RICO — Continuity — Duration of >1 Year in 7th Circuit — Number of Mailings May Be No Indication of Continuity of Underlying Fraudulent Activity — Only Predicates Count Toward, and Cover-Up Acts Don’t Extend, Duration (Good Quotes)

Goldring v. Regas, 2015 U.S. Dist. LEXIS 35552 (N.D. Ill. Mar. 20, 2015):

Generally, the predicate acts underlying a "one-shot scheme" must occur over the course of more than a year in order to form a pattern. Midwest Grinding, 976 F.2d at 1024 (collecting cases where periods of "several months" to "several years" were insufficient to support a pattern); see also Jennings v. Auto Meter Prods., Inc., 495 F.3d 466, 474-75 (7th Cir. 2007) (ten months insufficient); Vicom, Inc. v. Harbridge Merch. Servs., Inc., 20 F.3d 771, 782 (7th Cir. 1994) (nine months insufficient). The earliest of the predicate acts occurred with a letter mailed on June 9, 2006, and the latest occurred about nine months later, on March 17, 2007. This nine-month period is insufficient under the Seventh Circuit case law. This conclusion is reinforced by the fact that the only predicate acts that Goldring has successfully alleged are mailings, which "'are unique among predicate acts' because multiplicity of such acts 'may be no [*54]  indication of the requisite continuity of the underlying fraudulent activity.'" Midwest Grinding, 976 F.2d at 1024 (quoting U.S. Textiles, Inc. v. Anheuser-Busch Cos., Inc., 911 F.2d 1261, 1266 (7th Cir. 1990)) Courts have found insufficient continuity between even hundreds of mailings when the number of fraudulent transactions are small. See Vicom, Inc. v. Harbridge Merchant Servs., Inc., 20 F.3d 771, 781 (7th Cir. 1994) (finding no "pattern" from racketeering predicated only on a few acts of mail fraud); Midwest Grinding, 976 F.2d at 1024 (hundreds of mailings insufficient because there was only a single scheme with "a few" recipients and only one victim); see also Hartz v. Friedman, 919 F.2d 469, 473 (7th Cir. 1990) ("The Seventh Circuit, however, does not look favorably on relying on many instances of mail and wire fraud to form a pattern.").

And while Goldring has alleged a long, multi-year scheme in which the defendants had engaged in fraudulent and even criminal activity, only the predicate acts of racketeering count for the duration factor. Tortious or even criminal acts committed before the first act of racketeering do not start the clock. See Midwest Grinding, 976 F.2d at 1024 & n.5 (starting the duration count with "the first predicate act of mail fraud" rather than when the alleged coconspirators "began doing the groundwork"). Similarly, actions taken to cover up the completed scheme do not extend the duration, either. Id. (holding that actions to cover up discovery "do nothing to extend [*55]  the duration of the underlying . . . scheme"); see also Jennings, 495 F.3d at 474 (declining to consider later fraudulent cover-up attempts in the duration analysis). Therefore, although Goldring has alleged a long-running scheme involving a pattern of criminal activity with multiple perpetrators and multiple victims, the complaint falls short of alleging sufficient duration to establish a pattern of racketeering activity as defined in 18 U.S.C. § 1961(1).

Share this article:

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on email
Email

Recent Posts

Archives