United States District Court, District of Columbia
March 30, 2000
TARYN L. DODD, ET AL., PLAINTIFFS,
INFINITY TRAVEL, ET AL., DEFENDANTS.
The opinion of the court was delivered by: Robertson, District Judge.
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.
Plaintiffs allege that on various occasions over a
period, they were solicited by Kim Nguyen to "invest in
purchasing airline tickets in bulk for resale" by Infinity
Travel to groups traveling to the South Pacific. Amended
Complaint at 3. Lured by guarantees that they would receive a
15%-40% return on their investments within four months, the
Dodds and Ms. Wilkins agreed to purchase the tickets, and, at
the request of Kim Nguyen, drew checks payable to Kim Nguyen for
$20,800 and $16,000.*fn3
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).
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.
"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
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 been rejected by the Court of
Appeals. See Edmondson & Gallagher v. Alban Towers Tenants
Assn., 48 F.3d 1260, 1264 (D.C. Cir. 1995).
A viable RICO based on allegations of wire and mail fraud must
allege that each defendant participated in at least two acts of
wire or mail fraud. See Dooley v. United Technologies Corp.,
803 F. Supp. 428, 440 (D.C. 1992); First Interregional Advisors
Corp. v. Wolff, 956 F. Supp. 480, 485 (S.D.N.Y. 1997). It was
Kim Nguyen, and not either of the defendants, who made the
telephone calls soliciting plaintiffs' investment. Plaintiffs
are thus reduced to arguing (1) that these defendants should be
held vicariously liable for the predicate acts committed by
their agent (Kim Nguyen) in furtherance of the conspiracy, or
(2) that RICO civil liability will lie against an aider and
abettor (defendants) of one who commits two predicate acts (Kim
Neither theory succeeds. The Amended Complaint does not allege
that Kim Nguyen was the defendants' agent, or that defendants
had any role in making the telephone calls. It does not allege
facts that would amount to knowing and substantial assistance to
the principal violation. Plaintiffs cannot impose liability on
the husband and daughter of the putative wrongdoer on the basis
of nothing more than a familial relationship. See Lust v.
Burke, 876 F. Supp. 1474, 1482 (Md. 1994).
Setting aside plaintiffs' own uncertainty concerning what
entities constitute the alleged enterprise,*fn5 their failure
to plead facts identifying the common purpose and organizational
and decisionmaking structure of the alleged enterprise is fatal
to their claim. See United States v. White, 116 F.3d 903, 924
(D.C. Cir. 1997) (quoting United States v. Perholtz,
842 F.2d 343, 362 (D.C. Cir. 1988)).
An appropriate order accompanies this memorandum.
Upon consideration of defendants' motion to dismiss, it
appearing that plaintiff's Amended Complaint fails to state a
claim upon which relief can be granted, it is this 30th day of
ORDERED that defendant's motion [# 7-1] is granted.