# Petition for Writ of Certiorari — Terre Du Lac Ass'n v. Terre Du Lac, Inc.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1989
- **Citation:** 492 U.S. 913

## Text

No.

IN THE

Supreme Court of the United States

OcTOBER TERM, 1987

TERRE Du LAc ASSOCIATION, INC.,
Petitioner,
VS.
TERRE Du LAc, INc., TERRE Du LAC GoLF & COUNTRY
C.LuB, INc., TERRE DU LAc Country CLUB ASSOCIATES.

a limited partnership, C.1.T. CORPORATION, SENSIBAR
ENTERPRISES, INC., Mo-ILL_, Ltp., and JAMES O. Kwon,

Respondents.

PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT

KENTON E. KNICKMEYER
One Mercantile Center
Suite 3400

St. Louis, Missouri 63101
(314) 231-7676

Counsel for Petitioner
Terre Du Lac Association, Inc.

St. Louis Law Printing Co., Inc., 1330S Manchester Road 63131 314-231-4477

I
QUESTION PRESENTED

Whether acts of racketeering acitivity committed pursuant to
a common scheme can constitute a ‘‘pattern of racketeering ac-
tivity’’ within the meaning of 18 U.S.C. $§ 1961(5), 1962?

*

The Court has already granted a petition for a writ of cer-
tiorari in a case presenting substantially the same issue, H. J.
Inc. v. Northwestern Bell Telephone Company, No. 87-1252
cert. granted, 56 U.S.L.W. 3647 (March 21, 1988). A similar
issue is presented by the petition in Marshall-Silver Construc-
tion Co., Inc. v. Mendel, No. 87-1358 (filed February 12, 1988).

II
PARTIES BELOW

All of the parties to the proceedings below are listed in the
caption. Terre Du Lac Association, Inc., Petitioner herein, is a
not for profit corporation. It is not owned by any other cor-
poration and has no subsidiaries.

ill

TABLE OF CONTENTS

Page
ee eae h nw ecésececvcees l
ve dveaaeucece 2
Statutory Provisions Involved ...................... 2
ES 3
Reasons for Issuance of the Writ .................... 5
A rr 10
Appendix:
A. Terre Du Lac Association, Inc. v. Terre Du
Lac, Inc., 834 F.2d 148 (8th Cir. 1987) ...... A-1
B. Terre Du Lac Association, Inc. v. Terre Du
Lac, Inc., et al. (E.D. Mo. September 24,
ea a gga w eb eces sess A-6
C. Terre Du Lac Association, Inc. v. Terre Du
Lac, Inc., et al., Order Denying Rehearing... A-13
D. Statutory Provisions Involved 18 U.S.C. §
ee cet ibveses A-14
18 U.S.C. §§ 1961, 1962, 1964 ..... A-14,A-17,A-18
18 U.S.C. § 3575 (repealed, 1985) .......... A-19

iV

TABLE OF AUTHORITIES

Page
Sedima, S.P.R.L. v. Imrex Company, Inc., 473 U.S.
BORE Live Fond kuekaekeneedacnaneenes 4,5,6,7,8 10
Alexander Grant & Company v. Tiffany Industries,
MG., CPOE ae 107 Gale Cr. TGR) 2. cc cccccancnsn 5
Allright Missouri, Inc. v. Billeter, 829 F.2d 631 (8th
Oe PP ee a ee pee re re 6
Bank of America v. Touche Ross & Company, 782 F.2d
i I ye re 5
Barticheck v. Fidelity Union Bank/First National State,
Se Foe re Gc WT on en ws ks heaGe canes 5,9
Deviries v. Prudential-Bache Securities, Inc., 805 F.2d
Be ae NN naan kesed éoans eee aeeceaien: 6
H. J. Inc. v. Northwestern Bell Telephone Company,
829 F.2d 648 (8th Cir. 1987), cert. granted, 56
U.S.L.W. 3647 (March 31, 1988) ............... 5,6,9
Holmberg v. Morrisette, 800 F.2d 205 (8th Cir. 1986),
cert. denied, U.S.___, 107 S.Ct. 1953 (1987) 6
Henning v. First Bank of Worthington, No. 86-5320
Ge Gs BO Fa NEE 6 ook 0 hele oadceccacnaxehave 6
International Data Bank, Ltd. v. Zepkin, 812 F.2d 149
ST SEPELOG he tc adele hah ek ide oa ere 5
Madden v. Gluck, 815 F.2d 1163 (8th Cir. 1987), cert.
GEE, Te a ENF noc cceccksseeesinks 6
Morgan v. Bank of Waukegan, 804 F.2d 970 (7th Cir.
Pe eee ae ba See gee 5,8
Ornest v. Delaware North Companies, Inc., 818 F.2d
Pea, SUNOEL vec cc nous anaend wae ceawecees 6

Roeder v. Alpha Industries, Inc., 814 F.2d 22 (Ist Cir.
rere rr Perey yr rr ry rrr rer Ty 5,9

Sun Savings and Loan Ass’n. v. Dierdorff, 825 F.2d
SE, CTE a s's'6 is wade ne skeaGnaakinenne s 5,9

Superior Oil Company v. Fulmer, 785 F.2d 252 (8th Cir.
SD 52 aos ks oes waank saa tadeee ee eee ees 5,6

Terre Du Lac Ass’n., Inc. v. Terre Du Lac, Inc., 601
F.Supp. 257 (E.D. Mo. 1984), aff’d, in part, rev'd,
in part, 772 F.2d 467 (8th Cir. 1985), cert. denied,

SIRE es ccc wo bobo 056 050066303040 88405 090 3,4
Terre Du Lac Ass’n., Inc. v. Terre Du Lac, Inc., 834

woh Y fs By, Perrrrrrrer errr ye 4,6
Torwest DBC, Inc. v. Dick, 810 F.2d 925 (10th Cir.

i PPP PET TT TIPE OPO PEE rrr ETT Ty 8
United States v. Dean, 647 F.2d 779 (8th Cir. 1981),

cert. denied, 456 U.S. 1006 (1982)............... 5,10
United States v. lanniello, 808 F.2d 184 (2d Cir. 1986),

a ee, Bee ees BS 8 ek cbecaeennek es 5,9
United States v. Kragness, 830 F.2d 842 (8th Cir.

OPP TCT CTT TTT CC CRTC TTC Toor r ery 7
Northern Trust Banks/O’Hare v. Inryco, Inc., 615

F.Supp. S2B0N.D. TE. 1965) ... cc ccscrccccenas 8
RE rises ba duc kene ke eee eeete eras 2
eT ee ee oo chk dd 0b deed eredecieeee eee 2
eee EE ik dae da endear 2,4,7
See ee, SE aaa as ba oly RN ew ee 2,4,6,7
OE ee eS ee a oe ee rea sate ee 2,4

No.

