Irish v. Ferguson (970 F. Supp. 2d 317, 2013)

United States District Court for the Middle District of Pennsylvania 2013-09-03

Citations

Full opinion text

OPINION

SLOMSKY, District Judge.

TABLE OF CONTENTS

I. INTRODUCTION.......................................................328

II. BACKGROUND.........................................................328

A. Causes of Action in Complaint.........................................329

B. Parties and Related Entities...........................................329

1. Plaintiffs.......................................................329

2. Lakefront Development Company, LLC............................329

3. Defendants.....................................................330

a. “Owner Defendants”: Harry Ferguson, William Black, William Waldman, and Martin Woldow..........................330

b. “Carversville Defendants”: “Owner Defendants” (Ferguson, Black, Waldman, and Woldow), and Ronald Bugaj, Christine Vehstedt, Carversville Development Company, and Carversville Group.....................................330

c. “Accounting Defendants”: WeiserMazars, LLP, Alan Cohen, and Benjamin Fishbein.....................................330

d. Re/Max, LLC...............................................331

e. “ESSA Defendants”: ESSA Bank and Trust Company, and William Lewis.............................................331

f. “Meagher Defendants”: Meagher Realty Group, LLC, Meagher Associates, Incorporated, Tim Meagher, Heather Meagher, Paul Meagher Sr., Paul Meagher Jr., and Matthew Meagher.........................................331

g. “Anderson Defendants”: G. Anderson Homes, Inc., Grace Anderson, Santos Rolon, and Tammy Lee Clause..............331

h. “Weichert Defendants”: Weichert Realtors/Paupaek Group, Inc., Thomas McColligan, Judith Rodonski, Deborah Friese, and Karen Rice.....................................331

C. Statement of Facts as Alleged In Complaint.............................332

1. Origins of Lakefront Development Company, LLC...................332

2. Fraud Upon Lakefront: Corporate Waste..........................332

3. Agreement to Transfer the Re/Max Franchise ......................332

4. Fraud Upon Blue Cross..........................................333

5. Fraud Upon Lakefront and The Internal Revenue Service: Payments for Services Not Rendered, Unauthorized Distributions, and Underreporting of Lakefront’s Income and Profits...................................................333

6. Fraud Upon Lakefront: Scheme To Divert Lakefront’s Profits........334

7. Fraud Upon Lakefront and ESSA: Loans Made For The Benefit Of Others Paid For By Lakefront...............................334

8. Fraud Upon Lakefront: The “1740 House”.........................335

9. Attempts to Conceal the Fraud Upon Lakefront.....................335

a. ESSA Defendants...........................................335

b. Attempt to Liquidate Lakefront, Allegations Regarding Schedule K-l Tax Form....................................335

c. Extortion...................................................337

d. Irish’s Petition to Compel Inspection of Corporate Records.......337

10. Fraud Upon Lakefront: Credit Card Processing Account.............338

11. Conspiracy to Disparage Irish’s Name with Law Enforcement........338

12. Conspiracy to Transfer Re/Max Franchise and Destroy Irish and MIK.........................................................339

13. Unauthorized Alteration of “Multiple Listing Service” Records........341

14. Lawsuits Involving Plaintiffs......................................341

15. Franchise Litigation.............................................342

16. Receivership Litigation ..........................................342

III. STANDARD OF REVIEW ...............................................343

IV. ANALYSIS.............................................................343

A. Elements of Plaintiffs’ RICO Claims....................................343

1. 18 U.S.C. § 1962(c)..............................................344

a. Defendant Must Be Associated With an Enterprise..............344

b. Defendant Must Conduct or Participate in the Conduct of the Enterprise’s Affairs through a Pattern of Racketeering Activity..................................................345

c. Defendant Must Knowingly Commit At Least Two Acts of Racketeering Activity......................................345

d. Two Acts of Racketeering Activity Committed By a

Defendant Must Be Connected By a Common Scheme,

Plan, or Motive Constituting a Pattern of Racketeering Activity......................................345

e. The Enterprise Must Be Involved In or Affect Interstate Commerce................................................346

2. 18 U.S.C. § 1962(a)..............................................346

3. 18 U.S.C. § 1962(b)..............................................347

4. 18 U.S.C. § 1962(d)..............................................347

B. Plaintiffs Have Not Stated a Claim under RICO for Which Relief May Be Granted .......................................................347

1. Plaintiffs Lack RICO Standing....................................347

a. Plaintiffs’ Claims Regarding Harm to Lakefront by

Carversville Defendants, Accounting Defendants, and

ESSA Defendants Are Derivative in Nature and Do Not Confer Standing on Plaintiffs................................348

b. Plaintiffs Have No Standing to Recover Damages for Harm to Blue Cross, the Internal Revenue Service, or ESSA.....351

2. Plaintiffs’ Claims Involving the Re/Max Franchise Are Barred By Collateral Estoppel............................................352

3. Plaintiffs Have Not Established That Carversville Defendants or Accounting Defendants Have Committed a Predicate Act With Regard To the Schedule K-l Forms.............................356

4. All RICO Counts Will Be Dismissed...............................361

C. Plaintiffs Have Not Stated a Claim under the Sherman Act for Which Relief May Be Granted.............................................362

1. Count Nineteen: Plaintiffs Lack Antitrust Standing Because They Have Not Established an Antitrust Injury........................362

a. The Attempted Transfer and Cancelation of the Re/Max Franchise Did Not Have a “Competition-Reducing” Effect on the Marketplace........................................363

b. Weiehert Defendants and Meagher Defendants Do Not Have Market Power.............................................364

c. Plaintiffs Have Not Established an Antitrust Injury Because They Only Allege Harm to Themselves, Not To Market Competition ......................................... 365

2. Count Twenty: Plaintiffs Have Not Alleged Anticompetitive Conduct................................................. 366

a. There is No Per Se Liability Because Defendants Named in Count Twenty Do Not Have Market Power.............. 367

b. Plaintiffs’ Allegations in the Complaint Contradict Their Claims of an Illegal Boycott and Anticompetitive Conduct 367

D. The Court Will Decline to Exercise Supplemental Jurisdiction over the Pennsylvania Common Law Claims.............................. 368

368 V. CONCLUSION...................

Appendix I: Defendants By Group.......... ......................................368

Appendix II: Defendants By Count......... ......................................369

I. INTRODUCTION

Plaintiff George Irish, a real estate agent in the Lake Wallenpaupack region of Northeast Pennsylvania, filed this lawsuit alleging a plethora of legal claims against thirty-two defendants, who include his former business partners, other real estate agents, attorneys, accountants, and a bank, among others. The Complaint is lengthy — ninety-six pages containing 520 paragraphs with a four-page table of contents — and describes what is alleged to be a narrative of conspiratorial and deceitful misdeeds. Irish and his eo-Plaintiff, MIK, Inc., accuse the thirty-two defendants of engaging in a widespread scheme of criminal and tortious efforts to steal their assets, keep them in the dark about illicit activities, and render them unable to compete in the regional real estate market.

