CORE TERMS: forfeiture, racketeering, predicate, divestiture, gambling, predicate act, organized crime, real property, collection, pattern of racketeering activity, plead, Clayton Act, racketeering activity, Act of Racketeering, disgorgement, indictment, conspiracy, usury, Fifth Amendment, legislative history, extortion, antitrust, civil remedies, equitable relief, remedial, monetary damages, injunctive relief, participated, mail, adverse inference
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HeadnotesCOUNSEL: [**1] Peter R. Ginsberg, Esq., Assistant U. S. Attorney.
Judd Burstein, P.C., New York, New York, Attorney for Anthony Spero.
Joseph R. Benfante, Esq., New York, New York, Attorney for Gabriel Infanti.
Gerald B. Lefcourt, P.C., New York, New York, Attorney for Anthony Riela.
Gustave H. Newman, P.C., New York, New York, Attorney for Michael Sabella.
Benjamin Ruggiero, Pro Se, Memphis, Tennessee.
Robert M. Simels, Esq., New York, New York, Attorney for Nicholas Marangello and William Rodini.
Richard Ware Levitt, Esq., New York, New York, Local Attorney, for Joseph Bonanno.
Michael J. Coyle, Esq., Stanley A. Teilter, P.C., New York, New York, Attorney for Philip Rastelli.
Ronald P. Fischetti, Esq., Fischetti & Pomerantz, New York, New York, Attorneys for Joseph Massino.
Wallace Musoff, Esq., New York, New York, Attorney for Louis Attanasio.
John J. Pollok, Esq., Todtman, Hoffman, Epstein, Young, Goldstein, Tunick & Pollok, P.C., New York, New York, Attorneys for Alfred Embarrato, Frank Lino and Anthony Graziano.
Joel A. Pisano, Esq., Schwartz, Pisano, Simon & Edelstein, Livingston, New Jersey, Attorneys for Belleville Motor Lodge, Inc.
Sharon A. Flood, Esq., New York, New York, Attorney for James Vincent Bracco.
JUDGES: Glasser, United States District Judge.
OPINIONBY: GLASSER
OPINION: [*1419] MEMORANDUM AND ORDER
GLASSER, [**2] United States District Judge:
The government filed this civil action under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-1968 (1982 and Supp. IV 1986), n1 on August 25, 1987, and filed an Amended Verified Complaint on October 5, 1987. The Amended Complaint names as defendants "the Bonanno Organized Crime Family of La Cosa Nostra" and twenty-two additional individuals and entities. The Amended Complaint alleges that the defendants have engaged in at least 199 acts of racketeering including gambling offenses, narcotics offenses, trafficking in contraband cigarettes, transportation of stolen stock certificates, extortion, usury, labor racketeering, and interference with commerce by threats or violence.
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n1 For convenience, the relevant sections of RICO are included as an appendix to this decision.
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The Amended Complaint alleges that the defendants, through the enumerated acts of racketeering, have participated in the affairs of two enterprises, the Bonanno Organized Crime Family and an enterprise consisting of a union, its executive board, and its employee benefit funds, in violation of 18 U.S.C. § 1962(c) and that the defendants have invested income [**3] received from the alleged racketeering acts in eight business enterprises in violation of § 1962(a). In addition, the Amended Complaint alleges that the defendants have conspired, in violation of 18 U.S.C. § 1962(d), to violate 18 U.S.C. § 1962 (a) and (c).
The Amended Complaint seeks a preliminary injunction pursuant to 18 U.S.C. § 1964(a) restraining the defendants from, among other things, engaging in certain racketeering activities, associating with each other "for any business or commercial purpose," participating in the affairs of the union defendants or any other labor organization or employee benefit plan, and transferring property interests in the eight specified businesses. The Amended Complaint also seeks the appointment of a trustee pendente lite to oversee the operation of the union defendants and a receiver pendente lite to oversee the eight businesses.
The ultimate relief sought by the government includes a permanent injunction prohibiting the defendants from participating in the union defendants or any other labor organization or participating in any moving or storage business, from associating with each other for business or commercial purposes for five [**4] years, and from engaging in certain criminal activities. The Amended Complaint also seeks treble monetary damages pursuant to 18 U.S.C. § 1964(c) and divestiture of the defendants' interests in the eight businesses pursuant to 18 U.S.C. § 1964(a). Finally, the government has simultaneously filed a Verified Complaint in Rem seeking forfeiture of three properties pursuant to 18 U.S.C. § 1955.
On October 8, 1987, the government entered into a Consent Judgment with defendants International Brotherhood of Teamsters Local 814 Van Drivers, Packers and Furniture Handlers, Warehouseman's and Appliance Home Delivery Union ("Local 814"), the Executive Board of Local 814, Local 814 Welfare Fund, Local 814 Pension Fund, and Local 814 Annuity Fund (together "Local 814 Funds"), Ignatius Bracco, and Vito Gentile. The Consent Judgment, approved by court order, provided for the dismissal of the action as against those defendants, the appointment of a trustee, an interim executive board, and an interim board of trustees to oversee the affairs of Local 814 and Local 814 Funds, and for an injunction against Ignatius Bracco's and Vito Gentile's participation in the affairs of any labor organization, other [**5] than by simple membership or the receipt of employee benefits, for a period of five years.
