Sihler v. Global e-Trading, LLC

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

TAMPA DIVISION

JANET SIHLER and

CHARLENE BAVENCOFF,

Individually and

on Behalf of All Others

Similarly Situated,

Plaintiffs,

v. Case No. 8:23-cv-1450-VMC-LSG

GLOBAL E-TRADING, LLC,

d/b/a Chargebacks911,

GARY CARDONE, and

MONICA EATON,

Defendants.

/

ORDER

This matter is before the Court on consideration of

Plaintiffs Janet Sihler and Charlene Bavencoff’s Motion for

Partial Summary Judgment (Doc. # 225), Defendant Monica

Eaton’s Motion for Summary Judgment (Doc. # 220), Defendant

Gary Cardone’s Motion for Summary Judgment (Doc. # 227), and

Defendant Global e-Trading, LLC’s Motion for Summary Judgment

(Doc. # 226), all filed on February 5, 2025. For the reasons

that follow, Ms. Eaton and Mr. Cardone’s Motions are granted,

Global e-Trading’s Motion is granted in part and denied in

part, and Plaintiffs’ Motion is granted in part and denied in

part. Count Two is dismissed for lack of RICO standing, but

the case will proceed to trial on Count One and most of Global

e-Trading’s affirmative defenses.

I. Background

Plaintiffs initiated this class action against

Defendants on June 28, 2023. (Doc. # 1). The operative

complaint is the third amended complaint, in which Plaintiffs

assert two RICO claims: (1) for violation of 18 U.S.C. §

1962(c) (Count One) — a substantive RICO claim; and (2) for

violation of 18 U.S.C. § 1962(d) (Count Two) — a RICO

conspiracy claim. (Doc. # 102). Count One is asserted against

Global e-Trading and is premised on the actions of the Keto

Enterprise, which includes Global e-Trading, Brightree

Holdings Corporation, David Flynn, Mike Campbell, and others.

(Id. at 64-66). Count Two is asserted against Global e-

Trading, Mr. Cardone, and Ms. Eaton. Count Two relates to the

actions of a separate enterprise, the Microtransactions

Enterprise, which includes Global e-Trading, Mr. Cardone, Ms.

Eaton, and Johnny De Luca. (Id. at 123-124).

The Court granted in part and denied in part Defendants’

motion to dismiss the third amended complaint. (Doc. # 128).

The Court dismissed only the claims based on predicate acts

of financial institution fraud because Plaintiffs “lack[ed]

statutory standing to assert” such claims. (Id.). Defendants

filed their answer and affirmative defenses on June 17, 2024,

asserting twenty-three affirmative defenses. (Doc. # 135).

Relevant here, the fourth affirmative defense is that

Plaintiffs’ claims are barred by laches; the seventh

affirmative defense is based on release of claims; the ninth

affirmative defense asserts absence of due diligence; the

twentieth affirmative defense seeks to reduce any damages

award to prevent a duplicative recovery; the twenty-first

affirmative defense seeks an apportionment of any damages

award based on responsibility; and the twenty-third

affirmative defense asserts that Plaintiffs are not entitled

to prejudgment interest. (Id. at 79-84). On August 13, 2024,

the Court certified a nationwide class. (Doc. # 156).

Defendants move for summary judgment on both Counts.

(Doc. ## 220, 226, 227). Plaintiffs move for partial summary

judgment as to six of Defendants’ affirmative defenses. (Doc.

# 225). Each party responded and replied. (Doc. ## 272, 274,

275, 276, 286, 287, 288, 289). At the Court’s request,

Plaintiffs filed a supplemental memorandum (Doc. # 311), to

which Global e-Trading responded. (Doc. # 316). The Motions

are ripe for review.

The Court and the parties are familiar with the

allegations and evidence in this case. The Court will not

outline here all the admitted and disputed facts included in

the parties’ Motions, although the Court has reviewed all

record evidence. Rather, the Court will address relevant

record evidence within its analysis. For now, suffice it to

say that Brightree, run by Mr. Flynn and others, sold keto

diet pills on its website. See (Doc. # 274-38 at 47)

(Brightree members describing the business as “selling $10

bottles of keto pills for $195 to dumbasses”). That website

made misrepresentations to induce purchases by customers like

Plaintiffs Sihler and Bavencoff, including misrepresentations

about price under a “Buy X bottles, Get Y bottles free”

advertisement. (Doc. # 274-8 at 64; Doc. # 274-51; Bavencoff

Depo. at 40:23-43:11, 108:17-21). As a result of the pricing

misrepresentation on the website, Plaintiffs were overcharged

for the diet pills. (Bavencoff Depo. at 40:23-43:11, 108:17-

21; Sihler Depo. at 32:11-33:4).

Global e-Trading — of which Mr. Cardone was previously

the CEO and Ms. Eaton was previously COO and is currently CEO

— did not sell the diet pills to Plaintiffs. Rather, Global

e-Trading provided chargeback and representment services to

merchants including Brightree. (Doc. # 259-1 at 1-2, 6).

Merchants maintain merchant accounts (each of which has a

unique “MID” number to identify it) through which they process

debit and credit card transactions. (Id. at 2; Doc. # 274-36

at 5). If a customer is upset with a transaction, they can

challenge the charge with the bank that issued their credit

card and the bank may initiate a chargeback with the credit

card company (Visa or Mastercard) to reverse the payment.

(Doc. # 274-36 at 6). Ultimately, the chargeback is presented

to the merchant who “may refute the chargeback [through

paperwork called a representment] or accept it.” (Id.).

Count One alleges that Global e-Trading joined the

association-in-fact Keto Enterprise, committed predicate acts

of wire fraud and money laundering, and aided and abetted the

acts of mail and wire fraud committed by other members of the

Keto Enterprise. (Doc. # 102; Doc. # 311). The predicate acts

and aiding and abetting took numerous forms, such as issuing

refunds to prevent chargebacks or investigations by

government authorities, submitting decoy websites as part of

representments, helping Brightree acquire additional MIDs

through shell corporations, and referring Brightree to Mr. De

Luca for sham microtransactions to lower Brightree’s

chargeback ratios. See, e.g., (Doc. # 274-36 at 1, 39; Doc.

# 274-44 at 149; Doc. # 274-43 at 10-11; Doc. # 266-7 at 3;

Doc. # 274-49 at 19; Doc. # 274-50; Doc. # 274-37 at 611-

612). Count Two against Global e-Trading, Mr. Cardone, and

Ms. Eaton asserts that they joined the association-in-fact

Microtransactions Enterprise with Mr. De Luca. As alluded to

above, Global e-Trading’s clients, including Brightree, were

referred to Mr. De Luca for sham microtransactions to reduce

the clients’ chargeback ratios. (Doc. # 274-49 at 19; Doc. #

274-50; Christensen Depo. at 179:1-24). By keeping its

chargeback ratio artificially low, Brightree was able to

continue accepting credit card payments for its keto diet

pills.

The parties’ dispute at summary judgment largely

revolves around the extent to which Defendants — whether under

the Keto Enterprise for Count One or the Microtransactions

Enterprise for Count Two — can be held liable under RICO for

the harm Plaintiffs suffered when they were overcharged.

II. Legal Standard

Summary judgment is appropriate “if the movant shows

that there is no genuine dispute as to any material fact and

the movant is entitled to judgment as a matter of law.” Fed.

R. Civ. P. 56(a). A factual dispute alone is not enough to

defeat a properly pled motion for summary judgment; only the

existence of a genuine issue of material fact will preclude

a grant of summary judgment. Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 247-48 (1986).

