Plaintiffs filed a second amended complaint in June 1995. The VOA defendants moved to dismiss the second amended complaint under Fed. They also moved for sanctions and an order denying plaintiffs any further opportunities to amend their complaint. Plaintiffs opposed the motion and sought sanctions against the VOA defendants for making the motion to dismiss. The court dismissed the second amended complaint without leave to further amend and denied all applications for sanctions.
Plaintiffs now appeal.
We review de novo the district court's dismissal for failure to state a claim. Predicate acts for purposes of RICO include specifically enumerated crimes, including mail fraud, wire fraud, and fraud in the sale of securities. Because the mail and wire fraud allegations mention only the Gulati defendants, and contain no reference to the VOA defendants, they cannot be construed to allege a cause of action against the VOA defendants. As for the allegations of fraud in the sale of securities, plaintiffs allege only that the Gulati defendants sold the Notes in violation of the securities laws. Moreover, plaintiffs fail to set forth any basis whatsoever for the inference that the VOA defendants knew that Gulati's claims about the Notes were false or otherwise knowingly participated in a fraudulent scheme.