Court Opinion

ID: 735595
Source: CourtListenerOpinion
Date Created: 2012-04-17 18:00:33+00
Date Added: 2024-06-11T17:53:51.539286
License: Public Domain

[DO NOT PUBLISH]

                  IN THE UNITED STATES COURT OF APPEALS

                            FOR THE ELEVENTH CIRCUIT           FILED
                             ________________________ U.S. COURT OF APPEALS
                                                                      ELEVENTH CIRCUIT
                                                                        APRIL 17, 2012
                                     No. 10-15405
                                                                          JOHN LEY
                               ________________________
                                                                           CLERK

                          D. C. Docket No. 1:10-cv-21654-JLK

VIRENDRA RAJPUT,
a.k.a. Vedant Rajput,
MANSINGH RAJPUT,
                                                                        Plaintiffs-Appellants,

       versus

CITY TRADING, LLC,
a Florida company,
CHAND REALTY, LLC,
a Florida company, et al.
                                                                      Defendants-Appellees.

                  _________________________________________

                     Appeal from the United States District Court
                         for the Southern District of Florida
                  _________________________________________

                                       (April 17, 2012)

Before EDMONDSON, BARKETT, and SUHRHEINRICH,* Circuit Judges.

       *
         Honorable Richard F. Suhrheinrich, United States Circuit Judge for the Sixth Circuit
sitting by designation.
PER CURIAM:

      This case involves an alleged investment fraud committed in India.

Racketeer Influenced and Corrupt Organizations Act (“RICO”) claims and an

unjust enrichment claim against a U.S.-based affiliate of the alleged fraudsters are

involved.

      Plaintiffs invested in Indian businesses promising extraordinarily high rates

of return. But in the end, Plaintiffs were left with less money than they had

originally invested. Plaintiffs then filed this suit against the U.S.-based affiliate of

the Indian companies. Plaintiffs alleged that the affiliate U.S. business committed

RICO violations as part of a scheme to launder funds obtained through the

supposed Indian fraud. The district court granted Defendants’ motion to dismiss.

We vacate the District Court’s decision and remand the case.

                                    BACKGROUND

      Plaintiffs Virendra Rajput -- a/k/a Vedant Rajput -- and Mansingh Rajput

each invested significant sums of money with certain companies within an

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interrelated network of firms -- mainly based in India and closely connected to the

Masood family -- called City Group. This investment required a large up-front

investment with the promise of significant investment appreciation accomplished

through monthly payments back to shareholders over the course of several years.

Within only a few years though, the payments to investors faltered; and neither

Rajput received even their initial investment back. Plaintiffs contend that the

Masood family kept the invested funds for themselves, that they never intended to

pay out the promised returns, and that the entire scheme was a fraud.

      Plaintiffs do not allege that Defendants in this case were involved in the

investment phase of the alleged fraud. Instead, Plaintiffs contend the Defendants

committed RICO violations as part of a scheme to launder the funds obtained in

the alleged fraud. Broadly speaking, Plaintiffs allege that Defendant Chand

Masood moved to Florida to found Chand Realty LLC and to establish City

Trading, LLC (“City Trading”) as the U.S.-based arm of City Group. Plaintiffs

allege these U.S. companies had no legitimate customers and instead engaged in

sham dealings involving rugs, diamonds, and real estate to launder money that

City Group obtained through its fraud in India.

      To support their claims, Plaintiffs spent much of their complaint explaining

a system of money laundering that involved fake purchases of diamonds by City

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Group in India, the funneling of cash obtained through the alleged investment

fraud to “hawala person” intermediaries, and the use of this cash by the hawala

intermediaries to make fake purchases of the non-existent diamonds from different

City Group companies. Plaintiffs allege that City Trading participated in these

sham transactions and that, in doing so, aided in laundering the fraudulently

obtained investment money in furtherance of the Indian fraud.

      Beyond explaining City Trading’s role, Plaintiffs also offered specifics to

connect City Trading to the alleged diamond transactions and the Indian fraud.

Plaintiffs claim to have interviewed certain diamond dealers who admitted to

faking diamond transactions with City Group. Plaintiffs also attached allegedly

fake diamond invoices from one of the Indian City Group companies, a

spreadsheet allegedly obtained from City Group that listed City Trading in the

“Remitting info” column for diamond purchases, and bank correspondence that

raised concerns with the remittance arrangement for certain diamond transactions

involving City Trading. In addition to these specifics relating to diamond

transactions, Plaintiffs also included documentation showing financing

transactions that occurred between City Trading and certain Indian City Group

companies before the Plaintiffs’ investments.

