In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 20-1475

MUSKEGAN HOTELS, LLC, et al.,

Plaintiffs-Appellants,

v.

HIREN PATEL, et al.,

Defendants-Appellees.

____________________

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 1:14-cv-9186 — John J. Tharp, Jr., Judge.

____________________

ARGUED DECEMBER 11, 2020 — DECIDED JANUARY 20, 2021

____________________

Before ROVNER, HAMILTON, and SCUDDER, Circuit Judges.

SCUDDER, Circuit Judge. Hasan Merchant made ill-fated investments in three hotel properties in Michigan from late 2005 

to 2007 and lost all three to foreclosure in 2009. Believing that 

the seller had fraudulently inflated the appraised values and 

ultimate sale prices of the properties, Merchant sued a host of 

individuals and entities allegedly involved in the transactions. After years and numerous rounds of amended pleadings, the district court dismissed with prejudice all claims 
2 No. 20-1475

against two law firms that provided legal services for the 

seller and lender at various points in time. We agree that the 

operative complaint—here, the Fifth Amended Cross-Complaint—fails to state any claims against either law firm, so we 

affirm.

I

A

On a motion to dismiss, we take the facts stated in the operative complaint as true and view them in the light most favorable to the non-moving parties—the cross-plaintiffs. See 

Menzies v. Seyfarth Shaw LLP, 943 F.3d 328, 332 (7th Cir. 2019). 

Over the course of late 2005 to 2007, Hasan Merchant 

agreed to purchase three hotel properties in Michigan from 

the National Republic Bank of Chicago (NRB). Merchant financed the purchases through NRB and used two corporate 

entities as the buyers—Muskegan Hotels, LLC for two hotels 

in Muskegon and M.D. 1 LLC for one hotel in Benton Harbor. 

Merchant sold interests in these ventures to other investors.

Over time the investment values of the properties declined, and it became clear that the hotels had been appraised 

at inflated amounts and sold for about twice their fair values. 

When Muskegan Hotels, LLC and M.D. 1 LLC defaulted on 

their loan payments, NRB foreclosed on all three properties in 

2009. Merchant believes this investment failure was the fruit 

of appraisal fraud, contending that NRB’s executives, Hiren 

Patel and Edward Fitzgerald, colluded with an appraiser, William Daddono, to sell overvalued real estate to unsuspecting 

purchasers, wait for default, foreclose on the property, and 

then repeat the process with new, unwitting investors. 
No. 20-1475 3

Litigation ensued in 2010. It was then that Nabil Saleh, an 

investor in Muskegan Hotels, sued Merchant, Merchant’s 

property companies, NRB, and 12 others for investor fraud in 

the Circuit Court of Cook County, Illinois. The case made its 

way to federal court in 2014 when the Federal Deposit Insurance Corporation took NRB into receivership, substituted for 

NRB as a defendant, and removed the case pursuant to 

12 U.S.C. § 1819(b)(2)(B).

Saleh’s lawsuit prompted Merchant, along with four of his 

property companies, to bring a cross-complaint in March 2015 

against the FDIC as receiver for NRB, alleging violations of 

the Racketeer Influenced and Corrupt Organizations Act and 

related state law claims. The district court permitted two 

rounds of amendments to the cross-complaint to add parties 

and claims. The court dismissed nearly all claims in the Second Amended Cross-Complaint, permitted a Third Amended 

Cross-Complaint, refused the request to file a Fourth 

Amended Cross-Complaint adding 37 new cross-defendants, 

and one last time permitted a Fifth Amended Cross-Complaint adding new claims but no new parties.

This Fifth Amended Cross-Complaint—the last of many 

iterations of pleadings—raises 14 counts against ten defendants, including two law firms that provided legal work to 

NRB at different times. Wolin & Rosen, Ltd. performed legal 

services for NRB until 2012. Those services included preparing documents for NRB’s property transactions with Merchant, Muskegan Hotels, LLC, and M.D. 1 LLC. In 2012, 

SmithAmundsen LLC began providing legal services in connection with NRB’s real estate transactions.

The district court dismissed several counts in the Fifth 

Amended Cross-Complaint against various cross-defendants, 
4 No. 20-1475

but others remain active. Indeed, aspects of the litigation—in 

both the underlying lawsuit and this cross-complaint—are 

still pending in the district court. Before us in this appeal is 

one narrow portion of this sprawling litigation—the dismissal 

of all claims against Wolin & Rosen and SmithAmundsen.