IN THE

Supreme Court of the United States

OcToBer TERM, 1987

Terre Du Lac Association, IN«

Petitioner,
VS.

Terre Du Lac, Inc., Terre Du Lac Gort & COUNTRY
Cius, INc., Terre Du Lac Country CLUB ASSOCIATES,
a limited partnership, C.1.T. CORPORATION, SENSIBAR
ENTERPRISES, INC., Mo-ILt, Ltp., and James O. Kwon,

Respondents.

PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT

Petitioner, Terre Du Lac Association, Inc. respectfully re-
quests that a writ of certiorari issue to review the judgment and
opinion of the United States Court of Appeals for the Eighth
Circuit entered in this proceeding on December |, 1987.

ill
OPINIONS BELOW

The opinion of the United States Court of Appeals for the
Eighth Circuit is reported at 834 F.2d 148, and reprinted at pp.
A-1-S~of this Petition. The Order and the Opinion of the
District Court from which this appellate proceeding arises are
not reported, but are reprinted at pp. A-6-12 of this Petition.

1\

IL RISDICTION

STATUTORY PROVISIONS INVOLVED

VI

STATEMENT OF THE CASI

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Ihe Association commenced the action in the District Court

to secure relief from defendants’ conduct. The Association’s
Amended Complaint alleges, among other matters, that defen-
dants’ commission of mail fraud in the course of some 900
separate real estate transactions constituted a ‘‘pattern of
racketeering activity’? within the meaning of 18 U.S.C. § 1962,
and that it is entitled to relief pursuant to 18 U.S.C. § 1964. The
Association alleged that the District Court had jurisdiction pur-
suant to 28 U.S.C. § 1331 and 18 U.S.C. §§ 1964, 1965.

The District Court initially dismissed the Association’s RICO
claim for failure to allege that defendants had been convicted of
the predicate acts of racketeering activity alleged in the com-
plaint. Jerre Du Lac Association, Inc. v. Terre Du Lac, Inc.,
601 F.Supp. 257 (E.D. Mo. 1984). After that decision was
reversed in Jerre Du Lac Association, Inc. v. Terre Du Lac,
Inc., 772 F.2d 467 (8th Cir. 1985), cert. denied, 475 U.S. 1082
(1986), Respondents moved, pursuant to Rule 12(b)(6), Fed. R.
Civ. P., to dismiss the Association’s RICO claim a second time.
The District Court granted that motion and dismissed the
Association’s RICO claim. The District Court concluded that
no ‘*‘pattern of racketeering activity’’ could be found where the
predicate acts of racketeering activity occurred in the context of

a single scheme.

The U.S. Court of Appeals for the Eighth Circuit affirmed
the dismissal on those grounds. Jerre Du Lac Association, Inc.
v. Terre Du Lac, Inc., 834 F.2d 148 (8th Cir. 1987). In render-
ing its decision, the Court of Appeals reaffirmed its adherence
to a construction of RICO’s ‘‘pattern’’ requirement that is in-
consistent with this Court’s decision in Sedima S.P.R.L. v. Im-
rex Co., Inc., 473 U.S. 479 (1985) and has been rejected by a
clear majority of the Courts of Appeal that have considered the

question.

Vil
REASONS FOR ISSUANCE OF THE WRIT

A writ of certiorari should issue in this case because the rule
of decision adopted by the Court of Appeals conflicts with the
decision in Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479
(1985) and with decisions of the United States Court of Appeals
for the First, Second, Third, Fourth, Seventh, Ninth and
Eleventh Circuits.' Furthermore, issuance of the writ will avoid
the substantial injustice that would otherwise result if the Court
refused review in this case but, in deciding H. J., Inc. v. Nor-
thwestern Bell Telephone Company, No. 87-1252, cert. granted,
56 U.S.L.W. 3647 (March 21, 1988) rejects the rule of decision
which forms the basis for the Court of Appeals’ decision in the

present case.

A. The Eighth Circuit’s Present View Of A ‘‘Pattern Of
Racketeering Activity’? Conflicts With The Decision
In Sedima

In affirming the dismissal of Petitioner’s RICO claim in this
case, the Court of Appeals reiterated its present’ view that a pat-

See e.g., Barticheck v. Fidelity Union Bank/First National State,
832 F.2d 36 (3rd Cir. 1987); Sun Savings and Loan Ass’n vy. Dierdorff,
825 F.2d 187 (9th Cir. 1987); Roeder v. Alpha Industries, Inc., 814
F.2d 22 (1st Cir. 1987); /nternational Data Bank, Ltd. v. Zepkin, 812
F.2d 149 (4th Cir. 1987); United States v. lanniello, 808 F.2d 184 (2nd
Cir. 1986), cert. denied, 107 S.Ct. 3229; Morgan v. Bank of
Waukegan, 804 F.2d 970 (7th Cir. 1986); and Bank of America \.
Touche Ross & Co., 782 F.2d 966 (11th Cir. 1986).

> Prior to the decision in Superior Oil Company v. Fulmer, 785 F.2d
252 (8th Cir. 1986), the Court of Appeals adhered to the view that
multiple acts of racketeering activity committed pursuant to a single
scheme could form a pattern of racketeering activity. See e.g., United
States v. Dean, 647 F.2d 779 (8th Cir. 1981), cert. denied, 456 U.S.
1006 (1981); Alexander Grant & Company v. Tiffany Industries, Inc.,
770 F.2d 717, 718, n. 1 (8th Cir. 1985).

Dee yee

tern of racketeering activity cannot be found to have occurred
based on acts of racketeering activity committed pursuant to a
single scheme.’ Rather, according to the Court of Appeals,
‘*something more’’ than a single scheme must be present — e.g.
a similar scheme perpetrated by the same defendants at a dif-
ferent time or place. Jerre Du Lac Ass’n, Inc. v. Terre Du Lac,
Inc., 834 F.2d 148, 149-50 (8th Cir. 1987). This view of the
‘*pattern’’ requiremen. under RICO conflicts with both the ac-
tual holding of the Court in Sedima and the views which the
Court expressed in that case concerning the pattern requirement
under RICO.

