Eleventh Circuit Holds That An Already-Married Couple Can Form An “Association-In-Fact” Enterprise Under The Civil RICO Statute Without Creating A New Entity

This week, in Al-Rayes v. Willingham, 2019 WL 441325 (11th Cir. Feb. 5, 2019) the Eleventh Circuit held that a married couple cannot escape civil liability under the Racketeer Influenced and Corrupt Organizations Act solely on the basis that their marriage preceded the illegal acts and they did not form a formal entity in executing those acts.

In 2006, the plaintiff in this case, Mr. Al-Rayes, had sued Mr. Willingham (the defendant’s husband) and his businesses alleging that they had defrauded him in various ways.  Al-Rayes obtained a $25m consent judgement but was unable to collect.  In the current case, Al-Rayes filed suit against Mr. Willingham’s wife, Erika, alleging that she and her husband had conspired to create an elaborate asset-concealment scheme to shield Mr. Willingham’s assets in violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961–1968.  Al-Rayes alleged that the scheme originated shortly after he obtained his consent judgment.

The district court granted summary judgment for Erika, holding that because the marriage predated the alleged fraudulent acts, it could not have been formed for the purpose of engaging in those acts.  The district court suggested that, because the Willinghams’ marriage predated the alleged illegal acts, they could be found to have formed a RICO enterprise only if they had created an enterprise external to their marriage for the purpose of facilitating the alleged illegal acts—which they had not done.  According to the district court, this meant that no reasonable juror could find that the Willinghams had “formed an organization . . . for the purpose of engaging in racketeering activity.”

The Eleventh Circuit reversed the district court’s grant of summary judgment for Erika. Writing for the court, Judge Britt Grant—in her first published opinion since joining the Eleventh Circuit last year—held that a reasonable juror could conclude that the Willinghams’ relationship constituted a RICO enterprise.  Judge Grant explained that there was no requirement that the purpose to engage in illegal activity existed when the Willinghams met or married—rather, a RICO enterprise can exist where people with a preexisting relationship later join together for the common purpose of engaging in illegal activity.  Judge Grant also pointed out that a married couple need not form a discernible structure or entity external to their marriage in order to form a RICO enterprise.

Posted by Nick Boyd.

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