B

The Fifth Amended Cross-Complaint advanced three civil 

RICO counts and several related theories of recovery under 

state law, lumping the law firms together with all other crossdefendants. The district court dismissed all claims against the 

two firms with prejudice as part of a broader ruling on the 

cross-defendants’ motions to dismiss pursuant to Federal 

Rule of Civil Procedure 12(b)(6).

Beginning with the state law claims, the district court reasoned that Illinois’s statute of repose for actions arising out of 

legal work barred the state law claims against Wolin & Rosen 

as untimely. In so holding, the district court added that the 

cross-complaint’s bare allegation of fraudulent concealment 

was inadequate to toll the time for filing suit.

As for the claims against SmithAmundsen, the district 

court identified a fatal pleading deficiency. The cross-complaint, in the court’s view, lacked any well-pleaded allegations connecting SmithAmundsen’s conduct either to Hasan 

Merchant’s purchase of hotels or to Patel and Fitzgerald’s alleged fraud scheme. The court therefore dismissed all state 

law claims (in all counts) against SmithAmundsen.

What remained against both Wolin & Rosen and 

SmithAmundsen were three civil RICO counts: two alleged 

violations of 18 U.S.C. § 1962(c) for financial institution fraud 

and collection of unlawful debt, and one alleged violation of 
No. 20-1475 5

18 U.S.C. § 1962(a) for investing the proceeds of such fraud. 

As to the former two counts, the district court read the crosscomplaint as failing to allege that Wolin & Rosen was anything more than a paid services provider for NRB, or that 

SmithAmundsen performed anything other than routine legal work for NRB. The cross-complaint, the court concluded, 

failed to allege that either law firm conducted or participated 

in the activities of a RICO enterprise and therefore neither 

firm could be liable under § 1962(c).

The latter claim—the alleged violation of § 1962(a) based 

on the investment of proceeds from either a pattern of racketeering or collection of unlawful debt—likewise failed on the 

pleadings. For one, the court concluded the cross-complaint 

lacked allegations about any collection of unlawful debt. As 

for a pattern of racketeering, the only predicate acts of racketeering pleaded with sufficient particularity, the court determined, were Patel and Fitzgerald’s mailings of false appraisals to Merchant, Muskegan Hotels, LLC, and M.D. 1 LLC. But 

those acts alone, the district court reasoned, were too few in 

number, too short in duration, and too narrow in scope to constitute a pattern of racketeering activity. This same pleading 

failure, the court continued, doomed any claim of a RICO conspiracy under § 1962(d) because demonstrating a conspiracy 

required showing an agreement to participate in an enterprise 

through a pattern of racketeering activity, and no such pattern 

was pleaded here. 

After the court dismissed all claims against the law firms, 

Merchant and the other cross-plaintiffs filed a motion for reconsideration pursuant to Rule 54(b), which the court denied. 

The court’s earlier order on the Rule 12(b)(6) motions dismissed some, but not all, cross-defendants, so the court 
6 No. 20-1475

exercised the discretion conferred by Rule 54(b) and entered 

final judgment in favor of both law firms. See FED. R. CIV. P.

54(b) (authorizing a court to direct entry of a final judgment 

as to one or more, but fewer than all, claims or parties if the 

court determines there is no just reason for delay).

The cross-plaintiffs now appeal and, as a result of the separate Rule 54(b) judgment, we have jurisdiction under 

28 U.S.C. § 1291 to review the dismissal of claims against the 

law firms notwithstanding that some cross-claims against 

other cross-defendants remain pending in the district court. 

See Peerless Network, Inc. v. MCI Commc’ns Servs., Inc., 917 F.3d 

538, 543 (7th Cir. 2019) (citing VDF FutureCeuticals, Inc. v. 

Stiefel Labs., Inc., 792 F.3d 842, 845 (7th Cir. 2015)) (“A final 

judgment entered under Rule 54(b) is immediately appealable 

though the rest of the case remains pending in the district 

court.”). 

II

A

Having taken our own fresh look at the allegations in the 

Fifth Amended Cross-Complaint, we find that the district 

court was right to conclude that all claims against Wolin & 

Rosen and SmithAmundsen fail on the pleadings.

