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Phony bank charge supports RICO claim

Civil racketeering claims often don’t get very far in federal court, but a Lynchburg horsewoman gets another chance to use a RICO claim to rein in a man who allegedly defrauded her.

John Wynne misrepresented that his business Rivermont Consultants Inc., formerly known as Rivermont Banking Co., was in fact a bank, despite having no authority under Virginia banking laws, according to the federal RICO complaint filed by CVLR Performance Horses Inc. against Wynne, Rivermont and another Wynne business, 1650 Partners LLC.

Wynne purportedly targeted women in financial distress and persuaded several women to finance operations that benefited him. A Lynchburg federal court dismissed the RICO claim, but the 4th U.S. Circuit Court of Appeals reversed in CVLR Performance Horses Inc. v. Wynne.

According to CVLR’s complaint, Wynne persuaded CVLR president Crystal Rivers to buy a horseback riding center, and Wynne arranged financing in a deal that cut out CLVR in favor of 1650 Partners, with Rivers as guarantor. Rivers also bought a truck for CVLR and paid to insure it. Through a series of maneuvers, Wynne wound up as owner of the truck, and bought a second truck that he added to the policy Rivers had purchased. Wynne also collected the insurance money when his son wrecked the second truck.

Wynne allegedly filed false invoices with an insurance company to collect on unperformed repairs on a riding center barn damaged by high winds. He also allegedly made Rivers a partner in 1650 Partners, but then forged her signature on a $3,000 check to himself from the Partners.

Wynne perpetrated a similar fraud on Karen Foster, whom he convinced to execute a note to pay him $40,000 for a series of small loans, according to the complaint. And he allegedly used Rivermont in a scheme to use Vicki Marsh’s credit score to persuade a bank to loan her $500,000, paid to Wynne and secured by a mortgage on Marsh’s property on Pawley’s Island, S.C.

Senior U.S. District Judge Norman K. Moon dismissed CVLR’s civil claim under the Racketeering and Corrupt Organizations Act, 18 U.S.C. § 1962, saying the racketeering acts alleged were not sufficiently continuous to support a RICO claim.

Moon concluded each racketeering act pled by CVLR did not, on its face, threaten to continue long term, according to the May 29 unpublished opinion by 4th Circuit Judge Dennis W. Shedd.

Shedd said Moon had overlooked that Wynne’s alleged misconduct projected into the future with a threat of repetition, as Wynne had held Rivermont out as a bank to lure victims into his scheme.

The district court thought it was implausible the racketeering acts would continue, because the identified victims already had “been bilked” and presumably knew better than to do business with Wynne again. However, there was no indication Wynne’s conduct would be limited to only the identified victims, Shedd said, and the victims’ discovery of the fraud did not prevent CVLR from establishing “open-ended continuity” to support a RICO claim.

The panel reversed dismissal of the RICO claim and sent the case back to the district court.
–Deborah Elkins

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