disagrees. The Complaint is full
of allegations relating to the conduct and knowledge of the individual
and corporate defendants.
Further, it is immaterial that there may not be a specific agreement by
a defendant to commit two predicate acts. "[I]t is the well-established
law of this Circuit that an individual can be charged under § 1962(d)
even if he personally does not agree to commit two predicate acts of
racketeering." Slaney, 244 F.3d at 600. "[T]he touchstone of liability
under § 1962(d) is an agreement to participate in an endeavor which,
if completed, would constitute a violation of the substantive statute."
Goren, 156 F.3d at 731. As with the other RICO counts, the Liquidator has
stated a claim in Count IV for a violation of § 1962(d).
III. The State Law Claims
The Defendants next attack the Liquidator's state law causes of action
for fraud, conversion, and unjust enrichment. This Court finds that
Plaintiff has sufficiently stated a claim for fraud and unjust
enrichment, but has failed to state a claim for conversion.
A. Liquidator has Stated a Claim for Fraud in Count VI
The Defendants maintain that the Liquidator has not pled the fraud
claim with sufficient particularity in Count VI. The Defendants'
arguments are based on the same Rule 9(b) contentions raised in
connection with the RICO causes of action. Because the Court has rejected
those arguments earlier, the Court will not address them here. The
Liquidator has stated a claim for fraud in Count VI with sufficient
B. The Liquidator has not Stated a Claim for Conversion in Count VII
The Defendants claim that the Liquidator's conversion claim cannot
survive because he has not alleged the existence of an item that can be
legally converted. The Liquidator counters that his conversion claim can
survive because the Defendants had the duty to create and maintain
premium fund trust accounts.
An identifiable object of property must be the subject of conversion.
Cumis Ins. Soc'y, Inc. v. Peters, 983 F. Supp. 787, 793 (N.D. Ill. 1997)
(citation omitted). Because of this requirement, Illinois law limits the
situations where a plaintiff may maintain an action for the conversion of
money. "[T]he general rule is that conversion will not lie for money
represented by a general debt or obligation." In re Thebus,
483 N.E.2d 1258, 1261 (Ill. 1985). Money must be capable of being
described as "specific chattel" in order for it to be the subject of a
conversion action. Id.; Cumis, 983 F. Supp. at 793. To be a specific
chattel, the plaintiff must have a "right to a specific fund or specific
money in coin or bills." Mid-America Fire & Marine Ins. Co. v.
Middleton, 468 N.E.2d 1335, 1339 (Ill.App. Ct. 1984). Although the money
does not need to be specifically earmarked, it must be in a specified
identifiable fund. Thebus, 483 N.E.2d at 1260. Without the showing of a
specific chattel, a defendant is liable for a debt rather than for a
conversion. Sutherland v. O'Malley, 882 F.2d 1196, 1199 (7th Cir.
The Liquidator has failed to allege that the purported converted money
is a specific chattel. The Liquidator does not plead, as he must, that
the money was placed in a specific fund or is identifiable. Thebus, 483
N.E.2d at 1260. In fact, he has pled the exact
opposite.*fn9 "[A]t no
time during the terms of these agreements did TCO deposit premium and
other monies collected or received on behalf of Alpine or Transco into a
segregated, premium trust account." (R. 1-1, Compl. ¶ 28.) The
Defendants "permitted Alpine's and Transco's premiums to be commingled
with TCO's funds, and wrongfully diverted almost $9,000,000 in premium
fund trust monies to other affiliates over a period of several years."
(Id. ¶ 34.) Based on these allegations, at least some of the money
was diverted to other affiliates and none of it is in a specified or
segregated account. It is clear that the money is not identifiable or
segregated and some is not even in the control of defendants.
Accordingly, the Court finds that under Illinois law the Liquidator has
failed to state a claim in Count VIII for conversion.
C. The Liquidator Has Stated A Claim For Unjust Enrichment In Count IX
The Defendants claim that the Liquidator cannot maintain his unjust
enrichment claim for several reasons. First, the Defendants assert that
the Liquidator has not alleged that any of them besides O'Shaughnessy
received a benefit. Second, the Defendants contend that even the benefits
that O'Shaughnessy received were pursuant to contracts, and therefore an
unjust enrichment claim is barred. The Liquidator counters that his
allegations were adequate. The Court agrees with the Liquidator.
The essence of a claim for unjust enrichment is that one party has
received a benefit unfairly and that it would be unjust to allow the
recipient to retain the enrichment. Dames & Moore v. Baxter &
Woodman, Inc., 21 F. Supp.2d 817, 827 (N.D. Ill. 1998). Judge Gettleman
has found that a claim for unjust enrichment only needs to allege "that
there has been unjust retention of a benefit to the plaintiff's
detriment." Id. If a plaintiff, however, goes beyond these requirements
to allege the existence of a legally enforceable contract, then an unjust
enrichment claim can be dismissed under Illinois law. Premier Elec.
