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DODD v. INFINITY TRAVEL

March 30, 2000

TARYN L. DODD, ET AL., PLAINTIFFS,
V.
INFINITY TRAVEL, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Robertson, District Judge.

MEMORANDUM

Plaintiffs Taryn and Nicholas Dodd and Doris Wilkins bring this action against George Asmuth and Phuong (Christina) Nguyen, stockholders of Infinity Travel.*fn1 Plaintiffs allege that defendants — in coordination with Phong (Kim) Nguyen, President and General Manager of Infinity Travel — formed a RICO conspiracy that resulted in plaintiffs' loss of approximately $50,000.*fn2 Defendants move to dismiss for failure to state a claim under the Racketeer Influenced and Corrupt Organizations Act ("RICO"). The complaint was amended in response to defendant's motion to dismiss, but it remains fatally defective. The motion to dismiss must accordingly be granted.

FACTS

Plaintiffs further allege that Kim Nguyen and the defendants never purchased the airline tickets, and that they never intended to purchase them. Instead, plaintiffs allege, they "fraudulently retain[ed] and transferr[ed] said illegally obtained funds through their enterprise, Infinity Travel, to its stockholders, George W. Asmuth and Phuong H. (Christina) Nguyen." Amended Complaint at 7. They allegedly conspired and agreed that all funds obtained were to be designated as personal loans to Kim Nguyen and/or Infinity Travel, and, when they had accumulated (and disbursed to defendants) as much money as they could, Kim Nguyen and/or Infinity Travel would file for bankruptcy. Plaintiffs argue that this conspiracy between Kim Nguyen and defendants to commit mail, wire, and bankruptcy fraud was a pattern of racketeering activity in violation of 18 U.S.C. § 1962(a), (c), and (d).

ANALYSIS

Defendants move to dismiss, asserting that the complaint fails to allege (1) the special injury required by section 1962(a); (2) a pattern of racketeering activity under section 1962(c); (3) predicate acts performed by the named defendants; (4) a cognizable enterprise; and (5) enough facts to support the claim of fraud necessary to a RICO conspiracy. At least with respect to the first four of these assertions, defendants are correct.

Special Injury

"The civil remedy created by § 1964(c) authorizes recovery only for injury `by reason of' the RICO violation. . . . [A] plaintiff claiming under § 1962(a) must plead and prove that his injury flowed from the defendant's use or investment of racketeering income," Danielsen v. Burnside-Ott Aviation Training Ctr., Inc., 941 F.2d 1220, 1229 (D.C. Cir. 1991). "It is not sufficient to allege injury flowing from the predicate acts of racketeering." Id.

The inquiry of which plaintiffs complain is the loss of monies they paid to Kim Nguyen in response to her telephone calls, which are the alleged predicate acts. The claimed injury thus flows directly from the predicate acts. The Amended Complaint does not complain of injury resulting from the alleged racketeering activity or that racketeering proceeds were used or invested in an enterprise or activity separate and apart from the underlying racketeering activity. That failure is fatal to plaintiffs' claim.

Pattern of Racketeering Activity

A pattern of racketeering activity is "a series of related predicates extending over a substantial period of time. . . . Predicate acts extending over a few weeks or months and threatening no future criminal conduct do not satisfy this requirement." Pyramid Sec. Ltd. v. International Bank, 726 F. Supp. 1377, 1382 (D.C. 1989) (emphasis in original) (quoting H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229, 242, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989)). The predicate acts here alleged — three telephone calls by Kim Nguyen over a two-and-one-half-month period — do not establish a continuous pattern of racketeering activity. See, e.g., Zandford v. NASD, 19 F. Supp.2d 4, 11 (D.C. 1998) (dismissing RICO claim alleging six predicate acts over a six-year period); Wiggins v. Equifax Servs., Inc., 848 F. Supp. 213, 227 (D.C. 1993) (dismissing claim alleging three predicate acts over "a brief period of time"); Pyramid Sec. Ltd. v. International Bank, 726 F. Supp. 1377, 1382 (D.C. 1989) (dismissing claim alleging predicate acts over a two-month period); Long Distance Serv. v. MCI Telecommunications Corp., 692 F. Supp. 1402, 1406 (D.C. 1988) (dismissing claim in which "the number . . . of predicate acts are fairly small and the length of time over which they occurred is fairly short").

Nor have plaintiffs alleged facts that could establish that Kim Nguyen's past conduct poses a threat of future criminal conduct under a so-called "open-ended continuity model."*fn4 Infinity Travel, the alleged enterprise, has ended all operations and is in bankruptcy. Plaintiffs' speculative argument — that although defendants' conduct consisted of only three telephone phone calls over a two-and-one-half-month period, there is no guarantee that they will not continue their behavior into the future — has ...


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