District Court Concludes that RICO Cannot Be Given Extraterritorial Application, But That Sufficient Connection With U.S. Was Alleged Nonetheless

The World in U.S. Courts: Fall 2014 - Racketeer Influenced and Corrupt Organizations Act (RICO) | August.18.2014

Reich v. Lopez, U.S. District Court for the Southern District of New York, August 18, 2014

Plaintiffs, a former U.S. ambassador to Venezuela and his consulting company, sued a number of defendants for RICO and state claims including tortious interference with contract, arising out of the latters' alleged efforts to bribe Venezuelan officials and punish the plaintiffs for opposing those activities.  Implementing the recent appellate decision in the European community v. RJR Nabisco case [discussed in the Summer 2014 edition of The World in U.S. Courts], the District Court in New York noted that the extraterritorial applicability of RICO depends upon the extraterritorial applicability of the underlying predicate offenses alleged.  In the this case, the Court observed that predicate violations of the Travel Act and the Wire Fraud statute have been alleged, and both of those statutes are limited to U.S. conduct.  Thus, for the RICO claim to survive, sufficient facts must be alleged to establish a "domestic" violation.  The Court found this requirement to have been satisfied by allegations that the defendants implemented their scheme using telephone communications and wire transfers originating in the U.S., and in furtherance of their scheme traveled to and from the U.S.  The fact that additional aspects of the alleged scheme were international in nature did not affect the analysis, since the minimum U.S. contacts were found.  The Court concluded that other elements of a RICO violation had not been made out, however, and dismissed the claim.

[Editor's note:  The Reich case is also discussed in this report in connection with personal jurisdiction.]

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