Opinion ID: 2742919
Heading Depth: 3
Heading Rank: 1

Heading: nbuf

Text: As a threshold matter, we acknowledge that, consistent with RICO’s “remedial purposes,” United States v. Boyle, 556 U.S. 938, 944 (2009) (internal quotation marks omitted), “any legal entity may qualify as a RICO enterprise,” First Capital Asset Mgmt., Inc. v. Satinwood, Inc., 385 F.3d 159, 173 (2d Cir. 2004). Thus, by alleging that NBUF was a not-for-profit corporation, plaintiffs adequately alleged that it was an “enterprise” within the meaning of RICO, and the District Court erred in holding that “plaintiffs fail to state a RICO claim 5 because they do not plead any facts which indicate the existence of an enterprise.” D. Penguin Brothers, 2014 WL 982859 at . But a complaint does not state a RICO claim merely by alleging racketeering activity and denominating a legal entity a “RICO enterprise.” A RICO violation requires a specific relationship between the enterprise and the pattern of racketeering: under § 1962(c), that the enterprise’s affairs be conducted “through” the pattern of racketeering. In other words, a plaintiff must also plausibly allege “that a nexus exist[s] between the enterprise and the racketeering activity that is being conducted.” First Capital, 385 F.3d at 174. On appeal, plaintiffs contend that their identification of NBUF as a RICO enterprise saved the complaints’ RICO counts from dismissal. They argue that NBUF qualifies as an enterprise under the definition provided by § 1961(4)—which establishes that a “corporation” may be a RICO enterprise—and that nothing more is needed. This argument is unavailing because it ignores the nexus requirement. Here, plaintiffs’ complaints inadequately allege that the RICO defendants engaged in racketeering activity through NBUF or leveraged the NBUF corporate structure to perpetrate the fraud. The complaints fail to allege, for example, that Williams used NBUF to accomplish any of the predicate acts alleged or that NBUF actually received any of the funds allegedly stolen by Spiegelman and Williams. Rather, plaintiffs merely assert that, because he was Chairman of NBUF’s Board of Directors and the Director of Strategic Development, Williams could invoke the NBUF name to induce plaintiffs to invest in the bogus real estate ventures. But Williams’s highranking position in NBUF and his misleading statements do not in and of themselves create an adequate nexus between NBUF and the alleged racketeering activity. And plaintiffs’ overarching assertion on information and belief that the RICO defendants aimed to use the fraudulently obtained funds to benefit NBUF by funneling those funds to particular political campaigns is “wholly conclusory” and thus also inadequate to fulfill the nexus requirement. Twombly, 550 U.S. at 561. We conclude, therefore, that plaintiffs have not plausibly alleged the required nexus between NBUF and the alleged theft by Spiegelman and Williams. Accordingly, plaintiffs’ RICO claims cannot be based on the NBUF enterprise. 6