2017 WL 2954615 (9th Cir., July 11, 2017)

The Court ruled that the district court erred in concluding that Mongol Nation (Defendant) and the Mongols Gang (Enterprise) are not sufficiently distinct.
“[T]o establish liability under [RICO] one must allege and prove the existence of two distinct entities: (1) a ‘person’; and (2) an ‘enterprise’ that is not simply the same ‘person’ referred to by a different name.” Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158, 161 (2001).
The indictment charged Mongol Nation, an unincorporated association comprised of “official” or “full-patch” members of the Mongols Gang, as a RICO “person.” The alleged RICO “enterprise,” the Mongols Gang, is comprised of both Mongol Nation, i.e., the Mongols Gang’s official or full-patch members, and various associates. Although a RICO claim might fail on distinctiveness grounds where the “[entity] was the ‘person’ and the [entity], together with all its employees and agents, were the ‘enterprise,’ ” id. at 164 (citing Riverwoods Chappaqua Corp. v. Marine Midland Bank, N.A., 30 F.3d 339, 344 (2d Cir. 1994)), the Court stated that does not describe this case.
Rather, Mongol Nation is a subset of the alleged enterprise, which consists of legally distinct and separate persons in addition to the Defendant. When reviewing whether these entities are distinct, “the only important thing is that [the enterprise] be either formally … or practically … separable from the individual” RICO person. Sever, 978 F.2d at 1534 (brackets in original) (quoting United States v. Benny, 786 F.2d 1410, 1416 (9th Cir. 1986)). That is the case where, as here, the RICO “person” is part of the “enterprise” whole. Moreover, we have previously rejected the argument that “there is no distinction between the officers, agents and employees who operate [a] corporation and the corporation itself,” id. (internal quotation marks omitted), because “a corporate officer can be a person distinct from the corporate enterprise,” Living Designs, Inc. v. E.I. Dupont de Nemours & Co., 431 F.3d 353, 362 (9th Cir. 2005).
Accordingly, because Mongol Nation was alleged to be part of a larger whole, the Mongols Gang, which is comprised of additional individuals who together form the alleged enterprise, the district court erred by dismissing the indictment on distinctiveness grounds.
Ed. Note: This is a strong opinion, consistent with many other RICO case decisions, civil and criminal, finding that the RICO “person” can one of a number of members of the RICO enterprise. See Cullen v. Margiota, 811 F.2d 698, 730 (2d Cir. 1987); Atlas Pile Driving, 886 F.2d 986 (8th Cir.1989) (a collective entity is something more than the members of which is it is comprised). Riverwoods is distinguishable because the enterprise (the corporation and its officers and agents acting in the course of their employment) is practically the same as the RICO person.

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