predicate acts, the plaintiff must show that the predicate acts
are (1) related and (2) amount to or pose a threat of continued
criminal activity. Id. This is commonly referred to as the
"continuity plus relationship" test. LaSalle Bank Northbrook v.
Baker, No. 94 C 3827, 1994 WL 630705, at *2 (N.D.Ill. Nov.9,
In this case, counter-defendants argue that Quitman has not
stated a RICO claim because Quitman has failed to allege the
requirement of continuity. It is on the requirement of
continuity, therefore, that this court focuses.
With respect to the requirement of continuity, the Supreme
Court has stated: "`Continuity' is both a closed and open-ended
concept, referring to either a closed period of repeated conduct,
or to past conduct that by its nature projects into the future
with a threat of repetition." H.J. Inc., 492 U.S. at 241, 109
S.Ct. 2893. Thus, continuity is "centrally a temporal concept."
Id. at 242, 109 S.Ct. 2893. Because allegations of conduct that
can be characterized as either closed-ended or open-ended are
sufficient to allege the requirement of continuity, the court
will examine whether the conduct alleged in Quitman's
counterclaim satisfies either standard.
1. Closed-ended continuity
"A party alleging a RICO violation may demonstrate continuity
over a closed period by proving a series of related predicates
extending over a substantial period of time." H.J. Inc., 492
U.S. at 242, 109 S.Ct. 2893. According to the Supreme Court,
"[p]redicate acts extending over a few weeks or months and
threatening no future criminal conduct do not satisfy this
requirement: Congress was concerned in RICO with long-term
criminal conduct." Id.
There are several factors the court must consider in
determining whether the plaintiff has alleged closed-ended
continuity. Morgan v. Bank of Waukegan, 804 F.2d 970, 975 (7th
Cir. 1986); see also Corley, 142 F.3d at 1049 (stating that the
Seventh Circuit has continued to look to the Morgan factors
after the Supreme Court's decision in H.J. Inc.). These factors
include: (1) the number and variety of predicate acts; (2) the
length of time over which the predicate acts were committed; (3)
the number of victims; (4) the presence of separate schemes; and
(5) the occurrence of distinct injuries. Morgan, 804 F.2d at
975. Neither the presence nor absence of any of these factors is
dispositive. Uniroyal Goodrich Tire Co. v. Mutual Trading
Corp., 63 F.3d 516, 523 (7th Cir. 1995). The court must "apply
these factors with an eye toward achieving a `natural and
commonsense' result, recognizing that `Congress was concerned in
RICO with long-term criminal conduct.'" Vicom, Inc. v. Harbridge
Merchant Servs., Inc., 20 F.3d 771, 780 (7th Cir. 1994). With
this in mind, the court examines each of these factors in turn.
a. The number and variety of predicate acts
The first factor that the court must consider is the number and
variety of predicate acts. To do this, the court must first
determine what predicate acts the court can consider. According
to Quitman, the alleged predicate acts consist of many instances
of mail fraud, wire fraud, and bank fraud. According to
counter-defendants, there are only three or four predicate acts
which the court can consider because those are the only alleged
acts that meet the requirements of Federal Rule of Civil
Procedure 9(b) ("Rule 9(b)").
In alleging the predicate acts on which the RICO claim relies,
the RICO plaintiff must satisfy the requirements of Rule 9(b).
Corley, 142 F.3d at 1050. Rule 9(b) requires that "[i]n all
averments of fraud . . . the circumstances constituting the fraud
or mistake shall be stated with particularity." FED.R.CIV.P.
9(b). The Seventh Circuit has repeatedly instructed that Rule
9(b) requires the plaintiff to plead in detail the "who, what,
when, where, and how" of the circumstances constituting
the fraud. E.g., DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th
Cir. 1990). In other words, the plaintiff must plead in detail
the "the identity of the person who made the misrepresentation,
the time, place and content of the misrepresentation, and the
method by which the misrepresentation was communicated to the
plaintiff." E.g., Corley, 142 F.3d at 1050; Vicom, 20 F.3d at
777; Uni*Quality, Inc. v. Infotronx, Inc., 974 F.2d 918, 924
(7th Cir. 1992).
Examining the complaint, the court finds that Quitman, at best,
has alleged only three predicate acts with sufficient
particularity. These are (1) Lefkofsky's wire communication to
Quitman on June 29, 1998, (Countercl. ¶¶ 23-24); (2) Keywell's
wire communication to Quitman in July of 1998, (Countercl. ¶¶
23-24); and (3) Keywell's authorization to use money collected
from the factoring agreement, (Countercl. ¶ 33). Although Quitman
makes general claims that there are many instances of wire, mail,
and bank fraud, Quitman has failed to allege those predicate acts
with sufficient particularity. Accordingly, the court will not
consider those alleged predicate acts. See Jepson, Inc. v.
Makita Corp., 34 F.3d 1321, 1328 (7th Cir. 1994) (holding that
plaintiff's allegations that defendant engaged in "multiple
instances" of mail and wire fraud did not allege a "pattern of
racketeering activity" with sufficient particularity).
Having determined what predicate acts that the court can
consider, the court must now consider the number and variety of
those predicate acts. The sheer number of predicate acts is not
dispositive of continuity. LaSalle Bank Northbrook, 1994 WL
630705, at *4. In addition, the Seventh Circuit "does not look
favorably on relying on many instances of mail and wire fraud to
form a pattern." Hartz v. Friedman, 919 F.2d 469, 473 (7th Cir.
In this case, there are only three alleged predicate acts that
the court can consider, which is minimal amount. In addition, two
of those acts are only wire fraud. Accordingly, the court finds
that the number and variety of predicate acts weighs against a
finding that Quitman has sufficiently alleged a "pattern of
b. The length of time over which the predicate acts were
The next factor that the court must consider is the length of
time over which the predicate acts were committed. Duration is
the "single most important aspect of the closed-ended continuity
analysis" and "is perhaps the closest thing [the Seventh Circuit]
has to a brightline continuity test." Vicom, 20 F.3d at 780-81.
The predicate acts must extend over a "substantial" period of
time; a few weeks or months is considered insubstantial. Midwest
Grinding Co. v. Spitz,