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FEDERAL INFORMATION SYS., CORP. v. BOYD

October 16, 1990

FEDERAL INFORMATION SYSTEMS, CORP., et al., Plaintiffs and Counterdefendants,
v.
RICHARD LEE BOYD, et al., Defendants and Counterplaintiffs


Royce C. Lamberth, United States District Judge.


The opinion of the court was delivered by: LAMBERTH

ROYCE C. LAMBERTH, UNITED STATES DISTRICT JUDGE

 This case comes before the court on consideration of defendants Richard Boyd, McKay, Stevenson and Forest Boyd's motion to dismiss and for partial summary judgment, *fn1" and the opposition and reply thereto. Defendants' motion to dismiss is based on their position that plaintiffs have not adequately pled their case and that plaintiffs have failed to state a claim. Defendants' motion for partial summary judgment is incoherent. *fn2"

 Background

 This case is an action *fn3" by plaintiffs Federal Information Systems Corporation ("FISC"), a District of Columbia corporation engaged in the transmission of news briefings to the press and others; Cortes W. Randell, an officer and stockholder in FISC; and Carol L. DeHaven, a claimant to shares of FISC. Defendants are United Family Federation ("UFF"), a District of Columbia nonstock, § 501(c)(3) tax-exempt corporation; Richard L. Boyd, a claimant to shares of FISC, employee of International Media Services, Inc. ("IMS News"), a division of UFF, and former husband of plaintiff Carol L. DeHaven; William P. McKay, director and officer of both UFF and its division IMS News; J. John Stevenson, director and officer of both UFF and its division IMS News; and Forrest J. Boyd, officer of IMS News and father of defendant Richard L. Boyd. In their Amended Complaint, plaintiffs allege that in September, 1984, defendant Richard Boyd, and plaintiffs DeHaven, and Randell agreed to establish and operate together a news transcription service. Their common goal, according to plaintiffs, was to build up the business and then sell the corporation. The business was incorporated on April 2, 1985 under the name Federal Information Systems Corporation, and an agreement concerning ownership shares was signed October 2, 1985.

 Plaintiffs go on to describe a parallel scheme, involving Humane Family Foundation ("Humane"), a non-profit, § 501(c)(3) corporation formed in Pennsylvania with its principal place of business in Florida, devoted to the advocacy of animal rights. Humane and its principal officer, Emily F. Gleockler, were allegedly defrauded by defendants in order to gain access to Humane's financial resources. Defendants McKay and Stevenson, while employees or officers of Humane, allegedly devised a scheme to deceitfully secure property and other resources from Humane for their own purposes, including, inter alia, a scheme to purchase IMS News, then owned by defendant Forrest Boyd, for themselves. In furtherance of this scheme, defendants Stevenson and McKay allegedly formed defendant corporation UFF with a stated purpose of developing "an awareness in human beings of the importance of being humane toward all living beings" and falsely claimed tax exempt status under the Internal Revenue Code. On several occasions, defendants Stevenson and McKay allegedly transferred a total of at least $ 150,000.00 from the funds of Humane to UFF without knowledge or permission of Humane's board. UFF, in turn, purchased IMS News which became an unincorporated division of UFF when IMS News' corporate statutes were revoked for failure to pay statutory fees.

 When defendants McKay and Stevenson took over IMS News through UFF, they retained former owner defendant Forrest Boyd as an officer and employee of IMS News, and added defendant Richard Boyd as an employee of IMS News. Defendant Richard Boyd, who was hired by IMS News, allegedly conspired with defendants McKay and Stevenson and others to ruin the business of FISC, using the resources of IMS News and UFF, through several illegal operations.

 First, on several occasions, defendant Richard Boyd allegedly stole mail directly from FISC's United States Post Office box at the National Press Building in the District of Columbia. The mail stolen allegedly included twenty six negotiable checks payable to plaintiff corporation totaling $ 11,399.00, and other significant business correspondence, bills and records. The stolen mail was carried across state lines and the checks were deposited in a checking account at the Crofton, Maryland, branch of Maryland National Bank that defendant Richard Boyd created in the company name by falsely executing official bank documents. Defendant Richard Boyd allegedly kept the stolen mail until early November 1986, but denied under oath in his Maryland divorce proceeding on October 27, 1986 that the mail was in his possession.

 The second method defendants allegedly used to harm plaintiffs' business was through wiretapping. Plaintiffs allege that defendants Richard and Forrest Boyd engaged in illegal wire intercepting from late August to mid September 1986. Plaintiffs allege that defendants used the information to threaten FISC with interference with a prospective sale of the company, and to divulge proprietary company information and financial data to various newspapers in a misleading manner. Defendants Richard and Forrest Boyd, McKay, Stevenson, and UFF are alleged to have used and continue to use the information received from the wiretapping to extort information from FISC concerning its operations, finances, stock ownership, and corporate meetings.

 The last method that defendants are alleged to have used to harm and harass plaintiffs is through falsely representing that defendant Richard Boyd had transferred his interest in FISC to defendant UFF. Defendant McKay, representing himself as owner of UFF and therefore owner of the assigned shares of FISC, allegedly continued to intimidate FISC with threats of lawsuits. He is also alleged to have used information seized from the wiretapping to influence the issuance of share and other corporate affairs.

 In Counts One and Two of the Amended Complaint, plaintiffs allege violations of 18 U.S.C. § 1962 (a), (b), (c), (d), of the Racketeering Influenced and Corrupt Organizations Act ("RICO"), through the predicate acts of mail and wire fraud; extortion; and transportation of stolen goods in interstate commerce. In the remaining eight counts of the Amended Complaint, plaintiffs allege the common law claims of conversion, tortious interference with business opportunity, tortious interference with contractual relationships, tortious disclosure of confidential information and breach of duty, breach of contract, and illegal wire interception. Defendants' motion to dismiss addresses only the first two counts.

 Analysis

 Defendants' motion to dismiss is based on several grounds. Defendants allege that plaintiffs have not adequately pled a pattern of RICO activity; that the conspiracy allegations under the RICO statute fail because they are pled in a conclusory manner; that plaintiff FISC cannot be an enterprise for the purposes of §§ 1962 (a) and (b); and that plaintiffs have no standing because they are not injured in their business or property by reason of the alleged racketeering activity. Defendants' motion, while noting that they have no authority to move on behalf of UFF, see memorandum of points and authorities, motion of defendants Boyd, McKay, Stevenson and Boyd to dismiss and for partial summary judgment, at 3 note 2, attempts to do just that. Defendants argue that UFF must be dismissed because a corporation cannot conspire with its own employees, because respondeat ...


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