The remaining defendants, other than Michael Sabella, have filed motions to dismiss the Amended Complaint pursuant to [*1420] Rules 12(b)(3), 12(b)(6), and 9(b), Fed. R. Civ. P., for a more definite statement under Rule 12(e), Fed. R. Civ. P., and to strike redundant, immaterial, impertinent, or scandalous matter under Rule 12(f), Fed. R. Civ. P. The defendants attack the Amended Complaint on numerous grounds, asserting that it fails to allege legally sufficient predicate acts for each individual defendant, fails to allege predicate acts within the statute of limitations period, fails to allege a pattern of racketeering or collection of an unlawful debt as required by RICO, fails to plead RICO's requirements with particularity, relies on inapplicable theories of co-conspirator liability, fails to allege that the defendants participated as principals in unlawful activity as required by § 1962(a), and impermissibly names the Bonanno Family as both a defendant and a RICO enterprise.
The defendants challenge the relief sought in the action, claiming that the Amended Complaint seeks forfeiture of property [**6] interests which is unauthorized and unconstitutional in a civil RICO action and injunctive relief which would violate the defendants' First Amendment right of association. The defendants argue that forfeiture of real property is not authorized by 18 U.S.C. § 1955 and that the Amended Complaint impermissibly seeks forfeiture of defendant Rodini's interest in an employee benefit fund. The defendants move for a denial, without a hearing, of the government's request for preliminary relief, in particular asserting that the appointment of a receiver pendente lite would be unnecessary. The defendants also maintain that the government lacks standing under § 1964(c) to assert claims for money damages and that such claims are insufficient because they are barred by the statute of limitations and res judicata.
Defendants Riela and Joseph Bonanno maintain that the Eastern District of New York is an improper venue for the action, that the relief sought in this action would amount to the application of an ex post facto law, and that subjecting Riela and Bonanno, who are elderly and infirm, to this action would be a violation of their due process rights and an abuse of process. Defendant [**7] Spero also moves in limine for a ruling that the Court will not draw an adverse inference from Spero's invocation of his Fifth Amendment privilege against self-incrimination. n2
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n2 The government's application for review of Magistrate Chrein's order precluding the production of Spero's tax returns is discussed in a separate decision.
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The defendants have to a large extent divided the responsibility for briefing each of these arguments among them and then have joined in each other's motions when applicable. Defendant Sabella had already filed an answer and a motion to dismiss the original Complaint before the government filed its Amended Complaint. Thus Sabella's motion to dismiss the original Complaint and the government's motion to file the Amended Complaint against Sabella are also before the Court. The arguments raised in the motions concerning Sabella are similar to those raised in the other defendants' motions. Unless clearly limited to particular defendants, the following discussion is intended to apply to all defendants whose motions are before the Court.
The RICO statute was part of the Organized Crime Control Act of 1970, Pub. L. 91-452, 84 Stat. 922, which Congress [**8] enacted in an effort to eradicate organized crime in the United States. The Statement of Findings and Purpose of the Organized Crime Control Act provides:
The Congress finds that (1) organized crime in the United States is a highly sophisticated, diversified, and widespread activity that annually drains billions of dollars from America's economy by unlawful conduct and the illegal use of force, fraud, and corruption; (2) organized crime derives a major portion of its power through money obtained from such illegal endeavors as syndicated gambling, loan sharking, the theft and fencing of property, the importation and distribution of narcotics and other dangerous drugs, and other forms of social exploitation; (3) this money and power are increasingly used to infiltrate and [*1421] corrupt legitimate business and labor unions and to subvert and corrupt our democratic processes; (4) organized crime activities in the United States weaken the stability of the Nation's economic system, harm innocent investors and competing organizations, interfere with free competition, seriously burden interstate and foreign commerce, threaten the domestic security, and undermine the general welfare of the Nation [**9] and its citizens; and (5) organized crime continues to grow because of defects in the evidence-gathering process of the law inhibiting the development of the legally admissible evidence necessary to bring criminal and other sanctions or remedies to bear on the unlawful activities of those engaged in organized crime and because the sanctions and remedies available to the Government are unnecessarily limited in scope and impact.
It is the purpose of this Act to seek the eradication of organized crime in the United States by strengthening the legal tools in the evidence-gathering process, by establishing new penal prohibitions, and by providing enhanced sanctions and new remedies to deal with the unlawful activities of those engaged in organized crime.
RICO in particular is aimed at four categories of "Prohibited Activities": (a) the use of income derived from a "pattern of racketeering activity or through collection of an unlawful debt" to acquire an interest in, establish, or operate an enterprise engaged in or affecting interstate commerce; (b) the acquisition or maintenance of an interest in an enterprise through a pattern of racketeering activity or collection of an unlawful debt; [**10] (c) the conduct of or participation in the conduct of an enterprise through a pattern of racketeering activity or collection of an unlawful debt; and (d) conspiring to violate any of these three provisions. 18 U.S.C. § 1962(a)-(d).
RICO violations may result in the criminal penalties of imprisonment, fines, and forfeiture under 18 U.S.C. § 1963 and may also be the subject of civil actions under § 1964. Section 1964(a) confers equitable powers on the federal district courts to prevent and restrain RICO violations. Section 1964(b) authorizes the Attorney General to institute proceedings under this section. Section 1964(c) authorizes any "person injured in his business or property" because of a RICO violation to sue for treble damages. The government has brought this action under § 1964, seeking both equitable and monetary relief based on the defendants' alleged RICO violations.