The claims brought by Plaintiffs fall into three categories. Nearly all Defendants are accused of committing substantive and conspiratorial criminal acts in violation of the Racketeer Influenced and Corrupt Organizations Act of 1970 (“RICO”). Plaintiffs also allege certain Defendants unlawfully restrained commerce in violation of the Sherman Antitrust Act of 1890 (“Sherman Act”). Finally, Plaintiffs assert various Pennsylvania common law tort claims against certain Defendants.

These are serious allegations. Despite its length, however, the Complaint fails to adequately allege facts to support the federal RICO and antitrust claims. Consequently, all federal causes of action will be dismissed, and the Court will decline to exercise supplemental jurisdiction over the remaining state law claims.

II. BACKGROUND

The Complaint tests the limits of Federal Rule of Civil Procedure 8(a)(2), which requires that a pleading contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” The Complaint describes the parties and their relationship to each other on pages two to ten. Pages ten through sixty-five contain the factual allegations, a sprawling tale of alleged fraud, subterfuge, backstabbing, and misdirection. Pages sixty-five through sixty-nine contain “general RICO allegations.” Pages seventy through ninety-one describe in twenty-four counts the claims made against the thirty-two Defendants. Page ninety-two sets forth a jury demand, and pages ninety-three through ninety-six are the table of contents.

A. Causes of Action in Complaint

The Complaint alleges violations in twenty-four counts. They are as follows:

• Violations of federal law (Counts One through Twenty)

• Prohibited activity in violation of RICO

• 18 U.S.C. § 1962(a) (Count One)

• 18 U.S.C. § 1962(b) (Count Two)

• 18 U.S.C. § 1962(c) (Counts Three, Five, Seven, Nine, Eleven, Thirteen, Fifteen, and Seventeen)

• 18 U.S.C. § 1962(d) (Counts Four, Six, Eight, Ten, Twelve, Fourteen, Sixteen, and Eighteen)

• Prohibited activity in violation of the Sherman Act

• Conspiracy to Violate the Sherman Act, 15 U.S.C. § 1 (Count Nineteen)

• Illegal Boycott in Violation of the Sherman Act, 15 U.S.C. § 1 (Count Twenty)

• Violations of Pennsylvania common law (Counts Twenty-One through Twenty-Four)

• Breach of the Covenant of Good Faith and Fair Dealing (Count Twenty-One)

• Commercial Disparagement (Count Twenty-Two)

• Civil Conspiracy (Count Twenty-Three)

• Negligent Infliction of Emotional Distress (Count Twenty-Four)

B. Parties and Related Entities

1. Plaintiffs

Plaintiff George Irish is a Pennsylvania real estate agent. (Doc. No. 1 at 2.) Plaintiff MIK, Inc. (“MIK”) is a Pennsylvania corporation. (Id.) Irish has been a shareholder of MIK since 1998. (Id.) MIK formerly did business as Re/Max of Lake Wallenpaupack-North. (Id.) MIK owned the Re/Max Franchise from 1998 to 2005. (Id.) On February 1, 2005, MIK transferred the Re/Max franchise to a partnership operated by Defendants William Waldman and William Black. (Id. at 2-3.) Plaintiffs continued to operate as real estate agents under the Re/Max Franchise until it was terminated in November 2010. (Id. at 2.) George Irish and MIK together will be referred to in this Opinion as “Plaintiffs.”

2. Lakefront Development Company, LLC

Although not a party to this action, Lakefront Development Company, LLC (“Lakefront”), plays a central role in the dispute. Lakefront is a Pennsylvania limited liability company established on October 7, 2002. (Doc. No. 1 at 10.) The company engaged in home construction. (Id. at 12.) The members of Lakefront are Plaintiff Irish and Defendants Harry Ferguson, William Black, William Wald-man, and Martin Woldow. (Id. at 10.) Lakefront was placed in receivership on January 21, 2011. (Id. at 9.)

3. Defendants

In order to categorize the large number of defendants in this case, the Complaint organizes the defendants into groups. The thirty-two defendants and their relationship to each other are as follows :

a. “Owner Defendants”: Harry Ferguson, William Black, William Wald-man, and Martin Woldow

Defendants Ferguson, Black, Waldman, and Woldow (“Owner Defendants”) are members of Lakefront, along with Irish. (Doc. No. 1 at 8.) The Owner Defendants are also the sole members of Defendant Carversville Development Company, LLC and Defendant Carversvilie Group, LLC. (Id.) Irish is not a member of these two companies. (Id.)

b. “Carversville Defendants”: “Owner Defendants” (Ferguson, Black, Waldman, and Woldow), and Ronald Bugaj, Christine Vehstedt, Carversville Development Company, and Carversville Group

As stated above, Carversville Development Company and Carversville Group are companies owned by Owner Defendants. (Doc. No. 1 at 8.) Christine Vehstedt was an employee of Lakefront until it was placed in receivership. (Id. at 9.) Ronald Bugaj, Esquire, is a Pennsylvania attorney who has represented Lakefront, Owner Defendants, Vehstedt, and a general partnership known as “Waldman and Black” (“Waldman and Black GP”). The Complaint alleges Carversville Defendants are liable under Counts One, Two, Three, and Four (RICO, 18 U.S.C. § 1962(a-d)), Counts Nineteen and Twenty (Sherman Act), Count Twenty-One (Breach of Covenant of Good Faith and Fair Dealing), Count Twenty-Two (Commercial Disparagement), Count Twenty-Three (Civil Conspiracy), and Count Twenty-Four (Negligent Infliction of Emotional Distress).

c.“Accounting Defendants”: WeiserMazars, LLP, Alan Cohen, and Benjamin Fishbein

Alan Cohen and Benjamin Fishbein are certified public accountants. (Doc. No. 1 at 4.) Benjamin Fishbein is now retired. (Id.) Both defendants formerly worked for an accounting firm known as Fishbein and Company, P.C., which is not a defendant in this case. Alan Cohen now works for the accounting firm WeiserMazars, LLP, which is a defendant in this case. (Id.) The Complaint alleges Accounting Defendants are liable under Counts Five and Six (RICO, 18 U.S.C. § 1962(c, d)).

d.Re/Max, LLC

Re/Max, LLC is a Delaware corporation. (Doc. No. 1 at 4.) The Complaint alleges Re/Max, LLC is liable under Counts Seven and Eight (RICO, 18 U.S.C. § 1962(c, d)).

e.“ESSA Defendants”: ESSA Bank and Trust Company, and William Lewis

ESSA Bank and Trust (“ESSA”) is a Pennsylvania financial institution. (Doc. No. 1 at 4.) William Lewis is a vice-president of commercial lending at ESSA. (Id. at 5.) ESSA made three loans relevant to this lawsuit: (1) a March 16, 2005 loan in the amount of $2 million to Carversville Group (id. at 21); (2) a May 23, 2005 loan in the amount of $500,000 to Carversville Development Company (id.); and (3) an April 19, 2006 loan in the amount of $2.25 million to Carversville Group which was used to pay off the two earlier loans (id. at 22). The Complaint alleges ESSA Defendants are liable under Counts Nine, Ten, Eleven, and Twelve (RICO, 18 U.S.C. § 1962(c, d)).

