Fraud – Homeowners’ RICO claim is dismissed

Where homeowners asserted a Racketeering Influenced and Corrupt Organizations Act claim based upon an alleged fraudulent scheme, but the complaint fails to allege that the alleged enterprise is distinct from the people or entities unlawfully conducting the affairs of the enterprise, and failed to allege that the affairs of the RICO enterprise are distinct from the alleged pattern of racketeering that defendants engaged in, this claim was dismissed.

Background

Nader Afgan and Shanar Nasserifar bring claims under the Racketeering Influenced and Corrupt Organizations Act, or RICO, and state law claims for fraud, and related causes of action against Marco G LLC and the remaining defendants, all arising out of an alleged fraudulent scheme in which defendants provided deficient and unlicensed architectural and renovation services, leading to severe defects in plaintiffs’ home. Defendants have filed a motion to dismiss.

RICO

To impose RICO liability on any of the defendants, Plaintiffs must allege as to that defendant that he or she (1) conducted or participated, directly or indirectly, in the affairs of (2) an enterprise through (3) a pattern of racketeering activity, and show that (5 ) they were injured in their business or property (6) by reason of the RICO violation. A RICO enterprise is defined as an “individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.” Based on that definition, courts have concluded that the RICO enterprise must be distinct from the individual(s) liable under the statute because of their conducting the affairs of the enterprise through a pattern of predicate acts.

Here, the complaint fails to allege that the alleged enterprise is distinct from the people or entities unlawfully conducting the affairs of the enterprise. In this regard, the alleged enterprise, operating under the fictitious name “Marco G Architects,” consists of all of the defendants. In short, the complaint alleges an enterprise that consists of the same persons and entities that plaintiffs contend violated the RICO statute and therefore fails to allege an enterprise that is distinct from the defendants. The complaint also fails to adequately allege that the affairs of the RICO enterprise are distinct from the alleged pattern of racketeering that defendants engaged in, as required to state a civil RICO claim.

Accordingly, the facts alleged in the complaint do not plausibly satisfy the requirements that a RICO enterprise be distinct from both the defendants and from the pattern of racketeering activity they engaged in. The plaintiffs having failed to allege a valid RICO “enterprise,” Count One must be dismissed.

State claims

The court has original federal question jurisdiction over this action solely based on plaintiffs’ RICO claim, with jurisdiction over the remaining state law claims solely through supplemental jurisdiction under 28 U.S.C § 1367, were the court to exercise that jurisdiction. In that regard, the court may decline to exercise supplemental jurisdiction over a state law claim, where all claims over which it does have original jurisdiction are dismissed. Here, the court has dismissed the only claim over which it has original jurisdiction, plaintiffs’ RICO claim, and given that all remaining state law claims are governed exclusively by state law, the court will decline to adjudicate those claims under its supplemental jurisdiction.

Defendants’ motion to dismiss granted.

Afgan v. Marco G, LLC, Case No. 1:25-cv-02452, May 5, 2026. EDVA at Alexandria (Trenga). VLW 026-3-205. 8 pp.

Full-Text Opinion
VLW 026-3-205