Ninth Circuit Reverses and Allows Plaintiff to File Third Amended Civil RICO Complaint

Mai Mgoc Bui v. Ton Phi Nguyen, 2017 WL 4653438 (9th Cir. 10/17/17)

The Court reversed and remanded with instructions so that plaintiff Bui would have another opportunity to amend her complaint. The district court found that Bui’s SAC failed to sufficiently allege each element.

First, the Court found that Bui’s SAC sufficiently pleads the existence of such an enterprise. First, Bui alleges that Defendants had a “scheme to plunder millions of dollars from Mrs. Bui,” and that Defendants “accomplished this plunder of Mrs. Bui’s money by means of deliberate, calculated and malicious legal acts, including actual fraud, wire fraud and forgery.” As evidenced by the SAC’s allegations, this scheme required a common purpose to carry out. Second, the SAC pleads a sufficient “structure or organization,” because, although the SAC alleges that Hung Tran (Hung) and Lan Bich Nguyen (Lan) functioned as the primary actors, the corporate entities controlled by others, and the property transactions facilitation by them, formed a cohesive part of the group Bui alleges defrauded her. Finally, the SAC sufficiently alleges longevity necessary to accomplish the enterprise’s purpose, as it alleged that the Nguyen family operated other fraudulent schemes in the past, which interacted with the instant allegation. As such, the district court erred by concluding that Bui had failed to sufficiently plead the existence of an “enterprise.”

Second, a RICO claim must adequately plead at least “two acts of racketeering activity,” which, in this case, are wire and mail fraud. 18 U.S.C. § 1961(5). Bui alleges four wire transfers and one mailing as the necessary predicate acts of wire and mail fraud, but the district court concluded that, at most, only one of the alleged transfers was wire fraud. The Court disagreed finding that three of the alleged transfers sufficiently plead three instances of wire fraud.

The Court further stated that even if the three instances of alleged wire fraud may not provide a sufficient “pattern,” we cannot say that the amendment would be futile and would contradict the Chodos factors at this motion to dismiss stage of the action. There may be additional facts and legal theories that could be incorporated into a Third Amended Complaint which, as required by the Federal Rules, “[t]he court should freely give … when justice so requires.” Fed. R. Civ. P. 15(a)(2).

Ed Note: There are two major takeaways here: (1) the Court will liberally construe amendments of civil RICO complaints; (2) the Court will reverse even if the district court erred on the threshold issue of finding two acts, without necessity to find whether other elements, such as “pattern of racketeering activity” have been adequately alleged.



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