Bascuñán v. Elsaca

927 F.3d 108 (2019) United States Court of Appeals for the Second Circuit 2019-06-13

civil; foreign plaintiff sued his cousin under civil RICO for misappropriating estate funds held in New York bank accounts; district court dismissed the second amended complaint under Rule 12(b)(6) for lack of domestic injury, extraterritorial predicates and no pattern; CA2 reversed and remanded (second appeal) (result: claimant-won)

Facts

  1. 12 Civil RICO injury to business or property (18 U.S.C. § 1964(c)) satisfied pleaded
    Bascuñán is a resident and citizen of Chile.
  2. 12 Civil RICO injury to business or property (18 U.S.C. § 1964(c)) not pleaded
    Bascuñán claims Elsaca transferred this money from unknown accounts to several New York-based Morgan Stanley bank accounts owned by GM&E, a shell corporation that Elsaca indirectly owned.
  3. 12 Civil RICO injury to business or property (18 U.S.C. § 1964(c)) satisfied pleaded
    "when a foreign plaintiff maintains tangible property in the United States, the misappropriation of that property constitutes a domestic injury."
  4. 12 Civil RICO injury to business or property (18 U.S.C. § 1964(c)) not pleaded
    "the use of bank accounts located within the United States to facilitate or conceal the theft of property located outside of the United States does not, on its own, establish a domestic injury."
  5. 12 Civil RICO injury to business or property (18 U.S.C. § 1964(c)) satisfied pleaded
    The Estate owned Fintair when Elsaca transferred money into and out of its New York bank account, a fact Elsaca conceded in a declaration he submitted to the district court.
  6. 12 Civil RICO injury to business or property (18 U.S.C. § 1964(c)) satisfied pleaded
    The alleged theft or misappropriation occurred when the funds left the Estate, at which time they were located in a Morgan Stanley bank account in New York.
  7. 12 Civil RICO injury to business or property (18 U.S.C. § 1964(c)) satisfied pleaded
    The SAC alleges that Elsaca opened eleven New York bank accounts in Tarascona's name, filled them with money from the Estate's foreign accounts, and over time transferred the money out of the Estate.
  8. 12 Civil RICO injury to business or property (18 U.S.C. § 1964(c)) not pleaded
    Bascuñán concedes that he does not know where the injuries caused by the Sham Management Fees Scheme took place because he does not know the locations of the accounts from which Elsaca withdrew the relevant funds.
  9. 12 Civil RICO injury to business or property (18 U.S.C. § 1964(c)) not pleaded
    Because the SAC does not allege that these injuries took place in the United States, the district court correctly held that this scheme is impermissibly extraterritorial as pleaded.
  10. 12 Civil RICO injury to business or property (18 U.S.C. § 1964(c)) satisfied pleaded
    In sum, each of the injuries alleged in the SAC, except for the Sham Management Fees Scheme, calls for a domestic application of civil RICO.