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Case 1:11-cv-02794-KMW Document 131 Filed 09/18/15 Page 1 of 15
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`YULIA TYMOSHENKO, SCOTT SNIZEK,
`CHRISTY GREGORY RULLIS, and JOHN
`DOES 1 through 50, On Behalf of Themselves
`and All Those Similarly Situated,
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`Plaintiffs,
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`DMYTRO FIRTASH, et al.,
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`Defendants.
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`KIMBA M. WOOD, District Judge:
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` 11-CV-2794 (KMW)
`OPINION AND ORDER
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`Plaintiff Yulia Tymoshenko, former Prime Minister of Ukraine, and Plaintiffs Scott
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`Snizek and Christy Gregory Rullis have filed a Third Amended Complaint (“TAC”) against
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`Ukrainian businessman Dmytro Firtash, several Ukrainian associates, and a number of U.S.
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`individuals and corporations alleging that Defendants’ conduct violated the Racketeer Influenced
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`and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961–1968, as well as state law.
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`Several U.S. Defendant corporations and citizens have moved to dismiss the TAC with
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`prejudice pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6). For the reasons set
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`forth below, the Court GRANTS the motion to dismiss the TAC and DENIES Plaintiffs leave to
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`amend their complaint for a fourth time.
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`I.
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`BACKGROUND
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`What follows is an abbreviated summary of the history of the case and the factual
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`background. A more detailed discussion of this background can be found in Tymoshenko v.
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`Firtash, 57 F. Supp. 3d 311, 314–319 (S.D.N.Y. 2014) (Wood, J.) (“Tymoshenko II”).
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`1
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`Case 1:11-cv-02794-KMW Document 131 Filed 09/18/15 Page 2 of 15
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`A. Relevant Procedural History
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`In December 2011, Plaintiff Tymoshenko filed the Amended Complaint (“AC”) in this
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`action, asserting claims against Dmytro Firtash and his associates under RICO, the Alien Tort
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`Statute, 28 U.S.C. § 1350, and various state laws. See [Dkt. No. 23]. The AC alleged that Firtash
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`and his co-Defendants had induced Ukrainian officials to unlawfully prosecute and detain
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`Tymoshenko and her political allies in retaliation for their political opposition to Firtash’s
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`interests. See AC ¶¶ 15, 93–94,160–62, 279. In March 2013, the Court dismissed the RICO
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`claims as impermissibly extraterritorial, based on the prevailing legal framework at the time,
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`because the enterprise and pattern of racketeering activity described in the AC were
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`predominantly foreign. See Tymoshenko v. Firtash, No. 11-CV-2794, 2013 WL 1234821
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`(S.D.N.Y. Mar. 26, 2013) (Wood, J.).
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`Tymoshenko asserted a revised RICO claim in the Second Amended Complaint (“SAC”)
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`in November 2013, adding U.S.-based Plaintiffs Scott Snizek and Christy Gregory Rullis, and
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`alleging that the Defendants’ racketeering enterprise was domestic and therefore fell within
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`RICO’s territorial scope as then understood. See [Dkt. No 87]. In September of last year, the
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`Court dismissed the SAC on the grounds that Plaintiffs failed to adequately plead predicate acts
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`of wire fraud, mail fraud, or money laundering necessary to support a RICO claim. Tymoshenko
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`II, 57 F. Supp. 3d at 319. However, the Court granted leave for Plaintiffs to amend their
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`complaint in light of European Community v. RJR Nabisco, Inc., 764 F.3d 149 (2d Cir. 2014),
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`which was decided after the briefs had been filed and which changed the framework for applying
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`RICO extraterritorially.1
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`1 Because Tymoshenko II was decided based on Plaintiffs’ failure to plead predicate acts, the Court did not reach the
`issue of extraterritoriality. 57 F. Supp. 3d at 319.
