Fraud: Plaintiff sues three individuals under RICO

Where a company’s founder plausibly alleged three defendants devised a scheme to unlawfully take control of the company for their own benefit, his single-count complaint under the Racketeer Influenced and Corrupt Organizations Act survived motions to dismiss.

Background

Matthew LeFande is the founder of the Commonwealth Protection Institute, or CPI. He alleges that defendants Jona Blocker, Vladimir Torbenko and Floyd Allen devised a scheme to unlawfully take control of CPI for their own benefit, asserting one count under the Racketeer Influenced and Corrupt Organizations Act, or RICO. Allen and Blocker have filed motions to dismiss.

Standing

Defendants argue that plaintiff has not alleged that he detrimentally relied on any of the defendants’ actions. It was previously the rule in the Fourth Circuit that, to establish RICO standing, “(1) the plaintiff must have detrimentally relied on the predicate acts of racketeering activity; (2) the predicate acts must be the proximate cause of the injury to the plaintiff; and (3) the plaintiff must suffer actual injury.”

The Supreme Court subsequently held, however, that “a plaintiff asserting a RICO claim predicated on mail fraud need not show, either as an element of its claim or as a prerequisite to establishing proximate causation, that it relied on the defendant’s alleged misrepresentations.” Accordingly, judges in this District have recognized that the Supreme Court overruled any requirement for a plaintiff to establish that he detrimentally relied on a defendant’s actions for RICO claims premised on mail and wire fraud.

Defendants also argue that plaintiff lacks standing because he has failed to quantify the monetary damages that he is seeking. It is true that a private RICO plaintiff must show damage to “business or property” proximately caused by the defendant’s RICO violation to have standing to bring suit. However, “this Circuit has not held that quantifiable damages are a necessary precondition to RICO liability; instead, this Circuit has formulated the requirement in terms of the necessity of proving some damages, not a specific amount.”

Defendants’ argument that plaintiff may not seek injunctive relief, however, is well taken. Accordingly, plaintiff’s claims for such injunctive relief will be dismissed.

Enterprise

Defendants specifically argue (without further elaboration or case citations) that plaintiff does not sufficiently (1) identify an enterprise that has been engaged in, or which has activities affecting, interstate or foreign commerce, (2) allege how defendants are employed by or associated with such an enterprise or (3) allege how defendants conducted or participated in the affairs of an enterprise.

Plaintiff responds that CPI qualifies as an enterprise for RICO purposes, noting that CPI is alleged to be a corporation which the defendants have commandeered through the alleged predicate acts of mail and wire fraud. The court finds that plaintiff has plausibly alleged the existence of an enterprise in this case.

Predicate acts

Plaintiff asserts six predicate acts—two acts of alleged mail fraud and four acts of alleged wire fraud to support his RICO claim. Allen argues that plaintiff’s allegations do not constitute mail or wire fraud and are “completely devoid of the necessary information to meet the particularity requirements of Rule 9(b).”

“However, ‘[a] court should hesitate to dismiss a complaint under Rule 9(b) if the court is satisfied (1) that the defendant has been made aware of the particular circumstances for which she will have to prepare a defense at trial, and (2) that plaintiff has substantial prediscovery evidence of those facts.’” Here, defendants have not identified any specific asserted predicate act as particularly deficient, and the court finds that plaintiff has asserted enough particular factual allegations to put defendants on notice of the circumstances for which they will have to prepare a defense, and has otherwise plausibly alleged the predicate acts.

Blocker additionally argues that plaintiff has failed to allege facts to support his claims that defendants’ communications were fraudulent, that plaintiff “has not provided any factual support that Blocker or Allen were acting without CPI’s authority.” The court disagrees. The complaint also sufficiently articulates how Blocker was conducting CPI’s business through mail fraud.

Pattern

Plaintiff alleges an ongoing scheme in which multiple government entities are being repeatedly defrauded regarding a highly regulated corporation and the alleged ability to “contact a firearms dealer anywhere in the United States and purchase firearms over the counter or by mail without a background check or completion of ATF’s Firearm’s Transaction Record Form 4473.” That is sufficient.

Defendant Allen and Blocker’s motions to dismiss granted in part, denied in part.

LeFande v. Blocker, Case No. 1:25-cv-54, Sept. 30, 2025. EDVA at Alexandria (Alston). VLW 025-3-417. 22 pp.