Broker-Dealer Litigation - Greenberg Traurig LLP

Beaman v. Barth, 2011 Bankr. LEXIS 819 (E.D.N.C. Mar. 2, 2011).
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In this Chapter 7 bankruptcy proceeding, the trustee filed suit alleging that individuals
who controlled the bankrupt corporation engaged in a scheme to loot its assets, in violation of
RICO (among other laws). The court, however, granted defendants’ motion to dismiss, finding
that the fraudulent acts amounted to a single scheme with one victim and one goal, and not the
requisite pattern of racketeering activity.
In re Amerlink, Ltd., 2011 WL 802794 (Bankr. E.D.N.C. Mar. 2, 2011).
Bankruptcy trustee brought an adversary proceeding alleging violations of RICO and
North Carolina’s RICO statute arising out of defendants’ alleged scheme to deplete Amerlink’s
resources for personal gain. Although the alleged facts highlighted instances of separate conduct
over a course of several years, the conduct was in furtherance of one intended goal.
Furthermore, Amerlink was the sole victim. The court, following jurisprudence in the Fourth
Circuit, held that a solitary scheme aimed at a single victim does not fit within the scope of a
RICO pattern and allowed the motion to dismiss the trustee’s RICO claims.
Alack v. Jaybar, LLC, 2011 WL 3626687 (E.D. La. Aug. 17, 2011).
Plaintiffs alleged fraudulent sales of securities by defendants. Intervenor-Plaintiff moved
to alter the court’s order that dismissed with prejudice her RICO claims as asserted against
defendants. The court dismissed the RICO claims because they were barred by the Private
Securities Litigation Reform Act of 1995, which precludes securities fraud from serving as a
predicate for a private cause of action under RICO. The court declined to alter its order
dismissing the RICO claims for two reasons. First, Intervenor-Plaintiff alleged that the bank
fraud was undertaken in connection with the purchase of a security, even though a plaintiff
cannot avoid the RICO amendment’s bar by pleading bank fraud as a predicate offense in a civil
RICO action if the conduct giving rise to those predicate offenses amounts to securities fraud.
Second, the court found that the argument now made by Intervenor-Plaintiff – that the predicate
act for her RICO claims was bank fraud – is one that could and should have been raised in her
opposition to defendants’ motion for partial dismissal, and Intervenor-Plaintiff’s failure to do so
also justified the denial of her motion.
Abene v. Jaybar, LLC, 2011 WL 2847436 (E.D. La. July 14, 2011).
Plaintiffs alleged fraudulent sales of securities by defendants. Intervenor-Plaintiff
adopted most of plaintiffs’ allegations and asserted, among others, additional RICO claims. The
court dismissed the RICO claims because they were barred by the Private Securities Litigation
Reform Act of 1995, which precludes securities fraud from serving as a predicate for a private
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