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NORTHERN TRUST BANK/O'HARE v. INRYCO

July 29, 1985

NORTHERN TRUST BANK/O'HARE, N.A. AS TRUSTEE, ETC., PLAINTIFF,
v.
INRYCO, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Shadur, District Judge.

MEMORANDUM OPINION AND ORDER

Northern Trust Bank/O'Hare, N.A. as Trustee under Trust No. 74 L 214 ("Trustee") charges Inryco, Inc. ("Inryco") and others violated 18 U.S.C. § 1964(c) and (d) (part of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961-1968*fn1), as well as state law, when they participated in a construction contract kickback scheme. Inryco now moves under Fed.R.Civ.P. ("Rule") 9(b), 12(b)(1) and 12(b)(6) to be dismissed from the Complaint. For the reasons stated in this memorandum opinion and order, the motion is granted.

Facts*fn2

On October 22, 1979 Trustee contracted with Inryco for construction of a warehouse addition (the "Project") in Franklin Park, Illinois (Complaint ¶ 11(a)*fn3). Inryco designated its employee Jerry Ranke ("Ranke") as Senior Project Manager in charge of construction (¶ 11(b)). Ranke's duties included soliciting bids from subcontractors and awarding subcontracts (¶ 3(b)).

    1. On November 19, 1979 Ranke issued a phony
  work order to Century in the amount of $35,049
  (¶ 14(a)). Inryco released funds in that amount to
  Century, but Century never performed the specified
  work. On December 20 Century issued a $35,049 check
  to Ranke under the alias Tom Mann. Ranke converted
  the funds to his own use through a bank account he
  had established under the Mann name at First Bank
  and Trust Company of Palatine ("Palatine Bank") (¶¶
  12(a), 14(c)).
    2. Century and D'Angelo later funneled three
  more kickbacks to Ranke (¶ 15):
  (a) July 1, 1980            —       $190,000(b)
  October 27, 1980        —         20,840(c)
  October 27, 1980        —         18,939
  Each of those payments also took the form of a
  Century check made out to Mann and deposited in
  the Palatine Bank account (id.).

Century did not perform its work in accordance with the Project specifications (¶ 19(b)). Much of the concrete work was performed in an unworkmanlike manner (id.). Trustee charges Ranke is responsible for the defects because he either failed adequately to supervise the work or knowingly permitted Century to perform it in an unsatisfactory manner. Trustee alleges no other injury.

Inryco's Contentions

In support of its motion Inryco asserts a congeries of flaws in the Complaint:

    1. It fails to allege sufficient facts to permit
  a determination whether Trustee is the "real party
  in interest" (Rule 17(a)) and is hence the proper
  party to prosecute this action.
    2. It alleges injuries not proximately caused by
  the claimed racketeering activity.
    3. It improperly names Inryco as a RICO
  defendant, because Inryco was a victim of the
  fraud.

4. It fails to allege a proper "enterprise."

    5. It fails properly to allege Inryco conspired
  to violate RICO.
    6. It fails to set out the alleged fraudulent
  activity with the specificity ...

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