In Sedima, the Court held that in order to recover under 18
U.S.C. § 1964(c), a plaintiff must demonstrate an injury con-
sisting of ‘‘the harm caused by predicate acts sufficiently related
to form a pattern... .’’ Sedima, S.P.R.L. v. Imrex Co., Inc.,
473 U.S. at 497 (emphasis supplied). The Court of Appeals’
view that a “‘pattern’’ cannot exist in the absence of multiple
criminal schemes, taken in conjuction with this holding in
Sedima, would mean that the remedy created by 18 U.S.C. §
1964(c) is available only to those rarest of persons who are
repeatedly victimized (probably unintentionally) by defendants’
criminal acts committed pursuant to separate schemes

’ This view was first enunciated by the Court of Appeals in Superior
Oil Company v. Fulmer, 785 F.2d 252 (8th Cir. 1986). Since that deci-
sion was rendered by a panel of the Court of Appeals, it has provided
the basis for rejecting every civil RICO claim reviewed by the Court of
Appeals. See Holmberg v. Morrisette, 800 F.2d 205 (8th Cir. 1986),
cert. denied, 107 S.Ct. 1953 (1987); Deviries v. Prudential-Bache
Securities, Inc., 805 F.2d 326 (8th Cir. 1986); Madden v. Gluck, 815
F.2d 1163 (8th Cir. 1987), cert. denied, 108 S.Ct. 86; Ornest v.
Delaware North Cos., 818 F.2d 651 (8th Cir. 1987); Henning v. First
Bank of Worthington, No. 86-5320 (8th Cir. July 7, 1987); H. J. Inc.
v. Northwestern Bell Telephone Company, 829 F.2d 648 (8th Cir.
1987), cert. granted, 56 U.S.L.W. 3647 (March 21, 1988); Allright v.
Billeter, 829 F.2d 631 (8th Cir. 1987).

a

ee a

wns. Se

perpetrated in disparate times and/or places.* Rather than
reading RICO broadly, as required by this Court and the statute
itself, Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. at 497-98,
the Court of Appeals for the Eighth Circuit has, as a practical
matter, read 18 U.S.C. § 1964(c) out of the statute.

The Court of Appeals’ view of RICO’s pattern requirement is
also inconsistent with the Court’s description of the pattern re-
quirement in Sedima. Under the views expressed in Sedima, a
pattern of racketeering activity within the meaning of 18 U.S.C.
§ 1962 may exist when there have been two or more acts of
racketeering activity, committed within ten years of each other,

that have the same or similar purposes, results, par-
ticipants, victims, or methods of commission, or otherwise
are interrelated by distinguishing characteristics and are
not isolated events.

Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. at 496, n. 14.°
The Eighth Circuit’s ‘‘pattern’’ requirement applied in this case
— that the pattern of racketeering activity consist of separate
schemes — clearly conflicts with these views, because it requires
a conclusion that (a) there is no particular relationship between
the schemes or (b) that defendants’ conduct lacks temporal con-
tinuity.°

* In the context of the scheme involved in this case, a remedy under
18 U.S.C. § 1964(c) would be available only if defendants had
marketed lots in another development based on a similar fraudulent
scheme. Even then, the remedy would extend only to the unlucky per-
son(s) who bought lots in each of the different developments.

* Justice Powell’s dissenting opinion goes even further, at least im-
plying that the predicate acts should ‘‘be part of some common
scheme’’. Sedima, 473 U.S. at 528 (Powell, J., dissenting).

* Cf. United States v. Kragness, 830 F.2d 842 (8th Cir. 1987) (multiple
schemes perpetrated by groups of defendants having some common
members).

—

Accordingly, the Court should issue its writ to ensure confor-
mity between its decision in Sedima and the decisions of the
Court of Appeals for the Eighth Circuit in cases arising under
RICO.

B. The Decision Below Conflicts With Decisions From
Other Circuits

With the exception of a single decision by the U.S. Court of
Appeals for the Tenth Circuit’, each of the Courts of Appeals
that has considered the ‘‘multiple scheme’’ requirement
adopted by the Eighth Circuit and applied in this case has re-
jected the requirement.

The first court of appeals to reject expressly the ‘‘multiple
scheme’’ requirement after this Court’s decision in Sedima was
the Court of Appeals for the Seventh Circuit (the circuit in
which the concept was first developed). In Morgan v. Bank of
Waukegan, 804 F.2d 970 (7th Cir. 1986), the court observed -
that if the ‘‘multiple scheme’’ requirement were adopted as a
general rule, the result would be ‘‘untenable’’: ‘‘defendants
who commit a large and ongoing scheme [such as the scheme in
this case], albeit a single scheme, would automatically escape
RICO liability for their acts.’” Morgan v. Bank of Waulegan,
804 F.2d at 975.

The issue was subsequently raised in a case pending before the
Court of Appeals for the Second Circuit. That court analyzed
the statute and concluded that ‘‘forcing’’ a multiple scheme re-
quirement, as had the Eighth Circuit, ‘‘from the word ‘pattern’

’ Torwest DBC, Inc. v. Dick, 810 F.2d 925 (10th Cir. 1987).

* See Northern Trust Bank/O’Hare vy. Inryco, Inc., 615 F.Supp.
828, 833 (N.D. Ill. 1985).

ma ee

is a strained and inappropriate reading of the statutory
language.’’ United States v. lanniello, 808 F.2d 184, 192 (2d
Cir. 1986).

The Court of Appeals for the Ninth Circuit rejected the
multiple scheme requirement for similar reasons. As that court
stated:

RICO requires repeated acts, not repeated activity. Thus,
if a defendant commits two or more predicate acts that are
not isolated events, are separate in time, and are in fur-
therance of a single criminal scheme, then RICO’s pattern
requirement is satisfied.

Sun Savings and Loan Ass’n v. Dierdorff, 825 F.2d 187 at 193
(9th Cir. 1987) (emphasis in original).

Other circuits have also rejected the multiple scheme require-
ment in whole or in part. See Roeder v. Alpha Industries, Inc..,
814 F.2d 22, 31 (Ist Cir. 1987); Barticheck v. Fidelity Union
Bank/First National State, 832 F.2d 36, 39 (3rd Cir. 1987).
Thus, as this Court apparently recognized when granting the
petition for certiorari in H. J. Inc. v. Northwestern Bell
Telephone Company, No. 87-1252, 56 U.S.L.W. 3647 (March
21, 1988), there is a clear split of authority among the circuit
courts of appeal which should be resolved by this Court.

C. It Would Be Manifestly Unjust To Reject The
Association’s Petition, In Light Of The Issuance Of
The Writ In H. J. Inc.

In light of the fact that the Court has, apparently, undertaken
to resolve the split of authority between the decisions of the
Court of Appeals for the Eighth Circuit, and the decisions of
other Courts of Appeals, see H. J. Inc. v. Northwestern Bell
Telephone Company, No. 87-1252, cert. granted 56 U.S.L.W.
3657, the Court should issue its writ in this case in order to
assure that the Association’s RICO claim is not disposed of on
the basis of a rule of decision that is subsequently rejected by

this Court. To do otherwise would result in manifest injustice
to the Association.

