and misrepresentations made by Lome and Phoenix, but failed to inform plaintiffs. Based on these allegations, plaintiffs assert four counts of common law fraud against defendants, Counts IV-VII. In addition, plaintiffs assert three RICO claims under 18 U.S.C. §§ 1962(a), 1962(c) and 1962(d), Counts I-III.
In Counts I-III, plaintiffs Segretis, BC3, and Seigler claim violations of RICO under §§ 1962(a), 1962(c), and 1962(d). The violations outlined in these RICO sections represent variations on a common theme. 18 U.S.C. § 1962(a) makes it unlawful for any person who has received income from a pattern of racketeering activity to use or invest that income in an enterprise associated with interstate commerce. 18 U.S.C. § 1962(c) prohibits a person associated with an enterprise engaged in interstate commerce from conducting or participating in the conduct of that enterprise's affairs through a pattern of racketeering activity. 18 U.S.C. § 1962(d) makes it unlawful to conspire to perform these acts. To state a claim under all these sections, a plaintiff must properly allege as part of his complaint certain core elements -- namely, the existence of (1) a person; (2) a pattern of racketeering activity; and (3) an enterprise.
In this case, plaintiffs allege the existence of an enterprise and a pattern of racketeering. In support of their motion to dismiss, defendants argue that plaintiffs have not pled sufficient facts to demonstrate the existence of an enterprise or a pattern of racketeering activity. This court agrees with defendants with regard to one element: plaintiffs Segretis, BC3 and Seigler have not properly alleged the existence of an enterprise.
An "enterprise is an ongoing 'structure' of persons associated through time, joined in purpose, and organized in a manner amenable to hierarchial or consensual decision-making." Jennings v. Emry, 910 F.2d 1434, 1440 (7th Cir. 1990). The existence of an enterprise is established by "evidence of an ongoing organization, formal or informal, and by evidence that the various associates function as a continuing unit." United States v. Turkette, 452 U.S. 576, 583, 101 S. Ct. 2524, 2528, 69 L. Ed. 2d 246 (1981). While a plaintiff need not allege in his complaint information sufficient to prove the existence of an enterprise, a plaintiff must identify the enterprise. And, such identification must necessarily include details about the structure of the enterprise. See Jennings, 910 F.2d at 1439-1440, 1441.
In this case, plaintiffs' overly broad allegations of an enterprise are insufficient to withstand defendants' motion to dismiss. In their complaint, plaintiffs allege the enterprise element merely by asserting in a conclusory fashion that defendants Lome, Phoenix, Deck and ESB constitute an enterprise. See Complaint para. 42. Although the complaint contains several references to defendants' names, no where do plaintiffs identify anything approaching a continuous structured organization. The closest plaintiffs come to breathing life into the alleged enterprise is their assertion that the enterprise can be identified by the conduct and activities of the defendants. See Id. Unfortunately for plaintiffs, the identification of an enterprise by reference to the activities and conduct of defendants is not sufficient to state a claim. An enterprise must be "an entity separate and apart from the pattern of racketeering activity in which it engages." Turkette, 452 U.S. at 583, 101 S. Ct. at 2529. "Although a pattern of racketeering activity may be the means through which the enterprise interacts with society, it is not itself the enterprise, for an enterprise is defined by what it is, not what it does." Jennings, 910 F.2d at 1440.
Plaintiffs Segretis, BC3 and Seigler dig themselves into an even deeper hole by attempting to define the enterprise through what it supposedly did. According to plaintiffs, Lome and Phoenix made several misrepresentations. Plaintiffs also claim that Deck and ESB knew that Lome and Phoenix made these statements. Even if Lome, Phoenix, Deck and ESB engaged in these activities, the most plaintiffs may be able to establish is the existence of a pattern of racketeering activity. There is nothing in plaintiffs' complaint which suggests that Lome and Phoenix participated in an ongoing structured organization with Deck and ESB. From the claims in the complaint, this court knows nothing about the scope and nature of the enterprise. Plaintiffs do not identify when the enterprise started, how long the enterprise continued or how the defendants fit into the enterprise. Cf. Valley Forge Ins. Co. v. Colello, No. 89 C 9016, 1990 U.S. Dist. LEXIS 12491 (N.D. Ill. Sept. 18, 1990) (sufficient facts supplied to allege existence of an enterprise where plaintiff set out the date of the formation of the enterprise, names of members other than defendants, and additional details concerning the enterprise's structure). In short, plaintiffs have failed to identify what the enterprise is.
Since plaintiffs Segretis, BC3 and Seigler have not sufficiently alleged the existence of an enterprise, none of their RICO claims can survive defendants' motion to dismiss. See Latimer v. Hall Financial Group, Inc., No. 90 C 0156, 1990 U.S. Dist. LEXIS 12028 (N.D. Ill. August 31, 1990) (conclusory allegation that defendants constituted an enterprise insufficient to state a claim under RICO).
Accordingly, this court dismisses Counts I-III.
In Counts IV-VII, plaintiffs Segretis, BC3 and Seigler allege common law fraud claims. Having dismissed the RICO counts, this court no longer has jurisdiction over the pendent state claims. United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S. Ct. 1130, 1139, 16 L. Ed. 2d 218 (1966). Accordingly, Counts IV-VII are dismissed for lack of subject matter jurisdiction.
IT IS SO ORDERED.