Opinion ID: 2585
Heading Depth: 2
Heading Rank: 1

Heading: Allegations Specific to the RICO Claims

Text: As explained further below, RICO makes it unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity. . . . 18 U.S.C. § 1962(c). The City alleges that defendants engage in such a pattern of racketeering by committing mail or wire fraud each time they use, or cause to be used, the mails or wires to effect a sale of cigarettes to New York City residents without complying with the Jenkins Act's reporting requirements to the State. [9] The alleged RICO enterprises in the cases before us generally take one of two forms. Under the first, a defendant corporate entity is alleged to be a passive enterprise with its defendant officer(s) and/or director(s) acting as the RICO person[s] who conduct the affairs of the enterprise in violation of the statute. The second set is comprised of association-in-fact enterprises, [10] where the association consists of a defendant entity and a third party, and the RICO person[s] consist of the defendant entity and, in general, the officers and/or directors of the entities comprising the enterprise. [11] The City's case-specific enterprise allegations regarding the remaining defendants are as follows: In Smokes-Spirits, the remaining alleged enterprise is defendant Smokes-Spirits.com, a passive vehicle, and the person associated with it is defendant Michael Klee, an officer or employee of SmokesSpirits. com. In EZTobacco, the remaining alleged enterprise is EZ Tobacco Enterprise (EZTobacco Enterprise), consisting solely of Electronic Computer Consulting, LLC, and the persons associated with it are defendant Theresa Trivett, doing business as EZ-Tobacco.com, and others unknown. Nexicon involves two different groups of remaining defendants, and, for each, the City alleges the two alternative enterprise forms outlined above. With respect to the first group of defendants, the primary enterprise consists of defendant Nexicon, Inc. (Nexicon), and the persons associated with it are defendants Richard Urrea, President of Nexicon; defendant Daniel Urrea, Chief Financial Officer of Nexicon; non-party Brent Wolford, technical consultant to American Indian CigCo, LLC (American Indian CigCo), a New Mexico limited liability corporation; and non-party Chuck Arning, who allegedly participated in concealing Nexicon's cigarette sales from the City. Alternatively, the City alleges an association-in-fact enterprise consisting of Nexicon and American Indian CigCo. Since purchasing Nexicon's internet cigarette business, American Indian CigCo owns or controls the websites previously controlled by Nexicon, and is alleged to have assisted Nexicon in concealing cigarette sales previously made by Nexicon to New York City residents. The City alleges that the two companies, Nexicon and American Indian CigCo, have entered into profit-sharing and employment agreements. The RICO persons associated with this alleged association-in-fact enterprise are Nexicon, Richard Urrea, Daniel Urrea, and Wolford, Arning, and non-party Paul Rainbird, owner of American Indian CigCo. With respect to the second remaining group of defendants in Nexicon, the City alleges that defendant Hemi Group, LLC (Hemi Group), incorporated in New Mexico, is an enterprise and that the person associated with it is defendant Kai Gachupin, owner or officer of Hemi Group. The City also alleges an alternative association-in-fact enterprise consisting of Hemi Group and A1 Enterprises, Inc. (A1 Enterprises), a New Mexico corporation, which sells cigarettes over the Internet. According to the allegations, A1 Enterprises works with the Hemi Group to conceal from New York City cigarette sales made by Hemi Group to New York City residents. The persons alleged to be associated with the Hemi Group association-in-fact enterprise are Gachupin and Hemi Group. In NCCigarettes, the remaining alleged primary enterprise is NCCigarettes.com, and the persons associated with it are defendant Scott Herring, defendant Xfire Software LLC (Xfire), an internet service provider, and defendant Jeff Reinhardt, manager, Chief Executive Officer, and sole owner of Xfire. The City also appears to have alleged an alternative association-in-fact enterprise, consisting of Herring, Reinhardt, Xfire and NCCigarettes.com. The persons associated with this alleged enterprise are Herring, Reinhardt, and Xfire. [12]