An issue is genuine if the evidence is such that a

reasonable jury could return a verdict for the non-moving

party. Mize v. Jefferson City Bd. of Educ., 93 F.3d 739, 742

(11th Cir. 1996) (citing Hairston v. Gainesville Sun Publ’g

Co., 9 F.3d 913, 918 (11th Cir. 1993)). A fact is material if

it may affect the outcome of the suit under the governing

law. Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir.

1997). The moving party bears the initial burden of showing

the court, by reference to materials on file, that there are

no genuine issues of material fact that should be decided at

trial. Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1260

(11th Cir. 2004) (citing Celotex Corp. v. Catrett, 477 U.S.

317, 323 (1986)). “When a moving party has discharged its

burden, the non-moving party must then ‘go beyond the

pleadings,’ and by its own affidavits, or by ‘depositions,

answers to interrogatories, and admissions on file,’

designate specific facts showing that there is a genuine issue

for trial.” Jeffery v. Sarasota White Sox, Inc., 64 F.3d 590,

593-94 (11th Cir. 1995) (quoting Celotex Corp., 477 U.S. at

324).

If there is a conflict between the parties’ allegations

or evidence, the non-moving party’s evidence is presumed to

be true, and all reasonable inferences must be drawn in the

non-moving party’s favor. Shotz v. City of Plantation, 344

F.3d 1161, 1164 (11th Cir. 2003). If a reasonable fact finder

evaluating the evidence could draw more than one inference

from the facts, and if that inference introduces a genuine

issue of material fact, the court should not grant summary

judgment. Samples ex rel. Samples v. City of Atlanta, 846

F.2d 1328, 1330 (11th Cir. 1988). But, if the non-movant’s

response consists of nothing “more than a repetition of his

conclusional allegations,” summary judgment is not only

proper, but required. Morris v. Ross, 663 F.2d 1032, 1034

(11th Cir. 1981).

III. Analysis

A. Count One

Count One, a civil RICO claim under 18 U.S.C. § 1962(c),

is based on the conduct of the Keto Enterprise, which includes

Global e-Trading, Brightree, Mr. Flynn, and others. (Doc. #

102 at 64-66). “The course of conduct these individuals

associated to pursue was defrauding consumers like Plaintiffs

by selling inaccurately marketed diet pills online and

deceiving banks and payment processing companies about the

nature of their activities.” (Id. at 66).

Section 1962(c) provides: “It shall be 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.” 18

U.S.C. § 1962(c). Thus, “[a] private plaintiff suing under

the civil provisions of RICO must [establish] six elements:

that the defendants (1) operated or managed (2) an enterprise

(3) through a pattern (4) of racketeering activity that

included at least two predicate acts of racketeering, which

(5) caused (6) injury to the business or property of the

plaintiff.” Cisneros v. Petland, Inc., 972 F.3d 1204, 1211

(11th Cir. 2020).

Global e-Trading argues that Plaintiffs have failed to

demonstrate a genuine dispute of material fact on any element

of their substantive RICO claim. (Doc. # 226 at 7-9, 10-25).

The Court disagrees.

1. Enterprise

“A RICO enterprise exists where a group of persons

associates, formally or informally, with the purpose of

conducting illegal activity.” Jackson v. BellSouth

Telecommunications, 372 F.3d 1250, 1264 (11th Cir. 2004)

(citation and internal quotation marks omitted). Here,

Plaintiffs maintain the Keto Enterprise was an “association-

in-fact” enterprise. “An association-in-fact enterprise is

simply a continuing unit that functions with a common

purpose.” Cisneros, 972 F.3d at 1211 (citation and internal

quotation marks omitted). An association-in-fact enterprise

has three features: “(1) a purpose, (2) relationships among

those associated with the enterprise, and (3) longevity

sufficient to permit these associates to pursue the

enterprise’s purpose.” Id. (citation and internal quotation

marks omitted).

Global e-Trading primarily challenges the purpose

element of an association-in-fact enterprise in its Motion,

but also mentions the relationship element. (Doc. # 226 at

11-14). “The purpose prong contemplates ‘a common purpose of

engaging in a course of conduct’ among the enterprise’s

alleged participants.” Cisneros, 972 F.3d at 1211 (citation

omitted). “An abstract common purpose, such as a generally

shared interest in making money, will not suffice.” Id.

Here, taking the evidence in the light most favorable to

Plaintiffs, there is sufficient evidence of a common purpose

among the Keto Enterprise’s participants and a relationship

between Global e-Trading and the Keto Enterprise beyond a

standard commercial relationship. A reasonable jury could

conclude that Global e-Trading had more than a typical vendor-

vendee relationship with Brightree, and that Global e-Trading

shared a common purpose of enriching itself and the other

members of the Keto Enterprise through illegal conduct. See

Al-Rayes v. Willingham, 914 F.3d 1302, 1308 (11th Cir. 2019)

(“We can see, then, that the relevant ‘purpose’ in an

association-in-fact enterprise is the members’ shared purpose

of engaging in illegal activity — not the purpose for which

they initially became acquainted.”).

Notably, before it worked with Brightree, Global e-

Trading ran a program called “Value Added Promotion” (“VAP”)

as an in-house service it provided clients. (Eaton Depo. 1 at

76:11-77:8). Under VAP, Global e-Trading would perform

numerous small-dollar transactions on prepaid cards for a

client-merchant to “reduce” or “dilute” that client’s

chargeback ratio with the credit card companies. See (Doc. #

274-52 at 1; Doc. # 274-53 at 20; Doc. # 274-54 at 24). These

transactions were shams; they did not involve “real

customers.” (Doc. # 274-52 at 1) (stating that VAP involves

“transactions meant to assist with decreasing the

[chargeback] ratio, so they are not real customers”).

Reducing the chargeback ratio on a merchant’s merchant

accounts (called “MIDs”) was a valuable service to a client

because credit card companies like Visa and Mastercard set

limits (or thresholds) on the chargeback ratios for merchant

accounts to “evaluate and predict risk” and assess

“compliance issues.” (Eaton Depo. 2 at 413:16–414:25; Doc. #

274-39 at 1; Doc. # 274-36 at 6). A merchant’s chargeback

ratio is calculated by dividing the monthly number of

chargebacks for an MID by either that month’s or the previous

month’s number of transactions for the MID. (Doc. # 274-36 at

6). The threshold is “1.5% for Mastercard and 0.90% for Visa.”

(Id.). “Excessive [c]hargebacks” — resulting in a higher

chargeback ratio — “can be an indicator of fraudulent activity

and is one reason why Acquirers monitor [c]hargebacks.”

(Id.). A high chargeback ratio could lead to a merchant losing

its MID and so being unable to accept payments through the

credit card processors. As Global e-Trading wrote in a blog

post, “excessive chargeback levels can — and have — put many

merchants out of business completely.” (Doc. # 274-40 at 1);

see also (Id.) (“Excessive chargeback levels, however, can

send your costs through the roof, threatening both card-

processing privileges and your ability to even function in

the eCommerce environment.”). Plaintiffs’ expert, Kenneth

Musante, opined that VAP “is a ruse designed to do nothing

more than increase the number of transactions” to dilute a

merchant’s chargeback ratio and violated the credit card

companies’ rules that applied to Global e-Trading. (Doc. #

274-36 at 1, 8-9, 18).

There is evidence that Global e-Trading knew VAP was

improper. While Global e-Trading was running VAP, a Global e-

Trading internal document maintained that it was

“unacceptable” to disclose “[a]ny transaction directly

indicating VAP activity,” because that could “jeopard[ize]

the [merchant]’s standing with the processor.” (Doc. # 274-

67; Doc. # 274-68 at 1; Eaton Depo. 1 at 181:1-10). In

November 2018, Mr. Cardone and Ms. Eaton agreed that Global

e-Trading should “stop any VAP” and “get this out of our area

ASAP” because it was “not worth the risk right now.” (Doc. #

274-71 at 1).

