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VENZOR v. GONZALEZ

July 3, 1996

JOSE VENZOR, Plaintiff,
v.
JULIO CESAR CHAVEZ GONZALEZ, aka, JULIO CESAR CHAVEZ, DON KING PRODUCTIONS, INC., DON KING, AL BRAVERMAN, and CRAIG HOUK, Defendants.



The opinion of the court was delivered by: ASPEN

 MARVIN E. ASPEN, Chief Judge:

 I. Background

 According to the complaint, in March 1993 Chavez agreed to fight a June 1993 match in the Chicago area. However, King Productions owned the exclusive right to promote Chavez's fights, and Chavez had failed to obtain a waiver from King Productions before agreeing to the June fight. Venzor, an investor in the June fight, sued Chavez and others in state court to recover his investment. Eventually, Venzor and King began negotiating a settlement, and in February 1995, King Productions' counsel faxed a letter to Venzor's lawyer that generally spelled out the basis for a settlement. Compl. P 10, Ex. B. According to the fax, King agreed to released Chavez from the exclusivity contract for one non-championship fight in Chicago in exchange for Venzor's dismissal of the suit. Id., Ex. B.

 On April 20, 1995, the plaintiff met with King in Florida. Id. P 11. King told Venzor that Houk would be Chavez's opponent in the non-title fight. Houk, according to King, "would put up a 'great fight'" and "be a serious and competitive opponent" against Chavez. Id. After the meeting, King Productions' counsel faxed a draft settlement agreement and two subsequent revisions on, respectively, April 25, May 11, and June 28. Id., Exs. C, D, E. The June draft released Chavez to fight in exchange for, among other things, $ 50,000 to King Productions, a $ 250,000 purse for Chavez, and a $ 50,000 purse for Houk. In addition, the May and June drafts named Houk as the opponent.

 However, Venzor substituted another boxer's name for Houk's, signed the agreement, and faxed the agreement to Chavez, who then signed and returned the agreement to Venzor by fax. Id. P 16, Ex. F. Later, King called Venzor and insisted that "Chavez would fight nobody but . . . Houk." Id. It was not until early July 1995, the plaintiff alleges, that Houk learned that he was Chavez's opponent. Braverman phoned Houk and "instructed . . . Houk to go down and to make [Venzor] look bad in doing so." Id. P 17. King Productions promised to pay $ 10,000 for Houk to throw the fight, and Houk accepted. Id. According to the plaintiff, "as of the date of this phone call, all of the defendants were in agreement that defendant Houk would lose his fight with defendant Chavez." Id.

 As the date of the fight--July 29th--approached, King again told Venzor that only Houk would fight Chavez. Id. P 18. Assured of victory, Chavez allegedly failed, starting on July 15, to properly train for the fight; "he consumed substances which were deleterious to his body and which would have otherwise put him at risk in any honest fight at the professional level." Id. P 19. In addition, Chavez "got into at least one bar room fight" and was absent (or tardy) at important meetings, press conferences, and publicity events. Id. Meanwhile, King Productions sent a final fax to Venzor on July 25, confirming the undercard fight and reminding Venzor of his responsibility to pay for Houk's room and dining expenses while in Chicago. Id., Ex. G.

 The fight lasted ninety-six seconds; Chavez won by knockout. According to the plaintiff, King Productions and King took possession of the fight's videotapes immediately after the fight ended, and the match was not, contrary to custom, replayed on the United Center's video screens. Id. P 22. However, Venzor obtained an unauthorized videotape of the fight, and claims it shows that the supposed knockout punch, "if contact was made at all, was nothing more than a glancing blow." Id. P 23. Houk "jumped backwards in reaction to the 'knockout' punch and thereafter sat on the ring in the corner until the fight was over." Id.

 In addition to the allegations regarding the Chavez-Houk fight, the plaintiff charges that King, King Productions, and Braverman used Houk twice before to throw fights. On January 29, 1994, Houk intentionally lost a match against Meldrick Taylor, a boxer under contract to King Productions, after Houk received a bribe; Taylor "'needed a win'" because of an upcoming fight between Taylor and Chavez. Id. P 12(a). Also, on September 4, 1994, Houk purposefully lost a fight against Gary Murray, another King Productions boxer. Id. P 12(b).

