ABDULLAH M. AL-RAYES, et al., Plaintiffs-Appellants, v. ERIKA M. WILLINGHAM, individually and as Trustee of the ERIKA M. WILLINGHAM TRUST, Defendant-Appellee.
Nos. 18-11059, 18-11539
United States Court of Appeals for the Eleventh Circuit
February 5, 2019
[PUBLISH] Non-Argument Calendar. D.C. Docket No. 3:15-cv-107-J-34JBT. Appeals from the United States District Court for the Middle District of Florida.
Before JILL PRYOR, BRANCH, and GRANT, Circuit Judges.
The creditors in this case claim that a husband and wife worked together to commit multiple acts of mail and wire fraud over several years for the purpose of
I.
Abdullah Al-Rayes and various corporate entities under his control (collectively “Al-Rayes“) sued Ben Willingham and several of his businesses, asserting that Ben defrauded Al-Rayes over the course of many real-estate transactions. Roughly a year after that 2006 lawsuit, Al-Rayes received a $25.7 million consent judgment against Ben. But after more than a decade, he has been able to collect only $39,943.81. Al-Rayes now argues that Ben‘s wife, Erika Willingham, has stymied his efforts to collect the judgment by working with Ben
According to Al-Rayes, Erika and Ben‘s scheme to hide Ben‘s assets involved secretly transferring funds to offshore bank accounts. Their efforts to conceal those accounts began shortly after Al-Rayes secured the consent judgment against Ben. Less than a year after that judgment was entered, Al-Rayes‘s counsel deposed Ben as part of an attempt to collect the judgment. Ben testified that he did not have any accounts or assets in Switzerland, where Erika was from and where he and Erika had previously lived. Ben also swore that Erika did have a single Swiss bank account in her name, but that she had sole control over it. According to Ben, Erika made wire transfers from her Swiss account to the couple‘s joint account in the United States, and then used that money to pay for living expenses. Erika, on the other hand, testified that she had no Swiss bank accounts in her name, and that her husband controlled all of her financial matters.
Additional facts emerged a few years later when Ben filed for bankruptcy and Al-Rayes renewed his attempt to collect the consent judgment. During the proceedings, Erika stood by her earlier testimony that she did not have any bank accounts in Switzerland. But the bankruptcy court concluded otherwise, finding that approximately 68 wire transfers were made from a Swiss bank account held only in Erika‘s name to the couple‘s joint account in the United States. Those transfers, totaling $255,740, were all made within approximately three years of the consent judgment.
Bank records subsequently turned over to the bankruptcy court revealed that over an eleven-year span Erika and Ben (individually or together) made at least 240 wire transfers of Ben‘s salary and benefits to Erika‘s known Swiss account and to other (previously undisclosed) Swiss accounts held in Erika‘s name. When confronted with these records, Ben admitted that—despite his prior testimony that he had no control over his wife‘s (purportedly) single Swiss bank account—he actually had signatory authority over four Swiss bank accounts held in Erika‘s name. He also conceded that—contrary to his prior testimony that he had no assets in Switzerland—he had made numerous transfers of his salary, benefits, and tax refunds to Erika‘s Swiss accounts. Following these admissions, he acknowledged that he and Erika had used Swiss funds to pay their living expenses.
Still, the parties dispute the extent of Erika‘s involvement in these transfers. For his part, Al-Rayes cites Ben‘s testimony that his wife was aware that he was making the transfers, consented to the transfers, and even initiated some of the transfers herself. Erika, on the other hand, consistently testified that her husband had sole control over her finances and that she did not know about the Swiss accounts or any transfers involving those accounts.
