Court Finds State and Federal RICO Claims Sufficient to Support Default Judgment and Grant Summary Judgment

Sunbelt Rentals Inc. v. Second Life Equipment, LLC, 2022 WL 1446676 (W.D. Carolina, May 6, 2022)

The Court found the default judgment sufficient to support summary judgment under the North Carolina civil RICO statute and the federal civil RICO statute. 

The North Carolina RICO claim

To state a claim under the North Carolina Racketeer  Influenced and Corrupt Organizations Act a plaintiff must allege (1) an injury or damage to his business or property (2) that resulted from two or more acts of organized unlawful activity or conduct, (3) one of which is something other than mail fraud, wire fraud, or fraud in the sale of securities, (4) that resulted in a pecuniary gain to the defendant. See In re Bostic Const., Inc., 2010, 435 B.R. 46 (Bankr. M.D.N.C. 2010)N.C. Gen. Stat. § 75D-4(a)(1).

Sunbelt lost $4,044,475 when Second Life and the Guzmans illegally sold their assets. This loss resulted from Second Life, with the Guzmans, engaging in a pattern of racketeering activity. This pattern of racketeering activity included an act besides mail, wire, or securities fraud – money laundering. This pattern sought to acquire Sunbelt’s property and to sell it at auction for pecuniary gain, which was then transferred into Second Life’s bank account. Thus, summary judgment was granted to Sunbelt on its North Carolina RICO claim.

Federal RICO claim

The Racketeer Influenced and Corrupt Organizations Act “creates civil liability for those who engage in a pattern of racketeering activity.” GE Inv. Priv. Placement Partners II v. Parker, 247 F.3d 543, 548 (4th Cir. 2011) (citing 18 U.S.C. §§ 19621964). 18 U.S.C. § 1964 creates a cause of action for “[a]ny person injured in his business or property by reason of a violation of 18 U.S.C. § 1962.  The court found that undisputedly Second Life committed the required predicate acts, wire fraud and money laundering. These acts are among the predicate acts forbidden under RICO, and Second Life has already admitted to being a direct participant with the Guzmans in both acts. Finally, the loss of $4,044,475 is a measurable injury to Sunbelt and stemmed from this pattern of racketeering activity. As a result, Sunbelt was granted summary judgment on its federal RICO claim against Second Life.

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