Very few civil RICO cases go to trial. Even fewer RICO class actions will every be decided by a jury. But one long-running case in Denver made it to the finish line, and the verdict for the class of plaintiffs has been affirmed by the Tenth Circuit. CGC Holding Co. LLC v. Hutchens, decided September 14, 2020. Basically, the class alleged a scheme perpetrated by a Canadian family to defraud non-creditworthy Americans into paying loan application fees for loans which never materialized. In fact the lender, Mr. Hutchens, through various shell companies, had no money to lend, and was just cheating as many people as possible before shuffling his ill-gotten gains to a new entity. He was assisted by his wife and daughter.
There was numerous issues raised in the appeal of the judgment for over $20 million. I think the most significant one is jurisdictional. One of the Hutchens contended she, as a Canadian citizen, not directly involved in the scheme was beyond the reach of the federal court in Colorado. Or to put it in proper jargon, she lacked “minimum contacts” with the forum state, which is the usual analysis when a case arises under state law or under a federal statute which does not have a jurisdictional provision. But RICO does have such a provision, codified at 18 U.S.C. 1965. It does not require a defendant to have minimum contacts with any particular state. The Courts have uniformly held all that is necessary to satisfy the Constitution’s Fifth Amendment guarantee of “due process” is that the defendant have “minimum contacts” with the U.S. Here Ms. Hutchens denied she did have such contacts.
But the Court found her participation in a RICO conspiracy aimed at the U.S. was enough to meet that low threshold. And it also held her participation in the conspiracy was met by her “receipt of dirty money” earned by her co-conspirator relatives. She was not in contact with the borrower victims, but she was hardly innocent by virtue of handling the proceeds.
Many RICO plaintiffs make detailed allegations in their complaints to show a foreign defendant has “minimum contacts” with the U.S. based on owning property here, or involvement in a U.S. business from the U.S., at least part time. Neither was present in this case. The minimum contacts were her tangential involvement in the foreign business without having entered the U.S. This is a big development in RICO jurisdictional law.