White Collar Attorney

The Sixth Circuit’s “Functional Approach” Regarding Distinctness

Posted on: Tuesday, April 15th, 2014

The Sixth Circuit breaks with the Second Circuit and others and employs a “functional approach” to find a corporate defendant distinct from an enterprise consisting of the corporation and wholly owned and controlled subsidiaries when each played distinct roles that helped the fraudulent scheme.

In Classic Star Mare Lease Litig., the Sixth Circuit affirmed the grant of a summary judgment to plaintiff investors finding the “non-identity” or “distinctness” requirement satisfied. It is established law that “[u]nder RICO, a corporation cannot be both the ‘enterprise’ and the ‘person’ conducting or participating in the affairs of that enterprise.” In Begala v. PNC Bank, Ohio, N.A., 214 F.3d 776, 781 (6th Cir. 2000), the court explained that ...

Second Circuit Affirms RICO Dismissal

Posted on: Tuesday, April 15th, 2014

Jan. 21, 2014

Cruz v. FX DirectDealer, LLC, 720 F.3d 115 (2d Cir. 2013)

Issue:  Is a corporate RICO defendant distinct from a RICO enterprise consisting of itself, its parent, and corporate officers who acted within their scope of employment, in perpetuating a fraud?

Answer: The Second Circuit reaffirms the principles of Riverwoods and Discon in finding that a corporate defendant is not distinct from an enterprise consisting of itself, its officers, or its parent. As a result, there was not a valid claim under RICO sections 1962(c) or (d), and t...

Court Rules on Auction House’s Civil RICO Claim

Posted on: Thursday, April 3rd, 2014

In 4K & D Corp. v. Concierge Auctions, LLC, the court granted in part and denied in part the civil RICO allegations by Concierge Auctions, an auction house. The plaintiffs had alleged that the defendants fraudulently induced sellers of luxury real estate to enter into auction contracts with Concierge by making false promises and various misrepresentations about Concierge’s auction results, sales statistics, and track records, and that the defendants engaged in other fraudulent conduct such as using shill bidders, allowing bids from unregistered bidders, and adding a reserve at the last minute. As a result, Grand Estates was allegedly harmed because sellers chose Concierge instead of Grand Estates or other auction houses due to the defendants&...

Sixth Circuit Overrules Prior Precedent Re: Injury to “Business or Property” Under RICO

Posted on: Thursday, April 3rd, 2014

In Jackson V. Sedgwick, the Sixth Circuit, en banc, addressed the issue of whether plaintiffs who filed a class action claiming violations of civil RICO based on diminution of workers’ compensation benefits because of a fraudulent scheme were “injured in [their] business or property,” as was required to state a claim for civil RICO damages action.

The court first discussed that although RICO is to given an expansive reach, its breadth is not boundless as the text of the statute imposes genuine limitations. The court stated, “Congress must have intended to exclude some class of injuries by the phrase ‘business or property’ ...

Even Lawyers Sometimes Forget Their Right to Remain Silent

Posted on: Monday, March 24th, 2014

By Price Benowitz Staff Writer
March 24, 2014

The right to remain silent not only applies during an arrest, but also during the discovery and investigative phases of any alleged crime. Miranda Rights were enacted in the mid-1960′s, requiring law enforcement to advise suspects of their legal entitlement to silence and an attorney. Backed by the fifth and sixth amendments to the US Constitution, these two basic rights protect the accused from self-incrimination. Arising from an overturned case, kidnapping and rape suspect, Ernesto Miranda, claimed police coercion and ignorance of the law. As a result, the Supreme Court of the United State deemed reading Miranda Rights to sus...

Twenty Years Imprisonment for RICO Defendants Only If Special Findings by a Jury

Posted on: Thursday, March 20th, 2014

March 20, 2014

U.S. v. Nagi, 541 Fed. Appx. 556 (6th Cir. 2013)

In Nagi, the U.S. Court of Appeals for the Sixth Circuit remanded for sentencing two defendants (Clark and Moore) who were convicted of RICO conspiracy only, but sentenced to a term of imprisonment greater than twenty years.

The defendants were members of the Highwaymen Motorcycle Club (HMC) and were charged and convicted of numerous crimes, including substantive RICO, RICO conspiracy, and Violent Crimes in Aid of Racketeering, or VICAR. The HMC was a violent organization which engaged in violent predicate crimes, VICAR assaults, and the distribution of narcotics.


Plaintiff Failed to Satisfy Proximate Cause Test in Jackson v. NAACP

Posted on: Thursday, March 13th, 2014

March 13, 2014

The court affirmed the lower court’s dismissal of Jackson’s RICO claim finding the plaintiff did not have a cause of action under RICO because the asserted harm (the employer’s inability to reinstate her) is an action entirely distinct from the alleged predicate acts of wire and mail fraud. The plaintiff failed to meet the proximate cause test set forth in Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 461 (2006).

The Plaintiffs were employed by the Houston Branch of the NAACP, which was led by its Executive Director Yolanda Smith. Jackson and the other plaintiff was terminated when the funding for certain grants expired. The Texas Access ...

Jeffrey Thompson Charged in DC Shadow Campaign

Posted on: Tuesday, March 11th, 2014

By Price Benowitz Staff Writer

After three years of an extensive investigation, wealthy businessman Jeffrey E. Thompson has been formally indicted in relation to an illicit “shadow campaign” that funded Democratic Mayor Vincent Gray’s election in 2010 and, according to critics, was crucial in helping Gray unseat then-incumbent Adrian Fenty.

Assistant U.S. Attorney Michael Atkinson issued the charge against Jeffery Thompson, a well-known District of Columbia businessman and political fund-raiser. Thompson has entered a guilty plea for his role in conspiring to violate local and federal campaign finance laws when he funded several “under-the-radar activities” for candidates, which include Gray as well as potential presidential candidate

RICO Conspiracy Conviction Upheld for Crooked Cops

Posted on: Monday, March 10th, 2014

The court upheld RICO conspiracy convictions against three individual defendants who, while serving as law enforcement officers with the Virgin Islands, engaged in extortion, kidnapping, bribes, and drug trafficking. The court stated that this case presented a sordid picture of “law enforcement officers” who sought to enrich themselves, rather than protect the public, by engaging in a protracted pattern of criminality, all at the expense of the residents of the United States Virgin Islands.

One of the defendants, Francis Brooks, claimed that the District Court erred in denying his motion for a new trial on his conviction for RICO conspiracy, arguing that the jury considere...

Proximate Causation Sufficiently Alleged to State Civil RICO Claim

Posted on: Tuesday, March 4th, 2014

Facts — The 11th Circuit, in a detailed and reasoned opinion, reversed a lower court’s decision dismissal of a civil RICO complaint for failure to state a claim. The plaintiff, Corcel Corporation (Corcel), a supplier of plumbing materials, brought a civil RICO action against two competitors and a prime contractor, who allegedly formed the Ferguson–LT enterprise and undertook a fraudulent scheme wherein defendants Ferguson and LT solicited and prepared false and misleading documents and repeatedly submitted those documents to the county for the express purposes of (1) obtaining defendant LT’s SBE certifica...