Al-Rayes‘s allegations do not end there; he argues that Erika and Ben misrepresented not only the location of Ben‘s assets, but also their extent. For example, Al-Rayes points to Ben‘s declaration to the bankruptcy court that he and Erika had no significant assets and a combined monthly income of $4,062. Only a week after that declaration, however, the couple applied to a retirement community and represented that they owned $750,000 in real estate, $395,000 in investments,
The couple also failed to notify the bankruptcy court of two important real-estate transactions made while the bankruptcy action was pending. First, they sold their house and received $334,295.53 in net proceeds, but failed to notify either the bankruptcy court or Al-Rayes. Moreover, both Erika and Ben paid for the house and signed the mortgage, but the title was in Erika‘s name only, shielding Ben‘s funds from creditors who were seeking his assets. And a few months later, the couple purchased a condo for $120,000 and again failed to notify the bankruptcy court or Al-Rayes. Like the house, the condo was purchased using funds from a joint account, but title was placed in Erika‘s name alone—again, Al-Rayes contends, in an attempt to hide Ben‘s assets.
These were not the only transactions that went unreported. The couple also failed to notify the bankruptcy court or Al-Rayes when they received a partial refund of their retirement-home entrance fee after moving out early. And they failed to notify the bankruptcy court or Al-Rayes when Erika created a trust, named herself as trustee, and executed a quitclaim deed transferring the condo title to herself as trustee, while reserving a life estate in the condo for herself—and for her husband.
Their alleged scheme did not end there. A few months before the bankruptcy action closed, Erika and Ben formed a corporation—Osborn of Jacksonville, Inc.—purportedly to market a book that Ben had written. In the four
In light of these acts, Al-Rayes sued Erika1 in the United States District Court for the Middle District of Florida, alleging that she violated RICO,
In evaluating whether Erika and Ben could be considered an association-in-fact enterprise under RICO, the court acknowledged that the two “are associated in
Having disposed of both federal RICO claims, the court declined to exercise supplemental jurisdiction over the remaining state-law claims. The court later deemed Erika a prevailing party and awarded her $2,661.72 in costs under
II.
On appeal from a grant of summary judgment, this Court reviews legal questions de novo. Hairston v. Gainesville Sun Publ‘g Co., 9 F.3d 913, 918–19 (11th Cir. 1993). We also conduct a de novo review of the evidence, viewing all evidence in the light most favorable to the nonmoving party and resolving all reasonable inferences in favor of the nonmoving party. Id. As for the award of costs, whether “the facts as found suffice to render the plaintiff a ‘prevailing party’ is a legal question reviewed de novo.” Lipscher v. LRP Publ‘ns, Inc., 266 F.3d 1305, 1321 (11th Cir. 2001) (citation omitted).
RICO is widely regarded as a broad statute; indeed, the RICO text itself “provides that its terms are to be ‘liberally construed to effectuate its remedial purposes.‘” Boyle, 556 U.S. at 944 (quoting Pub. L. No. § 904(a), 84 Stat. 922, 947 (1970)); see also Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 497 (1985) (“RICO is to be read broadly.“); Russello v. United States, 464 U.S. 16, 21 (1983) (recognizing “the pattern of the RICO statute in utilizing terms and concepts of breadth“); Ray v. Spirit Airlines, Inc., 767 F.3d 1220, 1227 (11th Cir. 2014) (observing that “civil RICO targets a broad category of criminally fraudulent acts“). This breadth of language (and, we will see, of construction) is evident in the provision of RICO at issue in this case: RICO makes it “unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise‘s affairs through a pattern of racketeering activity or collection of unlawful debt.”
“Enterprise,” in turn, is defined to encompass “any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.”