Constr. Co. v. LaSalle Nat'l Bank, 477 N.E.2d 1249, 1257-58 (Ill.App.
Contrary to the Defendants' arguments, the allegations in the Complaint
are not confined to O'Shaughnessy receiving benefits pursuant to legally
enforceable contracts. For example, providing the Liquidator with all
reasonable inferences, the premium fund trust agreements may not have
been legally binding contracts because of fraud or lack of
consideration. Further, the Liquidator has not alleged the existence of
any contract related to the illicit stock transactions that caused
Transco to shell out $15 million for purportedly worthless stock while
Exstar received the same amount from a third party. TCO Holdings
allegedly unjustly received $4 million dollars as part of the same series
of transactions. Additionally, the Liquidator alleges that the other
defendants received benefits as part of the illegal activity. The
Defendants' attacks on this claim are not well taken because they ignore
these allegations in the Complaint. Accordingly, the Court finds that the
Liquidator has stated a claim for unjust enrichment in Count IX.
IV. The Allegations Related To The Corporate The Defendants Are
The corporate defendants argue that although they are each named as
defendants in several counts, the Liquidator does not allege that they
engaged in wrongdoing. The corporate defendants further maintain that the
Liquidator has failed to plead any specific facts showing their knowing
participation in the alleged criminal acts. The corporate defendants argue
that they should be dismissed from this action.
Indeed, most of the Liquidator's allegations name the individual
defendant that engaged in the specific conduct. There can be no doubt,
however, that a corporation acts only through its directors, officers,
and agents. Jansen v. Packaging Corp. of Am., 123 F.3d 490, 496 (7th
Cir. 1997) (a corporation acts only through its agents); 1 W. Fletcher,
Cyclopedia of the Law of Private Corporations § 30 (rev. ed. 1999). A
corporation is therefore liable for the intentional acts of its agents
acting within the scope of his authority. Jansen, 123 F.3d at 496
(citations omitted); see also RESTATEMENT (SECOND) OF AGENCY § 265.
The Court is sure that if the Liquidator had only alleged that the
corporate defendants had engaged in this conduct, the individual
defendants would be up in arms over the lack of details relating to their
conduct.*fn10 The individual defendants here are the officers and
directors of the corporate defendants. Providing the Liquidator with all
reasonable inferences, the Court concludes that the Liquidator's
allegations about the individual defendants' conduct and their intent
also amount to allegations of the corporate defendants' conduct and
intent. The corporate defendants' arguments fail. The Liquidator has
stated a claim against them, except as otherwise specified in this
V. The Allegations Related To Rice Are Sufficient
Defendant Rice argues that the allegations are insufficient to support
the claims against him because the Liquidator does not allege that he
took part in many of the alleged schemes. Instead of focusing on which
allegations do not mention Rice, it is important to look at the
allegations that do mention him.
The Liquidator claims that Rice and the other individual defendants
were associated with the enterprises through their positions as officers
and directors with Alpine and the corporate defendants. (R. 1-1, Compl.
¶ 89.) According to the Complaint. Rice participated in the
enterprises by implementing O'Shaughnessy's decisions and instructions.
(Id.) Rice was among those who allegedly knowingly dissipated assets as
part of the premium fund trust account scheme. (Id. ¶ 21.) He
purportedly knew of the requirement to establish segregated accounts for
those accounts, but failed to do so. (Id. ¶ 35.) He was an officer
who allowed the false group published annual statements to be sent. (Id.
¶ 70.) These allegations are sufficient to maintain an action against
It is irrelevant that Rice may have made no misrepresentations
himself. "[U]nder the mail fraud statute, a defendant does not have to
make a misrepresentation or omission himself in order to be liable. A
defendant need only participate in a scheme to defraud." Taylor v. Bob
O'Connor Ford, Inc., No. 97 C 0720, 1998 WL 177689, at *16 (N.D. Ill.
Apr. 13, 1998). Further, "it is irrelevant that the defendant did not
personally" conduct the mailing. United States v. Koen, 982 F.2d 1101,
1107 (7th Cir. 1992). "A mailing by a third party suffices if it is
incident to an essential part of the scheme." United States v. Walters,
997 F.2d 1219, 1222 (7th Cir. 1993) (internal quotation and citation
omitted). The "use of mails" element is satisfied where a defendant
"knowingly cause[d] the mails to be used in furtherance of a scheme to
defraud." Brockman, 991 F.2d at 1367. The allegations related to Rice are
The Defendants' motions to dismiss are granted in part and denied in
part. Count I is dismissed without prejudice with respect to Exstar and
TCO Holdings. Count VII is dismissed without prejudice against all of the
Defendants. Providing the Liquidator with all reasonable inferences, the
remaining counts have adequately stated claims upon which relief can be