It bears noting at the outset that this case does not present the problems of statutory application encountered in recent private civil RICO actions in which courts have expressed a concern that "instead of being used against mobsters and organized criminals, [RICO] has become a tool for everyday fraud cases [**11] . . . ." Sedima, S.P.L.R. v. Imrex Co., 473 U.S. 479, 499, 87 L. Ed. 2d 346, 105 S. Ct. 3275 (1985). This action is directed at the activities of an alleged extensive organized crime enterprise, the Bonanno Organized Crime Family of La Cosa Nostra, through which the defendants allegedly participate in numerous racketeering activities such as gambling, narcotics offenses, loansharking, extortion, and labor racketeering that are the very types of activity at which RICO is aimed. See 115 Cong. Rec. 5873-74 (1969) (remarks of Sen. McClellan) (gambling, narcotics, loansharking, and infiltration of legitimate businesses and labor unions described as major areas of activity for organized crime); accord Organized Crime Control Hearings before Subcomm. No. 5, Comm. on the Judiciary of the House of Representatives on S. 30 and Related Proposals Relating to the Control of Organized Crime in the United States, 91st Cong., 2d Sess. ("House Hearings") 96 & 152-53 (1970) (statements of Sen. McClellan and Attorney General Mitchell). The "families" of "La Cosa Nostra," the Bonanno Family in particular, and Joseph Bonanno, Philip Rastelli, Michael Sabella, and Nicholas Marangello are mentioned in the descriptions of organized [**12] crime contained in RICO's legislative history. 116 Cong. Rec. 18913, 18940 (1970) (remarks of Sen. McClellan); S. Rep. No. 617, 91st Cong., 1st Sess. ("Senate Report") 38, 42 (1969). As [*1422] stated by the United States Court of Appeals for the Second Circuit: "Indeed, we have no doubt that the conduct for which [the defendant] was indicted, murder, distributing narcotics, and gambling, all in furtherance of the Bonanno family enterprise, is precisely the type of activity Congress sought to reach through RICO." United States v. Ruggiero, 726 F.2d 913, 923 (2d Cir.), cert. denied sub nom. Rabito v. United States, 469 U.S. 831, 83 L. Ed. 2d 60, 105 S. Ct. 118 (1984).
The fact that this action purports to be aimed at the type of activity and perhaps even one of the very criminal enterprises which Congress had in mind in enacting RICO does not, obviously, establish whether these particular defendants may be held liable in a civil RICO action or whether the government's Amended Complaint sufficiently pleads RICO claims. The parties have briefed several novel and complex issues of RICO interpretation in connection with the defendants' motions to dismiss. The Court will address those motions, first, with respect to the [**13] sufficiency of the Amended Complaint's RICO allegations and second, with respect to the appropriateness of the relief requested.
THE SUFFICIENCY OF THE RICO CLAIMS
The defendants argue that the Amended Complaint fails to state a claim under § 1962(a), (c), and (d) of RICO because the government has not adequately alleged the statutory elements of RICO violations under those sections. Two defendants contend that venue in the Eastern District of New York is not proper and that this action violates their due process rights and the prohibition against ex post facto laws. For the reasons stated below, the defendants' arguments are in certain respects meritorious and the action will be dismissed as to the Bonanno Organized Crime Family, Joseph Bonanno, Alfred Embarrato, Frank Lino, Anthony Riela, Michael Sabella and Benjamin Ruggiero, and dismissed in part as to all other defendants.
The 1962(c) Claims
The Amended Complaint asserts four 1962(c) claims against the defendants. The first claim for relief alleges that the individual defendants are employed by and associated with the Bonanno Family, a RICO enterprise, and have conducted and participated in the Bonanno Family's affairs [**14] through a pattern of racketeering activity or collection of an unlawful debt. The second claim for relief alleges that the individual defendants and the union defendants employed by or associated with the Bonanno Family Enterprise conspired and agreed to obtain through collusion and bid-rigging contracts awarded by agencies of the United States government and unlawfully demanded and received payments in connection with such bid-rigging. The third claim for relief alleges that individual defendants, employed by or associated with the Bonanno Family Enterprise, have conducted or participated in the conduct of the Bonanno Family's affairs through a pattern of racketeering activity so as to cause Local 814 to be a captive labor organization. Finally, the twelfth claim for relief alleges that Local 814, Local 814's Executive Board, and the Local 814 Funds constitute an enterprise which is dominated and exploited as a captive labor organization by the Bonanno Family and the individual defendants.
Section 1962(c) provides:
(c) It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, [**15] to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt.
A violation of § 1962(c) thus requires that a person engage in the "(1) conduct (2) of an enterprise [by which the person is employed or with which he is associated] (3) through a pattern (4) of racketeering activity." Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496, 87 L. Ed. 2d 346, 105 S. Ct. 3275 (1985) (footnote omitted). As the Supreme Court has noted: "The plaintiff [*1423] must, of course, allege each of these elements to state a claim." Sedima, 473 U.S. at 496. The Court will therefore assess the sufficiency of the first, second, third, and twelfth claims for relief as to each required element of a § 1962(c) claim.