We begin with the ten counts under state law against 

Wolin & Rosen, all of which are untimely under Illinois’s statute of repose. Illinois law provides that any action against a 

law firm arising out of the performance of professional services may not commence more than six years after the act or 

omission at issue. See 735 ILCS 5/13-214.3(b)–(c). The last of 

Wolin & Rosen’s legal work on the property transactions featured in the Fifth Amended Cross-Complaint took place in 
No. 20-1475 7

June 2007, when a partner at the firm prepared a loan modification agreement with allegedly inflated principal amounts 

for the two hotels in Muskegon and sent it to NRB. That legal 

assistance extended at the very latest to the final closing on 

the Muskegon hotels in July 2007. Yet the cross-plaintiffs 

waited more than eight years—until the First Amended 

Cross-Complaint in November 2015—to file any claims 

against Wolin & Rosen.

The arguments the cross-plaintiffs make to avoid the statute of repose miss the mark. The cross-complaint contains no

allegations that any cross-defendant fraudulently concealed 

the existence of a cause of action against the law firms. See 

Logan v. Wilkins, 644 F.3d 577, 582 (7th Cir. 2011) (“[I]f the facts 

pleaded in the complaint establish that a claim is time barred, 

as they do here, a bare allegation of fraudulent concealment, 

without more, will not save the claim.”); see also DeLuna v. 

Burciaga, 857 N.E.2d 229, 240–43 (Ill. 2006) (recognizing that 

fraudulent concealment can, pursuant to 735 ILCS 5/13-215, 

toll Illinois’s statute of repose when a defendant conceals the 

existence of a cause of action from the plaintiff’s knowledge); 

Gredell v. Wyeth Labs., Inc., 803 N.E.2d 541, 548 (Ill. App. Ct. 

2004) (describing requirements for proving fraudulent concealment). 

Nor does any aspect of the Bankruptcy Code toll the statute of repose for Merchant’s claims. The assertion that Merchant filed a bankruptcy petition in 2004 is irrelevant to any 

state claims that he might have affirmatively brought against 

Wolin & Rosen. What is more, the cross-plaintiffs waived this 

argument by raising it for the first time in a motion to reconsider in the district court. See Brooks v. City of Chicago, 564 F.3d 

830, 833 (7th Cir. 2009).
8 No. 20-1475

We have no trouble concluding that all state law claims 

against Wolin & Rosen are untimely.

B

The state law claims against SmithAmundsen fare no better. Indeed, on appeal, the cross-plaintiffs altogether fail to address the claims against SmithAmundsen and have therefore 

forfeited any argument for reversal. See Hackett v. City of South 

Bend, 956 F.3d 504, 510 (7th Cir. 2020). Even if they had pursued these claims, the cross-complaint acknowledges that 

SmithAmundsen first entered the scene in 2012 when it began 

performing legal work for NRB. Put another way, the crosscomplaint effectively admits that SmithAmundsen played no 

role in NRB’s alleged fraud perpetrated against Hasan Merchant from 2005 to 2007. So the district court was correct to 

dismiss all state law counts against SmithAmundsen.

III

A

We turn next to the cross-plaintiffs’ three civil RICO 

claims. As these claims arise under federal law, Illinois’s statute of repose does not apply, but the cross-plaintiffs nevertheless failed to state a RICO claim against either law firm. 

In addition to imposing criminal liability, the RICO statute 

creates a civil cause of action with treble damages for individuals injured by those who engage in racketeering activity prohibited by 18 U.S.C. § 1962. See 18 U.S.C. § 1964(c). Where, as 

here, the alleged predicate acts of racketeering involve fraud, 

the complaint must describe the “who, what, when, where, 

and how” of the fraudulent activity to meet the heightened 

pleading standard demanded by Rule 9(b). Menzies, 943 F.3d 

at 338; see Roppo v. Travelers Com. Ins. Co., 869 F.3d 568, 587 
No. 20-1475 9

n.56 (7th Cir. 2017). The Fifth Amended Cross-Complaint 

grounds the RICO claims in two different provisions of the 

statute: § 1962(c), which prohibits conducting an enterprise’s 

affairs through a pattern of racketeering activity or collection 

of unlawful debt, and § 1962(a), which prohibits the investment of proceeds from such racketeering activity. See 

18 U.S.C. § 1962(a), (c).

To state a claim under § 1962(c), the complaint must allege 

that the law firms engaged in the (1) conduct (2) of an enterprise (3) through a pattern of racketeering activity or collection of unlawful debt. See Salinas v. United States, 522 U.S. 52, 

62 (1997). The first element demands proof that a defendant 

“conduct[ed] or participate[d] ... in the conduct of [the] enterprise’s affairs.” 18 U.S.C. § 1962(c). In Reves v. Ernst & Young, 

the Supreme Court explained that this element requires 

showing that a defendant “participate[d] in the operation or 

management of the enterprise itself.” 507 U.S. 170, 185 (1993). 

