Antitrust Law Daily Wrap Up, RICO—NDIll: Developer Fails To Show Pattern Of Racketeering Activity By Homeowners’ Association , (May 6, 2013)
Law Firms Mentioned:Griffin Villa Williams LLP | Jones & Jacobs
Organizations Mentioned:Dremco, Inc.
By Jody Coultas, J.D.
Real estate developer Dremco, Inc. failed to state a Racketeer Influenced and Corrupt Organizations Act (RICO) claim against home owners in its townhome development, the federal district court in Chicago has held (Dremco, Inc. v. Diver, May 3, 2013, Durkin, T.).
The home owners lived in a townhouse community that was a covered by a declaration of covenants, conditions, easements, and restriction (Declaration). The original developer of the community conveyed the undeveloped lots to Dremco and, according to Dremco, the Declaration. Dremco alleged that the home owners engaged in an ongoing criminal enterprise in violation of RICO by improperly taking control of the home owners’ association and violating the terms of the Declaration.
To state a RICO claim, Dremco must adequately allege: (1) conduct (2) of an enterprise (3) through a pattern of (4) racketeering activity. A pattern of racketeering activity requires at least two predicate acts in a 10-year period. Predicate acts include mail fraud and wire fraud.
Dremco was completely unable to state RICO claims against the home owners, according to the court. Dremco alleged that the homeowners mailed notices purporting to adopt budgets and levy assessments. However, there were no allegations regarding fraud or regarding how the particular mailings or wirings furthered the fraud. Dremco failed to allege racketeering activity by any particular homeowner. Because Dremco was unable to show one predicate act on the part of home owners, there was no evidence of a pattern of activity. The issue was whether the transfer from the original developer to Dremco shifted the right to control the association to the home owners. Thus, Dremco’s claim was based on a single alleged fraud by the homeowners, rather than an organized, long-term, habitual criminal activity.
The case is No. 12 C 8703.
Attorneys: Richard C. Jones, Jr. (Jones & Jacobs) for Dremco, Inc. Robert K. Villa (Griffin Villa Williams LLP) for Asim Ansari.
Companies: Dremco, Inc.
Cases: RICO IllinoisNews