Menzies v. Seyfarth Shaw LLP (197 F. Supp. 3d 1076, 2016)

MEMORANDUM OPINION AND ORDER

John Robert Blakey, United States District Judge

Plaintiff is a rich man who, ostensibly through hard work and good fortune, put himself in a position to sell over sixty million dollars in stock in a company he helped create. No crime in that, closing on such a sale exemplifies part of the American Dream. But when lawyers and financial consultants sold him on a 100% tax avoidance plan to save him millions on the deal, Plaintiff later paid the price to Uncle Sam with an even bigger IRS bill. Any crime in that? Plaintiff claims it constitutes civil racketeering and violates a host of state laws. Defendants disagree and claim that, at worst, it was just bad advice. They now challenge his right to sue in federal court.

Specifically, Plaintiff Steven Menzies (“Menzies” or “Plaintiff’) sued Defendants Seyfarth Shaw LLP (“Seyfarth”), Graham Taylor (“Taylor”), Northern Trust Corporation (“Northern”) and Christiana Bank & Trust Company (“Christiana”), collectively “Defendants,” based upon the purchase of a tax planning product designed to allow Plaintiff to avoid paying capital gains tax. Ultimately, the plan failed, and, in addition to the tax burden he owed the IRS, Plaintiff incurred fees, interest and penalties. Among other relief sought in his Complaint [1], Plaintiff seeks more than $10.4 million in damages from Defendants via nine causes of action, including civil racketeering, fraud, conspiracy, negligence, breach of fiduciary duty and unjust enrichment.

Defendants deny any wrongdoing and now move to dismiss [29] [31] [35] the Complaint under Federal Rules of Civil Procedure 9(b), 12(b)(2) and 12(b)(6). For the following reasons, the motions are granted in part and denied in part. As explained below, this Court dismisses the RICO counts under Rule 12(b)(2) and 12(b)(6), and, in light of the findings regarding the RICO claims, defers the motions to dismiss as to the state law counts.

I. Legal Standard

Under Rule 12(b)(6), this Court accepts as true all well-pleaded facts in the Complaint and draws all reasonable inferences from those facts in Plaintiffs favor. AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir.2011). Although this Court normally cannot consider extrinsic evidence without converting a motion to dismiss into one for summary judgment, when a document is referenced in the Complaint and central to Plaintiffs claims the Court may consider it in ruling on the motion to dismiss. Hecker v. Deere & Co., 556 F.3d 575, 582-83 (7th Cir.2009).

To survive a Rule 12(b)(6) motion, the Complaint must not only provide Defendants with fair notice of a claim’s basis, but must also be “facially” plausible. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim has facial plausibility when the plaintiff pleads “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. Although the Complaint need not include detailed factual allegations, Plaintiffs obligation to provide the grounds for his entitlement to relief requires more than mere labels and conclusions, and a “formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955.

Likewise, Rule 9(b) requires a party alleging fraud to “state with particularity the circumstances constituting fraud.” Fed. R. Civ. Pro. 9(b). This “ordinarily requires describing the “who, what, when, where, and how’ of the fraud, although the exact level of particularity that is required will necessarily differ based on the facts of the case.” AnchorBank, 649 F.3d at 615 (quoting Pirelli Armstrong Tire Corp. Retiree Medical Benefits Trust v. Walgreen Co., 631 F.3d 436, 441-42 (7th Cir.2011)). Rule 9(b) applies to “all aver-ments” of fraud, not just claims of fraud. Borsellino v. Goldman Sachs Group, Inc., 477 F.3d 502, 507 (7th Cir.2007) (internal quotations omitted). Any “claim that ‘sounds in fraud’—in other words, one that is premised upon a course of fraudulent conduct—can implicate Rule 9(b)’s heightened pleading requirements.” Id.

The Seventh Circuit has not yet explicitly examined whether Rule 9(b)’s heightened standard extends to each and every element of a civil RICO claim containing fraud-based predicate activity within it, or whether Rule 8⅛ less rigorous pleading standard applies to the non-fraud elements of the violation. The Seventh Circuit has, however, explicitly applied the Rule 8 standard to RICO’s enterprise element. Richmond v. Nationwide Cassel L.P., 52 F.3d 640, 644 (7th Cir.1995); Drobny v. JP Morgan Chase Bank, N.A., 929 F.Supp.2d 839, 845 (N.D.Ill.2013) (applying the Rule 8 standard to the non-fraud elements of a civil RICO claim). Following that lead, this Court applies the traditional Rule 8 standard to the non-fraud elements of the RICO claims, and the stricter Rule 9(b) standard to the underlying allegations of fraud-based racketeering activity within those claims (here, the mail and wire fraud predicates themselves). Slaney v. The Intern. Amateur Athletic Federation, 244 F.3d 580, 597 (7th Cir.2001) (finding “allegations of fraud” within a civil RICO complaint are “subject to the heightened pleading standard” of Rule 9(b)).

