Commercial Litigation and Arbitration

RICO § 1962(a) and (b) Requirements

From Carmona v. Spanish Broad. Sys., 2009 U.S. Dist. LEXIS 26479 (S.D.N.Y. Mar. 30, 2009):

To succeed under 1962(a), the alleged use or investment injury must be "distinct from the injuries resulting from predicate acts" themselves. Conclusory allegations that defendants used or invested income received from plaintiffs are insufficient to state a claim under 1962(a) because they fail to show how that use or investment injured plaintiffs. Furthermore, the injury requirement is not satisfied by allegations that a defendant, which is also the enterprise, invested racketeering income in its general operations, thereby permitting it to continue its pattern of racketeering and cause further injury.

Here, plaintiffs have failed to state a viable claim under Section 1962(a). Their complaint relies solely on the conclusory assertion that both defendants "received income directly from the pattern of racketeering activity and used the income or its proceeds for their own operation and for themselves." This is precisely the type of conclusory allegation that courts reject. Plaintiffs have failed to allege any injury whatsoever from the defendants' alleged investment of racketeering income. ***

In order "to state a claim under Section 1962(b), a plaintiff must allege (1) an injury resulting from the acquisition or control of an enterprise through a pattern of racketeering activity" and (2) "that the injury was caused by the acquisition or maintenance of control and not by the predicate acts."

The complaint is devoid of any allegation that defendants acquired or controlled an enterprise through a pattern of racketeering activity, let alone that they thereby injured plaintiffs. Any Section 1962(b) claim therefore is insufficient.

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