Opinion ID: 772567
Heading Depth: 3
Heading Rank: 1

Heading: The Town of Delaware as a RICO Enterprise

Text: 106 Dirie claims that the plaintiffs failed to establish that the Town of Delaware was a RICO enterprise and that the plaintiffs failed to establish an enterprise separate from the individual defendants. 12 The plaintiffs argue that an enterprise may be organized for a legitimate and lawful purpose and may include such things as a municipality or town or a subdivision thereof. 107 As noted above, the RICO statute defines an enterprise as includ[ing] any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity. 18 U.S.C. § 1961(4). The enterprise is an entity,... a group of persons associated together for a common purpose of engaging in a course of conduct. United States v. Turkette, 452 U.S. 576, 583 (1981). A racketeering enterprise is proven through evidence of an ongoing organization, formal or informal, and by evidence that the various associates function as a continuing unit. Id.; see United States v. Morales, 185 F.3d 74, 80 (2d Cir. 1999). Thus, evidence of an ongoing organization, the associates of which function as a continuing unit, suffices to prove an enterprise. See Turkette, 452 U.S. at 583; Procter & Gamble Co. v. Big Apple Industrial Buildings, Inc., 879 F.2d 10, 15 (2d Cir. 1989). 108 Under section 1962(c), a defendant and the enterprise must be distinct. Indeed, [i]t is well established in this Circuit that, under § 1962(c), the alleged RICO 'person' and RICO 'enterprise' must be distinct. Cedric Kushner Promotions, Ltd. v. King, 219 F.3d 115, 116 (2d Cir. 2000) (per curiam) (footnotes omitted) (citing Anatian v. Coutts Bank (Switzerland) Ltd., 193 F.3d 85, 89 (2d Cir. 1999); Riverwoods Chappaqua Corp. v. Marine Midland Bank, N.A., 30 F.3d 339, 343 45 (2d Cir. 1994); Bennett v. U.S. Trust Co., 770 F.2d 308, 315 (2d Cir. 1985), cert. denied, 474 U.S. 1058 (1986)). 109 In Riverwoods, this Court applied the distinctness requirement to hold that a bank - the RICO enterprise and the sole defendant - could not be liable under section 1962(c) when the RICO persons identified were the bank and bank employees acting within the scope of their employment. The Court later explained that the distinctness requirement could not be circumvented 'by alleging a RICO enterprise that consists merely of a corporate defendant associated with its own employees or agents carrying on the regular affairs of the defendant.' Cedric Kushner Promotions, 219 F.3d at 116 (quoting Riverwoods, 30 F.3d at 344). 110 Because a corporation can only function through its employees and agents, any act of the corporation can be viewed as an act of such an enterprise, and the enterprise is in reality no more than the defendant itself. Thus, where employees of a corporation associate together to commit a pattern of predicate acts in the course of their employment and on behalf of the corporation, the employees in association with the corporation do not form an enterprise distinct from the corporation. 111 Riverwoods, 30 F.3d at 344 (citation omitted). Notably, the Court stated that the plain language of section 1962(c) clearly envisions separate entities, and the distinctness requirement comports with legislative intent and policy. Riverwoods, 30 F.3d at 344 (citing Bennett, 770 F.2d at 315). This requirement focuses the section on the culpable party and recognizes that the enterprise itself is often a passive instrument or victim of the racketeering activity. Id. (internal quotation marks omitted). 112 The requirement of distinctiveness between the defendants and the enterprise, however, was met here. The jury could reasonably have concluded that the RICO persons - Dirie, Bernas, JBI and JML - were a separate and distinct assortment of public officials, private individuals and corporations who used their political power to influence the Town of Delaware's exercise of governmental authority over the plaintiffs' development. From the evidence adduced at trial, there was sufficient evidence from which a reasonable jury could conclude that the named defendants were separate, culpable parties and that the alleged enterprise, the Town of Delaware, was the passive instrument or victim of [their] racketeering activity. Id. 113 Moreover, this Court has previously held that a governmental unit can be a RICO enterprise. See United States v. Angelilli, 660 F.2d 23, 30-35 (2d Cir. 1981), cert. denied, 455 U.S. 910, 945 (1982). In Angelilli, the defendants were four of approximately eighty New York City marshals appointed by the Mayor of the City of New York as officers of the City's Civil Court. The marshals were charged with mail fraud in a scheme to auction judgment debtors' property at artificially deflated prices. Prior to an auction, the marshals would meet with certain buyers and determine: (1) a deflated price at which property would ostensibly be sold and (2) the amount over the agreed sales price that would be paid to the marshals in return (top money). The marshals retained the top money and subsequently mailed to judgment creditors amounts reflecting the fraudulently deflated prices. The enterprise in whose activities the marshals were alleged to have participated in a pattern of racketeering activity was the New York City Civil Court. 114 In concluding that the New York City Civil Court was an enterprise within the meaning of RICO, this Court first noted that, under the language of the statute: the definition of 'enterprise' is quite broad. We see no sign of an intention by Congress to exclude governmental units from its scope. Id. at 31. In reviewing the language of RICO, the Court concluded that, on its face the definition of an enterprise to 'include any... legal entity' is unambiguously broad, and that it does not exclude the Civil Court. Id. 115 That conclusion was bolstered by certain of RICO's substantive goals, some of which are specifically directed toward governmental entities. Id. Recognizing that racketeering activity is defined in section 1961(1) to include bribery and extortion, the Court noted that bribery is 'a crime which is peculiar to public officials,' and [e]xtortion under color of law is a crime which 'can only be committed in the context of governmental activity.' Id. at 31-32 (citations omitted). 116 By making bribery and extortion RICO offenses, Congress must be said to have understood that these offenses would be committed by governmental officials as a part of their work. Since these offenses can only be committed in the context of the work of a government agency, Congress must be taken to have intended that a governmental agency could be one of the types of enterprises, the affairs of which are conducted through a pattern of racketeering offenses. 117 Id. at 32 (quoting United States v. Sisk, 476 F. Supp. 1061, 1062 (M.D. Tenn. 1979)). Thus, [t]he connection between the named offenses of bribery and extortion and governmental work is too close to say that government work is not one of the kinds of activity that may constitute a RICO 'enterprise.' Id. 118 The interpretation of the language of the statute to extend to activities affecting governmental entities is supported by the purpose and legislative history of the Organized Crime Control Act of 1970 (the Act), Pub. L. No. 91-452, 84 Stat. 922, of which RICO is Title IX. Angelilli, 660 F.2d at 32-33. Both the purpose and legislative history of the Act reflect concern about the infiltration of local government units. Id. at 32. Accordingly, the language of section 1961(4), defining enterprise,... unambiguously encompass[es] governmental units, and... the purpose and history of the Act and the substance of RICO's provisions demonstrate a clear congressional intent that RICO be interpreted to apply to activities that corrupt public or governmental entities. Id. at 33 (citing cases). 119 The analysis in Angelilli applies with equal force to this case. Throughout this action, the only enterprise alleged by the plaintiffs was the Town of Delaware, and the jury specifically found that the Town of Delaware was a RICO enterprise. See Special Verdict Form, Question 1 at 1 (JA:629); see also (T2:1200). Based upon the evidence admitted at trial, the jury could reasonably have concluded that the Town of Delaware's grant or denial of approval for aspects of the plaintiffs' development was conditioned upon complying with the demands of Dirie, the Town Supervisor, and others with influence. As with the New York City Civil Court in Angelilli, the jury here could have reasonably found that the Town of Delaware was a passive instrument through which the defendants wielded power for their personal benefit and, accordingly, was a RICO enterprise.