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`2
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`Case 1:11-cv-02794-KMW Document 131 Filed 09/18/15 Page 3 of 15
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`Plaintiffs then filed their Third Amended Complaint (“TAC”) in November of last year,
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`again alleging violations of both RICO and state law. See [Dkt. No. 120]. The TAC asserts
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`largely the same claims as the SAC, although Plaintiffs have added several new Defendants and
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`have reframed their allegations regarding the purpose of the alleged racketeering enterprise. See
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`id. ¶¶ 4, 17–21, 34. In response, U.S. Defendants Paul J. Manafort; Barbara Ann Holdings, LLC;
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`CMZ Ventures, LLC; The Dynamic Group; Brad S. Zackson; and Vulcan Properties, Inc.
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`(collectively, “the Moving Defendants”) have filed motions to dismiss the TAC with prejudice.2
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`See [Dkt. No 121] (Manafort, et al.); [Dkt. No. 124] (Vulcan).
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`B. Factual Allegations
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`What follows is a summary of the factual allegations asserted in the TAC. These
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`allegations closely parallel those in the SAC. They are accepted as true for purposes of the
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`Moving Defendants’ motions to dismiss. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
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`Defendant Dmytro Firtash is the owner of a Ukrainian energy company, RosUkrEnergo
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`(“RUE”). TAC ¶ 3. From 2004 to 2009, RUE earned millions of dollars by serving as a
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`“middleman” in natural gas contracts between Naftogaz—a Ukrainian state-owned gas
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`company—and Gazprom—a Russian gas company that is also partially state-owned. Id. RUE
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`was able to obtain this lucrative position by virtue of Firtash’s close relationship with Ukrainian
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`government officials. Id. In December 2007, Plaintiff Yulia Tymoshenko became Ukraine’s
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`Prime Minister. Id. ¶ 10. Over the following two years, she took steps to exclude RUE from
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`natural gas transactions between Ukraine and Russia, culminating in her negotiation of new
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`2 Vulcan filed a separate motion to dismiss “based on the reasons . . . fully set forth” by the other Moving
`Defendants, Mot. Dismiss (Vulcan) [Dkt. No. 124] at 1, and which “join[ed], adopt[ed], and incorporate[d] the
`arguments” made in the Manafort Defendants’ motion, Mem. of Law in Supp. (Vulcan) [Dkt. No. 125] at 3.
`Therefore the Court considers the motions together.
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`3
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`Case 1:11-cv-02794-KMW Document 131 Filed 09/18/15 Page 4 of 15
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`natural gas contracts with Russia in 2009 that entirely eliminated RUE as an intermediary. See
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`id. ¶ 112.
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`In 2010, Viktor Yanukovych—an ally of Firtash—narrowly defeated Tymoshenko to
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`become President of Ukraine, and Tymoshenko resigned as Prime Minister. Id. ¶ 41. The
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`Yanukovych administration then began a campaign targeting Tymoshenko and her political allies
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`with unfounded and malicious prosecutions that resulted in her imprisonment. Id. ¶¶ 4, 43.
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`Plaintiffs allege that this campaign against Tymoshenko was funded by a U.S.-based
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`racketeering enterprise (“the Enterprise”) that was orchestrated by Firtash but that included
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`members of the Yanukovych administration, Ukraine-based individuals and companies
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`controlled by Firtash, and a number of U.S.-based corporations and U.S. citizens. See id. ¶ 65.
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`According to Plaintiffs, Firtash and his associates funneled money generated through unlawful
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`“skimming” of natural gas transactions between the Ukraine and Russia to corporations based in
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`the U.S., under the guise of legitimate real estate transactions that the Defendants in fact had no
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`interest in pursuing. See id. ¶ 27. Defendants then funneled this money back to the Ukraine
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`“through the labyrinth of Firtash . . . companies and bank accounts located in Europe, Cyprus,
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`Panama, and elsewhere” so as to generate “virtually untraceable funds” that could be used to pay
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`Ukrainian prosecutors and others within the Yanukovych administration. Id. ¶¶ 4, 10, 15, 22–23,
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`27, 35.