Vill
CONCLUSION

The Court of Appeals for the Eighth Circuit initially paved
the way for a reasoned construction of the pattern requirement
under RICO with its decision in United States v. Dean, 647 F.2d
779 (8th Cir. 1981). Apparently in the interest of restraining the
use Of a disfavored remedy by the judiciary but mandated by
Congress, the Court of Appeals has now abandoned that
reasoned construction. In its place, the Eighth Circuit has
adopted a construction of RICO’s pattern requirement that is at
odds with both the construction suggested by this Court’s deci-
sion in Sedima and the construction adopted by the majority of
the other circuit court of appeals. The Court should issue its
writ in this case in order to reestablish a consistent, reasoned
construction of RICO’s pattern requirement throughout the
judicial circuits.

Respectfully submitted,

Kenton E. Knickmeyer
One Mercantile Center
Suite 3400

St. Louis, Missouri 63101
(314) 231-7676

Counsel for Petitioner
Terre Du Lac Association, Inc.

APPENDIX

APPENDIX A

UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT

No. 87-1222

Terre Du Lac Association, Inc., a not-for-profit corporation,
Appellant,
Vv.
Terre Du Lac, Inc.;
Appellee,
Terre Du Lac Utilities Corp., Terre Du Lac Golf and
Country Club, Inc.; Terre Du Lac Country Club Association, a

limited partnership; CIT Corporation; Sensibar Enterprises,
Inc.; Moill, Ltd.; James O. Kwon,

Appellees.

Appeal from the United States District Court for the
Eastern District of Missouri.

Submitted: October 13, 1987

Filed: December 1, 1987

Before ARNOLD, Circuit Judge, HENLEY, Senior Circuit
Judge, and BOWMAN, Circuit Judge.

BOWMAN, Circuit Judge.

~~ < =

Terre Du Lac Association, Inc., appeals from an order
entered by the District Court' dismissing the Association’s
Racketeer Influenced and Corrupt Organizations Act (RICO)
claim against the defendants. We affirm the District Court’s
order. ;

This case involves an action filed by Terre Du Lac Associa-
tion, Inc., a property owners’ association, against Terre Du
Lac, Inc. and other alleged developers of the Terre Du Lac sub-
division. The subdivision is a private recreational land develop-
ment locaied in southeastern Missouri. This is the second time
the case has been before us. See Terre Du Lac Ass’n v. Terre
Du Lac, Inc. , 772 F.2d 467 (8th Cir. 1985) (reversing the District
Court’s dismissal of the Association’s RICO count), cert.
denied, 106 S.Ct. 1460-61 (1986).

The Association alleges that defendants violated Sections
1962{a) and 1962(c) of the RICO statute by failing to fulfill their
promises and representations relating to the paving of roads, the
completion of the sewage and water systems, and the use and
transfer of subdivision amenities. The claim is based upon
predicate acts of mail fraud, see 18 U.S.C. §§ 1341, 1961(1)(B),
and seeks equitable relief pursuant to Section 1964(a) of the
Act.?

The District Court granted defendants’ original motions to
dismiss the RICO claim on the basis that ‘‘none of th[e] defen-
dants ha[d] been convicted of any of the alleged predicate acts

' The Honorable William L. Hungate, United States District Judge for
the Eastern District of Missouri.

* The Association’s complaint included sixteen counts. The District
Court has dismissed every count and has entered its final judgment.
This appeal concerns only the Association’s RICO claim.

ao A.3} —

of mail fraud.’’ Terre Du Lac Ass'n v. Terre Du Lac, Inc., 001
F.Supp. 257, 261 (E.D. Mo. 1984). The Court relied upon
Sedima, S.P.R.L. v. Imrex Co., 741 F.2d 482 (2nd Cir. 1984),
rev'd, 473 U.S. 479 (1985), in which the Second Circuit deter-
mined that a criminal conviction of a predicate act must precede
a private civil suit under RICO.

Subsequent to the District Court’s ruling, the Supreme Court
reversed the Second Circuit’s decision in Sedima. The Supreme
Court held that a RICO action may proceed without a criminal
conviction of a predicate act. Sedima, 473 U.S. at 488-93. In
view of this holding, this Court found, on appeal, that ‘‘a rever-
sal of the district court’s dismissal of the RICO count [was] re-
quired, unless some other fatal defect in the complaint
existfed].’’ Terre Du Lac Ass'n, 772 F.2d at 472.’

After the Supreme Court denied certiorari in 1986, defen-
dants once again moved to dismiss the Association’s RICO
claim. The District Court granted this motion. The court held
that the Association had not shown a pattern of racketeering ac-
tivity because it had alleged only a single fraudulent scheme.
Terre Du Lac Ass'n v. Terre Du Lac, Inc., No. 83-2577C(3),
slip op. at 2-5 (E.D. Mo. Sept. 24, 1986). Further, the District
Court held that the ‘‘law of the case’’ doctrine did not foreclose
the dismissal since the ‘‘pattern of racketeering activity’’ issue
had not been presented or decided in the prior appeal. /d. at 5-6.
The Association appeals these rulings.

Under the prior decisions of this Court, it is clear that the
Association has failed to state a RICO claim. To establish a
claim under RICO there must be ‘‘(1) conduct (2) of an enter-
prise (3) through a pattern (4) of racketeering activity.’’ Sedima,
473 U.S. at 496 (footnote omitted). Following the Supreme

’ The defendants argued in that appeal that such a defect did exist in
that the complaint failed to allege sufficient facts supporting the
Association’s standing to pursue the RICO count. The Court rejected
this claim. Jerre Du Lac Ass’n, 772 F.2d at 472-73.

=

Court’s decision in Sedima, we held in Superior Oil Co. v.
Fulmer, 785 F.2d 252 (8th Cir. 1986) that something more than
a single scheme is required in order to establish a pattern of
racketeering activity. Jd. at 257. In subsequent cases, we have
consistently upheld this requirement. See e.g., United States v.
Kragness, Nos. 86-5087 to -5091, slip op. at 26-28 (8th Cir. Sept.
28, 1987) (to be reported at: 830 F.2d 842); H. J. Inc. v. Nor-
thwestern Beil Tel. Co., No. 87-5121, slip op. at 2-4 (8th Cir.
Sept. 22, 1987) (to be reported at: 829 F.2d 648); Allright Mo..,
Inc. v. Billeter, Nos. 86-1476 & 1537, slip op. at 17-19 (8th Cir.
Sept. 16, 1987) (to be reported at: 829 F.2d 631); Ornest v.
Delaware N. Cos., 818 F.2d 651, 652 (8th Cir. 1987); Madden v.
Gluck, 815 F.2d 1163, 1164 (8th Cir.), cert. denied, 108 S.Ct. 86
(1987); Deviries v. Prudential-Bache Securities, Inc., 805 F.2d
326, 329 (8th Cir. 1986); Holmberg v. Morrisette, 800 F.2d 205,
209-10 (8th Cir. 1986), cert. denied, 107 S.Ct. 1953 (1987).