This operation-or-management requirement does not necessarily limit the scope of liability to an enterprise’s upper 

management. Lower-rung participants and even third-party 

outsiders can be liable, provided they play a part in operating 

or managing the enterprise. See id. at 184–85; see also United 

States v. Shamah, 624 F.3d 449, 455 (7th Cir. 2010) (concluding 

that a street police officer was a lower-rung “operator” of the 

charged RICO enterprise); MCM Partners, Inc. v. AndrewsBartlett & Assocs., Inc., 62 F.3d 967, 979 (7th Cir. 1995) (determining that the complaint sufficiently pleaded that two contractors were lower-rung participants in a RICO enterprise).

But the law is equally clear that the operation-or-management requirement is not met through the mere provision of 

professional services to the alleged racketeering enterprise. 
10 No. 20-1475

See Crichton v. Golden Rule Ins. Co., 576 F.3d 392, 399 (7th Cir. 

2009); see also Goren v. New Vision Int’l, Inc., 156 F.3d 721, 728 

(7th Cir. 1998) (“Indeed, simply performing services for an enterprise, even with knowledge of the enterprise’s illicit nature, 

is not enough to subject an individual to RICO liability under 

§ 1962(c) ....”). A complaint that does no more than allege that 

a law firm performed legal work for an enterprise fails to state 

a violation of § 1962(c). See Slaney v. Int’l Amateur Athletic 

Fed’n, 244 F.3d 580, 598 (7th Cir. 2001) (concluding and explaining generally that a complaint advancing a claim under 

§ 1962(c) is legally deficient where it lacks allegations that the 

defendant managed or exerted any control over the enterprise 

itself).

This principle likewise applies to a claim alleging a RICO 

conspiracy in violation of § 1962(d). Allegations that a law 

firm provided legal representation to an enterprise do not, 

without more, suffice to state a RICO conspiracy. See Domanus v. Locke Lord LLP, 847 F.3d 469, 481–82 (7th Cir. 2017) 

(describing elements of a RICO conspiracy claim and a law 

firm’s potential liability). The complaint needs to go further 

and allege that the firm, with knowledge of a conspiracy to 

violate the RICO statute, agreed to conduct or participate in 

the affairs of an enterprise through a pattern of racketeering 

and agreed to the commission of two predicate acts of racketeering. See id. at 479, 481–82 (discussing in detail the requisite 

elements of a RICO conspiracy claim); see also DeGuelle v. Camilli, 664 F.3d 192, 204 (7th Cir. 2011). 

Recall that the cross-plaintiffs also allege a violation of 

§ 1962(a). That provision requires proof that a defendant received income from a pattern of racketeering activity, used or 

invested that income in the operation of an enterprise, and 
No. 20-1475 11

caused the injury complained of through the use or investment of racketeering income. See Rao v. BP Prods. N. Am., Inc., 

589 F.3d 389, 398 (7th Cir. 2009). When the pattern of racketeering activity element is supported by allegations of fraud, 

those facts must be pleaded with the particularity required by 

Rule 9(b). See Lachmund v. ADM Inv. Servs., Inc., 191 F.3d 777, 

784–85 (7th Cir. 1999).

B

The Fifth Amended Cross-Complaint alleges that NRB itself was a racketeering enterprise and spends over 170 paragraphs detailing alleged RICO violations. But none comes 

close to adequately pleading that Wolin & Rosen played a 

part in operating or managing NRB, conspired to commit a 

RICO violation, or invested income from a pattern of racketeering. 