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`Plaintiffs also allege that an additional purpose of the Enterprise was to defraud several
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`groups of U.S. plaintiffs: (1) Plaintiffs Scott Snizek and Christy Gregory Rullis, who are former
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`employees of U.S. defendant corporations allegedly participating in the Enterprise and were
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`denied promised wages and other benefits, id. ¶¶ 11, 97, 150; (2) John Doe U.S. Plaintiffs who
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`were owners or developers of real estate holdings in which the Enterprise feigned serious
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`interest, and who lost valuable time and money as a result of this deception, id. ¶¶ 13, 27, 148;
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`and (3) John Doe U.S. Plaintiffs to whom the Enterprise marketed Ukrainian real estate
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`opportunities at “grossly inflated” prices, id. ¶¶ 13, 150.
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`The TAC also incorporates new allegations relating to “recent developments,” none of
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`which appear to be relevant to either their RICO or state law claims. Specifically, Plaintiffs
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`allege that an “independent” investigation conducted by Skadden Arps into the prosecution of
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`Tymoshenko by the Yanukovych administration was in fact “orchestrate[d] and coordinate[d]”
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`by Defendant Paul Manafort, TAC ¶ 127, and that the Yanukovych administration intentionally
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`underestimated their payment to Skadden for the investigation in order to avoid application of a
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`Ukrainian anti-corruption law. Id. ¶ 129. The TAC has also added allegations describing separate
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`investigations and proceedings taking place in other U.S. jurisdictions that involve either Firtash
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`or purported associates of other Defendants, but it alleges no connection between the schemes at
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`issue in those proceedings and the scheme alleged here. See id. ¶¶ 133–36.
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`II.
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`LEGAL STANDARD
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`To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead facts sufficient “to
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`state a claim to relief that is plausible on its face.” Bell Atl. Corp v. Twombly, 550 U.S. 544, 570
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`(2007). A claim is facially plausible when the supporting factual allegations “allow[] the court to
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`draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556
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`U.S. at 678. Where a plaintiff has failed to “nudge” a claim “across the line from conceivable to
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`plausible,” a district court must dismiss the complaint. Twombly, 550 U.S. at 570.
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`The Court must accept as true all well-pleaded factual allegations in a complaint and
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`“draw[] all inferences in the plaintiff’s favor.” Allaire Corp. v. Okumus, 433 F.3d 248, 249–50
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`Case 1:11-cv-02794-KMW Document 131 Filed 09/18/15 Page 6 of 15
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`(2d Cir. 2006) (internal quotations omitted). But a court is “not bound to accept as true a legal
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`conclusion couched as a factual allegation.” Twombly, 550 U.S. at 555.
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`III. DISCUSSION
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`The Moving Defendants contend that the TAC, like the SAC before it, fails to plead the
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`elements of a civil RICO claim because it does not plead a predicate act of racketeering that
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`proximately caused Plaintiffs’ injuries. See Mem. of Law in Supp. (Manafort et al.) [Dkt. No.
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`122]; Mem. of Law in Supp. (Vulcan) [Dkt. No. 125].3 The Court agrees.
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`A. RICO Claims
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`RICO proscribes four different types of racketeering activity. 18 U.S.C. § 1962. The first
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`applies to anyone “who has received any income derived, directly or indirectly, from a pattern of
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`racketeering activity” from using or investing that income either to acquire an interest in,
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`establish, or fund the operation of an “enterprise” affecting interstate or foreign commerce. 18
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`U.S.C. § 1962(a). The second prevents any person from acquiring an interest in or maintaining
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`control of such an enterprise “through a pattern of racketeering activity.” Id. § 1962(b). The third
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`bars anyone “employed by or associated with” such an enterprise from “conduct[ing] or
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`participat[ing], directly or indirectly, in the conduct of such enterprise’s affairs through a pattern
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`of racketeering activity.” Id. § 1962(c). And the fourth applies to any conspiracy to commit one
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`of the prior offenses. Id. § 1962(d).