Realizing the risk associated with VAP, Global e-Trading

began referring its clients to Johnny De Luca for

microtransactions to dilute their chargeback ratios.

(Christensen Depo. at 179:1-24). For a time, Global e-Trading

openly received referral fees from Mr. De Luca’s business for

any clients it referred. (Id.). But Global e-Trading was

concerned that these referral fees showed its association

with Mr. De Luca’s microtransactions business. In 2016,

Global e-Trading employee Kendall Christensen emailed another

Global e-Trading employee, Mr. Scrancher, regarding the

corporate name under which Global e-Trading would accept the

referral fees, stating that Global e-Trading “need[ed] to be

aware how the funds come to insulate this service [the VAP

microtransactions] from our other services.” (Doc. # 274-72

at 1). Later, in September 2019, Global e-Trading, through

Mr. Scrancher, referred Mr. Flynn of Brightree to Mr. De Luca

for this microtransactions service and assured Mr. Flynn that

his money was safe with Mr. De Luca. (Doc. # 274-49 at 19;

Doc. # 274-50). There is a factual dispute regarding whether

Global e-Trading received a financial benefit for referring

Brightree to Mr. De Luca that may have been paid “off the

books.” See (Christensen Depo. at 232:10–236:2, 237:3-9)

(discussing email written by Global e-Trading employee, Mr.

Christensen, stating that Global e-Trading’s then-CEO, Mr.

Cardone, “requested [Mr. De Luca] not send any more fees to

the business, that he would work a deal with Chad to take

those funds another way” so there would be “no accounting

after that date” of any referral fees Mr. De Luca paid Global

e-Trading).

Mr. Scrancher of Global e-Trading was on a Skype group

chat with Mr. Flynn of Brightree and Mr. De Luca in which Mr.

De Luca explained that the sham microtransactions “to

increase transaction count” must be billed at $1.95 because

the lower price of $0.95 would raise “red flags” with the

credit card companies. (Doc. # 274-62 at 1-2, 6). Mr. De Luca

had previously — in 2016 — emailed Mr. Christensen and Mr.

Scrancher of Global e-Trading to explain that Mr. De Luca

only ran sham transactions at $1.49 or more because “Visa and

[Mastercard]” and “some of the processors” were “on the

lookout for anything [at $0.99].” (Doc. # 274-63). By

referring Brightree to Mr. De Luca for the sham

microtransactions, Global e-Trading knew it was assisting

Brightree to evade the detection of its fraudulent practices

by the credit card companies, thus enabling the fraudulent

practices to continue at the expense of customers but to the

enrichment of Global e-Trading and other members of the Keto

Enterprise.

Additionally, a reasonable jury could find that

Brightree provided Global e-Trading the URL for both its real

website and its “bank page” — or decoy website with “safer

language” that did “not push[] the envelope as much” that was

given to banks and credit card processing companies — so that

Global e-Trading could include the decoy website in the

representments for credit card companies. (Flynn Depo. 1 at

85:13–86:18; Campbell Depo. 1 at 127:8–129:6); see also (Doc.

# 274-37 at 611-612) (Skype chat between Mr. Flynn, Mr.

Campbell, and others in which Mr. Flynn stated that Global e-

Trading should be given the decoy website to use in

communications between Global e-Trading “and the merchant”

regarding chargebacks but should be given the real website

customers saw “for [Global e-Trading] to know what [it’s]

dealing with”). Defendants’ expert, Troy Carrothers, could

not identify a “legitimate reason” to provide a decoy website

as part of a representment. (Carrothers Depo. at 43:6-44:5,

56:6-14). Plaintiffs’ expert, Mr. Musante, opined that Global

e-Trading “either disregarded the actual check out pages or

turned a blind eye to what the fraudulent merchants were

presenting to cardholders. Instead, regardless of what the

customer reviewed at the time of checkout, [Global e-Trading]

utilized ‘Bank Pages’ or ‘Bank Sites’ to represent cardholder

disputes.” (Doc. # 274-36 at 35).1

Beyond the decoy website, Global e-Trading had another

reason to know that Brightree was making misrepresentations

1 For purposes of trial, the Court has prohibited Mr. Musante

from using the words “fraud” or “fraudulent” during his

testimony. (Doc. # 308 at 13). The Court did so because these

words have a legal meaning that could confuse the jury. (Id.).

The Court nevertheless believes that Mr. Musante was merely

using these words in the colloquial — rather than legal —

sense within his report. (Id.). Thus, in quoting Mr. Musante’s

report for purposes of summary judgment, the Court has not

removed the words “fraud” or “fraudulent.”

to its customers. Global e-Trading employee Nicholas Carroll

told Brightree that “almost 13% of these chargebacks are

coming through due to ‘incorrect Transaction Amounts’” and

speculated that the cause was “the way the pricing for the

offer is displayed on the website as we’ve talked about

(customers misinterpreting the ‘X dollars per bottle’ and

‘Buy X Bottles, Get X bottles Free’ statements).” (Carroll

Depo. at 226:1–227:11, 230:3–231:3; Doc. # 274-8 at 64; Doc.

# 274-51). This evidence suggests that Global e-Trading knew

that Brightree committed fraud in its pricing, but continued

working with Brightree and knowingly submitted the decoy

website in its representments. A reasonable jury could infer

from Global e-Trading’s knowledge of Brightree’s criminal

activity that Global e-Trading shared that criminal purpose.

Finally, the Skype messages that Global e-Trading

employee Mr. Scrancher deleted after Global e-Trading

received notice of this action also suggest a shared criminal

purpose. In one message, Mr. Scrancher introduces Mr. Flynn

of Brightree to a company that forms shell corporations: “I

have a large US merchant that needs 20 corps ASAP. Can you

guys help?” (Doc. # 266-7 at 3). In another message, Mr.

Scrancher sent to Mr. Flynn: “Nick updated me and I understand

you need signers. I can help. When can you talk?” (Doc. #

301-1 at 10). Signers appear to be the straw owners of shell

corporations used to obtain additional MIDs for Brightree

that the credit card processing companies would not be able

to associate with Brightree itself. Mr. Scrancher, as an agent

of Global e-Trading, was offering Brightree help in obtaining

these signers — likely not a typical chargeback management

service. A reasonable jury could conclude that Global e-

Trading’s aiding the creation of multiple shell corporations

owned by straw owners reflects a purpose to engage in the

Keto Enterprise’s criminal activity, rather than to provide

standard chargeback services to a client.

Taking all this evidence together and making all

reasonable inferences in Plaintiffs’ favor, a reasonable jury

could conclude that Global e-Trading had relationships with

the other members of the alleged Keto Enterprise and shared

the purpose to engage in illegal conduct. Indeed, a reasonable

jury could reject Global e-Trading’s assertion that it merely

provided standard chargeback and representment services to

Brightree to enrich itself. Because a reasonable jury could

conclude that the Keto Enterprise was an association-in-fact,

the Motion is denied as to this element.

2. Operated or Managed

“The critical inquiry in determining whether a RICO-

defendant was involved in the ‘operation or management’ of

the enterprise is whether the defendant ‘conducted or

participated in the conduct of the “enterprise’s affairs,”

not just [his or her] own affairs.’” Coquina Invs. v.

Rothstein, No. 10-60786-CIV, 2011 WL 197241, at *3 (S.D. Fla.

Jan. 20, 2011) (quoting Reves v. Ernst & Young, 507 U.S. 170,

185 (1993)). “Of course, ‘outsiders’ may be liable under §

1962(c) if they are ‘associated with’ an enterprise and

participate in the conduct of its affairs — that is,

participate in the operation or management of the enterprise

itself.” Reves, 507 U.S. at 185. “[T]he civil RICO defendant

must exercise some degree of direction of the enterprise as

well as an element of control.” Super Vision Int’l, Inc. v.