f.“Meagher Defendants”: Meagher Realty Group, LLC, Meagher Associates, Incorporated, Tim Meagher, Heather Meagher, Paul Meagher Sr., Paul Meagher Jr., and Matthew Meagher

Paul Meagher Sr. is the father of Tim Meagher, Paul Meagher Jr., and Matthew Meagher. (Doc. No. 1 at 9.) Heather Meagher is the spouse of Tim Meagher. (Id.) Meagher Realty Group, LLC, operates under the business name “Re/Max BEST.” (Id. at 5.) Meagher Associates, Incorporated, operates under the business name “Re/Max WAYNE.” (Id.) Tim Meagher is a real estate broker and owner of the Re/Max BEST and Re/Max WAYNE franchises. (Id. at 5.) The Complaint alleges Meagher Defendants are liable under Counts Thirteen and Fourteen (RICO, 18 U.S.C. § 1962(c, d)), Count Nineteen (Conspiracy to violate the Sherman Act), Count Twenty-Two (Commercial Disparagement), and Count Twenty-Three (Civil Conspiracy). Meagher Defendants, except for Paul Meagher Jr. and Matthew Meagher, are also alleged to be liable under Count Twenty (Illegal Boycott in Violation of the Sherman Act).

g. “Anderson Defendants”: G. Anderson Homes, Inc., Grace Anderson, Santos Rolon, and Tammy Lee Clause

G. Anderson Homes, Inc., is a Pennsylvania corporation. (Doc. No. 1 at 6.) Grace Anderson is a shareholder and president of G. Anderson Homes. (Id.) Santos Rolon is a Pennsylvania real estate salesperson and the spouse of Grace Anderson. (Id.) Tammy Lee Clause, Esquire, is a Pennsylvania attorney. (Id. at 7.) Anderson Defendants are alleged to be liable under Counts Fifteen and Sixteen (RICO, 18 U.S.C. § 1962(e, d)), Count Nineteen (Conspiracy to Violate the Sherman Act), Count Twenty-Two (Commercial Disparagement), and Count Twenty-Three (Civil Conspiracy).

h. “Weichert Defendants”: Weichert Realtors/Paupack Group, Inc., Thomas McColligan, Judith Rodonski, Deborah Friese, and Karen Rice

Weichert Realtors/Paupack Group, Inc. (“Weichert”) is a Pennsylvania corporation. (Doc. No. 1 at 7.) Thomas McColligan and Judith Rodonski are Pennsylvania real estate brokers and shareholders of Weichert. (Id.) Deborah Friese is a real estate broker associated with Weichert, and Karen Rice is a real estate salesperson associated with Weichert. (Id. at 7-8.) The Complaint alleges Weichert Defendants are liable under Counts Seventeen and Eighteen (RICO, 18 U.S.C. § 1962(c, d)), Count Nineteen (Conspiracy to Violate the Sherman Act), Count Twenty (Illegal Boycott in Violation of the Sherman Act), Count Twenty-Two (Commercial Disparagement), and Count Twenty-Three (Civil Conspiracy).

C. Statement of Facts as Alleged In Complaint

1.Origins of Lakefront Development Company, LLC

On October 7, 2002, Irish and Owner Defendants created Lakefront Development Company, LLC. (Doc. No. 1 at 10.) Each member of the LLC was required under Lakefront’s Operating Agreement to deposit $15,000 into Lakefront’s operating account. (Id.) Irish is the only member who made such a deposit. (Id. at 11.)

Owner Defendants did not disclose to Irish that they had an ownership interest in Carversville Development Company and Carversville Group. (Id.) At the time of Lakefront’s creation, Carversville Development Company owned a property in Bucks County, Pennsylvania, known as the “1740 House.” (Id.) From 2005 to 2009, Lakefront was one of the top-five home construction companies in the Pike/Wayne real estate market in northeastern Pennsylvania. (Id. at 12.) Plaintiffs allege that after the creation of Lakefront, Owner Defendants participated in a scheme to defraud Plaintiffs and benefit themselves and their companies, Carversville Development Company and Carversville Group. (Id.)

2.Fraud Upon Lakefront: Corporate Waste

On or about November 1, 2002, Ferguson purchased from Lakefront real estate worth $650,000. (Id.) The purchase price was $860,000. (Id.) This transaction caused a loss of $290,000 to Lakefront. (Id.) Ferguson also purchased materials to build his personal home using the funds of Lakefront. (Id. at 13.)

3.Agreement to Transfer the Re/Max Franchise

On February 1, 2005, Waldman and Black GP entered into what Plaintiffs characterize as an “accommodation agreement” with MIK regarding the Re/Max Franchise previously owned by MIK (the “Re/Max Franchise”). (Id.) At the time of the transfer, MIK had been operating under the Re/Max Franchise for seven years, had annual real estate sales of $55 million, and Irish’s ranking within the Pike/Wayne Association of Realtors was within the top ten out of 500 members. (Id. at 14.) The Complaint alleges that the “accommodation agreement” was created “as a way to insure [sic] that their fraud would not be discovered, to insure [sic] that they could continue their fraud, and that they could further control the victims of their fraud.” (Id. at 14-15.)

4. Fraud Upon Blue Cross

Sometime in or before February 2007, Lakefront began paying monthly health insurance premiums to Blue Cross of Northeastern Pennsylvania (“Blue Cross”) for two individuals: Defendant Christine Vehstedt and Joyce Cooke. (Id. at 15.) Although Vehstedt was employed by Lakefront, Joyce Cooke was not. (Id.) Vehstedt, however, represented in a facsimile sent to Blue Cross that “Carversville is the holding company for Lakefront,” and that Cooke “does work for both companies.” (Id.) Cooke was the full-time “innkeeper” at the “1740 House,” in which Lakefront had no business interest. (Id.) No entity named “Carversville” was a holding company for Lakefront. (Id. at 16.) On March 24, 2007, Vehstedt sent a “new Enrollment Application for the Blue Care Traditional Plan” to Blue Cross on behalf of Cooke. (Id.)

In January 2009, Blue Cross conducted a random audit of Lakefront. (Id.) After the audit, Blue Cross canceled the health insurance policy due to fraud, because Cooke was an ineligible person on the policy. (Id.) The Complaint alleges Owner Defendants and Vehstedt had actual knowledge of this fraud upon Blue Cross, which was achieved without notice to Irish. (Id.)

5. Fraud Upon Lakefront and The Internal Revenue Service: Payments for Services Not Rendered, Unauthorized Distributions, and Underreporting of Lakefront’s Income and Profits

Ferguson and Black received checks from Lakefront for services they did not perform. (Id. at 17.) Ferguson, Black, and Vehstedt also received free gasoline for their personal use, which was paid for by Lakefront. (Id.) Ferguson’s assistant, Theodore Hemke, also received payments from Lakefront that he did not earn, personal use of a truck and tools owned by Lakefront, and gasoline paid for by Lakefront. (Id. at 17-18.) Owner Defendants also made distributions to themselves from the assets of Lakefront. (Id. at 18.) Irish had no notice of the payments and benefits given to Hemke and Owner Defendants by Lakefront. (Id.)