 Based on these allegations, the complaint asserts seven counts: (1) King Productions, King, and Braverman violated 18 U.S.C. § 1962(a), by receiving income from a pattern of racketeering activity and investing or using that income in the establishment or operation of an enterprise, King Productions; (2) King, King Productions, Braverman, Chavez, and Houk violated § 1962(b) by acquiring or maintaining an interest in or control of an enterprise through a pattern of racketeering activity; (3) King, Chavez, Braverman, and Houk violated § 1962(c) by conducting or participating in the conduct of King Productions' affairs through a pattern of racketeering activity; (4) the defendants violated § 1962(d) by conspiring to violate § 1962(a), (b), and (c); (5) King and King Productions committed promissory fraud by misrepresenting that Houk would be a serious and competitive opponent; (6) Chavez breached an agreement to promote the fight; and (7) the defendants violated the Illinois Professional Boxing and Wrestling Act, 225 ILCS 105/1-26. The defendants move to dismiss, and we now turn to their arguments.

 II. Standard for Reviewing Motions to Dismiss

 A motion to dismiss should not be granted "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957); see also Richmond v. Nationwide Cassel L.P., 52 F.3d 640, 644 (7th Cir. 1995); Ellsworth v. City of Racine, 774 F.2d 182, 184 (7th Cir. 1985), cert. denied, 475 U.S. 1047, 89 L. Ed. 2d 574, 106 S. Ct. 1265 (1986). We take as true the well-pleaded factual allegations of the complaint and view them, as well as reasonable inferences drawn from them, in the light most favorable to the plaintiff. Cornfield v. Consolidated High Sch. Dist. 230, 991 F.2d 1316, 1324 (7th Cir. 1993) (citing Ellsworth, 774 F.2d at 184). In addition, we consider exhibits incorporated into the complaint, Webster v. New Lenox Sch. Dist. 122, 917 F.2d 1004, 1005 (7th Cir. 1990), as allegations in the complaint.

 III. Discussion

 A. Particularity of Fraud Allegations

 Initially, the defendants argue that the allegations of fraud fail to satisfy Federal Rule of Civil Procedure 9(b), which requires that "the circumstances constituting fraud . . . shall be stated with particularity." This particularity requirement attempts to serve three purposes: "(1) protecting a defendant's reputation from harm; (2) minimizing 'strike suits' and 'fishing expeditions'; and (3) providing notice of the claim to the adverse party." Vicom, Inc. v. Harbridge Merchant Servs., 20 F.3d 771, 777 (7th Cir. 1994). Accordingly, allegations of fraud should report "the who, what, when, where, and how" of the misrepresentation. DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir.), cert. denied, 498 U.S. 941, 112 L. Ed. 2d 312, 111 S. Ct. 347 (1990).

 Although the complaint does not always distinguish between defendants as precisely as it could have, e.g., Compl. P 24 (referring broadly to "one or more Defendants"), we think that the allegations sufficiently spell out the fraud. Principally, the fraudulent scheme comprised inducing Venzor to drop the state court lawsuit against Chavez and to pay King Productions, Chavez, and Houk in exchange for Chavez's release to fight a phony match. The scheme to defraud began with the February 1995 fax from King Productions, in which King represented that he would release Chavez for one fight if Venzor dropped the suit. Compl. PP 10, 24(a). King then furthered the scheme by insisting that Houk serve as the opponent and by misrepresenting that Houk would put up a good fight, id. PP 11, 16, 18, when in fact King and Braverman (acting on King Productions' behalf) paid Houk to lose. And by the time Houk accepted the bribe, all of the defendants agreed that Houk would throw the fight, id. P 17, including Chavez, who trained apathetically for the fight because victory was predetermined, id. P 19. The fight itself provided the final touch, as Houk and Chavez feigned a serious match. Id. PP 21, 23. In sum, the defendants' respective roles and misrepresentations in the fraudulent scheme are sufficiently alleged to satisfy Rule 9(b). *fn1"

 B. Pattern of Racketeering Activity

 Next, the defendants challenge the complaint's assertion, Compl. P 24(a)-(j), that the following acts constitute a "pattern" of ...


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