Mega Int’l Com. Bank Co., 534 F. Supp. 2d 1326, 1338 (S.D.

Fla. 2008) (citation and internal quotation marks omitted).

“[O]ne may be liable under the operation or management test

by knowingly implementing decisions, as well as by making

them.” United States v. Starrett, 55 F.3d 1525, 1548 (11th

Cir. 1995) (citation and internal quotation marks omitted).

A reasonable jury could conclude that Global e-Trading

was involved in the operation and management of the Keto

Enterprise. Taking the evidence in the light most favorable

to Plaintiffs, Global e-Trading planned the microtransactions

scheme — that is, using small-dollar transactions to dilute

Brightree’s chargeback ratio so its MIDs would not be shut

down. (Flynn Depo. 1 at 141:4-142:3, 149:25-151:3). Indeed,

Global e-Trading employee Mr. Scrancher introduced Mr. Flynn

of Brightree to Mr. De Luca, who went on to run hundreds of

thousands of dollars in microtransactions for the Keto

Enterprise. (Doc. # 274-49 at 19; Doc. # 274-50). Global e-

Trading also supplied data to Brightree about the number of

“transactions needed” to dilute the chargeback ratio below

the credit card companies’ threshold percentage (usually a 1%

chargeback ratio). (Doc. # 274-36 at 21-22, 25-26; Eaton Depo.

1 at 242:24-245:22; Eaton Depo. 2 at 351:21-352:22).

According to Plaintiffs’ expert Mr. Musante, the provision of

this “transactions needed” amount to Brightree was “solely to

assist fraudulent merchants [to] evade the chargeback

monitoring programs.” (Doc. # 274-36 at 21).

There is also evidence suggesting that Global e-Trading

could act on its own for the benefit of the Keto Enterprise.

Global e-Trading possessed “admin” credentials within

Brightree’s system from which Global e-Trading could

independently monitor Brightree’s transactions and

chargebacks. (Doc. # 274-43 at 7). Global e-Trading also

maintained a “proprietary” risk-based algorithm to determine

“the minimum amount necessary [as a refund] to avoid a

chargeback.” (Id. at 11). Global e-Trading maintained the

ability to refund Brightree customers on its own. Global e-

Trading issued a full refund to a Brightree customer without

“any direction” from Brightree. See (Id. at 10-11)

(conversation between Global e-Trading employee Mr. Carroll

and members of Brightree discussing an “auto refund[]” done

by Global e-Trading for a “high risk customer”); (Carroll

Depo. at 234:9-15). Mr. Carroll of Global e-Trading

acknowledged in his Skype chat with Brightree employees that

Global e-Trading performed the “decisioning regarding that

amount to refund” using its risk-based system. (Doc. # 274-

43 at 10); see also Starrett, 55 F.3d at 1548 (“[O]ne may be

liable under the operation or management test by knowingly

implementing decisions, as well as by making them.” (citation

and internal quotation marks omitted)). Another time, Global

e-Trading issued a partial refund to an aggrieved consumer

who had complained to a state attorney general. (Doc. # 274-

44 at 149).

Again, the Skype messages Global e-Trading employee Mr.

Scrancher deleted after Global e-Trading received notice of

this action are instructive. These messages support that

Global e-Trading was an active participant in the Keto

Enterprise. For example, the recently recovered Skype

messages Mr. Scrancher sent to Mr. Flynn of Brightree include:

“Hi David. Nick told me about your MID closure. Give me a

call ASAP, I can help.” (Doc. # 301-1 at 10). He also sent to

Mr. Flynn: “Nick updated me and I understand you need signers.

I can help. When can you talk?” (Id.). As noted above, signers

appear to be the straw owners of the shell corporations used

to obtain additional MIDs. Mr. Scrancher, as an agent of

Global e-Trading, was offering Brightree help in obtaining

these signers. Yet another message from Mr. Scrancher, in

which he introduces Mr. Flynn of Brightree to a company that

forms shell corporations, reads: “I have a large US merchant

that needs 20 corps ASAP. Can you guys help?” (Doc. # 266-7

at 3). These messages suggest that Global e-Trading assisted

Brightree and Mr. Flynn to keep the fraudulent enterprise

afloat by helping create multiple shell companies owned by

straw “signers” that could form new MIDs for the Keto

Enterprise. A reasonable jury could conclude that Global e-

Trading provided more than mere “introductions” to other

service providers on Global e-Trading’s behalf.

A reasonable jury could conclude that Global e-Trading

was far more involved with the Keto Enterprise than Global e-

Trading claims, and that Global e-Trading participated in the

conduct of the Keto Enterprise’s affairs. The jury could

believe that Global e-Trading was more than an innocent third-

party company providing legitimate “back end” chargeback

management services for Brightree, as Global e-Trading

contends. Summary judgment is inappropriate because of the

genuine disputes as to this element.

3. Pattern of Racketeering Activity

“To successfully [establish] a pattern of racketeering

activity, plaintiffs must [prove] that: (1) the defendants

committed two or more predicate acts within a ten-year time

span; (2) the predicate acts were related to one another; and

(3) the predicate acts demonstrated criminal conduct of a

continuing nature.” Jackson, 372 F.3d at 1264. “An act of

racketeering activity, commonly known as a ‘predicate act,’

includes any of a long list of state and federal crimes.”

Cisneros, 972 F.3d at 1215. As for continuity, to establish

open-ended continuity requires “either that the alleged acts

were part of the defendants’ ‘regular way of doing business,’

or that the illegal acts threatened repetition in the future.”

Jackson, 372 F.3d at 1267 (citation omitted).

“One who aids and abets two predicate acts can be civilly

liable under RICO.” Cox v. Adm’r U.S. Steel & Carnegie, 17

F.3d 1386, 1410 (11th Cir.), opinion modified on reh’g, 30

F.3d 1347 (11th Cir. 1994). “To establish civil liability for

aiding and abetting, the plaintiffs must show: (1) that the

defendant was generally aware of the defendant’s role as part

of an overall improper activity at the time that he provides

the assistance; and (2) that the defendant knowingly and

substantially assisted the principal violation.” Id. “The

defendant’s ‘[k]nowledge may be shown by circumstantial

evidence, or by reckless conduct.’” Id. (citation omitted).

Here, there is a genuine dispute whether Global e-

Trading committed two or more related acts of wire fraud and

money laundering, as well as aiding and abetting two or more

related predicate acts of wire and mail fraud. “Racketeering

activity includes mail and wire fraud.” Omnipol, a.S. v.

Worrell, 421 F. Supp. 3d 1321, 1350 (M.D. Fla. 2019), aff’d

sub nom. Omnipol, A.S. v. Multinational Def. Servs., LLC, 32

F.4th 1298 (11th Cir. 2022). “Mail or wire fraud occurs when

a person (1) intentionally participates in a scheme to defraud

another of money or property and (2) uses the mails or wires

in furtherance of that scheme.” Am. Dental Ass’n v. Cigna

Corp., 605 F.3d 1283, 1290 (11th Cir. 2010). “The first

element, a scheme or artifice to defraud, ‘requires proof of

a material misrepresentation, or the omission or concealment

of a material fact calculated to deceive another out of money

or property.’” Omnipol, a.S., 421 F. Supp. 3d at 1350

(citation omitted). “A misrepresentation is material if it

has a natural tendency to influence, or is capable of

influencing, the decision maker to whom it is addressed.” Id.

