United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
ROBERT BLAKEY UNITED STATES DISTRICT JUDGE
dental practices and their common management company, Dental
Practice Development (DPD)-sue two DPD managers, alleging
that those managers conspired with Defendant First Eagle Bank
and one of its agents to defraud the practices out of more
than $4 million. Plaintiffs sue under the Racketeer
Influenced and Corrupt Organizations (RICO) Act, 18 U.S.C.
§ 1961, et seq. and state-law causes of action.
September 2018, this Court dismissed Plaintiffs’
original complaint, finding that it failed to plausibly state
RICO claims and giving Plaintiffs leave to replead. .
Plaintiffs subsequently filed their first amended complaint
(FAC),  and Defendants now renew their motions to
dismiss,    . For the reasons explained
below, this Court grants in part and denies in part First
Eagle’s and Francione’s motions, and denies
Kelliher’s and Vihnanek’s motions.
Court presumes familiarity with, and incorporates by
reference, its prior opinion granting Defendants’
motions to dismiss Plaintiff’s original complaint.
. Therefore, the Background section briefly revisits the
facts in this case, and details only the additional
allegations that Plaintiffs added in their FAC. Likewise,
this Court will not repeat in detail its prior legal analysis
or the required elements of each cause of action.
comprise five related dental practices-Glen Flora Dental
Center, River West Smile Center, Oral Kare Network II Ltd.,
All Family Dental Ltd., Beverly Shores Smile Center Ltd.-and
their management service, DPD.  ¶¶ 7–12,
17. They sue Larry Kelliher and Lenny Vihnanek, two former
employees of DPD. Id. ¶¶ 15–16. They
also sue First Eagle Bank and First Eagle’s former
employee, Mikki Francione, who is Vihnanek’s
sister-in-law. Id. ¶¶ 13–14.
claim that sometime before 2010, Kelliher and Vihnanek
hatched a scheme to steal money from Plaintiffs, and
subsequently executed the scheme by diverting money from
Plaintiffs’ accounts. Id. ¶¶
45–49. Kelliher and Vihnanek enlisted the help of
Francione to carry out this scheme, id. ¶¶
57–58, and between 2010 and June 2016, Vihnanek and
Kelliher coordinated with Francione at First Eagle to
prioritize payment and authorize checks benefitting
themselves, their families, and personal creditors.
Id. ¶¶ 62–63. Plaintiffs’
principals fired Kelliher in June 2016 for “gross
mismanagement” of Plaintiffs’ accounts and
discovered over “the next several months . . . the
existence and extent of [Defendants’ alleged]
scheme.” Id. ¶¶ 215, 228.
the original complaint asserted a Section 1962(c) RICO claim
against each of the Defendants, see  ¶ 84,
the FAC asserts that claim only against Kelliher and
Vihnanek,  ¶ 230. Plaintiffs also bring RICO
conspiracy claims against all Defendants. See Id .
¶¶ 240, 248, 259, 268. Plaintiffs’ remaining
claims sound in Illinois state-law. Id. ¶¶
motion to dismiss under Federal Rule of Civil Procedure
12(b)(6) “challenges the sufficiency of the complaint
for failure to state a claim upon which relief may be
granted.” Gen. Elec. Capital Corp. v. Lease
Resolution Corp., 128 F.3d 1074, 1080 (7th Cir. 1997).
To survive a motion to dismiss, a complaint must provide a
“short and plain statement of the claim showing that
the pleader is entitled to relief, ” Fed.R.Civ.P.
8(a)(2), giving the defendant “fair notice” of
the claim “and the grounds upon which it rests, ”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)
(quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).
A complaint must also contain “sufficient factual
matter” to “state a claim to relief that is
plausible on its face.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at
has facial plausibility “when the pleaded factual
content allows the court to draw the reasonable inference
that the defendant is liable for the misconduct
alleged.” Id. (citing Twombly, 550
U.S. at 556). Accordingly, “threadbare recitals of the
elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Limestone Dev. Corp.
v. Vill. of Lemont, 520 F.3d 797, 803 (7th Cir. 2008).
In evaluating a complaint, this Court accepts all well-pled
allegations as true and draws all reasonable inferences in
the plaintiff’s favor. Iqbal, 556 U.S. at 678.
But this Court need not accept a complaint’s legal
conclusions as true. Brooks v. Ross, 578 F.3d 574,
581 (7th Cir. 2009).
the fraud-based portions of their claims, Rule 9(b) also
demands that claimants “state with particularity the
circumstances constituting fraud.” Particularity
requires that plaintiffs “describe the who, what, when,
where, and how of the fraud-the first paragraph of any
newspaper story.” Pirelli Armstrong Tire Corp.
Retiree Med. Benefits Trust v. Walgreen Co., 631 F.3d
436, 441–42 (7th Cir. 2011) (internal quotation marks
omitted); Slaney v. The Intern. Amateur Athletic
Federation, 244 F.3d 580, 597 (7th Cir. 2001)
(“allegations of fraud” within a civil RICO
complaint are “subject to the heightened pleading
standard” of Rule 9(b)). Although different cases
require different levels of detail for a complaint to satisfy
Rule 9(b), id. at 442, plaintiffs must provide
“precision and some measure of substantiation, ”
United States ex rel. Presser v. Acacia Mental Health
Clinic, LLC, 836 F.3d 770, 776 (7th Cir. 2016) (internal
quotation marks omitted).
