Virginia Lawyers Weekly VA Lawyers Weekly
Where defendants were sued for allegedly orchestrating a wide-ranging fraud scheme through a consortium of financial institutions in Ghana, the claims under the Racketeer Influenced and Corrupt Organizations Act were dismissed because there was no domestic injury, as required to state a viable claim.
Background
Plaintiffs sued Paa Kwesi Nduom and his family members for allegedly orchestrating a wide-ranging fraud scheme through a consortium of financial institutions that they owned in Ghana. Among these institutions was private investment firm, Gold Coast Securities, which offered investment banking, financial advisory and brokerage services to both individuals and corporate clients. Defendants have filed a motion to dismiss for lack of personal jurisdiction.
RICO
The Racketeer Influenced and Corrupt Organizations Act, or RICO, established four criminal offenses that proscribe certain activities involving a “pattern of racketeering activity.” The Supreme Court has held that, to recover in its action, a private RICO plaintiff must “allege and prove a domestic injury to its business or property.”
Defendants argue that the RICO claim at issue here — which is based on losses alleged to have occurred in Ghana stemming from investments made in Ghana — is exactly the kind of claim that the domestic injury requirement is designed to bar. This court agrees.
Percival Partners Limited is an investment firm headquartered in Ghana. It made an investment in Gold Coast, another Ghanaian entity. Although plaintiffs allege that plaintiff REIPLO Holdings LLC is the assignee of an unnamed Ghanaian-American investor, they do not allege that the assignor lives or holds her assets in the United States. Regardless, that assignor invested funds in Ghana with Gold Coast. The court concludes that the harm that plaintiffs suffered in the instant case arose when they lost money that they had invested abroad.
Plaintiffs urge the court to shift the focus of the analysis to where the property was located at the time that the specific RICO predicate acts causing the injury were committed. And here, plaintiffs argue, they were injured by the predicate acts when defendants transferred plaintiffs’ money from Gold Coast in Ghana to IBS in Virginia.
However, plaintiffs do not cite a single case holding that whether a domestic injury has been suffered is necessarily dependent on the underlying RICO predicate act. Indeed, courts in other circuits have rejected similar arguments. Because plaintiffs have failed to allege a domestic injury, the court need not consider whether their other allegations are sufficient to state a civil RICO claim.
State-law claims
Plaintiffs’ amended complaint invokes both diversity jurisdiction and supplemental jurisdiction over the state-law claims. In the amended complaint, plaintiffs allege that “[n]one of [plaintiff] Percival [Partners Limited]’s principals or partners is a citizen of, or is domiciled in, the Commonwealth of Virginia or the State of Washington or the State of Georgia.” Plaintiffs further allege that none of REIPLO Holdings LLC’s members are citizens of, or are domiciled in, the Commonwealth of Virginia or the State of Washington or the State of Georgia. The court finds that these allegations are insufficient to establish plaintiffs’ citizenship for purposes of diversity jurisdiction.
The court next turns to whether exercising supplemental jurisdiction over the state-law claims is appropriate. The Supreme Court has instructed that “in the usual case in which all federal-law claims are eliminated before trial, the balance of factors . . . will point toward declining to exercise jurisdiction over the remaining state-law claims.” Accordingly, since the court has dismissed plaintiffs’ only federal claim, the court deems it appropriate to also dismiss plaintiffs’ state-law claims without prejudice.
Defendants’ motion to dismiss granted.
Percival Partners Limited v. Nduom, Case No. 1:22-cv-16, Feb. 17, 2023. EDVA at Alexandria (Alston). VLW 023-3-074. 12 pp.