(citation omitted). Additionally, “a claim for money

laundering under RICO requires allegations that a person

conducted a financial transaction with money he knew to be

the proceeds of unlawful activity, with the intent to promote

the carrying on of specified unlawful activity.” Id. at 1352.

First, there is evidence that Global e-Trading aided and

abetted the Keto Enterprise’s predicate acts of wire fraud

and mail fraud. Again, the Keto Enterprise conducted numerous

transactions via the internet in which customers, including

Sihler and Bavencoff, were overcharged for diet pills because

of pricing misrepresentations on Brightree’s website.

Employees of Brightree discussed the “Buy X, Get Y”

advertising for per bottle pricing, knowing that customers

would believe the total price was higher than advertised.

Mike Campbell stated in a Skype chat with Mr. Flynn that the

policy was to “never show the totals” that would be charged.

See (Campbell Depo. 1 at 48:6-49:8) (discussing chats in which

Mr. Campbell advised Mr. Flynn “you display it as price per

bottle so it looks cheap [—] never show the totals”). The

purchased bottles were shipped to customers, including to

Sihler in October 2019 and to Bavencoff in December 2019.

(Bavencoff Depo. at 40:23-43:11, 108:17-21; Sihler Depo. at

32:11-33:4); see Bridge v. Phoenix Bond & Indem. Co., 553

U.S. 639, 647 (2008) (“The gravamen of the offense [of mail

fraud] is the scheme to defraud, and any mailing that is

incident to an essential part of the scheme satisfies the

mailing element, even if the mailing itself contain[s] no

false information.” (citations and internal quotation marks

omitted)). A reasonable jury could conclude that predicate

acts of wire fraud and mail fraud occurred.

Taking the evidence in the light most favorable to

Plaintiffs, Global e-Trading “was generally aware of [its]

role as part of an overall improper activity at the time that

[it] provide[d] the assistance” to Brightree and the other

members of the Keto Enterprise. Cox, 17 F.3d at 1410. The

evidence discussed previously in relation to other elements

establishes Global e-Trading’s awareness of its role in the

improper activity. Among other things, Global e-Trading was

aware of the false nature of the “Buy X bottles, Get Y bottles

free” pricing model on Brightree’s website and the fact that

many chargebacks were based on customers being charged the

wrong amount. (Carroll Depo. at 226:1–227:11, 230:3–231:3;

Doc. # 274-8 at 64; Doc. # 274-51). Likewise, Mr. Scrancher

of Global e-Trading in messages to Mr. Flynn of Brightree

volunteered to assist Brightree in forming multiple shell

corporations to establish additional MIDs, obtaining straw

owners or “signers” for those shell corporations, and

assuring Brightree that it should spend hundreds of thousands

of dollars with Mr. De Luca on sham microtransactions to

dilute Brightree’s chargeback ratios. (Doc. # 266-7 at 3;

Doc. # 301-1 at 10; Doc. # 274-49 at 19; Doc. # 274-50).

Global e-Trading continued to encourage customers like

Brightree with high chargeback ratios indicating fraud to

engage in microtransactions schemes with Mr. De Luca after

Global e-Trading had already determined this scheme was too

risky for it to continue performing itself. (Doc. # 274-49 at

19; Doc. # 274-50; Doc. # 274-71 at 1). “These sham

transactions served no purpose other than to distort the ratio

of disputed transactions and maintain the ability of these

fraudulent actors to maintain access to their merchant

account and acquire additional merchant accounts and hence

the ability to defraud consumers.” (Doc. # 274-36 at 1).

Even after discontinuing its VAP program, Global e-

Trading still took a cut of the profits of the

microtransactions scheme through its referral fees with Mr.

De Luca. (Christensen Depo. at 179:1-24, 232:10–236:2, 237:3-

9). Global e-Trading used a proprietary risk-based algorithm

to determine how much of a refund it should issue to

Brightree’s complaining customers to prevent a chargeback and

complaints to the Better Business Bureau or a state attorney

general. (Doc. # 274-43 at 10-11; Doc. # 274-44 at 149;

Carroll Depo. at 234:9-15). Likewise, there is evidence

Global e-Trading knew Brightree had given it a decoy website

to use in representments — an action with no legitimate

purpose. (Flynn Depo. 1 at 85:13–86:18; Campbell Depo. 1 at

127:8–129:6; Doc. # 274-37 at 611-612; Carrothers Depo. at

43:6-44:5, 56:6-14). A reasonable jury could conclude that

Global e-Trading was aware of its role to prevent the

detection of Brightree and the Keto Enterprise’s fraud so

that the Keto Enterprise could continue its improper diet

pill business.

Furthermore, a reasonable jury could conclude that

Global e-Trading knew of and substantially assisted these

predicate acts of wire and mail fraud. Again, the evidence

discussed above is sufficient for a reasonable jury to

conclude that Global e-Trading had knowledge of the predicate

acts of Brightree and the other members of the Keto

Enterprise. For example, Global e-Trading knew about the

pricing misrepresentations by Brightree on its website.

(Carroll Depo. at 226:1–227:11, 230:3–231:3; Doc. # 274-8 at

64; Doc. # 274-51). It knew that Brightree had a decoy website

with “safer language” than its real website to show to banks

or credit card companies. (Flynn Depo. 1 at 85:13–86:18;

Campbell Depo. 1 at 127:8–129:6; Doc. # 274-37 at 611-612).

Global e-Trading knew that Brightree needed shell

corporations and straw owners to obtain additional MIDs as

well as needing a flood of sham microtransactions to keep its

MIDs below the credit card companies’ thresholds. (Doc. #

266-7 at 3; Doc. # 301-1 at 10; Doc. # 274-49 at 19; Doc. #

274-50). And Global e-Trading actively assisted Brightree and

the other Keto Enterprise members in obtaining those things.

(Id.). Tellingly, Mr. Scrancher — after learning that this

lawsuit was imminent — deleted the Skype messages in which he

helped Mr. Flynn obtain shell corporations and “signers.”

(Doc. # 221; Doc. # 266-6; Doc. # 301).

Despite knowing the nature of Brightree’s business,

which involved wire and mail fraud, Global e-Trading

continued providing representment services to challenge

Brightree’s chargebacks and provided refunds to customers to

prevent them from initiating a chargeback or reporting to

consumer protection authorities. (Doc. # 274-43 at 10-11;

Doc. # 274-44 at 149; Carroll Depo. at 234:9-15). As

Plaintiffs’ expert Mr. Musante explained: Global e-Trading

“used its position to assist bad actors and fraudulent

companies to perpetuate their frauds and thwart the Card

Network Rules and industry standards. As a result, these

fraudulent firms were able to maintain their merchant

accounts, acquire new merchant accounts and win contested

cardholder disputes. As a result, the fraud continued and

consumers were harmed.” (Doc. # 274-36 at 1).

Even aside from Global e-Trading’s aiding and abetting

predicate acts of other Keto Enterprise members, there is a

genuine dispute whether Global e-Trading itself committed

predicate acts of wire fraud and money laundering. Plaintiffs

maintain that Global e-Trading committed numerous acts of

wire fraud. (Doc. # 311 at 2). For now, the Court need only

address a few of Mr. Scrancher’s Skype messages — many of

which were only recently recovered because Mr. Scrancher

deleted them when alerted to this action. As discussed

previously, Mr. Scrancher sent Mr. Flynn multiple messages

helping him obtain shell corporations and signers for those

shell corporations so that Mr. Flynn could secure additional

MIDs that the credit card monitoring services would not

associate with Brightree. (Doc. # 301-1 at 10). These messages

are more than mere introductions to other service providers.

For example, Mr. Scrancher invited Mr. Flynn to come to Global

e-Trading’s office to “white board[]” — that is, plan — how

to set up shell companies. (Id.). There is a genuine dispute

whether these messages were incident to an essential part of

the scheme to defraud. See United States v. Phillips, 647 F.