Owner Defendants and Vehstedt created and altered records in order to underreport Lakefront’s income, expenses, and profits. (Id. at 19.) This underreporting resulted in inaccurate tax returns filed with the Internal Revenue Service (“IRS”). (Id.)

6. Fraud Upon Lakefront: Scheme To Divert Lakefront’s Profits

Over the course of several years, Carversville Defendants engaged in a scheme to divert the assets of Lakefront and hide the diversion with the assistance of Accounting Defendants. (Id.) Under the scheme, unimproved land would be purchased by Lakefront, and a residence would be constructed on the land using Lakefront’s money. (Id.) At or near the time the construction of the residence was completed, the improved land would be transferred to a person or entity controlled by one or more of the Carversville Defendants for less than the cost incurred by Lakefront and for less than the market value of the property. (Id.) The purchasing entity would then sell the property for a profit. (Id. at 20.) In effect, Lakefront incurred all the costs of acquiring and improving the land, but received little or no profits. (Id.) Carversville Defendants hid this scheme from Irish and the IRS. (Id.)

7. Fraud Upon Lakefront and ESSA: Loans Made For The Benefit Of Others Paid For By Lakefront

Lakefront also made payments on loans for the benefit of others, without notice to Irish. (Id.) Lakefront received one or more loans from Invest National Bank and Trust Company. (Id.) The amount owed on one such loan was $1.8 million. (Id. at 21.)

Carversville Group and Carversville Development Company also entered into several loan transactions with ESSA. William Lewis was the banking official on these loans. (Id.) On March 16, 2005, Carversville Group borrowed $2 million from ESSA. (Id.) The billing address used by Carversville Group was Lakefront’s address at the time: HC6, Box 6103, Hawley, PA 18428. (Id.) This address was also the address of the residence of Defendant Woldow. (Id.)

On May 23, 2005, Carversville Development Company borrowed $500,000 from ESSA. (Id.) The billing address was Lakefront’s Hawley, Pennsylvania office address. (Id.) On April 10, 2006, Vehstedt sent a letter on Lakefront’s letterhead to ESSA and included interest checks covering interest due on these two loans. (Id. at 22.) On April 19, 2006, Carversville Group executed a promissory note and borrowed $2.25 million from ESSA. (Id.) The purpose of the loan was to pay off the $2 million and $500,000 loans from ESSA. (Id.) Payments on this loan were also made by Lakefront. (Id.)

The Complaint describes the nature of ESSA’s involvement in this alleged scheme as follows:

The methods by which the Carversville Defendants could and would dupe ESSA and [William] Lewis, or pretend to dupe them, and by which ESSA and Lewis could pretend to be duped, were as follows:

a) Certain of the Owner Defendants and Vehstedt would supply or appear to supply so much valuable and liquid collateral that the lender, ESSA, and its banking officers, including Lewis, did not engage in the checks and balances normally practiced by lenders for loans of amounts in excess of $2,000,000.

b) Certain of the Carversville Defendants would lead ESSA and Lewis to believe that the proceeds of the loans were for the benefit of [Lakefront] (when they were not.)

c) Certain of the Carversville Defendants would lead ESSA and Lewis to believe that one of the Carversville Defendants was the “holding company” of [Lakefront],

d) The beliefs (or purported beliefs) that the funds were for the benefit of [Lakefront] and/or that a company named “Carversville” was a holding company of [Lakefront] would allow ESSA and Lewis to ignore the fact that payments were being made by [Lakefront] on loans which [Lakefront] was not liable and which did not benefit [Lakefront].

e) ESSA had no [Lakefront] corporate document authorizing payment from [Lakefront] on loans on which it was not liable and on which it had not received the proceeds.

f) ESSA had no [Lakefront] corporate document authorizing [Lakefront] to become liable on loans made to Carversville Group or Carversville DC.

(Id. at 24 (emphasis in original).)

8. Fraud Upon Lakefront: The “1740 House”

Owner Defendants and Vehstedt used at least $925,000 of Lakefront’s money to maintain and renovate a property known as the “1740 House.” (Id. at 25.) The “1740 House” was owned by Carversville Development Company. (Id.) When the “1740 House” was sold on November 30, 2010 for $1,225 million, Carversville Development Company did not reimburse Lakefront for any funds used to maintain and renovate the property. (Id.)

9. Attempts to Conceal the Fraud Upon Lakefront

a. ESSA Defendants

On November 4, 2009, Irish contacted ESSA and inquired about loan payments to ESSA from Lakefront. (Id. at 26.) William Lewis attempted to redirect Irish to Ferguson and Waldman, and described “Carversville” and “Lakefront” as the same company. (Id.) The Complaint alleges that ESSA and Lewis had actual knowledge that the loans made to Carversville Development Company and Carversville Group were improperly paid for by Lakefront, and tried to hide the illicit activities from Irish. (Id.)

b. Attempt to Liquidate Lakefront, Allegations Regarding Schedule K-l Tax Form

On October 29, 2008, Ronald Bugaj, Esquire, sent a letter to Irish regarding the liquidation of Lakefront. (Id.) In the Complaint, Plaintiffs contend that the purpose of the liquidation was to conceal the illegal conduct of Carversville Defendants from Irish and the government. (Id.) On November 18, 2008, former counsel for Irish, John R Spall, Esquire, responded to the letter sent by Bugaj. (Id. at 27.) In the letter, Spall requested information regarding: (1) money expected to be paid to Lakefront; (2) daily business operations of Lakefront; (3) protection of Lakefront’s corporate assets; and (4) protection of Lakefront’s corporate books and records. (Id.)

On December 10, 2008, Spall and Bugaj held a meeting regarding the liquidation of Lakefront (the “December 10 Meeting”). (Id.) On December 11, 2008, Bugaj wrote to Spall to. confirm the discussions held during the December 10 Meeting. (Id.) In the letter, Bugaj represented that Irish would receive access to corporate records and documents regarding Lakefront’s outstanding debt. (Id.) On December 13, 2008,-Irish hired a forensic accountant.

On December 20, 2008, Irish wrote to Vehstedt inquiring about the Schedule K-l tax form Lakefront gave to Irish. (Id. at 28.) Irish did not receive the documents he requested. (Id.) On December 23, 2008, Vehstedt responded to Irish’s letter by e-mail, advising him that questions regarding the 2007 K-l should be addressed to accountants Fishbein and Company, P.C. (Id.) She also advised him that, per the instructions of Bugaj, “any and all concerns regarding any aspect to [sic] Lakefront Development Co, LLC” should be directed to Bugaj. (Id.) The Complaint alleges this instruction was given to hide the illicit conduct of Carversville Defendants. (Id.)