Read holistically and examined for necessary particularity, the cross-complaint reveals that Hiren Patel and Edward 

Fitzgerald, as CEO and President of NRB, ran the bank’s operations and managed its real estate dealings. As for Wolin & 

Rosen’s involvement, the cross-complaint at most describes 

that the firm’s attorneys prepared promissory notes, closing 

documents, and loan modification agreements for the three 

Michigan hotel transactions, and then provided this work 

product to its client, NRB. Our cases make clear that a law 

firm’s provision of legal services for a client—even with 

knowledge of the client’s unlawful activities—does not alone 

demonstrate operation or management of a racketeering enterprise. See Crichton, 576 F.3d at 399 (“The [RICO] statute 

does not penalize tangential involvement in an enterprise,” 

and “[a]llegations that a defendant had a business relationship with the putative RICO enterprise or that a defendant 
12 No. 20-1475

performed services for that enterprise do not suffice.”); Goren, 

156 F.3d at 728 n.4 (collecting cases reinforcing the same 

point).

Absent particular allegations that Wolin & Rosen participated in the operation or management of NRB itself, the firm 

cannot be held liable under § 1962(c). See Reves, 507 U.S. at 

185. Conclusory allegations to the contrary—that Wolin & 

Rosen participated in the enterprise, schemed to induce crossplaintiffs to buy overvalued property, or contributed in some 

way to the conception of the fraud scheme—will not do. It is 

these shortcomings that defeat the § 1962(c) claims against 

Wolin & Rosen.

The claim that Wolin & Rosen conspired to commit a RICO 

offense fails for much the same reason. The Fifth Amended 

Cross-Complaint states in a conclusory manner that Wolin & 

Rosen knew that NRB was engaged in a fraudulent appraisal 

and loan scheme and agreed to participate in this conspiracy. 

But the cross-complaint provides no details about the content 

of any agreement, when and where any agreement arose, or 

what acts of racketeering were agreed upon. Adequately 

pleading a RICO conspiracy also demands allegations that a 

defendant agreed to participate in the affairs of an enterprise—here, NRB—and no non-conclusory allegations establish such an agreement by Wolin & Rosen. See Domanus, 847 

F.3d at 481.

The cross-complaint further fails to plead that Wolin & 

Rosen received and invested proceeds from a pattern of racketeering activity. It alleges that Wolin & Rosen received a 

$2,000 fee payment per real estate transaction on the Michigan 

properties, but there is no assertion the law firm did anything 
No. 20-1475 13

to reinvest that income in NRB as the alleged racketeering enterprise.

In the end, the Fifth Amended Cross-Complaint does little 

more than allege that Wolin & Rosen provided legal services 

to its client, NRB, with the bank then using that legal work to 

close three real estate transactions with Hasan Merchant. 

Even if Wolin & Rosen knew or should have known that the 

appraisals for these properties were inflated, alleging mere 

knowledge is insufficient to state a claim against Wolin & 

Rosen under the RICO statute. See Goren, 156 F.3d at 728.

These conclusions are doubly true for SmithAmundsen. 

There is no allegation anywhere in the Fifth Amended CrossComplaint connecting any work SmithAmundsen performed 

for NRB—all of which occurred in or after 2012—to any alleged racketeering, conspiracy, or investment of proceeds 

from racketeering from 2005 to 2007.

IV

Within the morass of the cross-plaintiffs’ appeal lie challenges to other decisions of the district court over which we 

have no appellate jurisdiction or that have nothing to do with 

the claims on appeal. The district court’s partial final judgment under Rule 54(b), for example, did not include the dismissal of claims against Hiren Patel and Edward Fitzgerald, 

so we cannot review the non-final dismissal of those claims. 

As another example, the opening brief on appeal contests the 

district court’s refusal to allow discovery from the U.S. Treasury Department, a matter having nothing to do with the sufficiency of the pleadings against Wolin & Rosen and 

SmithAmundsen. Having reviewed all remaining arguments, 

we are confident that none has merit.
14 No. 20-1475

Trying to make sense of the cross-plaintiffs’ contentions 

has presented quite a challenge on appeal, and our review 

benefitted significantly from the adept care and diligence 

taken by Judge Tharp in the district court. We close by noting 

that several claims remain pending before the district court 

and others were dismissed in non-final orders not subject to 

appellate review at this time. We express no opinion on the 

viability of claims or bases for dismissal not properly before 

us on appeal. 

As to the final dismissal of claims against Wolin & Rosen 

and SmithAmundsen, we AFFIRM.