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`Thus, to establish a RICO violation under any of these provisions, a plaintiff must allege
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`(1) that the defendant participated in an enterprise, and (2) that the enterprise engaged in a
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`“pattern” of racketeering activity, which requires the commission of at least two predicate acts
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`3 Defendant Manafort also moves to dismiss on the additional ground that the Court lacks personal jurisdiction over
`him, as he did in response to the AC and the SAC. See Mem. of Law in Supp. (Manafort et al.) [Dkt. No. 121] at 24.
`As in the two previous opinions, the Court resolves the motion without reaching Manafort’s jurisdictional argument.
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`identified in 18 U.S.C. § 1961(1). In a case against multiple defendants, the defendant must have
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`“personally committed or aided and abetted in the commission of two predicate acts.” Sanchez v.
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`ASA Coll., Inc., No. 14-CV-5006, 2015 WL 3540836, at *6 (S.D.N.Y. June 5, 2015) (Furman, J.)
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`(emphasis added) (quoting McLaughlin v. Anderson, 962 F.2d 187, 192 (2d Cir. 1992)).
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`In order to obtain a civil remedy for a RICO violation under 18 U.S.C. § 1964(c), a
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`plaintiff must also demonstrate that he has standing, which requires: (1) a violation of 18 U.S.C.
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`§ 1962, (b) an injury to plaintiff’s business or property, and (c) proximate causation of the injury
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`by the defendant’s violation. Commercial Cleaning Servs., L.L.C. v. Colin Serv. Sys., Inc., 271
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`F.3d 374, 380 (2d Cir. 2001). Proximate cause, in turn, is established when the plaintiff’s injuries
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`are directly caused by the conduct that constitutes the RICO violation, id. at 381 (citing Holmes
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`v. Sec. Investor Prot. Corp., 503 U.S. 258, 268–73 (1992)), and the plaintiff’s injury is
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`“reasonably foreseeable or anticipated as a natural consequence” of the defendant’s conduct,
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`Lerner v. Fleet Bank, N.A., 318 F.3d 113, 123 (2d Cir. 2003) (internal quotation marks omitted);
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`Hecht v. Commerce Clearing House, Inc., 897 F.2d 21, 24 (2d Cir. 1990). An injury is
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`reasonably foreseeable when the plaintiff is the “target[], competitor[], or intended victim[]” of
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`the racketeering enterprise. Lerner, 318 F.3d at 124; In re Am. Express Co. S’holder Litig., 39
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`F.3d 395, 400 (2d Cir. 1994); Sperber v. Boesky, 849 F.2d 60, 65 (2d Cir. 1988).
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`Here Plaintiffs allege violations of all four subsections of 18 U.S.C. § 1962, predicated on
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`three types of acts: wire fraud under 18 U.S.C. § 1343, mail fraud under 18 U.S.C. § 1341, and
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`money laundering under 18 U.S.C. § 1956. See TAC ¶¶ 140, 142–44. However the TAC—like
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`the SAC—fails to plead adequately any predicate act that proximately caused Plaintiffs’ injuries,
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`and therefore fails to state a civil RICO claim.
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`1. Predicate Acts of Wire and Mail Fraud
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`The elements of wire fraud and mail fraud are almost identical. For both, a plaintiff must
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`show (1) that the defendant initiated a scheme to defraud, (2) in order to obtain money or
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`property, and (3) that the scheme was furthered by the use of either interstate wires, 18 U.S.C. §
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`1343, or the mails, 18 U.S.C. § 1341. In both cases, the object of the fraud must be something of
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`value (i.e. money or property) “in the victim’s hands.” Pasquantino v. United States, 544 U.S.
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`349, 355 (2005).