On February 12, 2009, Spall wrote to Bugaj regarding the representations made in the December 10 Meeting, requesting an inspection of books, records, and other documents listed in the letter. (Id.) On April 3, 2009, Spall sent another letter to Bugaj complaining about the lack of response. (Id.) On April 6, 2009, Bugaj responded to Spall, promising “a response as quickly as possible,” but only if Spall provided his “authority for requesting such an inspection and a specific list of the documents as to what documents [he] would like to look at.” (Id. at 29.) On April 8, 2009, Spall responded, stating that he had already met Bugaj’s conditions and attaching applicable portions of Lakefront’s Operating Agreement and Spall’s February 12, 2009 letter. (Id.)

Bugaj rejected Spall’s requests on the basis that Irish had not resigned from Lakefront, and stated that if Irish wanted records, he should contact Mr. Fishbein. (Id.) The Complaint alleges that as of April 8, 2009, Bugaj had actual knowledge of the “plundering” of Lakefront by Carversville Defendants.

On April 16, 2009, Spall faxed a letter to Bugaj stating that Irish had not agreed to resign from Lakefront because he had received a prior correspondence stating that Ferguson intended to resign. (Id. at 30.) On April 17, 2009, Joseph Rydzewski wrote to Bugaj requesting written authorization to copy Lakefront’s records in the possession of Mr. Fishbein, (Id.) On April 21, 2009, Bugaj responded to Rydzewski, stating that Irish “would be allowed only access to the records, and not copying of those records, unless Irish paid for copying.” (Id. (emphasis in original).) Bugaj also stated that Lakefront would not compensate Mr. Fishbein for his time in providing Irish access to the books and records. (Id.)

c. Extortion

On June 23, 2009, Bugaj and Waldman visited Spall and Rydzewski’s offices and presented a “Stipulation and Settlement Agreement.” (Id.) Although no civil action had been filed at the time, the Stipulation and Settlement Agreement included a caption listing Lakefront as the plaintiff and Irish as the defendant. (Id. at 31.) The Stipulation and Settlement Agreement asserted that Re/Max had received complaints of unethical behavior about Irish’s business operations under the Re/Max franchise. (Id.) The Complaint alleges that Re/Max did not receive any such complaints, and that “[a]ny false complaints received by Re/max [sic] were created and passed on to ReMax by the Carversville Defendants using the mails and interstate wires.” (Id.) On June 26, 2009, Rydzewski wrote to Bugaj, advising him that Irish considered the Stipulation and Settlement Agreement to be an extortion attempt. (Id. at 32.)

d. Irish’s Petition to Compel Inspection of Corporate Records

On July 1, 2009, Rydzewski requested access to Lakefront’s books and records. (Id. at 33.) On July 7, 2009, Rydzewski wrote a letter notifying Bugaj “of the need for a full aecounting[ ] and of the doubtful legality of the alleged loss of $370,217.60 on the 2007 K-l.” (Id.) On August 12, 2009, Irish filed a “Petition to Compel Inspection of Corporate Records and/or Documents” in the Court of Common Pleas of Pike County, No. 1667-Civil-2009 (“the Records Action”). (Id.) On August 24, 2009, Carversville Defendants filed an answer to the petition stating that Irish was on a “fishing expedition,” and that “Irish had violated the law and the Operating Agreement to such an extent that he had effectively elected to withdraw from Lakefront.” (Id. at 34.) The Complaint alleges that there is no basis under the Operating Agreement to assert that Irish had withdrawn, and that “[t]he purpose of causing (or purporting to cause) the ‘withdrawal’ of Irish, either at Irish’s request or as an operation of law, was to hide the fraudulent and illegal conduct of the Carversville Defendants.” (Id.)

On October 21, 2009, Irish and Lakefront entered into a stipulation.- (Id.) Under the terms of the stipulation, Lakefront was obligated to produce its files and records on October 26, 2009. (Id.) In return, a hearing and depositions of Vehstedt and Waldman were postponed. (Id. at 35.) The Complaint alleges the purpose of the stipulation was for Carversville Defendants to “extend the time period during which the Carversville Defendants’ conduct, as described in [the] Complaint, would be kept from Irish and government agencies, including the Internal Revenue Service.” (Id.) The Complaint also alleges that Carversville Defendants “had no intention of complying with the Stipulation in the Records Action.” (Id.)

Carversville Defendants did not turn over any records until October 30, 2009. (Id.) The records turned over were not the records Irish sought, and were instead “specifically selected by the Carversville Defendants.” (Id.) The Complaint alleges that Carversville Defendants breached the Stipulation “to extend the period during which the Carversville Defendants’ conduct, as described in [the] Complaint, would go undisclosed, thus providing the Carversville Defendants with additional time to use their own efforts and those of others, as outlined in [the] Complaint, to destroy Irish.” (Id.)

On November 1, 2009, Joseph Yanushefsky, a forensic accountant, reviewed the records produced by Lakefront on October 30, 2009. (Id. at 36.) On November 2, 2009, he prepared a report regarding the records produced and not produced by Lakefront. (Id.) On November 4, 2009, Rydzewski sent a letter to Bugaj complaining about missing records, with Yanushefsk/s report attached. (Id.) The Complaint alleges that Fishbein and Co., P.C., which is now Defendant WeiserMazars following a merger, along with Defendants Fishbein and Cohen, “participated in the refusal of the Carversville Defendants to turn over the books and records of [Lakefront.]” (Id.)

10. Fraud Upon Lakefront: Credit Card Processing Account

On or about March 1, 2009, Ferguson and Waldman opened a credit card processing account in the name of Lakefront and Waldman at Honesdale National Bank, with a credit line of $15,000. (Id. at 37.) Ferguson used the credit card processing account for his own personal benefit. (Id.) Carversville Defendants did not disclose this account to Irish. (Id.)

11. Conspiracy to Disparage Irish’s Name with Law Enforcement

On June 4, 2009, “Waldman and Black took the affirmative step of contacting Re/ Max to drop the bomb of ‘fraud,’ [committed by Irish and MIK], but declining to provide further clarification, supposedly at the instruction of the District Attorney of Pike County, when in fact the District Attorney made no such instruction.” (Id. at 40.) The Complaint alleges that “[t]he complaint and the conduct of June 4, 2009, by WTaldman and Black originated only because of the request by Irish to review the books and records of [Lakefront.]” (Id.) In June 2009, Bugaj, as the attorney for Waldman, spoke to a Re/Max representative and discussed “removing Irish.” (Id.) While Waldman and Black were communicating with Re/Max, Ferguson and Waldman initiated meetings with the Pennsylvania State Police and the District Attorney of Pike County. (Id.)

The meeting with the Pennsylvania State Police took place at the Blooming Grove State Police Barracks with State Trooper Sandra Van Luvender. (Id.) Present at the meeting was McColligan, Kayla Scott (Tim Meagher’s secretary), Dave Matthews (a real estate agent associated with Re/Max Wayne), and Ferguson. (Id.) With the exception of Ferguson, all others attending the meeting were competitors of Irish. (Id.) On the same date, Tim Meagher met with Ferguson. (Id. at 41.)

