Opinion ID: 526475
Heading Depth: 2
Heading Rank: 3

Heading: The Existence of a RICO Pattern

Text: 46 Appellants contend that their conduct did not amount to a pattern of racketeering activity required for RICO liability. 18 U.S.C. § 1962(c). The statute defines pattern of racketeering activity as at least two acts of racketeering activity occurring within a ten year period. 18 U.S.C. § 1961(5). Despite the language of the statute, the Supreme Court has stated that while two acts are necessary, they may not be sufficient. Indeed, in common parlance two of anything do not generally form a 'pattern.'  Sedima, 473 U.S. at 496 n. 14, 105 S.Ct. at 3285 n. 14. Instead, quoting legislative history, the Court observed that isolated incidents of racketeering activity do not implicate Congress' concerns about organized crime infiltrating legitimate business activity. Therefore, it repeated the language of the Senate Report stating  '[i]t is this factor of continuity plus relationship which combines to produce a pattern.'  Id. (emphasis added by Court). 47 The Supreme Court has heard argument on a case dealing with the pattern requirement and will perhaps provide additional guidance in the application of the continuity plus relationship test. See H.J., Inc. v. Northwestern Bell Telephone Co., 829 F.2d 648 (8th Cir.1987), cert. granted, --- U.S. ----, 108 S.Ct. 1219, 99 L.Ed.2d 420 (1988). 48 In the meantime, however, we believe that the Third and Seventh Circuits have correctly ascertained the Court's inclinations regarding the pattern requirement. In determining whether the predicate acts are sufficiently continuous and related ... [the following factors are relevant]: the number and variety of predicate acts and the length of time over which they were committed, the number of victims, the presence of separate schemes and the occurrence of distinct injuries. Liquid Air, 834 F.2d at 1304; see Environmental Tectonics v. W.S. Kirkpatrick, Inc., 847 F.2d 1052, 1063 (3d Cir.1988) (stating, a court should consider a combination of specific factors such as the number of unlawful acts, the length of time over which the acts were committed, the similarity of the acts, the number of victims, the number of perpetrators, and the character of the unlawful activity); see also Sedima, 473 U.S. at 496 n. 14, 105 S.Ct. at 3285 n. 14 (suggesting that courts define pattern with the language employed in Liquid Air ). 5 49 We believe that appellants' conduct was of a magnitude sufficient to exhibit a pattern of racketeering activity. The jury found that each defendant had committed wire and mail fraud (except Krypton which committed only mail fraud)--9 separate acts, each constituting a racketeering activity. All 19 plaintiffs (excluding spouses) were alleged victims of mail fraud and wire fraud. 6 Two specified individuals, two corporations and Krypton were embroiled in this scheme. The acts occurred over a period of time; the solicitations began in October 1980; the sales occurred between November 1980 and early 1981; the contract envisioned a 10-year relationship between defendants and plaintiffs. 7 We conclude that these acts, even though arguably in furtherance of a single scheme to defraud a class of investors, constituted a sufficient pattern of racketeering activity. 8 50 We also reject any contention that a pattern requires multiple schemes. See H.J., Inc., 829 F.2d at 650; Int'l Data Bank, Ltd. v. Zepkin, 812 F.2d 149 (4th Cir.1987); United States v. Ianniello, 808 F.2d 184, 192 (2d Cir.1986); cert. denied, 483 U.S. 1006, 107 S.Ct. 3229, 3230, 97 L.Ed.2d 736 (1987); Bank of Amer. v. Touche Ross & Co., 782 F.2d 966, 971 (11th Cir.1986); Sun Sav. & Loan Ass'n v. Dierdorff, 825 F.2d 187 (9th Cir.1987); Calif. Architectural Bldg. Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1469 (9th Cir.1987); Barticheck v. Fidelity Union Bank/First Nat. State, 832 F.2d 36, 39 (3d Cir.1987) (pattern need not involve more than one unlawful scheme). In Hospital Employees' Division of Local 79 v. Mercy Memorial Hospital Corp., 862 F.2d 606, 608-09 (6th Cir.1988) and Hofstetter v. Fletcher, 860 F.2d 1079 (6th Cir.1988), we have implicitly rejected a multiple scheme requirement. 51 We find that the scheme was significant enough to constitute a pattern of racketeering activity, although we concede it is a close question.