Are the courts right to dismiss ‘single-scheme’ RICO fraud cases?

November 25, 2014

stack of file foldersIn case after case, courts dismiss RICO actions based on mail/wire fraud if there is a single victim or scheme.  Courts generally describe such cases as “garden-variety” fraud cases.

Two examples are Miranda v. Ponce Federal Bank, 948 F.2d 41 (1st Cir. 1991), and DLJ Mortgage Capital Inc. v. Kontogiannis, 726 F. Supp. 2d 225, 236 (E.D.N.Y. 2010).

(Westlaw users: Click here for the Civil RICO Report database.)

David J. Stander says the courts base their decisions on congressional intent to avoid applying “draconian” RICO penalties to ordinary business disputes.  But he believes this view conflicts with that of the Supreme Court, and makes the argument that some of these cases should be viable.

Citing the liberal construction intent of Congress, Stander says courts are ignoring long-term continuous racketeering activity simply because there is a single scheme alleged.

At the same time, a few courts have bucked the trend: Tabas v. Tabas, 47 F.3d 1280 (3d Cir. 1995), and Annulli v. Parker, 200 F.3d 189 (3d Cir. 1999).

Stander says, “It remains to be seen how far the lower courts will continue their increasingly narrow interpretations of civil RICO litigation.”

David J. Stander is a former U.S. Department of Justice Trial Attorney who specializes in civil RICO litigation, and white-collar criminal defense.  David can be reached at 240-643-2723 or at dstanderlaw@gmail.com.   David’s website is www.ricoconsultingattorney.com.