                                         4
      While Plaintiffs’ pleadings showed potential connections between City

Trading, diamond transactions with City Group in India, and potential money

laundering, no fact alleged established directly an irrefutable connection between

City Trading and the Indian investment fraud. Based on what the district court

saw as absence of a connection between City Trading and the Indian fraud, the

district court concluded that the RICO claims and unjust enrichment claim failed

and that Defendants’ motion for dismissal must be granted.

                                STANDARD OF REVIEW

      We review a district court’s dismissal of a case pursuant to Federal Rule of

Civil Procedure 12(b)(6) de novo. Catron v. City of St. Petersburg, 658 F.3d 1260,

1264 (11th Cir. 2011).

      A “complaint must contain sufficient factual matter, accepted as true, to

‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 129 S.Ct.

1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1974

(2007)). To state a plausible claim for relief, Plaintiffs must go beyond merely

pleading the “sheer possibility” of unlawful activity by a defendant and so must

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offer “factual content that allows the court to draw the reasonable inference that

the defendant is liable for the misconduct alleged.” Id.

                                    DISCUSSION

      Plaintiffs’ complaint asserts claims under three sections of RICO --

substantive violations of 18 U.S.C. §§ 1962(a) and 1962(c) and a conspiracy claim

under 18 U.S.C. § 1962(d) -- as well as an unjust enrichment claim. Section

1962(a) prohibits the use or investment of funds derived “from a pattern of

racketeering activity,” and section 1962(c) prohibits persons employed by an

enterprise from conducting the enterprise’s business “through a pattern of

racketeering activity.” Section 1962(d) makes it unlawful to conspire to violate

the other provisions of section 1962.

                                   RICO CLAIMS

      To prove a pattern of racketeering in a civil RICO case, a plaintiff must

show at least two related racketeering predicates that amount to continued criminal

activity over time or pose a threat of continued criminal activity. Am. Dental

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Ass’n. v. Cigna Corp., 605 F.3d 1283, 1290-91 (11th Cir. 2010). To establish a

RICO conspiracy, a plaintiff must show either agreement with the objective of the

conspiracy or agreement to commit two racketeering predicates. Direct evidence

of agreement is not necessary as “the existence of conspiracy may be inferred from

the conduct of the participants.” Id. at 1293 (internal quotation omitted).

      Plaintiffs pleaded multiple racketeering predicates, including (1) money

laundering in violation of 18 U.S.C. § 1956; (2) transportation of money obtained

by conversion or fraud in violation of 18 U.S.C. § 2314; (3) sale or receipt of

money obtained by conversion or fraud in violation of 18 U.S.C. § 2315; (4)

engaging in monetary transactions in property derived from specified unlawful

activity in violation of 18 U.S.C. § 1957. The underlying fraud for purposes of

these acts was the alleged Indian investment fraud committed by certain City

Group companies. The specifics presented with Plaintiffs’ pleadings sufficiently

connect Defendants to the alleged Indian fraud to qualify as factual content that

allows the district court to draw the reasonable inference that Defendants

committed the alleged RICO violations and engaged in a RICO conspiracy.

                            UNJUST ENRICHMENT CLAIM

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      To state a claim for unjust enrichment, a plaintiff must sufficiently plead (1)

that the plaintiff conferred a benefit on the defendant; (2) that the defendant had

knowledge of the benefit; (3) that the defendant accepted or retained the benefit

conferred; and (4) that the circumstances are such that allowing the defendant to

retain the conferred benefit without paying fair value would be inequitable.

Golden v. Woodward, 15 So. 3d 664, 670 (Fla. Dist. Ct. App. 2009). The

specifics presented with Plaintiffs’ pleadings connect the Defendants to the

alleged Indian fraud enough to support a claim of unjust enrichment based on

Defendants’ control of funds illicitly gained through the fraud and prevent

dismissal of the claim.

      Plaintiffs’ pleadings include sufficient factual content to allow the drawing

of a reasonable inference that the defendants are liable for the misconduct alleged

and to state properly a claim to relief that is plausible on its face. We therefore

VACATE the district court’s dismissal and REMAND for further proceedings.

      VACATED and REMANDED.

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