A RICO claim requires "racketeering activity (known as predicate acts)." Eller v. EquiTrust Life Insurance Company, (9th Cir. 2015).
[I]n 1970 Congress enacted Racketeer Influenced and Corrupt Organizations Act, which created both criminal and civil liability for "racketeering activity" connected to interstate commerce. 18 U.S.C. § 1962. Section 1961(1) of RICO defines racketeering activity to include acts indictable as mail fraud, id. § 1341, and wire fraud, id. § 1343. RICO provides criminal penalties, but also allows "[a]ny person injured in his business or property" by a RICO violation to sue to recover treble damages, as well as fees and costs. Id. § 1964(c). " . . . [T]he plaintiff only has standing if, and can only recover to the extent that, he has been injured in his business or property by the conduct constituting the violation." Sedima, 473 U.S. at 496, 105 S.Ct. 3292. Ray v. Spirit Airlines, Inc., 767 F. 3d 1220 (11th Cir. 2014).
The RICO statute incorporates by reference numerous specifically identified federal criminal statutes, as well as a number of generically described state criminal offenses (known in RICO jurisprudence as "predicates"). 18 U.S.C. § 1961(1). It adds new criminal and civil consequences to the predicate offenses in certain circumstances — generally speaking, when those offenses are committed in a pattern (consisting of two or more instances) in the context of "any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce." 18 U.S.C. § 1962; see also id. § 1964. European Community v. RJR Nabisco, Inc., 764 F. 3d 129 (2nd Cir. 2014).
To state a private RICO claim, "a plaintiff must allege four elements: (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity." Robbins v. Wilkie, 300 F.3d 1208, 1210 (10th Cir. 2002) (internal quotation marks omitted). Racketeering activity is "any act in violation of specified state and federal crimes, including wire fraud, bank fraud, and fraud in the sale of securities." Resolution Trust Corp. v. Stone, 998 F.2d 1534, 1543 (10th Cir. 1993). The specified crimes are found at 18 U.S.C. § 1961(1). Davison v. Grant Thornton LLP, (10th Cir. 2014).
A pattern requires at least two predicate acts. In addition, to satisfy RICO's pattern requirement, a plaintiff must allege not only that the defendants had committed two or more predicate acts, but also that the predicates themselves amount to, or that they otherwise constitute a threat of, continuing racketeering activity.Bixler v. Foster, 596 F.3d 751, 761 (10th Cir. 2010) (brackets, citations, emphasis, and internal quotation marks omitted). Davison v. Grant Thornton LLP, ibid.
To show the existence of an enterprise under the second element, plaintiffs must plead that the enterprise has (A) a common purpose, (B) a structure or organization, and (C) longevity necessary to accomplish the purpose. Boyle v. United States, 556 U.S. 938, 946, 129 S.Ct. 2237, 173 L.Ed.2d 1265 (2009). Racketeering activity, the fourth element, requires predicate acts. Eclectic Properties East v. Marcus & Millichap Co., 751 F. 3d 990 (9th Cir. 2014).
The mail and wire fraud statutes are identical except for the particular method used to disseminate the fraud, and contain three elements: (A) the formation of a scheme to defraud, (B) the use of the mails or wires in furtherance of that scheme, and (C) the specific intent to defraud. Schreiber Distrib. Co. v. Serv-Well Furniture Co., Inc., 806 F.2d 1393, 1399 (9th Cir.1986). Eclectic Properties East v. Marcus & Millichap Co., ibid.
Mail and wire fraud can be premised on either a nondisclosure or an affirmative misrepresentation. See United States v. Benny, 786 F.2d 1410, 1418 (9th Cir. 1986). A nondisclosure, however, can support a fraud charge only "when there exists an independent duty that has been breached by the person so charged." United States v. Dowling, 739 F.2d 1445, 1449 (9th Cir. 1984), rev'd on other grounds, 473 U.S. 207 (1985). "Absent an independent duty, such as a fiduciary duty or an explicit statutory duty, failure to disclose cannot be the basis of a [RICO] fraudulent scheme." Cal. Architectural Bldg. Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1472 (9th Cir. 1987) (citing Dowling, 739 F.2d at 1449). Eller v. EquiTrust Life Insurance Company, ibid.
"In order to prove a violation of 18 U.S.C. § 1341, [Frauds and swindles] there must be a showing of a specific intent to defraud. The intent to defraud may be inferred from a defendant's statements and conduct." United States v. Peters, 962 F.2d 1410, 1414 (9th Cir.1992). In the absence of direct evidence of intent, the party asserting fraud must first prove "the existence of a scheme which was reasonably calculated to deceive persons of ordinary prudence and comprehension," and then, "by examining the scheme itself" the court may infer a defendant's specific intent to defraud. United States v. Green, 745 F.2d 1205, 1207 (9th Cir.1984) (internal quotation marks omitted) (quoting United States v. Bohonus, 628 F.2d 1167, 1172 (9th Cir.1980)). Eclectic Properties East v. Marcus & Millichap Co., ibid.
THIS CASEBOOK contains a selection of 41 U. S. Court of Appeals decisions that analyze and interpret provisions of the Racketeer Influenced and Corrupt Organizations Act. The selection of decisions spans from 2010 to the date of publication.