App’x 917, 918 (11th Cir. 2016) (“It is not necessary that

the transmitted information [in a wire] include any

misrepresentation or for the transmission itself to be

essential to the success of the scheme to defraud, but it can

be ‘incident to an essential part of the scheme’ or ‘a step

in the plot.’ Thus, a ‘routine and innocent’ mailing can form

the basis of a wire-fraud conviction if it was an essential

part of the scheme.” (citations omitted)). A reasonable jury,

therefore, could conclude that these acts constitute wire

fraud.

Similarly, a reasonable jury could conclude that Global

e-Trading committed acts of money laundering though its

issuance of refunds to Brightree’s customers. Again, there is

evidence of at least two risk-based refunds Global e-Trading

itself conducted on Brightree’s behalf to prevent those

customers from initiating a chargeback. (Doc. # 274-43 at 10-

11; Doc. # 274-44 at 149). There is also evidence that these

refunds were issued to facilitate Brightree’s fraud by

keeping Brightree’s chargeback rates low so the fraud would

not be detected. Again, Global e-Trading determined the

amount to refund a customer based on its assessment of the

customer’s likelihood of initiating a chargeback or making

complaints to authorities. (Doc. # 274-43 at 10-11). Global

e-Trading’s former CEO, Mr. Cardone, testified that refunding

a customer to prevent a chargeback is “literally paying the

cop not to give you a ticket” to “prevent[] the one percent

rule” for chargeback ratio from being “effective.” (Cardone

Depo. at 42:4-23). He also testified that paying a refund

after an alert to prevent a chargeback is “a great dilution

tool” for diluting a merchant’s chargeback ratio. (Cardone

Depo. at 243:23-244:1). While Global e-Trading insists that

it did not independently handle refunds and that its issuance

of refunds was an innocent business practice (Doc. # 226 at

5, 17-19), a reasonable jury could disagree. See United States

v. Van Alstyne, 584 F.3d 803, 815-16 (9th Cir. 2009)

(affirming money laundering conviction in Ponzi scheme case

where a transaction at issue “refunded the full amount

invested by James and Evelyn Easley, in response to their

complaints after the scheme began to unravel” because

“returning the Easleys’ investment was intended to ‘promote

the carrying on,’ 18 U.S.C. § 1956(a)(1)(A)(i), of the

‘scheme’ at the heart of the mail fraud counts, by

discouraging detection of that scheme”).

Summary judgment is inappropriate because of the genuine

disputes as to this element.

4. Causation and Injury

“The Supreme Court has been clear that a party is only

entitled to recover under RICO ‘to the extent that[] he has

been injured in his business or property by the conduct

constituting the violation.’” Ray v. Spirit Airlines, Inc.,

836 F.3d 1340, 1349 (11th Cir. 2016) (quoting Sedima, S.P.R.L.

v. Imrex Co., 473 U.S. 479, 496 (1985)). “Thus, a defendant

who commits an act of racketeering is not liable for treble

damages to everyone he might have injured by other conduct,

nor is the defendant liable to those who have not been

injured.” Id. (citation and internal quotation marks

omitted). Rather, the act of racketeering must “the but-for

and proximate cause of the plaintiffs’ injuries.” Id.

(citations omitted). “The connection between the racketeering

activity and the injury can be neither remote, purely

contingent, nor indirect.” Id. (citing Anza v. Ideal Steel

Supply Corp., 547 U.S. 451, 457 (2006)). “When a court

evaluates a RICO claim for proximate causation, the central

question it must ask is whether the alleged violation led

directly to the plaintiff’s injuries.” Anza, 547 U.S. at 461.

“The injurious conduct need not be the sole cause of the

plaintiffs’ injuries, but there must be ‘some direct

relation’ between the conduct and the injury to sustain a

claim.” Ray, 836 F.3d at 1349 (citation omitted).

Here, there is a genuine dispute of material fact

concerning whether the predicate acts of the Keto Enterprise,

including acts Global e-Trading either committed or aided and

abetted, caused Plaintiffs’ injury. Plaintiffs’ injury was

being charged for bottles of diet pills they were told would

be free on the website advertising the pills. (Bavencoff Depo.

at 40:23-43:11; Sihler Depo. at 32:11-33:4). As discussed

above, there is a genuine dispute over the existence of a

pattern of racketeering activity that included the false “Buy

X, Get Y” pricing for the diet pills. See, e.g., (Doc. # 274-

38 at 47) (Keto Enterprise members describing the business as

“selling $10 bottles of keto pills for $195 to dumbasses”);

(Campbell Depo. 1 at 48:6-49:8) (discussing chats in which

Mr. Campbell advised Mr. Flynn “you display it as price per

bottle so it looks cheap [—] never show the totals”). The

misrepresentations about pricing, among other things, were

made by members of the Keto Enterprise on Brightree’s website.

These misrepresentations directly caused Plaintiffs’ injury

of overpaying for the diet pills. Even though these particular

predicate acts of wire fraud were not committed by Global e-

Trading, Global e-Trading aided and abetted those fraudulent

acts that injured Plaintiffs. Additionally, as discussed

previously, there is also a genuine dispute whether Global e-

Trading committed acts of wire fraud and money laundering

itself that kept the Keto Enterprise active to harm

Plaintiffs. See In re Managed Care Litig., 150 F. Supp. 2d

1330, 1348 (S.D. Fla. 2001) (“A predicate act of extortion

which does not directly injure a plaintiff may be aggregated

with acts of mail and wire fraud which did directly and

tangibly injure the plaintiff to form a pattern of

racketeering activity.”).

As Plaintiffs’ expert Mr. Musante opined: “The

fraudulent merchants, including the Keto Merchants, required

merchant processing to perpetuate their fraud. But for

[Global e-Trading], these merchants would have been tripped

up by the chargeback monitoring programs and likely closed .

. . .” (Doc. # 274-36 at 39). The Motion is denied as to this

element for Count One. Because there is a genuine dispute as

to every element of the claim, Count One survives summary

judgment.

B. Count Two

Section 1962(d) makes it unlawful to conspire to violate

RICO. 18 U.S.C. § 1962(d). “The essence of a RICO conspiracy

claim is that each defendant has agreed to participate in the

conduct of an enterprise’s illegal activities.” Solomon v.

Blue Cross & Blue Shield Ass’n, 574 F. Supp. 2d 1288, 1291

(S.D. Fla. 2008) (emphasis in original). “Plaintiffs can

establish a RICO conspiracy claim by showing a Defendant: (1)

agreed to the overall objective of the conspiracy; or (2)

agreed to commit two predicate acts.” In re Takata Airbag

Prods. Liab. Litig., 524 F. Supp. 3d 1266, 1282 (S.D. Fla.

2021).

“A party may be liable for RICO conspiracy even if not

liable for the alleged substantive RICO claim.” Ou v. Click

Labs, Inc., No. 8:22-cv-1341-WFJ-SPF, 2023 WL 2499151, at *6

(M.D. Fla. Mar. 14, 2023) (citing Jackson v. BellSouth

Telecommunications, 372 F.3d 1250, 1269 (11th Cir. 2004)).

“However, the parties must agree to commit an illegal act,

and if the complaint fails to state a substantive RICO claim,

then the conspiracy claim is without merit.” Id.; see also

Jackson, 372 F.3d at 1269 (“The plaintiffs protest that the

trial court erred in dismissing their RICO conspiracy claims

because a party may be liable for RICO conspiracy even if it

is not liable for the substantive RICO offense. While this

observation is undoubtedly correct, the plaintiffs’ argument

fails to acknowledge that what is required to support a claim

of RICO conspiracy is that plaintiffs allege an illegal

agreement to violate a substantive provision of the RICO

statute.”).

