Source: cases/18usc1343/f2d-829-286-new-england-data-services-v-becher.case
Case source: https://www.neochart.com/catalog/cases/f2d/volume_829/0286_01/index.html
In RICO, the plaintiff must go beyond a showing of fraud and state the time, place and content of the alleged mail and wire communication perpetrating that fraud.
In an appropriate case, where, for example the specific allegations of the plaintiff make it likely that the defendant used interstate mail or telecommunications facilities, and the specific information as to use is likely in the exclusive control of the defendant, the court should make a second determination as to whether the claim as presented warrants the allowance of discovery and if so, thereafter provide an opportunity to amend the defective complaint.
It is apparent in the instant case that the complaint does not satisfy Rule 9(b).
The plaintiff clearly set out a general scheme, which very plausibly was meant to defraud the plaintiff, and also probably involved interstate commerce.
casedsl 1 case /f2d/829/0286-01 name New England Data Services, Inc. v. Becher cite 829 F.2d 286 (1987) court United States Court of Appeals for the First Circuit date 1987-09-28 url catalog/cases/f2d/volume_829/0286_01/index.html source ir/caselaw/f2d_829.jsonl sha1=e38f315c1f9ef85ae3a01289f735e2a03ed58368 chars=22110 law 18usc1343 role background posture civil RICO (1962(b),(c),(d)) with mail and wire fraud as predicate acts; complaint dismissed under Fed.R.Civ.P. 9(b) after limited interrogatories; plaintiff appeals result remanded element wire : not-satisfied [pleaded] scope procedural variant rule-9b-particularity/use-of-wires-alleged-on-information-and-belief fact @3269..3616 [supports] | On information and belief, in effecting the stock sale agreement, the grant of the security interest, in purporting to exercise remedies to enforce said security interest, and in furtherance of the fraudulent scheme, defendants on two or more occasions used the mails and/or transmitted communications by wire in interstate or foreign commerce ... fact @18246..18415 [cuts-against absent] | The plaintiffs have merely stated conclusory allegations of mail and wire fraud, see ante p. 288, with no description of any time, place or content of the communication. fact @18639..18743 [cuts-against] | Defendants responded that, “to the best of [their] recollection,” they had not used the wires and mails. fact @13752..13919 [supports] | Assuming the facts as stated in plaintiff’s complaint, defendant Monarch Investments is incorporated in a different state than that resided in by the other defendants. rule @16678..16840 | In RICO, the plaintiff must go beyond a showing of fraud and state the time, place and content of the alleged mail and wire communication perpetrating that fraud. rule @12836..13298 | In an appropriate case, where, for example the specific allegations of the plaintiff make it likely that the defendant used interstate mail or telecommunications facilities, and the specific information as to use is likely in the exclusive control of the defendant, the court should make a second determination as to whether the claim as presented warrants the allowance of discovery and if so, thereafter provide an opportunity to amend the defective complaint. held @18164..18245 | It is apparent in the instant case that the complaint does not satisfy Rule 9(b). gloss The claim actually brought is civil RICO (18 U.S.C. 1962(b),(c),(d)); § 1343 (with § 1341, treated together throughout) appears only as an alleged predicate act, hence case-level `role background`: no block in this file is an instance of wire fraud. gloss A Rule 9(b) particularity ruling, not a holding that no wire was used: the bare information-and-belief allegation of wire/mail use fails 9(b), but dismissal was an abuse of discretion because the pleaded scheme and the out-of-state defendant make interstate communication probable and the details are peculiarly within defendants' knowledge. Remanded for 60 days of discovery limited to use of the wires and mails, then amendment. element scheme : satisfied [pleaded] scope procedural variant fraudulent-transfer/sham-stock-sale-and-security-interest-to-defeat-judgment-creditor fact @1144..1418 [supports] | Shortly after entry of judgment in favor of plaintiff, Becher, Valenti and Schechter, pursuant to an alleged conspiracy to defraud creditors, sold all the stock of Ginsu and IBI to buyers, including defendants Schecter and Monarch Investments, an entity created by Schecter. fact @1569..1709 [supports] | The transfer of the security interest was made without fair consideration to the corporations, thereby rendering the corporations insolvent. fact @1889..2158 [supports] | After plaintiff commenced efforts to collect its judgment against Ginsu and IBI, defendants Becher and Valenti declared a default under the stock sale agreement, and exercising their rights as holders of a security interest, took possession of Ginsu’s and IBI’s assets. held @13599..13751 | The plaintiff clearly set out a general scheme, which very plausibly was meant to defraud the plaintiff, and also probably involved interstate commerce. gloss The adequacy of the scheme allegations is a factor in the court's discovery-before-dismissal test, not a merits ruling; a footnote says the comment does not reflect on the strength of the merits. No misrepresentation to the plaintiff is identified: the alleged fraud is a transfer of assets out of a judgment creditor's reach. element interstate : not-reached gloss The court infers only that interstate communication was probable (one defendant incorporated in another state); left to discovery on remand. element furtherance : not-reached misfit The ruling is about pleading particularity under Rule 9(b) and a district court's discretion over discovery, with 1343 only a RICO predicate (18 U.S.C. 1961(1)(B)); the opinion treats mail and wire fraud together throughout. The case-level role is therefore `background` and both blocks are `scope procedural`, so neither is an instance, but `not-satisfied [pleaded]` still conflates "too vague under 9(b), may replead" with "allegations legally insufficient" (known gap 5), and the cross-law pointer to 18usc1962 cannot be expressed (known gap 10). misfit The court's new two-step test (9(b) satisfied? if not, allow discovery?) is a rule about procedure with a multi-factor list; it sits as a `rule` line under `wire` only because the wire/mail use is what must be particularized. misfit Whether a fraudulent conveyance that deceives no one by a statement is a "scheme to defraud", and whether materiality/property are met, is never analysed; the opinion gives no basis for blocks on those elements.