Non-lawyers often associate the Racketeer Influenced and Corrupt Organizations (RICO) Act with mobsters and gangs. RICO’s reach spans far beyond that, though. The statute allows for civil actions, making a federal RICO claim a potentially powerful weapon in a business dispute. Pleading requirements for federal civil RICO are complex, however, creating many traps for the inexperienced. If you or your company is on the receiving end of one of these weaponized RICO claims, get in touch with a knowledgeable Atlanta civil RICO lawyer, who can review your case, and perhaps dispatch that RICO claim before a trial even begins.
Some years ago, the federal First Circuit Court of Appeals in Boston described civil RICO claims as “the litigation equivalent of a thermonuclear device.” That’s partly because civil RICO claims offer plaintiffs the potential of recovering large sums via the treble (in other words, triple) damages. Sometimes, these claims are a means to an end, such hopefully forcing a defendant to agree to a settlement.
As a pair of recent cases illustrate, there are numerous ways a plaintiff’s federal civil RICO claim can fail. In a Missouri federal court, a bank accused the heirs of a famous 20th Century American painter of violating the RICO law. The judge noted a glaring weakness in the bank’s case, which dealt with the required “pattern of racketeering activity,” according to NPR in Kansas City.
A ‘Pattern of Racketeering Activity’ and the Continuity Requirement
Federal RICO claims require that the predicate illegal acts the plaintiff alleged were more than sporadic. To support a valid civil RICO claim, the alleged racketeering activity must display some degree of continuity. That means that the racketeering activity occurred over a prolonged period, or that the activity poses a threat of continuing.
In the bank’s case, it accused the heirs of engaging in fraud. However, it didn’t allege that the heirs engaged in fraud with any degree of continuity. As the judge stated, there was “nothing in the Amended Complaint to indicate” that the defendants “routinely disseminated fraudulent statements to news outlets.”
Georgia’s RICO statute is different and notably broader. Georgia RICO does imposes the high continuity requirements federal law does, making the requirement for a valid pattern of racketeering activity less stringent than the federal law.
Properly Pleading a RICO ‘Enterprise’
In a state-level court in New York, the issue was not art but a resort property. The co-owners of an Upstate New York resort, having fallen out over how to manage the property, ended up in litigation. The plaintiff included a RICO claim. In this lawsuit, the pleading problem that felled the plaintiff’s RICO case was not the pattern of racketeering activity, but the enterprise requirement.
The RICO Act says that you must plead the existence of an enterprise. That enterprise can be a corporation, a partnership, or even something informal like an association-in-fact. It’s important to note that the alleged enterprise must be distinct from the allegedly liable entity. In other words, a plaintiff generally cannot sue XYZ Corp. for civil RICO damages and also assert that XYZ Corp. was the RICO enterprise.
Similar to how Georgia’s RICO statute imposes a lower “pattern” requirement, the state law also sets a lower hurdle for clearing the “enterprise” requirement (compared to federal law.)
Whether you’re pursuing a civil RICO claim or defending against one, legal representation with RICO experience is essential. The strategies and techniques of RICO cases (both federal RICO and Georgia RICO) differ from other business disputes. To protect your business interests, rely on the experienced Atlanta civil RICO attorneys at Poole Huffman, LLC. Our attorneys have the knowledge and skills necessary to achieve a successful outcome in your RICO case. Contact our attorneys online or by calling 404-373-4008 to schedule your confidential consultation today.
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