The RICO Enterprise
The first three claims for relief designate the Bonanno Organized Crime Family as the RICO enterprise. The Amended Complaint describes the Bonanno Family as an organized criminal group connected to a nationwide crime organization known as the Mafia or La Cosa Nostra. (Amended Complaint para. 4) The Bonanno Family allegedly was founded by defendant Joseph Bonanno in 1924 and over the years has operated [**16] and continues to operate illegal activities including "drug trafficking, gambling, bookmaking and numbers games, hijackings, robberies and burglaries, loansharking, extortion and racketeering, and infiltrating, controlling, and corrupting labor unions." (Amended Complaint para. 4(d) & (e))
The Amended Complaint alleges that the Bonanno Family operates through groups known as "crews" comprising "made members" or "soldiers" and associates or "connected people." The crews are allegedly headed by "Capos" who in turn report to and share profits with a hierarchy consisting of a Boss, Underboss, and Consigliere. (Amended Complaint para. 4(a)) The Amended Complaint alleges that the operation of the Bonanno Family is governed by strict rules requiring that the enterprise's hierarchy approve all illegal activities and share in all profits. (Amended Complaint para. 4(b))
The Amended Complaint's description of the Bonanno Family alleges an enterprise under RICO. Section 1961(4) of RICO defines "enterprise" as "any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity." The Amended Complaint [**17] alleges that the Bonanno Family consists of "individuals or a group of individuals associated in fact." (Amended Complaint para. 45)
The Supreme Court has held that "RICO is equally applicable to a criminal enterprise that has no legitimate dimension or has yet to acquire one" as it is to a legitimate enterprise. United States v. Turkette, 452 U.S. 576, 591, 69 L. Ed. 2d 246, 101 S. Ct. 2524 (1981). The courts have recognized that organized crime families, a council of leaders of organized crime families, or divisions of organized crime families may qualify as RICO enterprises. United States v. Persico, 832 F.2d 705 (2d Cir. 1987) (Colombo Family); United States v. Langella, 804 F.2d 185 (2d Cir. 1986) (the Commission of La Cosa Nostra); United States v. Local 560, 780 F.2d 267 (3d Cir. 1985), cert. denied, 476 U.S. 1140, 90 L. Ed. 2d 693, 106 S. Ct. 2247 (1986) (Provenzano Group of Genovese Family); United States v. Santoro, 647 F. Supp. 153 (E.D.N.Y. 1986) (Lucchese Family). The United States Court of Appeals for the Second Circuit has also specifically recognized that the Bonanno Crime Family may be a RICO enterprise. United States v. Ruggiero, 726 F.2d 913, 923 (2d Cir.), cert. denied sub nom. Rabito v. United States, [**18] 469 U.S. 831, 83 L. Ed. 2d 60, 105 S. Ct. 118 (1984).
The Bonanno Family Enterprise as described in the Amended Complaint is allegedly characterized by "an ongoing organization, formal or informal." United States v. Turkette, 452 U.S. at 583; United States v. Ianniello, 808 F.2d 184, 191 (2d Cir. 1986), cert. denied,, 483 U.S. 1006, 107 S. Ct. 3230, 97 L. Ed. 2d 736 (1987); see United States v. Persico, 832 F.2d at 708 (Colombo Family hierarchy consisting of Boss, Underboss, Consiglieri, Capos, crew soldiers, and associates); United States v. Ruggiero, 726 F.2d at 916 (Bonanno Family headed by Boss and organized into crews). The Bonanno Family is also alleged to "function as a continuing unit," United States v. Turkette, 452 U.S. at 583; United States v. Ianniello, 808 F.2d at 191; Furman v. Cirrito, 828 F.2d 898, 903 (2d Cir. 1987), in its conduct of various unlawful activities for profit from 1924 to the present. The alleged Bonanno Family Enterprise thus possesses the qualities of "relatedness and continuity" which the United [*1424] States Court of Appeals for the Second Circuit has held must characterize a RICO enterprise. United States v. Ianniello, 808 F.2d at 191-92 (discussing Sedima, S.P.L.R. v. Imrex Co., [**19] 473 U.S. 479, 496, 87 L. Ed. 2d 346, 105 S. Ct. 3275 n. 14 (1985)); see United States v. Benevento, 836 F.2d 60, 72 (2d Cir. 1987) ("so long as the enterprise is long and elaborate enough to be considered continuing, the enterprise requirement is satisfied"); cf. Creative Bath Products, Inc. v. Connecticut General Life Insurance Co., 837 F.2d 561 (2d Cir. 1988); Albany Insurance Co. v. Esses, 831 F.2d 41 (2d Cir. 1987); Beck v. Manufacturers Hanover Trust Co., 820 F.2d 46 (2d Cir. 1987), cert. denied, 484 U.S. 1005, 108 S. Ct. 698, 98 L. Ed. 2d 650 (1988) (all finding alleged enterprises with limited short-lived goals insufficient).
The twelfth claim for relief alleges that Local 814, its Executive Board, and the Local 814 Funds collectively constitute an "association or union" under § 1961(4)'s definition of enterprise. (Amended Complaint para. 99) Although the Amended Complaint does not elaborate on the nature of the "association or union" allegedly formed by the union, executive board, and funds, the defendants have not challenged the designation of enterprise in the twelfth claim for relief. The Court notes, moreover, that the infiltration of labor organizations, with the concomitant "theft from union [**20] funds, extortion through the threat of economic pressure, and the profit to be gained from the manipulation of welfare and pension funds," was a specific wrong which Congress sought to address in RICO. Senate Report at 78 (1969); 115 Cong. Rec. 5874 (1969) (remarks of Sen. McClellan). A "captive labor organization" consisting of a union, union funds, and a severance pay plan was found to be an appropriate RICO enterprise in United States v. Local 560, 581 F. Supp. 279, 283 n. 3 (D.N.J. 1984), aff'd, 780 F.2d 267 (3d Cir. 1985), cert. denied, 476 U.S. 1140, 90 L. Ed. 2d 693, 106 S. Ct. 2247 (1986). While the Local 814 Enterprise should be better defined at a hearing on the merits of this case, the allegations of the twelfth claim for relief are sufficient to put defendants upon notice as to the enterprise involved.