Here, the District Court concluded, and the Association does
not contest, that the alleged predicate acts of mail fraud con-
stitute parts of a single allegedly fraudulent scheme to market
Terre Du Lac property. There are no allegations that defen-
dants have engaged in similar activities in the past or that they
are engaged in similar fraudulent activities elsewhere.
Therefore, we hold that under the rule of Superior Oil and its
progency the Association’s RICO claim was properly dismissed.

Further, we agree with the District Court that the “‘law of the
case’’ doctrine does not bar the dismissal of the Association’s
RICO claim. In the first appeal, this Court did not consider the
‘*nattern of racketeering activiiy’’ issue. ‘‘[T]he law of the case
established by a prior appeal does not extend to preclude con-
sideration of issues not presented or decided on the prior ap-
peal.’’ Conway v. Chemical Leaman Tank Lines, 644 F.2d
1059, 1062 (Sth Cir. 1981). See also Kuhn v. National Ass’n of
Letter Carriers, Branch 5, 570 F.2d 757, 759 n.3 (8th Cir. 1978).

se eee

Since the Association’s RICO claim must fail because of the
pattern requirement established in Superior Oil, we need not ad-
dress defendants’ alternative arguments. The decision of the
District Court is affirmed.

A true copy.

Attest:

Clerk, U.S. Court Of Appeals, Eighth Circuit.

ay

APPENDIX B

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

No. 83-2577C(3)

Terre Du Lac Association, Inc.,
Plaintiff,

ie

Terre Du Lac, Inc., et al.,
Defendants.

ORDER
(Filed Sept. 24, 1986)

A memorandum dated this day is hereby incorporated into
and made a part of this order.

IT IS HEREBY ORDERED that the renewed motion to
dismiss of defendants Terre du Lac Golf and Country Club,
Terre du Lac Country Club Association, Sensibar Enterprises,
Inc., and MO-ILL, Inc., and the motions to dismiss of defen-
dants Terre du Lac, Inc., and James O. Kwon and C.I.T. Cor-
poration be and the same are granted only insofar as they seek
dismissal of Count Fifteen of plaintiff’s complaint. The mo-
tions are denied in all other respects.

IT IS HEREBY FURTHER ORDERED defendants Terre du
Lac, Inc., and Kwon be and the same are granted leave to file
their counterclaims.

IT IS HEREBY FURTHER ORDERED that plaintiff’s mo-
tion to strike counterclaims be and the same is denied.

Dated this 24th day of September, 1986.

/s/ William L. Hungate
United States District Judge

a

eo

UNITED STATES DIS1tRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

No. 83-2577C(3)

Terre Du Lac Association, Inc.,
Plaintiff,

Vv.

Terre Du Lac, Inc., et al.,
Defendants.

MEMORANDUM
(Filed Sept. 24, 1986)

This matter is before the Court on plaintiff’s motion to strike
counterclaims, and motions to dismiss filed by various defen-
dants.

Plaintiff filed this case on November 8, 1983, alleging sixteen
counts against defendants. Counts One through Six were based
upon the Interstate and Land Sales Full Disclosure Act, 15
U.S.C. §§ 1701-1720. Counts Seven through Fourteen were
based on pendent state law claims. Count Fifteen was based
upon the Racketeer Influenced and Corrupt Organizations Act
(RICO), 18 U.S.C. §§ 1961-1968, and Count Sixteen was based
on the Sherman Antitrust Act, 15 U.S.C. §§ 1-7.

On August 31, 1984, the Court granted defendants’ motions
to dismiss all counts of plaintiff’s complaint. Terre du Lac
Association, Inc. v. Terre du Lac, Inc., 601 F.Supp. 257, 262
(E.D. Mo. 1984). On appeal, the Eighth Circuit affirmed the
dismissal of the Land Sales Act counts, but reversed the
dismissal of the RICO and antitrust counts, and vacated the
dismissal of the pendent state claims. Terre du Lac Association,
Inc. v. Terre du Lac, Inc., 772 F.2d 467, 475 (8th Cir. 1985). On
March 24, 1986, the United States Supreme Court denied all

initia aeetanenaieneiemnteeni tie

ae

parties’ applications for writ of certiorari. /d., 106 S.Ct. 1460,
1461 (1986).

On April 10, 1986, the Court dismissed the pendent state
claims at plaintiff’s request. Thus, the only counts remaining in
plaintiff’s complaint are Count Fifteen, the RICO claim, and
Count Sixteen, the antitrust claim.

Plaintiff’s RICO claim will be dismissed. In this count, plain-
tiff, a property owner’s association, alleges that defendants,
developers of the Terre du Lac subdivision, violated § 1962(a)
and (c) by failing to fulfill promises relating to the paving of
roads, the completion of sewage and water systems, and the use
and transfer of subdivision amenities. Plaintiff bases this claim
on predicate acts of mail fraud and seeks equitable relief pur-
suant to § 1964 of RICO.

The Court originally dismissed this count because none of the
defendants were convicted of the predicate acts of mail fraud.
Terre du Lac, supra, 601 F.Supp. at 261. The Court relied on
Sedima, S.P.R.L. v. Imrex Co., 741 F.2d 482 (2d Cir. 1984) for
its action. The Supreme Court, however, later reversed the Se-
cond Circuit and held that a RICO claim may proceed without a
criminal conviction of a predicate act. Sedima, S.P.R.L. v. Im-
rex co., 105 S.Ct. 3275 (1985). Accordingly, the Eighth Circuit
reversed this Court’s decision.

In Sedima, the Supreme Court determined that a violation of
§ 1962(c) requires (1) conduct (2) of an enterprise (3) through a
pattern (4) of racketeering activity. Sedima, supra, 105 S.Ct. at
3285. Defendants now contend that plaintiff has not alleged a
pattern of racketeering activity.'. This Court agrees.

' Although plaintiff asserts its RICO claim under § 1962(a) as well
as § 1962(c), the former section also requires a pattern of racketeering
activity. Superior Oil Co. v. Fulmer, 785 F.2d 252, 255 n.1 (8th Cir.
1986).