Counts I–V: RICO Claims
RICO Act permits private civil plaintiffs to sue under §
1964(c) for violations of the statute that proximately damage
the plaintiff’s business or property. Holmes v.
Sec. Inv’r Prot. Corp., 503 U.S. 258, 265–68
(1992). To establish a violation of § 1962(c),
Plaintiffs must allege: (1) conduct; (2) of an enterprise;
(3) through a pattern; (4) of racketeering activity.
Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496
renewed motions to dismiss argue that Plaintiffs’ FAC
insufficiently establishes the pattern prong for a §
1962(c) violation.  at 16–17;  at 19–21;
 at 14–24;  at 5–8. A pattern of
racketeering activity “consists, at the very least, of
two predicate acts of racketeering committed within a
ten-year period.” Jennings v. Auto Meter Prods.,
Inc., 495 F.3d 466, 472 (7th Cir. 2007). Plaintiffs must
also satisfy the “continuity plus relationship”
test: that is, Plaintiffs must show that the predicate acts
relate to each other and present a “threat of
continuity.” H.J. Inc. v. Nw. Bell Tel. Co.,
492 U.S. 229, 236–50 (1989). To establish continuity,
Plaintiffs must show either “open-ended”
continuity, meaning that the predicate acts have no obvious
termination point, or “closed-ended” continuity,
meaning the acts have ceased but previously extended over
“a substantial period” of time. Midwest
Grinding Co. v. Spitz, 976 F.2d 1016, 1022 (7th Cir.
RICO Pattern: Predicate Acts
stated in its prior opinion, the original complaint’s
primary deficiency concerned Plaintiffs’ failure to
plead the predicate acts of wire fraud with sufficient
particularity.  at 12. This Court finds that the FAC
cures this deficiency.
FAC, Plaintiffs assert predicate acts of mail fraud under 18
U.S.C. § 1341 and interstate transfers of stolen money
under 18 U.S.C. § 2314.  ¶¶ 106– 14,
115–24. And this time, unlike the original complaint,
Plaintiffs allege with specificity the fraud-based
transactions purportedly underlying the RICO scheme. See
Id . ¶¶ 105, 111, 121; [77-3].
instance, Plaintiffs allege that Kelliher transacted 260
times with American Express between February 26, 2010 and
June 27, 2016 to pay his personal expenses from
Plaintiffs’ accounts.  ¶ 111(a). An exhibit to
the Amended Complaint details each American Express
transaction by account (name and number), date, transaction
type, and amount. [77-3] at 10–13. To take another
example, the FAC asserts that Kelliher transacted twelve
times with the University of Southern California (USC) via
online payments from Plaintiffs’ accounts between June
2013 and May 2015 totaling $21, 499.  ¶ 111(h).
These transactions, according to Plaintiffs, benefitted
Kelliher and his daughter, who attended USC. Id.
Additionally, an exhibit to the FAC sets forth each
transaction with USC, including the amount of each
transaction, date, transaction type, and account number.
[77-3] at 37. These representative examples, and others in
the FAC, demonstrate that Plaintiffs have pled with
particularity multiple predicate acts committed within a
ten-year period. Jennings, 495 F.3d at 472.
this, Kelliher argues that Plaintiffs omit “crucial
transactions of loans” that he made to them, which
ostensibly would undermine the plausibility of the purported
RICO narrative while proving that Kelliher conducted the
transactions to repay himself.  at 6. This Court,
however, remains confined to Plaintiffs’ current
allegations, which it must accept as true. See
AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir.
2011) (on a motion to dismiss, courts must take as true all
well- pled factual allegations). The allegations plausibly
establish that Kelliher engaged in the transactions for
non-legitimate, fraudulent purposes.
also contends that the Section 1962(c) claim should be
dismissed against him, because the FAC does not allege that
he “personally conducted even one” of the
allegedly fraudulent transactions.  at 12. This argument
misses the mark, because it erroneously assumes that Vihnanek
must have personally performed the mailings or interstate
transfers to incur liability.
to Vihnanek’s assumption, a mail fraud defendant
“d[oes] not have to mail the check himself to be guilty
of mail fraud. He only needed to cause it to be mailed or to
commit some act that would cause the mailing of the check to
be reasonably foreseeable.” United States v.
Swan, 250 F.3d 495, 500 (7th Cir. 2001). Similarly, a
person charged under § 2314 “need not actually
have transported the [stolen] property across state lines . .
. so long as he or she caused or induced another to do
so.” R.E. Davis Chem. Corp. v. Nalco Chem.
Co., 757 F.Supp. 1499, 1513 (N.D. Ill. 1990). Here,
Plaintiffs allege that between 2010 and 2016, Vihnanek (along
with Kelliher) spoke regularly with Francione and instructed
her to pay checks to personal creditors and family members of
Kelliher.  ¶¶ 64–65. Plaintiffs also
allege that Vihnanek directed Kelliher to initiate the