The Amended Complaint alleges that the individual defendants are "employed by or associated with" the Bonanno Organized Crime Family Enterprise as required by § 1962(c). Not only do the first three claims for relief expressly allege such employment or association but each of the individual defendants is described as holding the position of Boss, Underboss, Acting Boss, Consigliere, Capo, soldier, [**21] made member, and/or associate of the Bonanno Family. The twelfth claim for relief also alleges that the Bonanno Family and individual defendants have "infiltrated, dominated and exploited" and are "employed by or associated with" the Local 814 Enterprise. n3
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n3 The twelfth claim for relief specifically names defendants Rastelli, Massino, Marangello, Spero, James Vincent Bracco, and Rodini as being employed by or associated with the Local 814 Enterprise. The Amended Complaint contains no specific allegations indicating that the other defendants are employed by or associated with the Local 814 Enterprise. The Court need not address the sufficiency of the general allegation of employment or association, however, since as discussed below, the Amended Complaint's allegations of a pattern of racketeering as to all individual defendants except Rastelli, Massino, Marangello, James Vincent Bracco, and Rodini are insufficient to sustain the twelfth claim for relief.
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Defendant Infanti n4 argues that the Amended Complaint is legally defective because the Bonanno Family cannot be both a RICO enterprise and a defendant or "person" violating RICO under § 1962(c). Bennett v. United States Trust [**22] Co., 770 F.2d 308, 315 (2d Cir. 1985), cert. denied, 474 U.S. 1058, 88 L. Ed. 2d 776, 106 S. Ct. 800 (1986); Cullen v. Margiotta, 811 F.2d 698, 729 (2d Cir.), cert. denied sub nom. Nassau County Republican Committee v. Cullen, 483 U.S. 1021, 107 S. Ct. 3266, 97 L. Ed. 2d 764 (1987). This argument, however, [*1425] is misplaced because the Bonanno Family is not alleged to fulfill the role of both the enterprise and a "person" violating RICO in any of the Amended Complaint's § 1962(c) claims. In the first three claims for relief, the Bonanno Family is alleged to be the enterprise but only the individual and union defendants are alleged to have conducted or participated in the conduct of the enterprise's affairs. The twelfth claim for relief alleges that the Bonanno Family, along with the individual defendants, infiltrated and exploited the Local 814 Enterprise. The Amended Complaint's § 1962(c) claims are therefore not defective under Bennett. See Lumbard v. Maglia, Inc., 621 F. Supp. 1529, 1534 (S.D.N.Y. 1985); United States v. Local 560, 581 F. Supp. at 329-30 (defendant may be alleged to be enterprise in some claims and "person" violating RICO in others).
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n4 On January 19, 1988, the government filed a Suggestion of Death pursuant to Rule 25(a)(1), Fed. R. Civ. P., suggesting that Infanti had died. The Court, however, will address the motion filed by Infanti because he is, as of this date, a named defendant and other defendants have joined in Infanti's arguments.
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Moreover, even if the Bonanno Family were alleged to be both the § 1962(c) "enterprise" and "person" in a single claim, that defect in the pleading might be appropriately raised by the defendant Bonanno Organized Crime Family but it would not be grounds for dismissal of the claims against the individual defendants. See United States v. Computer Sciences Corp., 689 F.2d 1181, 1190-91 (4th Cir. 1982), cert. denied, 459 U.S. 1105, 74 L. Ed. 2d 953, 103 S. Ct. 729 (1983); Morris v. Gilbert, 649 F. Supp. 1491, 1501 (E.D.N.Y. 1986); Rodonich v. House Wreckers Union Local 95, 627 F. Supp. 176, 180-81 (S.D.N.Y. 1985) (dismissing claims only as to defendant improperly alleged to be both "person" and "enterprise"). The defendant Bonanno Organized Crime Family has not moved to dismiss, or even appeared in, this action. It is hard to imagine how the Bonanno Family could appear since it is not a legal entity and is alleged to exist only as an "association in fact" enterprise. As such, the Bonanno Family is not an appropriate RICO defendant. As stated by the United States Court of Appeals for the Seventh Circuit: "The nebulous association in fact does not itself fall within the RICO definition of 'person.' We [**24] doubt that an 'association in fact' can, as such, hold any interest in property or even be brought into court. In the association in fact situation, each participant in the enterprise may be a 'person' liable under RICO, but the association itself cannot be." Haroco, Inc. v. American National Bank & Trust Co., 747 F.2d 384, 401 (7th Cir. 1984), aff'd on other grounds, 473 U.S. 606, 87 L. Ed. 2d 437, 105 S. Ct. 3291 (1985) (per curiam). Since the Bonanno Organized Crime Family cannot constitute a "person" under RICO capable of violating § 1962(a), (c), or (d), the Amended Complaint as to that named defendant is dismissed. See Leonhard v. United States, 633 F.2d 599, 609 n. 11 (2d Cir. 1980), cert. denied, 451 U.S. 908, 68 L. Ed. 2d 295, 101 S. Ct. 1975 (1981); 5 C. Wright & A. Miller Federal Practice & Procedure § 1357 at 593 & n. 43 (1969) (court may dismiss complaint sua sponte for failure to state a claim).
Pattern of Racketeering Activity
The RICO offenses listed in § 1962(a)-(c) require that the defendant have engaged in either a "pattern of racketeering activity" or the "collection of an unlawful debt." The Amended Complaint sets forth at least 199 "acts of racketeering" which the government maintains constitute either [**25] racketeering activity or the collection of unlawful debts by the defendants.