—

A pattern of racketeering activity requires more than one
fraudulent scheme. This concept has evolved from Sedima and
its progeny. In Sedima, the Supreme Court suggested that the
‘*pattern’’ element of a RICO violation requires evidence of
criminal conduct characterized by ‘‘continuity plus
relationship.’’ Id. at 3285 n.14. This two-prong ‘‘pattern’’ test
was recently applied by the Eighth Circuit in Superior Oil Co. v.
Fulmer, 785 F.2d 252 (8th Cir. 1986). The Court there found
that Superior Oil had proven the ‘‘relationship prong’’ by show-
ing that defendants committed several related acts of wire fraud
in pursuit of their conversion or theft of gas from Superior’s in-
terstate pipeline. Superior, however, failed to prove ‘‘continui-
ty’’ because defendants’ actions

comprised one continuing scheme to convert gas from
Superior Oil’s pipeline. There was no proof that [defen-
dants] had ever done these activities in the past and there
was no proof that they were engaged in other criminal ac-
tivities elsewhere.

Id. at 257. The Eighth Circuit cited with approval similar post-
Sedima opinions in which district courts dismissed RICO claims
for failure to allege more than one fraudulent scheme. /d. at
257-58 n.8.?

Plaintiff argues that Superior Oil does not require that
more than one fraudulent scheme be shown in order to prove a
pattern of racketeering activity. In support of this claim, plain-
tiff points to the Eighth Circuit’s citation to a portion of Justice
Powell’s dissenting opinion in Sedima. Superior Oil, supra at
256-57.

> This district recently rendered several similar decisions. Madden v.
Bluck, 636 F.Supp. 463 (E.D. Mo. 1986); Clodfelter v. Thurston, 637
F.Supp. 1034 (E.D. Mo. 1986); Allright Missouri, Inc. v. Billeter, 631
F.Supp. 1328 (E.D. Mo. 19.4).

— A-10 —

The Court is not persuaded by plaintiff’s argument that a
single fraudulent scheme is sufficient to invoke the effect of the
RICO statute. The Eighth Circuit has explicitly set forth the
essential elements necessary to meet RICO’s ‘‘pattern’’ require-
ment. That court cited with favor cases in which a single
scheme, encompassing multiple acts of mail or wire fraud, oc-
curring Over a long period of time, was held-not sufficent to
establish the pattern of racketeering activity necessary for pur-
poses of 18 U.S.C. § 1962. The RICO statute and its construc-
tion as first applied in the Seventh Circuit, see Schacht vy.
Brown, 711 F.2d 1343 (7th Cir. 1983), cert. denied, 464 U.S.
1002 (1983), has evoked a flurry of scholarly essays — not all
favorable. See generally Goldsmith and Keith, Civil RICO
Abuse: The Allegations in Context, 1986 Brigham Young
University Law Review 55; Burnett, Federal Civil RICO: Essen-
tial Reforms Necessary to Achieve Balanced Federalism Bet-
ween Federal and State Courts and the Efficient Administration
of Justice, 33 Fed. BN & J 200 (1986); Cole and McNamara,
Civil RICO After Sedima, 12 Litigation J. of the Section of
Litigation A.B.A. 24 (1986). Efforts to cut the garment to fit
the cloth come from savants academicians and trial practi-
tioners.

Here, plaintiff has not shown a pattern of racketeering activi-
ty because it has alleged only a single fraudulent scheme. In its
memorandum opposing defendants’ motions, plaintiff admits
this finding by characterizing its RICO claim as:

based upon separate frauds perpetrated upon as many as
3400 individuals over a decade, the combined effect of
which has been to result in injury [to plaintiff]. The frauds
were related, in that they were perpetrated as part of a
common scheme to market lots in the Terre Du Lac
development.

The Court concludes that the alleged predicate acts of mail
fraud constitute parts of one fraudulent scheme to market Terre

ATO A hae ee

Ali —

du Lac lots. Plaintiff does not allege that defendants have done
these activities in the past or that they were engaged in other
criminal activity elsewhere. Consequently, plaintiff fails to
state a viable RICO claim.

The Court is not foreclosed from dismissing plaintiff's RICO
count by the ‘‘law of the case’’ doctrine. Plaintiff argues that
the Eighth Circuit has ruled that this count states a claim for
relief and that this ruling establishes the law of the case that
must be followed in all subsequent proceedings. As defendants
correctly argue, however, the ‘‘law of the case’’ doctrine is not
an absolute bar to lower court reconsideration. Lehrman v.
Gulf Oil Corp., 500 F.2d 659, 663 (Sth Cir.), cert. denied, 420
U.S. 929 (1974). Moreover, the doctrine is inapplicable to issues
not presented or decided on prior appeal. Conway v. Chemical
Leaman Tank Lines, Inc., 644 F.2d 1059, 1062 (Sth Cir. 1981).
The Eight Circuit did not consider whether plaintiff had alleged
a pattern of racketeering activity.

Plaintiff’s antitrust claim will not be dismissed. Plaintiff
alleges that defendants charge lot owners a $3,000 initiation fee
to join the Terre du Lac Golf and Country Club if they purchas-
ed their lots from persons other than defendants, but offer free
club memberships to those who buy lots from defendants.
Plaintiff contends this conduct is a per se violation of § 1 of the
Sherman Act and seeks injunctive relief pursuant to 15 U.S.C. §
26.

Defendants argue that plaintiff’s antitrust claim (1) is unsup-
ported by fact; (2) is barred by res judicata; (3) insufficiently
pleads the essential elements of the alter ego doctrine against
defendants Terre du Lac Country Club Association, Sensibar
Enterprises, Inc., and MO-ILL, Inc.; and (4) fails to plead
fraud with particularity under Fed. R. Civ. P. 9(b).

Each of defendants’ arguments is unpersuasive at this junc-
ture. Viewing the complaint in the light most favorable to plain-
tiff, the Court finds that plaintiff may prove facts in support of

— A-12 —

its claim that would entitle it to relief. See Coniey v. Gibson,
355 U.S. 41, 45-46 (1957). Moreover, the Court concludes that
plaintiff’s antitrust claim is sufficiently pleaded and is not bar-
red by res judicata.

Plaintiff’s motion to strike counterclaims will be denied. On
April 30, 1986, defendants Terre du Lac, Inc., and James O.
Kwon filed as separate documents their answer, counterclaims,
and motion to dismiss. On May 22, 1986, plaintiff filed the ins-
tant motion, arguing, in essence, that even though the answer
and counterclaims were filed on the same day, they cannot be
filed as separate documents without leave of court under Fed.
R. Civ. P. 7(a) and 13(f). Plaintiff cites no cases in support of
its argument.

