Broker-Dealer Litigation - Greenberg Traurig LLP

the units, and rental of the units beyond what is necessary to pay the lease amount results in
greater revenue for defendants only. Because the court found that defendants did not commit
any violations of securities laws, the court also dismissed the plaintiff’s RICO claims since no
other predicate act remained.
Negrete v. Allianz Life Ins. Co. of N. America, 2011 WL 4852314 (C.D. Cal. Oct. 13, 2011).
In this class action lawsuit brought on behalf of about 200,000 senior citizens, defendant
life insurance company filed a motion for summary judgment seeking dismissal of plaintiffs’
RICO claims, which alleged that defendant conspired with its network of Field Marketing
Organizations (FMOs) to make misleading statements and omissions in order to induce plaintiffs
to purchase erroneously priced annuities. Defendant argued that plaintiffs could not prove a
RICO enterprise among it and its FMOs, which sell its annuity products, because the FMOs were
independent and competed with one another in the marketplace, and as such could not be said to
belong to a common enterprise. Defendant also argued that the FMOs could not share a common
purpose, another prerequisite for finding a RICO enterprise. The court denied defendant’s
motion and found that enough material facts existed for a jury to find that (1) the Marketing
Advisory Committee served as an intermediary for communications among the FMOs, (2) the
FMOs had a common purpose because FMOs are not required to share every purpose, just one
common purpose (here, to sell defendant’s annuities), and (3) defendant participated in the
management of a RICO enterprise, since it had considerable control over the FMOs.
Coquina Investments v. Rothstein, 2011 WL 4971923 (S.D. Fla. Oct. 19, 2011).
A now-disbarred attorney ran a Ponzi scheme whereby he convinced investors to
purchase legal settlements that did not actually exist. As part of the scheme, the attorney
maintained accounts at a major national bank, held meetings at a Florida branch of that bank
(where the attorney’s co-conspirators would impersonate bank employees), and falsified bank
statements. In a lawsuit naming the bank as one of the defendants, the court granted the bank’s
motion to dismiss plaintiff’s civil RICO claim, holding that the bank was an unwitting conduit
for criminal activity, and not a participant in the criminal enterprise or any pattern of
racketeering activity. Even assuming that acts by a bank employee could be imputed to the bank,
plaintiff failed to show that the bank derived any benefit from the Ponzi scheme (a requirement
for vicarious liability), such as high balances in the law firm’s bank accounts that led to
improved cash flow and interest earnings. In fact, the court found that the bank may have
actually suffered because the accounts had low monthly balances and the bank was owed
uncollected funds.
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