RICO defines "racketeering activity" as including any act or threat "chargeable" under several types of state criminal laws and punishable by imprisonment for more than one year; any act "indictable" under several specifically enumerated federal criminal provisions; any act "indictable" under 29 U.S.C. §§ 186 and 501(c), relating to labor organizations and union funds; any bankruptcy fraud, securities fraud, or narcotics offense "punishable" under federal law; and any act "indictable" under the Currency and Foreign Transactions Reporting Act. 18 U.S.C. 1961(1); see Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 481-82, 87 L. Ed. 2d 346, 105 S. Ct. 3275 (1985).
The RICO definition of "pattern of racketeering activity" provides:
[*1426] "Pattern of racketeering activity" requires at least two acts of racketeering activity, one of which occurred after the effective date of this chapter and the last of which occurred within ten years (excluding any period of imprisonment) after the commission of a prior act of racketeering activity.
18 U.S.C. § 1961(5). The Second Circuit has held that "two related predicate acts will suffice to establish a [**26] pattern under 18 U.S.C. § 1961(5)," Beck v. Manufacturers Hanover Trust, 820 F.2d 46, 51 (2d Cir. 1987), cert. denied, 484 U.S. 1005, 108 S. Ct. 698, 98 L. Ed. 2d 650 (1988), and has specifically rejected a requirement of multiple schemes or episodes for racketeering acts to constitute a pattern. United States v. Ianniello, 808 F.2d 184, 192 (2d Cir. 1986), cert. denied, 483 U.s. 1006, 107 S. Ct. 3230, 97 L. Ed. 2d 736 (1987); accord, e.g., United States v. Benevento, 836 F.2d 60, 72 (2d Cir. 1987); see United States v. Coonan, 839 F.2d 886 (2d Cir. 1988) ("Two racketeering acts, if committed in furtherance of the affairs of an enterprise, suffice without more to constitute a pattern"). For a "pattern of racketeering" to exist under § 1962(c), all that is required is that the defendant commit at least two acts of racketeering (or "predicate acts") "related to the common purpose of the enterprise." Albany Insurance Co. v. Esses, 831 F.2d 41, 44 (2d Cir. 1987); accord United States v. Ianniello, 808 F.2d at 191-92.
RICO defines "an unlawful debt" as a debt incurred in unlawful gambling activity or unenforceable under state or federal usury laws and which was incurred in connection [**27] with an unlawful gambling business or with the business of making usurious loans when the usurious rate is at least twice the enforceable rate. 18 U.S.C. § 1961(6) The statute contains no "pattern" requirement for the collection of an unlawful debt except to the extent it requires that the defendant be engaged in a gambling business or a business of making usurious loans.
Several of the defendants move to dismiss the Amended Complaint for failure to allege the collection of an unlawful debt or a pattern of at least two acts of racketeering within the definitional time period for each defendant. The defendants also argue that the Amended Complaint must be dismissed because its allegations of a pattern of racketeering activity do not meet the particularity requirements of Rule 9(b), Fed. R. Civ. P.
The government has attempted to name each defendant, with the exception of Joseph Bonanno, in connection with at least two of the 199 or more acts of racketeering set forth in the Amended Complaint. The sufficiency of those allegations will be discussed below. The government has also, perhaps in an effort to ensure that sufficient predicate acts are alleged for each defendant even if some [**28] of the specific acts alleged are found deficient, alleged that each defendant has aided and abetted the commission of all of the acts listed even if the defendant is not specifically named in connection with the predicate act. Paragraph 43 of the Amended Complaint states:
The Bonanno Family, the individual defendants herein, Local 814, the Local 814 Executive Board and the Local 814 Funds, and others, have committed and aided and abetted in committing the above-enumerated racketeering acts and other racketeering and illegal acts, and continue to commit and aid and abet in committing the above-enumerated racketeering acts and other racketeering and illegal acts, thereby affecting interstate and foreign commerce.
The allegations of the predicate acts themselves contain broad statements that "the individual defendants who are members or associates of the Bonanno Family" engaged in the predicate acts.
The defendants argue both that these general allegations fail to set forth each defendant's participation in the predicate acts with particularity and that the government's aiding and abetting allegation is an improper attempt to impose co-conspirator liability under Pinkerton v. United [**29] States, 328 U.S. 640, 90 L. Ed. 1489, 66 S. Ct. 1180 (1946), on the defendants for the substantive violation of § 1962(c). While the Court finds Rule 9(b) standards inapplicable to [*1427] predicate acts not sounding in fraud, the Court nevertheless holds that the Amended Complaint's broad aiding and abetting allegation may not be used to meet § 1961(5)'s requirement that at least two acts of racketeering per defendant be alleged.
Rule 9(b), Fed. R. Civ. P., n5 by its terms is limited to allegations of fraud or mistake. See United States v. Rivieccio, 661 F. Supp. 281, 290 (E.D.N.Y. 1987) (Rule 9(b) not applicable to breach of fiduciary duty, conversion, and unjust enrichment claims); Bosio v. Norbay Securities, Inc., 599 F. Supp. 1563, 1570-71 (E.D.N.Y. 1985) (Rule 9(b) not applicable to breach of fiduciary duty and conversion claims); 5 C. Wright & A. Miller, Federal Practice & Procedure § 1297 at 405 (1969). Only one of the predicate acts alleged in the Amended Complaint, a mail fraud predicate act alleged against James Vincent Bracco, is based on fraud.
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n5 Rule 9(b), Fed. R. Civ. P., provides:
(b) Fraud, Mistake, Condition of the Mind. In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other condition of mind of a person may be averred generally.