Upon careful consideration, the Court determines the
counterclaims should have been set forth in the defendants’
answers, see Fed. R. Civ. P. 7(a), 13(a), 13(b), 13(f); Jn re
Cessna Distributorship Antitrust Litigation, 532 F.2d 64, 67 n.7
(8th Cir. 1976) (discussing cross-claim), cert. denied, 423 U.S.
947 (1977). The Court will now grant defendants Terre du Lac,
Inc., and Kwon leave to file their counterclaims as presently fil-
ed.

Dated this 24th day of September, 1986.

_/s/ William L. Hungate
United States District Judge

— A-13 —

APPENDIX C

UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT

No. 87-1222-EM

Terre Du Lac Association, Inc., etc.,
Appellant,
Vv.
Terre Du Lac Golf and Country Club, et al.,
Appellees.

Appeal form the United States District Court for the
Eastern District of Missouri

Appellant’s petition for rehearing en banc has been con-
sidered by the Court and is denied.

Petition for rehearing by the panel is also denied.

January 22, 1988 as
Order Entered at the Direction of the Court:
/s/ Robert D. St. Vrain

Clerk, United States Court of Appeals, Eighth Circuit

A-14

APPENDIX D
STATUTES INVOLVED
18 U.S.C. § 1341. Frauds and swindles

Whoever, having devised or intending to devise any scheme o1
artifice to defraud, or for obtaining money or property by
means of false or fraudulent pretenses, representations, or pro-
mises, or to sell, dispose of, loan, exchange, alter, give away,
distribute, supply, or furnish or procure for unlawful use any
counterfeit or spurious coin, obligation, security, or other arti-
cle, or anything represented to be or intimated or held out to be
such counterfeit or spurious article, for the purpose of ex-
ecuting such scheme or artifice or attempting so to do, places in
any post office or authorized depository for mail matter, any
matter or thing whatever to be sent or delivered by the Postal
Service, or takes or receives therefrom, any such matter or
thing, or knowingly causes to be delivered by mail according to
the direction thereon, or at the place at which it is directed to be
delivered by the person to whom it is addressed, any such matter
or thing, shall be fined not more than $1,000 or imprisoned not
more than five years, or both.

18 U.S.C. § 1961. Definitions
As used in this chapter —

(1) ‘‘racketeering activity’’ means (A) any act or threat in-
volving murder, kidnapping, gambling, arson, robbery,
bribery, extortion, dealing in obscene matter, or dealing in nar-
cotic or other dangerous drugs, which is chargeable under State
law and punishable by imprisonment for more than one year;
(B) any act which is indictable under any of the following provi-
sions of title 18, United States Code: Section 201 (relating to
bribery), section 224 (relating to sports bribery), sections 471,
472 and 473 (relating to counterfeiting), section 659 (relating to
theft from interstate shipment) if the act indictable under sec-
tion 659 is felonious, section 664 (relating to embezzelement

em ee ae

ee

.

— fi$ —

from pension and welfare funds), section 891-894 (relating to
extortionate credit transactions), section 1084 (relating to the
transmission of gambling information), section 1341 (relating to
mail fraud), section 1343 (relating to wire fraud), sections
1461-1465 (relating to obscene matter), section 1503 (relating to
obstruction of justice), section 1510 (relating to obstruction of
criminal investigations}, section 1511 (relating to the obstruc-
tion of State or local law enforcement), section 1512 (relating to
tampering with a witness, victim or an informant), section 1513
(relating to retaliating against a witness, victim or informant),
section 1951 (relating to interference with commerce, robbery,
or extortion), section 1952 (relating to rackc.eering), section
1953 (relating to interstate transportation of wagering parapher-
nalia), section 1954 (relating to unlawful welfare fund
payments), section 1955 (relating to the prohibition of illegal
gambling businesses), section 1957 (relating to engaging in
monetary transactions in property derived from specified
unlawful activity), sections 2312 and 2313 (relating to interstate
transportation of stolen motor vehicles), sections 2314 and 2315
(relating to interstate transportation of stolen property), section
2320 (relating to trafficking in certain motor vehicles or motor
vehicle parts), sections 2341-2346 (relating to trafficking in con-
traband cigarettes), sections 2421-24 (relating to white slave
traffic), (C) any act which is indictable under title 29, United
States Code, section 186 (dealing with restrictions on payments
and loans to labor organizations) or section 501(c) (relating to
embezzelment from union funds), (D) any offense involving
fraud connected with a case under title 11, fraud in the sale of
securities, or the felonious manufacture, importation, receiving,
concealment, buying, selling, or otherwise dealing in narcotic or
other dangerous drugs, punishable under any law of the United
States, or (E) any act which is indictable under the Currency and
Foreign Transactions Reporting Act;

(2) *‘State’’ means any State of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, any territory or
possession of the United States, any political subdivision, or any
department, agency, or instrumentality thereof;

— A-16 —

(3) ‘‘person’’ includes any individual or entity capable of
holding a legal or beneficial interest in property:

(4) ‘‘enterprise’’ includes any individual, partnership, corpora-
tion, association, or other legal entity, and any union or group
of individuals associated in fact although not a legal entity;

(5) ‘‘pattern of racketeering activity’’ requires at least two acts
of racketeering activity, one of which occurred after the effec-
tive date of this chapter and the last of which occurred within
ten years (excluding any period of imprisonment) after the com-
mission of a prior act of racketeering activity;

(6) ‘unlawful debt’’ means a debt (A) incurred or contracted in
gambling activity which was in violation of the law of the
United States, a State or political subdivision thereof, or which
is unenforceable under State or Federal law in whole or in part
as to principal or interest because of the laws relating to usury,
and (B) which was incurred in connection with the business of
gambling in violation of the law of the United States, a State or
political subdivision thereof, or the business of lending money
or a thing of value at a rate usurious under State or Federal law,
where the usurious rate is at least twice the enforceable rate;

(7) ‘racketeering investigator’’ means any attorney or in-
vestigator so designated by the Attorney General and charged
with the duty of enforcing or carrying into effect this chapter;

(8) ‘‘racketeering investigation’’ means any inquiry conducted
by any racketeering investigator for the purpose of ascertaining
whether any person has been involved in any violation of this
chapter or of any final order, judgment, or decree of any court
of the United States, duly entered in any case or proceeding aris-
ing under this chapter;

(9) ‘‘documentary material’’ includes any book, paper, docu-
ment, record, recording, or other material; and

~- Al? —

(10) *‘Attorney General’’ includes the Attorney General of the
United States, the Deputy Attorney General of the United
States, any Assistant Attorney General of the United States, or
any employee of the Department of Justice or any employee of
any department or agency of the United States so designated by
the Attorney General to carry out the powers conferred on the
Attorney General by this chapter. Any department or agency so
designated may use in investigations authorized by this chapter
either the investigative provisions of this chapter or the in-
vestigative power of such department or agency otherwise con-
ferred by law.