Here, the district court granted summary judgment because it determined that the evidence was insufficient to satisfy Boyle‘s “purpose” requirement. The district court‘s order acknowledges the rather obvious point that as a married couple Erika and Ben have a relationship, and goes on to conclude that “in the course of that marriage [the couple] engaged in acts which may constitute mail or wire fraud.” Still, the district court declined to recognize Erika and Ben as an association-in-fact enterprise because the record lacked evidence that they originally married for the purpose of engaging in mail or wire fraud. The district court was careful to note that it was not ruling out the possibility that a married couple could form an enterprise. But the court also indicated that, so long as a couple does not “get married for the purpose of engaging in racketeering activity,” some additional structure or vehicle must be alleged for the pair to qualify as an association-in-fact enterprise; this requirement seemed to reflect a view that the
We disagree. As an initial matter, to satisfy the purpose requirement, neither the text of RICO nor any relevant precedent requires an association-in-fact enterprise to consist of strangers who originally met for the purpose of engaging in illegal activity. “That an ‘enterprise’ must have a purpose is apparent from the meaning of the term in ordinary usage, i.e., a ‘venture,’ ‘undertaking,’ or ‘project.‘” Boyle, 556 U.S. at 946 (quoting Webster‘s Third New International Dictionary 757 (1976)). Thus, the “concept of ‘associat[ion]’ requires both interpersonal relationships and a common interest.” Id. (alteration in original). Nothing in that description prevents individuals with preexisting relationships—say, family members or business partners—from later joining together for the common purpose of engaging in illegal activity. So, unsurprisingly, federal courts have routinely recognized association-in-fact enterprises made up of individuals who had relationships that predated their schemes. See, e.g., Crowe v. Henry, 43 F.3d 198, 201, 205 (5th Cir. 1995) (plaintiff adequately pleaded an association-in-fact enterprise consisting of two people who originally met as “friends and business associates“); United States v. Torres Lopez, 851 F.2d 520, 528 (1st Cir. 1988) (evidence was sufficient for a rational trier of fact to find that a RICO enterprise consisted of a group of police officers who met as members of the Puerto Rico Police Department and then joined together to engage in criminal conduct for pay); Nesbitt v. Regas, No. 13 C 8245, 2015 WL 1331291, at *7 (N.D. Ill. Mar. 20, 2015) (plaintiff adequately pleaded that people with longtime “family
Moreover, neither the text of RICO nor any relevant precedent imposes a heightened “structure” requirement for married couples. But the district court appears to have done just that. While it may not have described it as mandatory, the district court‘s explanation of how a married couple could form an association-in-fact enterprise under RICO is telling. The court emphasized that an enterprise must be a “vehicle” and that “some discernable structure is still required.” The court then went on to deem it “[s]ignificant[]” that the RICO enterprise here “does not encompass the actions of Ben Willingham‘s business entities.”3 The court also concluded that the couple‘s actions to hide Ben‘s assets were those of a “husband and wife, conducting the personal affairs of Erika and Ben Willingham, not the affairs of a separate ‘enterprise.‘”
In so reasoning, the court imposed a requirement that the Supreme Court has already expressly rejected in Boyle. When presented with the assertion that “the
We note that the district court cited several cases to back up its suggestion that, absent a business or other distinct operation, Erika and Ben could not constitute an association-in-fact enterprise. But none of those cases actually supports that conclusion. In fact, one case shows that an association-in-fact enterprise can consist solely of two people who are married to each other. See,
That brings us back around to the facts of this case. Under a purpose analysis consistent with Boyle, the record contains sufficient evidence for a reasonable juror to find that—although Erika and Ben originally joined together for the purpose of marriage—the couple came together shortly after the consent
In sum, to survive summary judgment, Al-Rayes did not need to bolster Erika and Ben‘s marital relationship with evidence that the alleged association-in-fact enterprise included a business or other separate entity formed by the couple. Nor did he need to provide evidence that Erika and Ben originally married for the
This opinion addresses only the “enterprise” element of the RICO claims because the district court‘s order addressed only that element. Accordingly, nothing in this decision prevents the district court from entering judgment as a matter of law in Erika‘s favor on some other basis, should that be appropriate. And because we reverse the order granting summary judgment in Erika‘s favor, Erika no longer qualifies as a prevailing party under
REVERSED, VACATED, AND REMANDED.