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`Claims of either mail or wire fraud are subject to the heightened pleading standard under
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`Federal Rule of Civil Procedure 9(b), which requires, “at a minimum, a plaintiff pleading RICO
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`predicate acts sounding in fraud . . . [to] ‘specify the statements it claims were false or
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`misleading, give particulars as to the respect in which plaintiffs contend the statements were
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`fraudulent, state when and where the statements were made, and identify those responsible for
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`the statements.’” Lefkowitz v. Reissman, No. 12 CIV. 8703, 2014 WL 925410, at *4 (S.D.N.Y.
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`Mar. 7, 2014) (Abrams, J.) (quoting Moore v. PaineWebber, Inc., 189 F.3d 165, 173 (2d Cir.
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`1999)). A plaintiff must do more than say that a particular statement was false or misleading; he
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`or she must “demonstrate with specificity why and how that is so.” Sanchez, 2015 WL 3540836,
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`at *5 (quoting Rombach v. Chang, 355 F.3d 164, 174 (2d Cir. 2004)). When there are multiple
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`defendants, a plaintiff must specify how each contributed to the fraud, rather than simply allege
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`general participation in an overall fraudulent scheme. DiVittorio v. Equidyne Extractive Indus.,
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`Inc., 822 F.2d 1242, 1247 (2d Cir. 1987) (“Where multiple defendants are asked to respond to
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`allegations of fraud, the complaint should inform each defendant of the nature of his alleged
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`participation in the fraud.”); see also Spool v. World Child Int’l Adoption Agency, 520 F.3d 178,
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`185 (2d Cir. 2008) (“Allegations of predicate mail and wire fraud acts should state . . . who was
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`involved.”).
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`Here, as with the previous complaint, Plaintiffs fail to allege predicate acts of mail and
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`wire fraud with sufficient particularity to pass the heightened pleading standard under Federal
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`Rule of Civil Procedure 9(b). In Tymoshenko II, the Court noted that, “Plaintiffs never explicitly
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`identify any particular act or transaction that constitutes wire or mail fraud.” 57 F. Supp. 3d at
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`317. The SAC did identify three courses of conduct that could be considered fraudulent: (1) the
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`false promises of salaries and benefits to Plaintiffs Snizek and Rullis, as well as other employees;
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`(2) the “sham real estate investment proposals” that falsely asserted Defendants had a serious
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`interest in properties in the U.S.; and (3) the marketing of Ukrainian properties to U.S. investors
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`at “fraudulently inflated prices.” Id. However the Court concluded that the pleadings were
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`inadequate to establish any of these as a predicate act for RICO purposes. Id. at 321–22.
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`The TAC identifies these same three courses of conduct, and offers nearly identical
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`factual allegations in support of them. Compare TAC ¶¶ 98–100, 139, 145, 148, 150 with SAC
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`¶¶ 93–95, 128, 131. Plaintiffs have amended their pleadings to incorporate some new references
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`to communications made via interstate mail or wires, e.g., TAC ¶¶ 76, 81, 84, 89-91, 98, but
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`none of these modifications provides enough specificity to overcome the failings identified
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`previously. With respect to all three courses of conduct, the TAC still fails to plead with
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`particularity specific statements that were made, when and where the statements were made, how
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`statements were fraudulent, and most crucially, who was responsible for making them. See
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`Lundy v. Catholic Health Sys. of Long Island, Inc., 711 F.3d 106, 119 (2d Cir. 2013); Rombach,
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`355 F.3d at 174.