A later meeting with the District Attorney of Pike County occurred at Weichert’s offices in Hawley, Pennsylvania. (Id.) Present at this meeting was Pike County District Attorney Ray Tonkin, Trooper Van Luvender, Ferguson, Black, Wald-man, Dave Matthews, McColligan, and Tim Meagher. (Id.) The Complaint alleges Black, Waldman, McColligan, and Tim Meagher used the meeting to smear Irish’s name. (Id.) Several other meetings were also held by these defendants for the purpose of eliminating Plaintiffs as competitors. (Id. at 41-42.)

12. Conspiracy to Transfer Re/Max Franchise and Destroy Irish and MIK

As previously noted, on February 1, 2005, the Re/Max Franchise operated by MIK was transferred to Waldman and Black GP. (Id. at 37.) After the transfer to Waldman and Black GP, the Re/Max Franchise had a five-year term due to expire on January 31, 2010. (Id.) Plaintiffs continued to operate under the Re/Max Franchise now owned by Waldman and Black GP as employees or independent contractors. (Id. at 38.) Waldman and Black GP made material misrepresentations in the documents submitted to Re/ Max in 2005. (Id.) MIK paid the fees associated with the Re/Max Franchise. (Id. at 39.) Re/Max did not impose upon Waldman and Black GP the normal training and business standards for franchisees. (Id.)

In 2009, Waldman and Black stated an intention to renew the Re/Max franchise, in accordance with the requirements of the franchise agreement. (Id.) At that time, Plaintiffs were operating the Re/Max Franchise within Re/Max’s required standards and had real estate sales exceeding $60 million per year. (Id.) Irish was also being honored by Re/Max for his achievements. (Id. at 40.)

Meanwhile, Waldman and Black began negotiating with Re/Max to have the Re/ Max Franchise transferred to Meagher Defendants for less than its market value, and for Meagher Defendants to rent space from Lakefront for less than its fair rental value. (Id. at 42-43.) This office space is directly next door to the Irish Office Building, where Defendant Irish had his office. (Id.) The object of this plan “was to create a buyer/transferee of the ReMax Franchise, or a sham buyer/transferee, who would cause the most harm to Irish and MIK and cause the most benefit to the Carversville Defendants.” (Id. at 43.)

Around September 2009, “certain Meagher Defendants” began to negotiate directly with Re/Max to acquire the Re/ Max Franchise. (Id.) At this time, Plaintiffs controlled 17% of the relevant real estate sales market. (Id.) On October 9, 2009, Ferguson and Waldman met with the Meagher Defendants. (Id.) On October 16, 2009, Meagher Defendants developed a business plan. (Id. at 43M4.) The Complaint alleges that Tim Meagher “intended to not only obtain a ReMax franchise next door to the Irish Office Building, but also to insure [sic] that Irish would no longer be operating under the ReMax name,” (Id. at 44.) The Complaint also alleges that “Carversville Defendants would likewise benefit from a ReMax operation in the [Lakefront] Office Building as they would continue to operate [Lakefront] in the same building as the ReMax real estate office.” (Id.) The Complaint alleges that Weichert also had a motive to assist the plans of Carversville Defendants and Meagher Defendants because “Weichert would rather a [sic] weak ReMax operation run by the Meagher Defendants ... than the powerful and successful ReMax operation owned by MIK and operated by Irish ....” (Id.)

On January 13, 2010, Waldman and Black GP informed Re/Max they intended to renew the franchise for five years. (Id. at 46.) On January 25, 2010, Re/Max notified Waldman and Black GP that it would grant a six-month extension of the franchise. (Id.) The purpose of this six-month extension was a “potential transfer” of the Re/Max Franchise to Meagher Defendants, which the Complaint alleges was “to further the conspiracy against Irish and MIK.” (Id. at 46-47.) The Complaint also alleges that “[n]o party to the extension intended the extension to benefit Irish or MIK in any way.” (Id.) Carversville Defendants falsely represented to Re/Max that the Pike County District Attorney had asked Waldman and Black to request the extension. (Id.)

In May through July 2010, a series of conference calls were held regarding the Re/Max Franchise. (Id.) On July 21, 2010, Waldman, Black, Tim Meagher, and Paul M. Meagher Jr. falsely represented to Re/ Max that the District Attorney of Pike County was pursuing charges against Irish. (Id. at 48.) Re/Max did not attempt to determine the status of the purported investigation by the District Attorney until July 2010. (Id.)

On July 26, 2010, Bugaj requested an additional six-month extension of the franchise. (Id. at 49.) Re/Max denied this request (Id.) On July 27, 2010, Harry Ferguson spoke to a representative of Re/ Max, and Re/Max granted a one-month extension of the franchise “to make the franchise marketable.” (Id.) As of July 30, 2010, Re/Max was complying with Waldman’s request that important correspondence not be sent to Plaintiffs’ office. (Id. at 50.)

On August 23, 2010, a Re/Max representative contacted Irish by telephone, and he learned for the first time that the Re/Max Franchise would terminate on August 31, 2010. (Id.) Later that day, Tim Meagher spoke with a Re/Max representative, and later wrote a letter stating that he was “VERY interested in purchasing a franchise and operating one in the HawleyLake Wallenpaupack area very near to where the current one exists.” (Id. (emphasis in original).)

13. Unauthorized Alteration of “Multiple Listing Service” Records

Irish is a member of the Pike-Wayne Association of Realtors (the “Association”). (Id. at 52.) The Association maintains a “multiple listing service” (“MLS”). (Id.) Irish subscribed to this service. (Id.) The MLS is accessible by consumers and real estate professionals, and lists properties for sale by a real estate broker. (Id.) Other realtors who subscribed to the MLS were Defendants Weichert, MeColligan, Rodonski, Friese, Rice, Paul Meagher Sr., Tim Meagher, Heather Meagher, and Santos Rolon. (Id.) A broker’s profile on the MLS is password-protected. (Id.)

Until August 4, 2010, Irish’s listings on the MLS would direct a viewer to a website maintained by Irish and MIK: www. LakeRealtor.com. (Id. at 53.) On or about August 4, 2010, the website listed on the MLS was changed from www.LakeRealtor. com to www.poconolakehome.com, which is a website maintained by Elaine Strong, a real estate agent in Scranton, Pennsylvania. (Id.) Around October 6, 2010, Irish discovered the website had been changed and reported the problem to the Association. (Id. at 53-54.) Irish later discovered that his MLS profile had been repeatedly accessed using a password to change the website address and to access confidential information on the profile. (Id. at 54.)

At the time of this unauthorized access, Defendant MeColligan was a member of the Association’s board, and both McColligan and Tim Meagher were members of the sub-committee charged with overseeing the MLS. (Id.) The Complaint alleges that “one or more of the Weichert Defendants or one or more of the Anderson Defendants participated in or benefitted from the unauthorized change in the primary web address or the unauthorized access described above.” (Id.) MeColligan is named as one of the “Weichert Defendants,” but Tim Meagher is not named as one of the “Anderson Defendants.”