Importantly, Count Two is not based on the Keto

Enterprise or the actions of Brightree. Rather, it is based

on the Microtransactions Enterprise, consisting of Global e-

Trading, Mr. Cardone, Ms. Eaton, and Mr. De Luca. (Doc. # 102

at 123-124). As pled in the Third Amended Complaint, the

“fraudulent course of conduct pursued by [the

Microtransactions Enterprise] was a scheme whereby [Global e-

Trading] — under the direction and control of Defendants Eaton

and Cardone — would refer its clients to Johnny De Luca so

that he could conduct thousands of sham microtransactions on

those clients’ accounts.” (Id. at 124). The running of

microtransactions was done “with the aim of defrauding

[Global e-Trading’s clients’] banks and payment processors by

making it seem as if the accounts’ chargeback rates were lower

than they actually were.” (Id. at 124-125). Plaintiffs’

theory of injury for this claim is that “Plaintiffs lost

property (the money they spent purchasing falsely advertised

diet pills) as a result of the fact that [Global e-Trading’s]

client was able to hide its fraud from payment processors and

financial institutions by fraudulently reducing its apparent

chargeback rate.” (Id. at 142-143).2

In support of this claim, Plaintiffs obtained

significant discovery about the microtransactions performed

by Mr. De Luca for clients Global e-Trading referred. There

is no doubt that this scheme is questionable ethically and

legally. However, the Court agrees with Defendants that

Plaintiffs cannot show a direct harm to themselves

proximately caused by the Microtransactions Enterprise. (Doc.

2 The Court agrees with Defendants that Count Two of the Third

Amended Complaint does not incorporate by reference the

predicate acts alleged in Count One. (Doc. # 287 at 4). And

because the predicate acts alleged in Count One involve the

Keto Enterprise rather than the Microtransactions Enterprise,

“Count [One]’s purported predicate acts may not serve as Count

[Two]’s predicate acts and do not assist Plaintiffs in

establishing their RICO-conspiracy claim.” (Id. at 5). It

would be unjust, and highly prejudicial to Defendants, to

allow Plaintiffs to amend their claims in their summary

judgment briefing to now hold the Microtransactions

Enterprise responsible for predicate acts supposedly

committed by the Keto Enterprise. See Naeh Media Grp. LLC v.

City of Lauderhill, No. 23-11022, 2024 WL 1155815, at *3 (11th

Cir. Mar. 18, 2024) (“At bottom, the complaint must identify

any ‘basis for liability’ relied on at summary judgment.”).

# 220 at 16-22; Doc. # 226 at 7-9; Doc. # 227 at 11-15). Thus,

Plaintiffs and the Class lack statutory RICO standing for

this claim.

The RICO statute provides a cause of action for “[a]ny

person injured in his business or property by reason of a

violation of section 1962.” 18 U.S.C. § 1964(c) (emphasis

added). As mentioned previously, “[t]he Supreme Court has

been clear that a party is only entitled to recover under

RICO ‘to the extent that[] he has been injured in his business

or property by the conduct constituting the violation.’” Ray,

836 F.3d at 1349 (quoting Sedima, S.P.R.L., 473 U.S. at 496).

“Thus, a defendant who commits an act of racketeering is not

liable for treble damages to everyone he might have injured

by other conduct, nor is the defendant liable to those who

have not been injured.” Id. (citation and internal quotation

marks omitted). Rather, the act of racketeering must “the

but-for and proximate cause of the plaintiffs’ injuries.” Id.

(citations omitted). “The connection between the racketeering

activity and the injury can be neither remote, purely

contingent, nor indirect.” Id. (citing Anza, 547 U.S. at 457).

“When a court evaluates a RICO claim for proximate causation,

the central question it must ask is whether the alleged

violation led directly to the plaintiff’s injuries.” Anza,

547 U.S. at 461. “The injurious conduct need not be the sole

cause of the plaintiffs’ injuries, but there must be ‘some

direct relation’ between the conduct and the injury to sustain

a claim.” Ray, 836 F.3d at 1349 (citation omitted). “Notably,

the fact that an injury is reasonably foreseeable is not

sufficient to establish proximate cause in a RICO action —

the injury must be direct.” Id. (citing Hemi Grp., LLC v.

City of New York, 559 U.S. 1, 12 (2010) (plurality opinion)).

Here, Plaintiffs’ theory of harm caused by the

Microtransactions Enterprise (rather than the Keto Enterprise

from Count One) is that the Microtransactions Enterprise

defrauded banks or payment processors by tricking them into

believing Global e-Trading’s clients had lower chargeback

rates than they had. The flood of fake microtransactions

diluted the chargeback rate of Global e-Trading’s clients,

making those client merchants appear more legitimate than

they were. Because the banks and payment processors were

tricked about the percentage of chargebacks, they continued

to offer Global e-Trading’s clients access to their payment

processing services. Because clients like Brightree continued

to have access to payment processing services, Brightree was

able to accept payments from Plaintiffs and the Class for

purchases of keto diet pills. And Brightree (as part of the

Keto Enterprise) charged Plaintiffs and the Class more than

they said they would. See (Doc. # 276 at 11) (“Each named

Plaintiff was defrauded into paying for bottles they did not

order based on statements on the websites at issue.”).

The harm to Plaintiffs and the Class — being charged

more for diet pills than they should have been — is thus an

indirect result of the Microtransactions Enterprise’s

predicate acts of wire fraud. A reasonable jury could find

that the harm to Plaintiffs was directly caused by the Keto

Enterprise — but not by the Microtransactions Enterprise.

Because Plaintiffs were indirectly harmed by the conduct of

the Microtransactions Enterprise, there is no genuine dispute

of material fact as to causation. See Hemi Grp., LLC, 559

U.S. at 10-12 (finding that causation was too attenuated where

the plaintiff City’s injury resulted from defendant Hemi

Group’s failure to submit customer information to New York

State, that then could not pass the information to the City,

that then could not use the information to determine which

City-based customers to pursue for unpaid taxes); Virtus

Pharms., LLC v. Woodfield Distribution, LLC, No. 8:21-cv-

02427-WFJ-SPF, 2024 WL 4235895, at *7 (M.D. Fla. Sept. 19,

2024) (“Mr. Runsdorf and the Woodfield entities engaged in or

were connected to drug trafficking activity, which resulted

in a raid and product seizure by the DEA, which ultimately

caused Virtus’s losses. These intervening, intermediary

causes of harm . . . sever the direct relationship between

racketeering activities and a plaintiff’s harm.”), appeal

dismissed, No. 24-13349, 2025 WL 548247 (11th Cir. Feb. 19,

2025).

Plaintiffs lack statutory standing under RICO to bring

this claim. See Bivens Gardens Off. Bldg., Inc. v. Barnett

Banks of Fla., Inc., 140 F.3d 898, 908 (11th Cir. 1998)

(“[T]he test for RICO standing is whether the alleged injury

was directly caused by the RICO violation, not whether such

harm was reasonably foreseeable.”). Count Two is dismissed

for lack of standing.

C. Affirmative Defenses

On to Plaintiffs’ Motion, seeking summary judgment on

six of Defendants’ affirmative defenses: affirmative defenses

four, seven, nine, twenty, twenty-one, and twenty-three.

(Doc. # 258).

“On a plaintiff’s motion for summary judgment, the

defendant bears the initial burden of showing that the

affirmative defense is applicable.” Off. of Thrift

Supervision v. Paul, 985 F. Supp. 1465, 1470 (S.D. Fla. 1997).