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`Plaintiffs have also failed to establish that the alleged acts of mail and wire fraud
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`proximately caused the victims’ harms, because again they have failed to plead facts to establish
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`that they were the “targets, competitors, or intended victims” of the Enterprise. Although
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`Plaintiffs have amended their complaint to include general allegations to this effect, see, e.g.,
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`TAC ¶ 13, these statements amount to no more than legal conclusions couched as factual
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`allegations, which the Court is not bound to accept as true. Twombly, 550 U.S. at 555. Plaintiffs
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`have not plead facts adequate to support the conclusion that obtaining money from the John Doe
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`investors was the purpose or object of the alleged scheme, even accepting as true the allegation
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`that investors wasted “time, money, and property” in reliance on Defendants’ misleading
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`statements. See Tymoshenko II, 57 F. Supp. 3d at 322–23. Plaintiffs have also not provided any
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`facts to show that obtaining the unpaid labor of Plaintiffs Snizek and Rullis was the purpose or
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`object of the alleged scheme. Therefore, the conclusory allegations that Plaintiffs were the
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`“targets or intended victims” of the Enterprise is insufficient to establish proximate cause for a
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`civil RICO claim based on a predicate act of wire or mail fraud.
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`2. Predicate Acts of Money Laundering
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`There are two primary sections to the money laundering statute, one that applies to
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`domestic activity and one that applies to international activity. The section that applies to
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`domestic activity, 18 U.S.C. § 1956(a)(1) (hereinafter the “domestic money laundering statute”),
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`requires that a defendant (1) engaged in a financial transaction that in fact involved the proceeds
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`of a specified unlawful activity, (2) knew that the transaction involved such proceeds, and (3)
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`either intended “to promote the carrying on of a specified unlawful activity,” 18 U.S.C. §
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`1956(a)(1)(A)(i), or knew the transaction was designed “to conceal or disguise the nature,
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`location, source, ownership, or control of the proceeds,” 18 U.S.C. § 1956(a)(1)(B)(i). A
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`“specified unlawful activity” is any activity listed in 18 U.S.C. § 1956(c)(7). Meanwhile the
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`section that applies to international activity, 18 U.S.C. § 1956(a)(2) (hereinafter the
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`“international money laundering statute”), applies whenever a defendant moves funds across the
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`Case 1:11-cv-02794-KMW Document 131 Filed 09/18/15 Page 11 of 15
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`U.S. border “with the intent to promote the carrying on of a specified unlawful activity,” 18
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`U.S.C. § 1956(a)(2)(A). Importantly, this latter statute does not require that the funds being
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`transferred be the “proceeds” of a specified unlawful activity, so long as the party engaging in
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`the transfer has the requisite intent to “promote the carrying on of a specified unlawful activity.”
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`See Piervinanzi, 23 F.3d 670, 679–80 (contrasting the domestic and international money
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`laundering statute).4
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`Whether Plaintiffs sufficiently plead a predicate act of money laundering is a closer
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`question than whether Plaintiffs have sufficiently plead acts of either wire or mail fraud, in part
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`because the pleading standard is lower. In Tymoshenko II, the Court identified three transactions
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`described in the SAC that could conceivably constitute money laundering: (1) the transfer of
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`funds from the Ukraine to the U.S.; (2) the acquisition of new U.S. companies to expand the
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`Enterprise; and (3) the transfer of funds from the U.S. back to the Ukraine. 57 F. Supp. 3d at 323.
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`The TAC describes these same transactions in almost identical terms. See TAC ¶¶ 24, 25, 27, 85,
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`104. None of these three transactions is plead with enough detail to state a violation of the
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`domestic money laundering statute, because Plaintiffs have failed to sufficiently allege that
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`Defendants engaged in a “specified unlawful activity” that actually generated proceeds that could
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`then be laundered.5
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`Plaintiffs come closer to pleading an activity that would violate the international money
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`laundering statute when they allege that Defendants funneled money “through various Firtash-
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`4 There is one portion of the international money laundering statute, 18 U.S.C. § 1956(a)(2)(B), that does require the
`defendant to have knowledge that the assets involved in the transfer are the proceeds of some form of unlawful
`activity. But the requirement that the money involved in the transaction be the proceeds of an unlawful activity does
`not apply to all subsections of the international money laundering statute, in contrast to the domestic statute.
