agents, perpetrated a scheme to defraud and cheat him, which
resulted in significant losses to him. The plaintiff contends
that the defendant, by its agents, solicited him to open one,
then another, account in order to engage in commodities
trading with it, and that he [plaintiff] relied on the acts,
practices, and misrepresentations of the defendant's agents in
opening these accounts and when engaging in commodities
trading. Mr. Parnes further alleges that unauthorized trading
occurred in these accounts, said trading having been caused to
occur by the defendant's agents, and that the defendant
continued such unauthorized trading — a fact it concealed from
the plaintiff — after he purportedly had discovered and
instructed it [the defendant] to cease such activities. The
plaintiff claims that as a result of this alleged scheme to
defraud, the fraud itself and the unauthorized trading, he has
suffered losses in excess of $35,000.
In Count V of the complaint at issue, the plaintiff
specifically alleges that the defendant used the United States
Postal Service mail system two or more times in furtherance of
its alleged scheme to defraud him. Such conduct, he contends,
is violative of 18 U.S.C. § 1341 and 1962(c), and accordingly
provides the basis for a civil damages action under 18 U.S.C. § 1964(c).
As this court believes the plaintiff has stated a
claim for relief under 18 U.S.C. § 1964(c), the defendant's
motion to dismiss or, in the alternative, to strike will, for
the reasons hereinafter stated, be denied.
The statute upon which the plaintiff brings Count V is part
of the Organized Crime Control Act of 1970, 18 U.S.C. § 1961 et
seq. (Title IX of the Act). It is true that the purpose for the
passage of the Act, as stated in its legislative history, is to
provide "enhanced sanctions and new remedies to deal with the
unlawful activities of those engaged in organized crime". 1970
U.S. Code Cong. & Admin.News, p. 4007 (1970). The language of
the statute, however, requires neither proof nor allegation of
any connection to organized crime for a violation to lie.
United States v. Campanale, 518 F.2d 352 (9th Cir. 1975), cert.
denied, 423 U.S. 1050, 96 S.Ct. 777, 46 L.Ed.2d 638 (1976);
United States v. Aleman, 609 F.2d 298 (7th Cir. 1979); United
States v. Chovanec, 467 F. Supp. 41 (S.D.N.Y. 1979); United
States v. Vignola, 464 F. Supp. 1091 (E.D.Pa. 1979). In
addition, the Seventh Circuit, when interpreting Title IX of
the Organized Crime Control Act, indicated in United States v.
Aleman that the Act could be applied whenever the conditions of
the statute are met. Supra at 303. This court, therefore, if it
is to rule properly on the defendant's motion to dismiss, must
examine the provisions of the statute to determine if the
relevant statutory conditions have been met by the allegations
of the plaintiff's complaint.*fn1
In Count V of his complaint, plaintiff Parnes alleges that
the defendant, on two or more occasions between March, 1978
and September, 1979, used the United States mail to defraud,
and/or to further its scheme to defraud, the plaintiff. Such
alleged use of the United States mails would be violative of
18 U.S.C. § 1341, and could constitute a pattern of unlawful
racketeering activity. United States v. Weatherspoon,
581 F.2d 595 (7th Cir. 1978). These acts of the defendant's agents, done
while conducting the defendant's affairs, appear to fall within
the activities prohibited by 18 U.S.C. § 1962(c). The
defendant, however, argues that these allegations are not
to state a claim for relief under 18 U.S.C. § 1964(c),*fn2 in
that no `violation' of § 1962(c) has been shown. It [the
defendant] urges that a violation means a criminal conviction.
We do not agree.
The language of this section of the Act does not condition
any civil cause of action upon previous conviction under the
criminal penalties section of the statute, 18 U.S.C. § 1963.
Subsections (a) and (b), moreover, grant the United States
district courts the "jurisdiction to prevent and restrain
violations of section 1962 . . . making due provision for the
rights of innocent persons," and provide for civil action by
the government. A fair reading of this section thus indicates
that violation is not tantamount to conviction.
The Seventh Circuit addressed the question of civil
enforcement by the government under this section of the
statute in United States v. Cappetto, 502 F.2d 1351, 1357 (7th
Cir. 1974). In that case, the government elected to bring a
civil action rather than a criminal charge. The district court,
applying a civil evidence standard, allowed the government to
pursue civil remedies against defendants. The Seventh Circuit,
in affirming the actions of the district court, stated
pointedly that Congress had the power to provide both civil and
criminal remedies in the statute, and that if civil remedies
were pursued, the civil standard as to burden of proof was the
proper one to be applied. The Seventh Circuit's interpretation
of the civil remedies section of the Act subsequently was
extended by the District Court for the District of Delaware in
Farmers Bank of Delaware v. Bell Mortgage Corp., 452 F. Supp. 1278
(D.Del. 1978). That court held expressly that there is no
merit to the argument that civil remedies are available to
individuals in a private cause of action only after a criminal
conviction has been obtained. Id. at 1280.
Accordingly, as this court finds that a viable claim for
relief has been stated in Count V of plaintiff's complaint,
the defendant's motion to dismiss is denied. That being so,
the court believes it unnecessary to address the defendant's
alternative argument in support of its motion to strike.