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RICO Pleading and Particularity Requirements

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Cory v. Straub Int’l, 2012 Kan. App. Unpub. LEXIS 10 (Kan. Ct. App. Jan. 6, 2012):

Bill J. Cory, acting pro se, sued the defendants, Straub International, Ron Straub, and Scott DeWerff after he purchased from them a used piece of farm equipment known as a swather. He alleged the machine did not operate properly and the defendants had violated the Kansas Consumer Protection Act (KCPA) and the Racketeer Influenced and Corrupt Organizations Act (RICO). The district court granted the defendants' summary judgment motion, finding the KCPA did not apply because the purchaser of the machine was actually a corporation and Cory had failed to properly plead the RICO cause of action. The court also granted the defendants sanctions in the form of their attorney fees. Cory appeals, again pro se.***

As to Cory's claim of RICO violations, *** in setting forth his RICO claims in his petition, Cory made several conclusory allegations without particularity.

One of the elements of a civil RICO claim is that the plaintiff suffered an injury "by reason of defendant's violation of section 62." Joseph, Civil RICO, A Definitive Guide, pp. 27-28, 35 (American Bar Association 2d ed. 2000). Here, Cory alleged that Dewerff and Straub conducted their business through a pattern of racketeering activity in violation of 18 U.S.C. 1962(c) (2006) and conspired to do so which, under 18 U.S.C. 1962(d) (2006), amounted to another violation.

18 U.S.C. 1962(c) states:

"It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt."

Section (d) of the statute then makes it unlawful to conspire to violate section (c).

"Racketeering activity" consists of no more and no less than the commission of a predicate act.' Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 495 (1985)." Joseph Civil RICO, p. 79. 18 U.S.C. 1961(1) (2006) defines such activity by setting "forth an exhaustive list of predicate offenses," which include both state and federal law offenses. See Joseph Civil RICO, pp. 79-81.

From what we can gather from our review of Cory's somewhat rambling and disjointed petition, it alleged in very conclusory fashion that the defendants committed several acts that violated either 18 U.S.C. § 1341 (2006) (relating to mail fraud), or section 18 U.S.C. §1343 (2006) (relating to wire fraud). The details are lacking, however.

In order to state a violation of the wire or mail fraud statute, "it is necessary to show (1) a scheme to defraud, (2) participation by the defendant[s] in the scheme, (3) specific intent to defraud, and (4) the use of the United States wires or mails in furtherance of the scheme." Joseph Civil RICO, pp. 82-84. In one of Cory's allegations, he states merely that the defendants processed the check used to purchase the swather through the Federal Reserve System. He also lists what appear to be the dates of several phone calls without setting forth their content and how they were fraudulent. Additionally, since the crimes of both wire and mail fraud sound in fraud, Cory's pleading must satisfy the particularity requirements of K.S.A. 60-209(b). Cory's petition falls woefully short in this regard.

As to his claims that the defendants violated section (d) of 18 U.S.C. 1962 (conspira-cy), Cory again sets forth allegations that the defendants conspired to commit RICO violations without particularity as to their unlawful and fraudulent nature. Under Section 1962(d), the plaintiff's complaint must allege, "at a mini-mum (1)[] the parties' specific agreement to commit at least two predicate acts and (2) contain supportive factual allegations. Mere conclusions are not enough." Joseph Civil RICO, p. 162. In conclusion, Cory failed to satisfy the RICO pleading requirements. The Tenth Circuit Court of Appeals has recognized that the district court is not required to "match the factual assertions with the elements of all subsections of the RICO statute to determine if the complaint states a claim for relief." Glenn v. First Nat'l Bank in Grand Junction, 868 F.2d 368, 371 (10th Cir. 1989). The court then stated: "After reviewing the record . . . , we conclude the trial court did not err in refusing to attempt to create order out of chaos. The complaint failed to state a claim under any conceivable matching of allegations." Glenn, 868 F.2d at 372. The same can be said for Cory's petition here.

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New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

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