`5 Plaintiffs’ allegations that Defendants generated proceeds through unlawful “skimming” of natural gas transactions
`between the Ukraine and Russia, see, e.g., TAC ¶ 24, are not enough to support a violation of the domestic money
`laundering statute, even assuming such conduct is in fact a violation of Ukrainian law. The domestic money
`laundering statute applies only to the laundering of proceeds of specified unlawful activities listed in 18 U.S.C. §
`1956(c), none of which encompasses the “skimming” conduct Plaintiffs describe.
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`controlled European banks and bank accounts to New York-based banks, and then wired [the
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`money] back to European bank accounts . . . through various complex and circuitous transfers”
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`in order to generate “untraceable funds.” TAC ¶ 10. According to Plaintiffs, these funds were
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`then used to finance a “campaign to neutralize and destroy Tymoshenko . . . by means of illegal
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`pay-offs to prosecutors and others in the Yanukovich administration.” Id. Accepting these
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`allegations as true, Plaintiffs have arguably plead that Defendants (collectively) (1) transferred
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`funds across the U.S. border, and (2) that they did so with the intent of promoting a specified
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`unlawful activity, namely, “an offense against a foreign nation involving . . . bribery of a foreign
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`official.” 18 U.S.C. § 1956(c)(7)(B)(iv).
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`But even assuming Plaintiffs have successfully plead a predicate act of money
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`laundering, they nonetheless fail to establish a violation of RICO for two primary reasons: first,
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`because they have not provided enough detail in their allegations to show that the predicate acts
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`of money laundering took place on more than one occasion, which is necessary to establish a
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`“pattern” of activities for RICO; and second, because they have failed to allege facts sufficient to
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`establish that the Defendants were involved.
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`As discussed previously, in order to sufficiently plead any of the alleged RICO
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`violations, Plaintiffs must show that there was a “pattern” of racketeering activity. GICC Capital
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`Corp. v. Technology Finance Grp., Inc., 67 F.3d 463, 465 (2d Cir. 1995). A “pattern of
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`racketeering activity” requires “at least two acts of racketeering activity.” 18 U.S.C. § 1961(5).
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`These acts (1) must be related, and (2) must amount to or pose a threat of continuing criminal
`
`activity. H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 239 (1989); Spool, 520 F.3d at
`
`183. Continuity can be either “open-ended”—meaning there is a “threat of continuing criminal
`
`activity beyond the period during which the predicate acts were performed,” Cofacrédit, S.A. v.
`
`
`
`12
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`

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`Case 1:11-cv-02794-KMW Document 131 Filed 09/18/15 Page 13 of 15
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`Windsor Plumbing Supply Co., 187 F.3d 229, 242 (2d Cir. 1999)—or “closed-ended”—which
`
`requires “a series of related predicates extending over a substantial period of time,” H.J., 429
`
`U.S. at 242. Although there is no bright line rule, the Second Circuit has never held a period of
`
`less than two years to constitute a substantial period of time. Spool, 520 F.3d at 184. The relevant
`
`time period is the period during which the RICO predicate activity took place, rather than the
`
`time during which the underlying scheme was in operation. Id.; see also DeFalco v. Bernas, 244
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`F.3d 286, 321 (2d Cir. 2001).
`
`The TAC fails to allege predicate acts of money laundering with enough specificity to
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`establish a pattern under RICO. The TAC doesn’t even clearly state that there was more than one
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`transaction. Reading the pleadings generously, one could assume that Defendants must have
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`engaged in at least two transactions, namely one moving funds from the Ukraine to the U.S. and
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`one moving funds from the U.S. to the Ukraine, both by way of numerous intermediaries. See
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`TAC ¶ 4. But the pleadings could just as plausibly be read as describing transfers that were part
`
`of one continuous transaction that routed funds out of the Ukraine, through numerous
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`intermediate locations (of which the U.S. was just one), and back to the Ukraine. And even
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`taking the more generous view, i.e. assuming the existence of at least two independent
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`transactions, nothing in the TAC specifies when these transactions took place, approximately
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`how many there were, and most crucially, which Defendants were involved in which transactions
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`and in what capacity. See Reply Mem. in Supp. [Dkt. No. 130] at 6.