14. Lawsuits Involving Plaintiffs

Beginning on September 25, 2010, a series of lawsuits were filed in state court against Plaintiffs. (Id. at 55.) Plaintiffs contend these lawsuits are meritless and that “[w]hile others were attempting to acquire the ReMax Franchise and to otherwise harm the Plaintiffs, other Defendants, including the Anderson Defendants, conspired with others and sought to use the burdens of meritless litigation to harm the Plaintiffs MIK and Irish.” (Id.) Plaintiffs also contend that Carversville Defendants and Anderson Defendants sent pleadings and other information regarding these lawsuits to Re/Max in order to further damage Plaintiffs’ reputation. (Id.) In addition, MIK also commenced actions in state court against various parties, including several defendants in this case, for unpaid commissions and bonuses.

15. Franchise Litigation

On August 25, 2010, less than 48 hours after the telephone call from Re/Max notifying Plaintiffs that the Re/Max franchise would terminate at the end of the month, Irish, MIK, Inc. and the remaining shareholders of MIK commenced an equity action seeking injunctive relief in the Court of Common Pleas of Pike County, 1857-Civil-2010 (the “Franchise Litigation”). (Id. at 60.) The equity complaint alleged that Waldman and Black acted in bad faith, and attempted to terminate the franchise following Irish’s attempt to obtain Lakefront’s records in the Records Action. (Id.) Re/Max opposed the allegations and commenced a separate lawsuit in a Colorado federal court. (Id. at 61.) The Complaint alleges that Re/Max opposed the Franchise Litigation “to hide the conspiracy of which it had become a part.” (Id.)

During the Franchise Litigation, at the deposition of Waldman, he was handed a note by Black that read “Save Tim,” referring to Tim Meagher. (Id.) The Complaint alleges that Ferguson, Tim Meagher, Waldman, and Black made various misrepresentations during their depositions. (Id. at 61-62.)

On November 1, 2010, the court held a trial on the equity complaint. (Id. at 63.) The trial court ruled against Irish and MIK. (Id.) Following the decision of the trial court, Irish and MIK were no longer permitted to do business under the name Re/Max. (Id.)

16. Receivership Litigation

On September 24, 2010, Irish commenced an equity action in the Court of Common Pleas of Pike County, No.2099Civil-2010 (the “Receivership Litigation”). (Id.) The pleadings filed by Irish sought: (1) the dissolution of Lakefront; (2) the appointment of a receiver; and (3) injunctive relief. (Id. at 64.) During the Receivership Litigation, Ferguson, Waldman, and Black admitted transferring $925,000 to Carversville Development Company to renovate the 1740 House. (Id.) The court appointed John J. Martin as receiver. (Id.) After being appointed receiver, Martin failed to secure Lakefront’s books and records, and failed to prevent Bugaj “from assisting those who hand plundered [Lakefront], including Ferguson, Black, and Waldman.” (Id.)

After being appointed receiver, Martin commenced an action against Ferguson, Waldman, Black, Woldow, Carversville Development Company, and Carversville Group in the Court of Common Pleas of Bucks County. (Id.) This action sought to recoup funds diverted to the 1740 House. (Id.) Martin has not filed any other lawsuits, including a lawsuit alleging a scheme to defraud Irish by the various defendants named in the Complaint. (Id.)

III. STANDARD OF REVIEW

The motion to dismiss standard under Federal Rule of Civil Procedure 12(b)(6) is set forth in Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). After Iqbal it is clear that “threadbare recitals of the elements of a cause of action, supported by mere conclusory statements do not suffice” to defeat a Rule 12(b)(6) motion to dismiss. Id. at 663, 129 S.Ct. 1937; see Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Applying the principles of Iqbal and Twombly, the Third Circuit in Santiago v. Warminster Township, 629 F.3d 121 (3d Cir.2010), set forth a three-part analysis that a district court in this Circuit must conduct in evaluating whether allegations in a complaint survive a 12(b)(6) motion to dismiss:

First, the court must “tak[e] note of the elements a plaintiff must plead to state a claim.” Second, the court should identify allegations that, “because they are no more than conclusions, are not entitled to the assumption of truth.” Finally, “where there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief.”

Id. at 130 (quoting Iqbal, 556 U.S. at 675, 679, 129 S.Ct. 1937). “This means that our inquiry is normally broken into three parts: (1) identifying the elements of the claim, (2) reviewing the complaint to strike conclusory allegations, and then (3) looking at the well-pleaded components of the complaint and evaluating whether all of the elements identified in part one of the inquiry are sufficiently alleged.” Malleus v. George, 641 F.3d 560, 563 (3d Cir.2011).

A complaint must do more than allege a plaintiffs entitlement to relief, it must “show” such an entitlement with its facts. Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir.2009) (citing Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234-35 (3d Cir.2008)). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged— but it has not ‘shown’ — ‘that the pleader is entitled to relief.’ ” Iqbal, 556 U.S. at 679, 129 S.Ct. 1937. The “plausibility” determination is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id.

Moreover, Federal Rule of Civil Procedure 9(b) provides: “In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person’s mind may be alleged generally.” Rule 9(b) requires a plaintiff to plead: (1) a specific false representation of material fact; (2) knowledge by the person who made it of its falsity; (3) ignorance of its falsity by the person to whom it was made; (4) the intention that it should be acted upon; and (5) that the plaintiff acted upon it to his [or her] damage. In re Suprema Specialties, Inc. Sec. Litig., 438 F.3d 256, 270 (3d Cir.2006) (quoting Shapiro v. UJB Fin. Corp., 964 F.2d 272, 284 (3d Cir.1992)).

IV. ANALYSIS

A. Elements of Plaintiffs’ RICO Claims

The congressional purpose in enacting RICO is “the elimination of the infiltration of organized crime and racketeering into legitimate organizations operating in interstate commerce.” S.Rep. No. 91-617, at 76 (1969), The provisions of RICO encompass complex crimes involving multiple elements. Although RICO is a criminal offense, the statute also provides civil remedies to plaintiffs injured by RICO activity. 18 U.S.C. § 1964(c).

Four prohibited activities are codified in RICO at 18 U.S.C. § 1962(a-d), each of which provides a separate cause of action in this civil lawsuit. Subsections (a) and (b) address the infiltration of legitimate organizations by “outsiders,” which cover illegal activities such as money laundering and acquiring an interest in a legitimate organization with racketeering proceeds. Subsection (c) is restricted to persons “employed by or associated with” an enterprise that is engaged in racketeering activity. Reves v. Ernst & Young, 507 U.S. 170, 185, 113 S.Ct. 1163, 122 L.Ed.2d 525 (1993). Subsection (d) addresses a conspiracy to violate subsection (a), (b), or (c).

In the Complaint, Irish alleges that specified defendants have violated all four RICO provisions, while other defendants have violated § 1962(c, d) only. A summary of the elements of these causes of action follows.

