District Court Dismisses RICO Claim on Finding that Plaintiff Suffered Injury in Panama, where He Resides, Even Though Funds Were Stolen From His Bank Account in New York

The World in U.S. Courts: Summer and Fall 2016 - Racketeer Influenced and Corrupt Organizations Act (RICO)

Bascuñan v. Elsaca, U.S. District Court for the Southern District of New York, September 28, 2016

The case involves allegations that the defendants, through various frauds, stole approximately U.S.D64 million from the plaintiff and affiliated companies, including the removal of funds from the plaintiff’s bank accounts in New York.  None of the plaintiffs or defendants is a U.S. resident or entity, and except for the actual withdrawals of funds, no part of the scheme was alleged to have been implemented in the U.S. 

The District Court in New York observed that the recent RJR Nabisco case [discussed above] established that RICO violations may be based on extraterritorial conduct to the extent the underlying criminal violations claimed to constitute the “pattern of racketeering activity” have extraterritorial reach.  But the Court also noted that private RICO actions could be brought only if the plaintiffs suffered injuries in the U.S.  This was the focus of the Court’s discussion:  where the plaintiffs’ injuries occurred.  After reviewing a number of alternative formulations for determining where an “injury” occurred, the Court parsed the language of the RJR Nabisco opinion and concluded that the focus of the inquiry for purposes of a private right of action should be where the plaintiff suffered the injury.  (By contrast, it concluded that the location of the defendants’ alleged conduct should be the focus in determining whether a substantive violation of the RICO statute occurred.)  The Court thus found that the plaintiff suffered his alleged injury in Panama, where he resided, even though the funds were physically located in New York.  The plaintiff’s RICO claims were thus dismissed.

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