The World in U.S. Courts: Fall 2014 - Racketeer Influenced and Corrupt Organizations Act (RICO) | September.30.2014
Plaintiff Yulia Tymoshenko, the former Prime Minister of Ukraine, and others sued a former political opponent, Dmytro Firtash, and related individuals and companies in U.S. District Court in New York for violations of the Alien Tort Statute and RICO. The complaint alleged that Tymoshenko, a long-time "vocal critic" of Firtash and the natural gas companies he controlled, was detained and persecuted by them 2010 following her defeat in Ukrainian elections.
Tymoshenko's RICO allegations included a charge that the defendants had used money obtained as a result of illegal bribery to operate a RICO "enterprise" in the U.S. that engaged in money laundering and other violations under the guise of legitimate real estate deals and additional investments. The complaint also alleged that the U.S. enterprise sought to raise money in the U.S. through the sale of unidentified non-U.S. real estate investments at inflated prices. Finally, Firtash and his associates were alleged to have acquired a Ukrainian bank that was then used to transfer illegally-obtained funds to the U.S. The complaint alleged three RICO "predicate acts": wire fraud, mail fraud, and money laundering.
The District Court in New York dismissed the complaint, finding that none of these violations had been properly supported by factual allegations. However, the Court allowed the plaintiffs to amend their complaint, because of a change in the law regarding the extraterritorial application of RICO. The original complaint had been dismissed in 2013, based upon a finding that both the alleged RICO "enterprise" and "pattern of racketeering activity" were "essentially foreign." The Court recognized that the amended complaint currently under review was "likely" drafted with an eye to the law that existed prior to the Second Circuit's 2014 decision in European Community v. RJR Nabisco [See The World in U.S. Courts, Summer 2014 issue], which changed the relevant inquiry to the geographic scope of the predicate acts alleged. In light of the intervening law, the district court allowed the plaintiffs to amend their complaint for a second time.