1. 18 U.S.C. § 1962(c)

18 U.S.C. § 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.

“To plead a RICO claim under § 1962(c), ‘the plaintiff must allege (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.’ ” In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 362 (3d Cir.2010) (quoting Lum v. Bank of Am., 361 F.3d 217, 223 (3d Cir.2004)).

a. Defendant Must Be Associated With an Enterprise

In order to establish a violation of § 1962(c), a plaintiff must allege the existence of an enterprise. An “ ‘enterprise’ includes any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.” 18 U.S.C. § 1961(4). “[A]n association-in-fact enterprise must have at least three structural 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.” Boyle v. United States, 556 U.S. 938, 946, 129 S.Ct. 2237, 173 L.Ed.2d 1265 (2009). “[A]n association-in-fact enterprise is ‘a group of persons associated together for a common purpose of engaging in a course of conduct.’ ” Id. (quoting United States v. Turkette, 452 U.S. 576, 583, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981)).

Merely being part of an enterprise is not enough to establish a RICO violation. A plaintiff must also allege the presence of the additional elements noted above.

b.Defendant Must Conduct or Participate in the Conduct of the Enterprise’s Affairs through a Pattern of Racketeering Activity

A plaintiff must also establish that a defendant participated in conducting the enterprise’s affairs. The U.S. Supreme Court has said “[a]s a verb, ‘conduct’ means to lead, run, manage, or direct.” Reves, 507 U.S. at 177, 113 S.Ct. 1163 (citing Webster’s Third New International Dictionary 474 (1976)). Regarding the definition of “participate,” the Court has held:

In order to “participate, directly or indirectly, in the conduct of such enterprise’s affairs,” one must have some part in directing those affairs. Of course, the word “participate” makes clear that RICO liability is not limited to those with primary responsibility for the enterprise’s affairs, just as the phrase “directly or indirectly” makes clear that RICO liability is not limited to those with a formal position in the enterprise, but some part in directing the enterprise’s affairs is required.

Id. at 179, 113 S.Ct. 1163 (footnote omitted). “[0]ne is not liable under [§ 1962(c) ] unless one has participated in the operation or management of the enterprise itself.” Id. at 183, 113 S.Ct. 1163. Section 1962(c) “cannot be interpreted to reach complete ‘outsiders’ because liability depends on showing that the defendants conducted or participated in the conduct of the ‘enterprise’s affairs,’ not just their own affairs.” Id. at 185, 113 S.Ct. 1163 (emphasis in original).

c. Defendant Must Knowingly Commit At Least Two Acts of Racketeering Activity

A plaintiff must establish that a defendant committed at least two acts of racketeering activity. “Racketeering activity” is defined at 18 U.S.C. § 1961(1). The defined racketeering acts are also referred to as “predicate acts.” Mail fraud, wire fraud, and bank fraud are included as predicate acts under § 1961(1).

d. Two Acts of Racketeering Activity Committed By a Defendant Must Be Connected By a Common Scheme, Plan, or Motive Constituting a Pattern of Racketeering Activity

The Third Circuit has held:

Simply pleading that a defendant “participated in the operation or management” of an enterprise, however, is not enough to make out a violation of § 1962(c). The defendant must have done so “through a pattern of racketeering activity.” In other words, there must be not only a “nexus between the [defendant] and the conduct [of] the affairs of an enterprise,” but also a nexus between the conduct of those affairs and the pattern of racketeering activity.

In re Ins. Brokerage Antitrust Litig., 618 F.3d at 371 (citing Univ. of Md. at Balt. v. Peat, Marwick, Main & Co., 996 F.2d 1534, 1539 (3d Cir.1993); Banks v. Wolk, 918 F.2d 418, 424 (3d Cir.1990)) (internal citations omitted).

To establish a pattern of racketeering activity, a plaintiff must demonstrate more than a series of separate, isolated, or disconnected acts. A “ ‘pattern of racketeering activity’ requires at least two acts of racketeering activity ... the last of which occurred within ten years ... after the commission of a prior act of racketeering activity.” 18 U.S.C. § 1961(5). “[T]he existence of an enterprise is an element distinct from the pattern of racketeering activity and ‘proof of one does not necessarily establish the other.’ ” Boyle, 556 U.S. at 947, 129 S.Ct. 2237 (quoting Turkette, 452 U.S. at 583, 101 S.Ct. 2524). “It is the ‘person’ charged with the racketeering offense — not the entire enterprise— who must engage in the ‘pattern of racketeering activity.’ ” United States v. Bergrin, 650 F.3d 257, 267 (3d Cir.2011) (citing H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 244, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989)).

e. The Enterprise Must Be Involved In or Affect Interstate Commerce

The final element under § 1962(c) is that the enterprise must be involved in or affect interstate commerce. “[OJnly the criminal enterprise must affect interstate commerce- — -not the conduct of each individual defendant.” Rose v. Bartie, 871 F.2d 331, 357 n. 38 (3d Cir.1989) (quoting United States v. Robinson, 763 F.2d 778, 781 n. 4 (6th Cir.1985)). “[T]he predicate acts supporting a RICO violation may provide the nexus with interstate commerce.” Id. (quoting R.A.G.S. Couture, Inc. v. Hyatt, 774 F.2d 1350, 1353 (5th Cir.1985)). “The nexus with interstate commerce required by RICO is ‘minimal.’ ” Id. (quoting R.A.G.S. Couture, Inc., 774 F.2d at 1353).

2. 18 U.S.C. § 1962(a)

18 U.S.C. § 1962(a) provides:

It shall be unlawful for any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity ... to use or invest, directly or indirectly, any part of such income, or the proceeds of such income, in acquisition of any interest in, or the establishment or operation of, any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce....

In order to establish a violation of § 1962(a), a plaintiff must allege: “(1) that the defendant has received money from a pattern of racketeering activity; (2) invested that money in an enterprise; and (3) that the enterprise affected interstate commerce.” Id. (citing Shearin v. E.F. Hutton Grp., Inc., 885 F.2d 1162, 1165 (3d Cir.1989)).

Section 1962(a) is one of the two RICO substantive offenses that targets the actions of “outsiders” corrupting otherwise legitimate organizations. Section 1962(a) is “primarily directed at halting the investment of racketeering proceeds into legitimate businesses, including the practice of money laundering.” Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1188 (3d Cir.1993). Moreover:

[T]he plaintiff must allege an injury resulting from the investment of racketeering income distinct from an injury caused by the predicate acts themselves. This allegation is required because section 1962(a) “is directed specifically at the use or investment of racketeering income, and requires that a plaintiffs injury be caused by the use or investment of income in the enterprise.”

Id. (quoting Brittingham v. Mobil Corp., 943 F.2d 297, 303 (3d Cir.1991)) (internal citations omitted) (emphasis added).

3. 18 U.S.C. § 1962(b)

18 U.S.C. § 1962(b) provides:

It shall be unlawful for any person through a pattern of racketeering activity ... 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.

In order to recover under § 1962(b), “a plaintiff must show injury from the defendant’s acquisition or control of an interest in a RICO enterprise, in addition to injury from the predicate acts.” Lightning Lube, Inc., 4 F.3d at 1190. “Such an injury may be s