This entire debate, which is raging in courts across the country in RICO cases has come to two appellate circuits, and both ended ambiguously. This is the result of the Supreme Court’s decision in RJR Nabisco two years ago. It decided RICO’s civil damages provision, 18 U.S.C. 1964(c) only applied to “domestic” injuries, even though that word cannot be found in the statute itself and four justices disagreed. It noted that reasonable jurists were sure to differ, as they do about almost everything, meaning there will be more cases asking the justices to decide this once things become clearer. But after the Second and Seventh Circuits have weighted in, clarity is elusive.
The key to these two decisions is where the property lost was located. The place where the racketeering acts, which had concerned the Supreme Court in RJR Nabisco, was not part of the analysis. The Second Circuit in Bascunan v. Elsaca (2017) focused on the “specific type of injury” alleged. There the plaintiff alleged four different types of damages. But the only one the Court found definite enough to constitute “property” was the theft of funds from an account maintained at a New York bank. This overcame the the fact the plaintiff lived in Chile, which the district court thought was dispositive. The court also applied the same rule to the theft of shares of stock from a safety deposit box. Since the box and the shares were in New York, their loss was also domestic. But the Court rejected the argument that the mere transfer of money through a bank account in New York would affect the outcome. That was deemed too fortuitous. In order to constitute a domestic injury, the mooney had to come to rest in the U.S.
Today the Seventh Circuit acknowledged the Second Circuit’s reasoning but limited it to cases involving “tangible” property. In its view the case it had to decide involved “intangible” property, namely a judgment of foreign arbitration panel which was later registered in an Illinois federal court (as if it had entered it) ordering the defendant to pay it tens of millions of dollars. Armada (Singapore) PTE Ltd. v. Amcol Intl. Corp. The court held Armada, which was unable to collect the enormous sum because the defendant Amcol had hidden its assets, suffered its intangible injury at its headquarters. (Had its cash or real property been stolen Armada’s injury would presumably have occurred where the property was located at the time of its loss.) But its corporate headquarters is in Singapore, so it had no domestic injury. The Court cited prior decisions for this principle, including one from the Supreme Court.
Left to be litigated are cases where racketeers plot to harm a foreign company from the U.S. and all the racketeering activity, say wire fraud, is committed in the U.S. The plaintiff, a foreign corporation, is this fraudulently induced to pay money to Americans. Arguably the Supreme Court in RJR Nabisco wanted RICO to apply in that situation. It believed, rightly, that American racketeers should not get off the hook because their victim is foreign. Why is the injury foreign if the defendants are American and their activities are committed in the US? But these two decisions both lead toward a conclusion RICO would not apply.