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Although Rule 9(b) has frequently been applied in RICO cases, most RICO cases applying the rule have involved predicate acts based upon fraud. See, e.g., Beck v. Manufacturers Hanover Trust Co., 820 F.2d at 49-50 (mail and wire fraud); Haroco, Inc. v. American National Bank & Trust Co., 747 F.2d 384, 405 (7th Cir. 1984), aff'd on other grounds, 473 U.S. 606, 87 L. Ed. 2d 437, 105 S. Ct. 3291 (1985) (per curiam) (mail fraud); Seville Industrial Machinery Corp. v. Southmost Machinery Corp., 742 F.2d 786, 791 (3d Cir. 1984), cert. denied, 469 U.S. 1211, 84 L. Ed. 2d 327, 105 S. Ct. 1179 (1985) (wire and mail fraud, transportation of fraudulently obtained goods); Connors v. Lexington Insurance Co., 666 F. Supp. 434, 450 (E.D.N.Y. 1987) (mail and wire fraud); Andreo v. Friedlander, Gaines, Cohen, Rosenthal & Rosenberg, 651 F. Supp. 877, 882 (D. Conn. 1986) (securities, mail, and wire fraud); Newman v. L. F. Rothschild, Unterberg, Towbin, 651 F. Supp. 160, 162 (S.D.N.Y. 1986) (mail and wire fraud); Rhoades v. Powell, 644 F. Supp. 645, 668-70 (E.D. Cal. 1986) (securities, mail, and wire fraud); Frota v. Prudential-Bache Securities, Inc., 639 F. Supp. 1186, 1192 (S.D.N.Y. 1986) (securities, mail, [**31] and wire fraud); Levine v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 639 F. Supp. 1391, 1396 (S.D.N.Y. 1986) (mail, wire, and securities fraud); Ichiyasu v. Christie, Manson & Woods International, Inc., 637 F. Supp. 187, 189 (N.D. Ill. 1986) (mail and wire fraud); Schnitzer v. Oppenheimer & Co., 633 F. Supp. 92, 97 (D. Or. 1985) (mail, wire, and securities fraud); McLendon v. Continental Group, Inc., 602 F. Supp. 1492, 1507 (D.N.J. 1985) (mail and wire fraud); Doxie v. Ford Motor Credit Co., 603 F. Supp. 624, 627 (S.D. Ga. 1984) (mail fraud); Saine v. A.I.A., Inc., 582 F. Supp. 1299, 1303 (D. Colo. 1984) (wire fraud); Slattery v. Costello, 586 F. Supp. 162, 168 (D.D.C. 1983) (mail and wire fraud); In re Sattler's, Inc., 73 B.R. 780, 786 (Bankr. S.D.N.Y. 1987) (mail, wire, and bankruptcy fraud).
A few courts have, however, suggested that RICO complaints in general, apparently regardless of whether the predicate acts involve fraud, should comport with particularity standards of Rule 9(b). Concerned about the stigma attached to the label of "racketeer" and the possibility of strike suits, these courts have stated that a "RICO plaintiff must meet a higher [**32] pleading standard than that imposed on an ordinary plaintiff." Schnitzer v. Oppenheimer & Co., 633 F. Supp. at 97; see Plount v. American Home Assurance Co., 668 F. Supp. 204, 206-07 (S.D.N.Y. 1987) ("Yet all of the concerns that dictate that fraud be pleaded with particularity exist with even greater urgency in civil RICO actions"); see also Taylor v. Bear Stearns & Co., 572 F. Supp. 667, 682 (N.D. Ga. 1983) (Rule 9(b)'s standards apply to RICO claims).
The Court finds no basis for extending the reach of Rule 9(b) to all RICO cases: "Since the rule is a special pleading requirement and contrary to the general approach of simplified pleading adopted by the federal rules, its scope of application [*1428] should be construed narrowly and not extended to other legal theories or defenses." 5 C. Wright & A. Miller, Federal Practice & Procedure § 1297 at 405 (1969); see id. § 1221 at 149 (Rule 9 is the only special pleading provision in the Federal Rules of Civil Procedure). The Court is not persuaded that the fact that a RICO defendant may be labelled a "racketeer" calls for judicial extension of Rule 9(b)'s scope. See Sedima, S.P.R.L. v. Imrex Co. 473 U.S. 479, 492, 87 L. Ed. 2d 346, 105 S. Ct. 3275 (1985) [**33] ("As for stigma, a civil RICO proceeding leaves no greater stain than do a number of other civil proceedings"); Rodonich v. House Wreckers Union Local 95, 627 F. Supp. 176, 178 (S.D.N.Y. 1985) (questioning propriety of altering RICO's pleading burden). The Court therefore will not scrutinize the non-fraud RICO allegations of the Amended Complaint against a heightened particularity standard.
Even though Rule 9(b) is not generally applicable to RICO allegations, a complaint purporting to allege a violation of RICO must comply with the notice pleading requirements of Rule 8(a)(2), Fed. R. Civ. P. n6 Rule 8(a) requires that a complaint set forth "'a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957). Notice pleading requirements are applicable to RICO, and "it is imperative that the court and the defendants be placed on clear notice as to what is being alleged, and what the substance of the claim is, in order to facilitate a decision on the merits of the case." Ralston v. Capper, 569 F. Supp. 1575, 1581 (E.D. Mich. 1983); see Gregoris [**34] Motors v. Nissan Motor Corp., 630 F. Supp. 902, 913 (E.D.N.Y. 1986) (applying Rule 8(a) to RICO complaint).
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n6 Rule 8(a)(2) requires that a pleading setting forth a claim for relief contain "a short and plain statement of the claim showing that the pleader is entitled to relief."
