Antitrust Law Daily Wrap Up, RICO NEWS: Petition to review RICO award in action alleging securities fraud denied, (Mar 31, 2014)

By Linda O’Brien, J.D., LL.M.

The U.S. Supreme Court will not consider a challenge to an Eighth Circuit decision to uphold a $12.9 million award against participants in a failed business venture in an action that claimed both federal RICO and securities fraud. The appellate court declined to consider the participants’ argument that the Private Securities Litigation Reform Act (PSLRA) barred civil RICO claims on the grounds that it was first raised on appeal. Today, the Court denied the participants’ petition for certiorari. The petition was docketed on January 23, 2014 (Bogart v. Oliver Family Interests, Dkt. 13-878).

Michael Bogart and Doris Wright appealed the judgment of the federal district court in Springfield, Missouri, which awarded damages of $12.9 million in accordance with a jury verdict on state law claims of misrepresentation and breach of fiduciary duty and federal law claims of violations of the Racketeer Influenced Corrupt Organization Act (RICO). Bogart and Wright claimed that the PSLRA barred the finding of a RICO violation based on securities fraud. The Eighth Circuit upheld the district court decision, refusing to consider the argument because it was newly raised on appeal, and noting that appellate courts consider arguments first raised on appeal only if the question is purely legal and requires no additional factual development or if manifest injustice would otherwise result.

In the petition, the participants contended that the civil judgment should be overturned, since it was entered on a non-existent cause of action as a result of trial counsel’s failure to alert the tribunal to the fact that the cause of action was not one cognizable under federal law. The participants also questioned whether the RICO judgment, grounded in the type of conduct that the PSLRA specifically excluded from the list of eligible predicates, should be immune from changes on appeal by the mere virtue of trial counsel’s failure to preserve an objection.

Attorneys: Alexey V. Tarasov for Michael Bogart

Companies: Oliver Family Interests

News: RICO