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`
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`Furthermore, the TAC does not state how Defendants are the proximate cause of
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`Tymoshenko’s harms.6 Although Plaintiffs have incorporated in the TAC conclusory allegations
`
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`6 The TAC alleges no facts to show how Plaintiffs Snizek and Rullis, as well as the unknown John Doe Plaintiffs,
`were harmed by the Defendants’ alleged money laundering for the purpose of promoting bribery of a Ukrainian
`official. Therefore, the Court’s analysis of proximate cause in the context of money laundering as a RICO predicate
`act focuses only on Plaintiff Tymoshenko.
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`Case 1:11-cv-02794-KMW Document 131 Filed 09/18/15 Page 14 of 15
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`that Defendants “intentionally and knowingly” funded the “unlawful investigations and
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`prosecutions” of Tymoshenko, TAC ¶ 10, the pleadings do not describe what role each
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`Defendant played in the “complex and circuitous” series of transfers funneling money back and
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`forth across the Atlantic, id. In the RICO context, proximate cause analysis must focus on the
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`directness of the relationship between the conduct and the harm. Hemi Grp., LLC v. City of New
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`York, N.Y., 559 U.S. 1, 12 (2010). Without specifying the particular contribution of each
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`Defendant to the money laundering scheme, Plaintiffs fail to establish the requisite directness of
`
`relationship between each Defendant’s conduct and the harm suffered by Tymoshenko. See
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`McLaughlin, 962 F.2d at 192.
`
`Therefore, because Plaintiffs have failed to plead a pattern of money laundering acts by
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`Defendants that proximately caused their harms, they have failed to allege acts necessary to
`
`support their civil RICO claim.
`
`B. State Law Claims
`
`Plaintiffs also bring claims under state law alleging fraud and malicious prosecution.
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`TAC ¶¶ 147–55. However, the TAC’s RICO allegations are the only claims over which this
`
`Court has original jurisdiction. Having dismissed those claims, the Court declines to exercise
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`supplemental jurisdiction over Plaintiffs’ state law claims, pursuant to 28 U.S.C. § 1367(c)(3).
`
`IV. CONCLUSION
`
`Given that this is now Plaintiffs’ fourth unsuccessful attempt to plead RICO claims, and
`
`given that the changes in the TAC fail to remedy the deficiencies found in the SAC, the Court
`
`declines to grant Plaintiffs yet another opportunity to amend their pleadings. When further
`
`amendment is likely to be futile, leave to amend need not be granted. See De Jesus v. Sears,
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`Roebuck & Co., 87 F.3d 65, 72 (2d Cir. 1996) (“Plaintiffs were accorded four opportunities to
`
`
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`14
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`

`
`Case 1:11-cv-02794-KMW Document 131 Filed 09/18/15 Page 15 of 15
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`plead their claims in this case, and the deficiencies in their federal claims are fundamental. The
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`district court did not abuse its discretion by refusing them a fifth opportunity.” (internal citations
`
`omitted)); see also Ruffolo v. Oppenheimer & Co., 987 F.2d 129, 131; BNP Paribas Mortgage
`
`Corp. v. Bank of Am., N.A., No. 09 Civ. 9783, 2013 WL 6484727, at 6* (S.D.N.Y. Dec. 9, 2013)
`
`(Sweet, J.). The changes from the SAC to the TAC are largely superficial or irrelevant and have
`
`not remedied the fundamental defects identified by this Court in Tymoshenko II.
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`For the foregoing reasons, the TAC is dismissed with prejudice. The Clerk of Court is
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`directed to close this case.
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`
`
`SO ORDERED.
`
`DATED:
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`
`
`New York, New York
`September 18, 2015
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`
` /s/
`
` KIMBA M. WOOD
` United States District Judge
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`15

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