18 U.S.C. § 1962. Prohibited activities

(a) It shall be unlawful for any person who has received any in-
come derived, directly or indirectly, from a pattern of racketeer-
ing activity or through collection of an unlawful debt in which
such person has participated as a principal within the meaning
of section 2, title 18, United States Code, to use or invest,
directly or indirectly, any part of such income, or the proceeds
of such income, in aquisition of any interest in, or the establish-
ment Or operation of, any enterprise which is engaged in, or the
activities of which affect, interstate or foreign commerce. A
purchase of securities on the open market for purposes of in-
vestment, and without the intention of controlling or par-
ticipating in the control of the issuer, or of assisting another to
do so, shall not be unlawful under this subsection if the
securities of the issuer held by the purchaser, the members of his
immediate family, and his or their accomplices in any pattern or
racketeering activity or the collection of an unlawful debt after
such purchase do not amount in the aggregate to one percent of
the outstanding securities of any one class, and do not confer,
either in law or in fact, the power to elect one or more directors
of the issuer.

(b) It shall be unlawful for any person through a pattern of
racketeering activity or through collection of an unlawful debt

me

tO acquire or maintain, directly or indirectly, any interest in or
control of any enterprise which is engaged in, or the activities of
which affect, interstate or foreign commerce.

(c) 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 par-
ticipate, directly or indirectly, in the conduct of such
enterprise’s affairs through a pattern of racketeering activity or
collection of unlawful debt.

(d) It shall be unlawful for any person to conspire to violate any
of the provisions of subsections (a), (b), or (c) of this section.

18 U.S.C. § 1964. Civil remedies

(a) The district courts of the United States shall have jurisdic-
tion to prevent and restain violations of section 1962 of this
chapter by issuing appropriate orders, including, but not limited
to: ordering any person to divest himself of any interest, direct
or indirect, in any enterprise; imposing reasonable restrictions
on the future activities or investments of any person, including,
but not limited to, prohibiting any person from engaging in the
Same type of endeavor as the enterprise engaged in, the activities
of which affect interstate or foreign commerce; or ordering
dissolution or reorganization of any enterprise, making due pro-
vision for the rights of innocent persons.

(b) The Attorney General may institute proceedings under this
section. Pending final determination thereof, the court may at
any time enter such restraining orders or prohibitions, or take
such other actions, including the acceptance of satisfactory per-
formance bonds, as it shall deem proper.

(c) Any person injured in his business or property by reason of a

violation of section 1962 of this chapter may sue therefor in any
appropriate United States district court and shall recover
threefold the damages he sustains and the cost of the suit, in-
cluding a reasonable attorney’s fee.

<--1

(d) A final judgment or decree rendered in favor of the United
States in any criminal proceeding brought by the United States
under this chapter shall estop the defendant from denying the
essential allegations of the criminal offense in any subsequent
civil proceding brought by the United States.

18 U.S.C. § 3575. Increased sentence for special offenders

(e) A defendant is a special offender for purposes of this section
if —

(1) the defendant has previously been convicted in courts
of the United States, a State, the District of Columbia, the —_
Com;monwealth of Puerto Rico, a territory or possession
of the United States, any political subdivision, or any
department, agency, or instrumentality thereof for two or
more offenses committed on occasions different from one
another and from such felony and punishable in such
courts by death or imprisonment in excess of one year, for
one or more of such convictions the defendant has been
imprisoned prior to the commission of such felony, and
less than five years have elapsed between the commission
of such felony and either the defendant’s release, on parole
or otherwise, from imprisonment for one such conviction
or his commission of the last such previous offense or
another offense punishable by death or imprisonment in
excess Of one year under applicable laws of the United
States, a State, the District of Columbia, the Com-
monwealth of Puerto Rico, a territory or possession of the
United States, any political subdivision, or any depart-
ment, agency or instrumentality thereof; or

(2) the defendant committed such felony as part of a pat-
tern of conduct which was criminal under applicable laws
of any jurisdiction, which constituted a substantial source
of his income, and in which he manifested special skill or
expertise; or

— A-20 —

(3) such felony was, or the defendant committed such
felony in furtherance of, a conspiracy with three or more
other persons to engage in a pattern of conduct criminal
under applicable laws of any jurisdiction, and the defen-
dant did, or agreed that he would, initiate, organize, plan,
finance, direct, manage, or supervise all or part of such
conspiracy or conduct, or give or receive a bribe or use
force as all or part of such conduct.

A conviction shown on direct or collateral review or at the hear-
ing to be invalid or for which the defendant has been pardoned
on the ground of innocence shall be disregarded for purposes of
paragraph (1) of this subsection. In support of findings under
paragraph (2) of this subsection, it may be shown that the
defendant has had in his own name or under his control income
or property not explained as derived from a source other than
such conduct. For purposes of paragraph (2) of this subsection,
a substantial source of income means a source of income which
for any period of one year or more exceeds the minimum wage,
determined on the basis of a forty-hour week and a fifty-week
year, without reference to exceptions, under section 6(a)(1) of
the Fair Labor Standards Act of 1938 (52 Stat. 1602, as amend-
ed 80 Stat. 838), and as hereafter amended, for an employee
engaged in commerce or in the production of goods for com-
merce, and which for the same period exceeds fifty percent of
the defendant’s declared adjusted gross income under section 62
of the Internal Revenue Act of 1954 (68A Stat. 17, as amended
83 Stat. 655), and as hereafter amended. For purposes of
paragraph (2) of this subsection, special skill or expertise in
criminal conduct includes unusual knowledge, judgment or
ability, including manual dexterity, facilitating the initiation,
organizing, planning, financing, direction, management, super-
vision, execution or concealment of criminal conduct, the enlist-
ment of accomplices in such conduct, the escape from detection
or apprehension for such conduct, or the disposition of the
fruits or proceeds of such conduct. For purposes of paragraphs

eg eT ee ee ae ee ee

ee ee a

— A-21 —

(2) and (3) of this subsection, criminal conduct forms a pattern
if it embraces criminal acts that have the same or similar pur-
poses, results, participants, victims, or methods of commission,
or otherwise are interrelated by distinguishing characteristics
and are not isolated events.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_0768%3A1. Public record. Not legal advice.