“To do so, [t]he defending party must rely on or submit record

evidence in support of the purported affirmative defenses to

create a genuine issue of material fact preventing the entry

of summary judgment.” SFR Servs., LLC v. Lexington Ins. Co.,

No. 2:19-cv-229-JES-NPM, 2020 WL 7425265, at *2 (M.D. Fla.

Dec. 18, 2020) (citation and internal quotation marks

omitted). “It is ‘[o]nly upon such a showing [that] the burden

shift[s] to [a] plaintiff regarding that affirmative

defense.’” Id. (quoting Paul, 985 F. Supp. at 1470).

Because the Court has granted summary judgment to

Defendants on Count Two, Plaintiffs’ Motion is moot to the

extent it seeks summary judgment on affirmative defenses that

concern Count Two. The Court will only discuss the challenged

affirmative defenses as they relate to Count One.

Additionally, Defendants have withdrawn their seventh

affirmative defense. (Doc. # 272 at 1). Thus, the Motion is

granted as to the seventh affirmative defense of release and

waiver.

Plaintiffs’ Motion is denied as to affirmative defenses

twenty, twenty-one, and twenty-three, which relate to double

recovery of damages, proportionate reduction of damages, and

prejudgment interest. The Court agrees with Global e-Trading

that, because there remains a genuine dispute of material

fact regarding Plaintiffs’ entitlement to damages, summary

judgment should not be granted on affirmative defenses that

relate to how any damages should be calculated. (Doc. # 272

at 11). Plaintiffs may be correct that issues of prejudgment

interest, set offs to prevent double recovery, and

application of joint and several liability are to be decided

by the Court, rather than the jury. (Doc. # 225 at 11 n.28,

21, 23); see also Indus. Risk Insurers v. M.A.N.

Gutehoffnungshutte GmbH, 141 F.3d 1434, 1446 (11th Cir. 1998)

(“[A]wards of prejudgment interest are equitable remedies, to

be awarded or not awarded in the district court’s sound

discretion.”), overruled on other grounds by Corporacion AIC,

SA v. Hidroelectrica Santa Rita S.A., 66 F.4th 876 (11th Cir.

2023). But that is not a basis to grant summary judgment on

these affirmative defenses. Rather, these issues should be

addressed in limine or at trial. See Losch v. Experian Info.

Sols., Inc., No. 2:18-cv-809-MRM, 2022 WL 17823593, at *2

(M.D. Fla. June 22, 2022) (“[T]he weight of authority suggests

that a one-satisfaction rule determination should be made by

the Court on a post-judgment motion under Rule 60(b)(5).”),

aff’d sub nom. Losch v. Nationstar Mortg. LLC, No. 22-12421,

2024 WL 1282459 (11th Cir. Mar. 26, 2024).

Next, Plaintiffs’ Motion is denied as to affirmative

defense four, which asserts that Plaintiffs’ claim is barred

by laches. “Though the doctrine [of laches] is an equitable

doctrine that should be applied flexibly, a defendant must

demonstrate the presence of three elements in order to

successfully assert laches as a defense: (1) a delay in

asserting a right or a claim; (2) that the delay was not

excusable; and (3) that there was undue prejudice to the party

against whom the claim is asserted.” Kason Indus., Inc. v.

Component Hardware Grp., Inc., 120 F.3d 1199, 1203 (11th Cir.

1997). “[T]he defense of laches is dependent on the specific

facts of a case.” Ga. Coal. for People’s Agenda, Inc. v. Kemp,

347 F. Supp. 3d 1251, 1259 (N.D. Ga. 2018); see also Jeffries

v. Chicago Transit Auth., 770 F.2d 676, 679 (7th Cir. 1985)

(“Laches is generally a factual question not subject to

summary judgment.”). Although “there is a strong presumption

that a plaintiff’s suit is timely if it is filed before the

statute of limitations has run,” the Eleventh Circuit has

clarified that laches should not “be determined merely by a

reference to and a mechanical application of the statute of

limitations.” Black Warrior Riverkeeper, Inc. v. U.S. Army

Corps of Eng’rs, 781 F.3d 1271, 1286 (11th Cir. 2015)

(citations and internal quotation marks omitted).

Here, there is a genuine dispute over whether Plaintiffs

inexcusably delayed in bringing their claims and whether the

delay resulted in undue prejudice to Global e-Trading.

“[D]elay is to be measured from the time at which the

plaintiff knows or should know she has a provable claim.”

Kason Indus., Inc., 120 F.3d at 1206. Plaintiffs were aware

of their injury — the overcharge for the keto diet pills — in

late 2019. (Bavencoff Depo. at 40:23-41:1; Sihler Depo. at

48:13-16). While Plaintiffs sued the Keto entities in a

separate action in August 2020, they did not initiate this

action against Global e-Trading until June 2023. (Doc. # 1).

Plaintiffs insist they could not have learned of Global e-

Trading’s involvement with the Keto entities until discovery

in the separate action revealed it in December 2022. (Doc. #

258 at 6). But a reasonable jury could very well disagree,

given that Plaintiffs’ separate action had been pending for

a full two years by December 2022 and Plaintiffs’ initial

complaint in that action shows that Plaintiffs were aware

that the Keto entities had used a chargebacks service. See

Sihler et al. v. The Fulfillment Lab, Inc., et al., No. 3:20-

cv-01528-LL-DDL (S.D. Cal. 2020) at (Doc. # 1 at ¶ 11) (“These

scammers operate in rings . . . include[ing] . . . the

companies who provide specialized software for the scammers

. . . to utilize multiple merchant accounts and chargeback/re-

billing screening in order to avoid fraud detection by banks

and credit card companies.”). As to undue prejudice, Global

e-Trading points to the degraded memory of witnesses

allegedly caused by the delay in bringing this action. (Doc.

# 272 at 19); see, e.g., (Flynn Depo. at 174:2-14, 198:24-

199:10, 223:14-20, 236:3-14; Campbell Depo. at 21:3-8, 101:3-

12, 104:7-10; Carroll Depo. at 107:15-24, 138:20-139:5). The

jury must conduct the fact-intensive laches inquiry.

However, the Court grants summary judgment on Global e-

Trading’s ninth affirmative defense, which is that

“Plaintiffs failed to exercise appropriate due diligence.”

(Doc. # 135 at 80). This does not appear to be a separate

affirmative defense than laches. See State of Kansas v. State

of Colorado, 514 U.S. 673, 687 (1995) (explaining that the

“defense of laches ‘requires proof of [] lack of diligence’”).

Even Global e-Trading acknowledges that “[d]ue diligence is

often analyzed as part of the first prong of laches

(unreasonable and inexcusable delay).” (Doc. # 272 at 13 n.6).

Thus, summary judgment is granted on the ninth affirmative

defense as duplicative of the fourth affirmative defense of

laches.

Accordingly, it is now

ORDERED, ADJUDGED, and DECREED:

(1) Plaintiffs Janet Sihler and Charlene Bavencoff’s Motion

for Partial Summary Judgment (Doc. # 225) is GRANTED in

part and DENIED in part. Summary judgment is granted

only on affirmative defenses seven and nine.

(2) Defendant Global E-Trading, LLC’s Motion for Summary

Judgment (Doc. # 226) is GRANTED in part and DENIED in

part as set forth herein.

(3) Defendants Monica Eaton’s Motion for Summary Judgment

(Doc. # 220) is GRANTED.

(4) Defendant Gary Cardone’s Motion for Summary Judgment

(Doc. # 227) is GRANTED.

(5) Count Two is dismissed for lack of RICO standing. The

case will proceed to trial on Count One.

DONE and ORDERED in Chambers in Tampa, Florida, this

27th day of May, 2025.

VIRGINIA M. HERNANDEZ’COVINGTON

UNITED STATES DISTRICT JUDGE

48