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A complaint's insufficiency under Rule 8(a) may provide the basis for a motion to dismiss under Rule 12(b)(6), Fed. R. Civ. P. See New York v. Cedar Park Concrete Corp., 665 F. Supp. 238, 246 (S.D.N.Y. 1987); DeFina v. Latimer, 79 F.R.D. 5, 6 (E.D.N.Y. 1977); 5 C. Wright & A Miller, Federal Practice & Procedure, § 1203 at 66-67 (1969). A RICO plaintiff must allege each of RICO's statutory elements, Sedima, 473 U.S. at 496, and a complaint which fails to allege one or more of those elements, may be dismissed. Albany Insurance Co. v. Esses, 831 F.2d 41 (2d Cir. 1987) (failure to plead enterprise); Beck v. Manufacturers Hanover Trust Co., 820 F.2d 46 (2d Cir. 1987), cert. denied, 484 U.S. 1005, 108 S. Ct. 698, 98 L. Ed. 2d 650 (1988) (same); Ralston v. Capper, 569 F. Supp. 1575 (E.D. Mich. 1983) (failure to plead predicate acts, violation of § 1962, enterprise).
While mindful that a complaint should not [**35] be dismissed for failure to state a claim "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief," Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957); Goldman v. Belden, 754 F.2d 1059, 1065 (2d Cir. 1985), the Court is also aware that it need not assume that conclusory statements as to legal effects or conclusions, deductions, or opinions as to factual allegations are true. 5 C. Wright & A. Miller, Federal Practice & Procedure, § 1357 at 597 (1969); 2A J. Moore, J. Lucas, G. Grotheer, Moore's Federal Practice para. 12.07 [2.-5] at 12.63-64 (2d ed. 1987).
The broad allegation of aiding and abetting contained in paragraph 43 of the Amended Complaint is not sufficient under Rule 8 to attribute to each defendant the preceding 199 or more acts of racketeering. A defendant's aiding and abetting the commission of a predicate act may constitute a predicate act itself. 18 U.S.C. § 2; Petro-Tech, Inc. v. Western Co. 824 F.2d 1349, 1356-57 (3d Cir. 1987); First Federal Savings & Loan Ass'n v. Oppenheim, Appel, Dixon & Co., 629 F. Supp. 427, 445 (S.D.N.Y. 1986); Fireman's Fund Insurance Co. v. Plaza [**36] Oldsmobile Ltd., 600 F. Supp. 1452, 1456-57 n. 2 (E.D.N.Y. 1985). The aiding and abetting allegation of the [*1429] Amended Complaint, however, is devoid of allegations as to how the defendants associated themselves with the predicate acts, participated in them as something they wished to bring about, or sought by their actions to make them succeed. Nye & Nissen v. United States, 336 U.S. 613, 619, 93 L. Ed. 919, 69 S. Ct. 766 (1949); United States v. Sigalow, 812 F.2d 783, 785 (2d Cir. 1987). The Amended Complaint's aiding and abetting allegation also runs counter to Rule 8's requirement that "actions brought against multiple defendants must clearly specify the claims with which each particular defendant is charged." 5 C. Wright & A. Miller, Federal Practice & Procedure, § 1248 at 226 (1969); see Laterza v. American Broadcasting Co., 581 F. Supp. 408, 412 (S.D.N.Y. 1984) (must allege how each defendant aided and abetted specific predicate act).
It cannot be discerned from the Amended Complaint which defendants are alleged to have aided and abetted which predicate acts or in what manner they aided and abetted the acts. The defendants' alleged association with the Bonanno Organized Crime Family alone [**37] is not sufficient to attribute to each defendant all of the predicate acts. Congress specifically declined to make mere membership in an organized crime organization a RICO offense. See Moss v. Morgan Stanley, Inc., 719 F.2d 5, 21 n. 17 (2d Cir. 1983), cert. denied sub nom. Moss v. Newman, 465 U.S. 1025, 79 L. Ed. 2d 684, 104 S. Ct. 1280 (1984) (discussing legislative history). As stated in United States v. Persico, 832 F.2d 705, 714 (2d Cir. 1987), "the focus of section 1962(c) is on the individual patterns of racketeering engaged in by a defendant, rather than the collective activities of the members of the enterprise." n7
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n7 The defendants have argued at length that the Amended Complaint seeks to hold each defendant responsible for all the predicate acts alleged under principles of co-conspirator liability established in Pinkerton v. United States, 328 U.S. 640, 90 L. Ed. 1489, 66 S. Ct. 1180 (1946). The Court believes it is neither necessary nor useful to discuss the possible application of Pinkerton to RICO cases since the Amended Complaint in this action does not seek to attribute predicate acts to defendants based upon Pinkerton and the government has disclaimed any reliance on Pinkerton in its predicate act allegations. (Government Brief at 35 n. 14)
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The government argues, in support of its aiding and abetting allegation, that the structure of the Bonanno Family requires all criminal activity to be approved by the Family hierarchy and that a Bonanno Family member's superiors share in the profits from the members' criminal activity. The structure of the Bonanno Family as alleged in the Amended Complaint, however, could also be viewed as inconsistent with characterizing each individual defendant as an aider and abettor of all the predicate acts by virtue of his association with the Family. A soldier, associate, or capo of one crew, for example, may theoretically have no connection with the activities of another crew.
The aiding and abetting allegation of paragraph 43 does not give each defendant sufficient notice as to the predicate acts alleged against him. The Court therefore will disregard the aiding and abetting allegation in assessing whether the Am