Fleetwood Servs., LLC v. Complete Bus. Solutions Grp., Inc.
civil RICO action (18 U.S.C. § 1962(c)) with wire fraud as predicate; defendants' Rule 12(b)(6) / Rule 9(b) motions to dismiss denied as to the wire-fraud predicate (result: claimant-won)
Facts
- 1 Scheme or artifice to defraud satisfied pleaded
Defendants' promises, according to the Amended Complaint, were lies manufactured to conceal the true purpose behind CBSG and PTF's offer, which was to "worsen [ ] Fleetwood Services's cash flow and thereby increase its dependence on further loans exclusively from [ ] CBSG."
- 1 Scheme or artifice to defraud satisfied pleaded
"Mail or wire fraud consists of (1) a scheme to defraud, (2) use of the mail or interstate wires to further that scheme, and (3) fraudulent intent."
- 1 Scheme or artifice to defraud satisfied pleaded
At its core, the Amended Complaint alleges the Defendants engaged in a scheme to defraud by intentionally misrepresenting the enforceability of the Factoring Agreement, when, in fact, the Factoring Agreement was a usurious, and thus unenforceable, loan.
- 1 Scheme or artifice to defraud satisfied pleaded
As evidence, Plaintiffs allege the existence of (but have not actually filed with the Court) two email exchanges between Plaintiffs, PTF, and CBSG, in January 2017, in which Defendants fraudulently (1) claimed the Agreement would help move Fleetwood Services away from cash advances and save money, and (2) the Agreement was legally enforceable.
- 1 Scheme or artifice to defraud satisfied pleaded
Nevertheless, a plaintiff "must allege who made a misrepresentation to whom and the general content of the misrepresentation."
- 1 Scheme or artifice to defraud satisfied pleaded
The Court is satisfied Plaintiffs have alleged "who made a misrepresentation to whom and the general content of that misrepresentation," Lum , 361 F.3d at 224, and that the Amended Complaint suffices to put Defendants on the notice of the "precise misconduct with which they are charged," Seville , 742 F.2d at 791.
- 5 Transmission or causation by wire, radio, television satisfied pleaded
The Factoring Agreement obligated Fleetwood Services to repay the Receipts Purchased Amount in 110 daily installments of $ 5,000.25, which were effectuated by electronic automated clearing house debits from Fleetwood Services's Texas-based bank accounts.
- 5 Transmission or causation by wire, radio, television satisfied pleaded
In further support of its claim, Plaintiffs allege Defendants' use of the interstate wires to electronically debit its bank account "further created the impression" the Factoring Agreement was enforceable, and once Fleetwood Services experienced issues making payments, Defendants used emails and other wire communications to bolster this impression.
- 5 Transmission or causation by wire, radio, television satisfied pleaded
(2) the use of the wires (i.e., January, 2017, emails and ACH debits between Defendants and Fleetwood Services furthering the false impression of the enforceability of the unenforceable agreements) to further the scheme
- 2 Enterprise (§ 1961(4)): legal entity or association-in-fact satisfied pleaded
PTF and CBSG, along with the unidentified Investor Defendants, work together to fund, originate, underwrite, and service loans, which, like their consumer analogs, feature exorbitant annualized interest rates.
- 2 Enterprise (§ 1961(4)): legal entity or association-in-fact satisfied pleaded
Here, Plaintiffs allege the existence of an "association-in-fact" enterprise, which requires its own three-part showing: "(1) there exists an ongoing organization, formal or informal; (2) the various associates of the organization function as a continuing unit; and (3) the organization has an existence separate and apart from the alleged pattern of racketeering activity."
- 2 Enterprise (§ 1961(4)): legal entity or association-in-fact satisfied pleaded
The Court finds the Amended Complaint satisfies both Turkette and Boyle at this stage.
- 2 Enterprise (§ 1961(4)): legal entity or association-in-fact satisfied pleaded
Rather, the Amended Complaint explains how they each worked together in this scheme to originate, underwrite, and service loans with illegal interest rates.
- 2 Enterprise (§ 1961(4)): legal entity or association-in-fact satisfied pleaded
there were relationships between each of the members (the John and Jane Does provided the capital, PTF brokered the loans, and CBSG serviced them), and sufficient longevity (from at least 2015) to accomplish that purpose