II. Facts

Without predicting which parties and claims might prevail later at summary judgment or trial, this Court gleans the following from the Complaint:

A. Initiation of the Estate Planning Conspiracy

Plaintiff is the co-founder, President and Chief Operating Officer of Applied Underwriters Inc. (“AUI”), a financial services firm that specializes in providing workers’ compensation insurance to small and midsized businesses. Compl. ¶ 1. In November 2002, Northern contacted Plaintiff and other AUI senior executives to gauge their interest in Northern’s estate planning services. Northern, a Delaware corporation with its principal place of business in Chicago, Illinois, is a prominent financial services firm with offices dotting the globe. Plaintiff and others at AUI accepted a meeting to learn about Northern’s tax products, and, thereafter, Northern gave a presentation highlighting its services. Id. ¶¶ 8-9, 28-29.

In the following months, Northern marketed and discussed its estate planning and personal financial services solutions with Plaintiff and other AUI executives. Through in-person meetings and phone calls, Northern outlined the ways Plaintiff could avoid certain tax liabilities, including those related to his ownership of the highly-valued AUI stock. Id. ¶ 30. In January 2003, Northern sent Plaintiff a proposal for personal financial consulting. Northern proposed to: (1) review Plaintiffs financial data and personal information; (2) develop a financial plan of action tailored to his “goals and objectives”; and (3) implement an appropriate plan of action. A key element of Northern’s proposal entailed financial planning for income tax liability and “special strategy ideas relative to any potential liquidity events.” Id. ¶¶ 31-32. Persuaded by the proposal, Plaintiff retained Northern in March 2003. Id. ¶33.

Plaintiff alleges that by mid-2003, Northern and its agents, Mark Harbour (“Harbour”), Michael Niemann (“Niem-ann”) and Tom Hines (“Hines”), had gathered enough information about Plaintiff and other AUI executives that they then decided to perpetrate an illegal tax scam, what Plaintiff terms an “abusive” tax avoidance scheme (“Tax Scheme”). Compl. ¶ 34. Disguised as a legitimate estate planning tax-savings strategy, this Tax Scheme purported to lawfully reduce (if not eliminate) capital gains tax on a participant’s gains, such as Plaintiffs disposition of AUI stock, by artificially inflating the shareholder’s tax basis, thereby diminishing or eliminating any capital gains associated with the stock sale. Id. ¶ 16. Plaintiff avers that Defendants hatched—and then participated in, promoted, marketed and implemented—the Tax Scheme to pocket substantial fees from its participants, including Plaintiff. Id. ¶ 17. By early July 2003, Northern pitched the specifics of the Tax Scheme to Plaintiff and others at AUI, and marketed it as a lawful tax strategy for the disposition of the AUI stock, which supported Plaintiffs estate planning objectives. Id. ¶ 36.

On July 30, 2003, Northern arranged a conference call with Plaintiff to outline the steps of the Tax Scheme, describing it as a legal tax shelter for the contemplated gains realized from his disposition of AUI stock. The proposed tax shelter plan involved a series of loans, unsecured structured notes from alleged co-conspirator European American Investment Bank, AG (“Euram Bank”) and the creation and use of trusts and other devices. Plaintiff alleges that Northern failed to disclose during the call, or ever, that this type of tax shelter was unlawful and would subject him to significant liability for taxes, penalties and interest. Relying upon Northern’s false representations, Plaintiff set up the tax shelter transactions for the purpose of selling his AUI stock and avoiding tax liability. Compl. ¶¶ 37-40.

On July 31, 2003, Plaintiff believes a conference call took place, without him, among agents for Euram Bank, Northern, Taylor, Christiana and others. The purposes of the call were: (1) to advise the conspirators that Plaintiff (as well as other AUI executives) had agreed to proceed with the Tax Scheme; (2) to discuss details on how the transactions would be structured and implemented; and (3) to determine how the parties would introduce one another to Plaintiff (and the other AUI targets) in furtherance of Defendants’ conspiracy. Id. ¶ 42.

On August 7, 2003, Plaintiff believes another conference call took place, again without him, among agents for Euram Bank, Northern, Taylor, Christiana and others. The purpose of this call was to discuss the details of drafting the Euram Bank loan documents, the promissory notes, and the necessary trust documents, all in furtherance of the illegal conspiracy. During the call, Plaintiff believes that Taylor promised to draft the necessary opinion letters to provide the purported legal justification and appearance of “legitimacy” for the fraudulent tax shelter plan. Id. ¶43.

On August 7, 2003, Niemann (one of Northern’s agents) emailed Plaintiff, advising him to retain Taylor, a partner at the Seyfarth law firm. Plaintiff followed this advice. Agents for Northern also convinced Plaintiff to engage Christiana as trustee for the various trusts. As part of the plan, none of the Defendants ever disclosed to Plaintiff the prior relationship that purportedly existed between the various conspirators. Compl. ¶¶ 44-47.

B. Execution of the Tax Shelter Scheme

Defendants then marched Plaintiff through a series of scripted steps to create tax shelters for 2003 and 2004, all in furtherance of the same Tax Scheme. Plaintiff took the first step on August 11, 2003. He obtained a loan from Euram Bank for an amount equivalent to the value of the AUI stock he intended to sell first (approximately $19 million). Per the loan agreement, Plaintiff deposited the loan funds into an account at Euram Bank, and agreed to pay Euram Bank significant fees and interest (London Interbank Offered Rate “LIBOR” plus 40 basis points). Id. ¶¶ 48-49;

On August 25, 2003, Plaintiff took the second step, creating the “Steven Menzies Grantor Retained Remainder Trust” (“Menzies GRRT”). Under the Menzies GRRT, Plaintiff retained the power in a non-fiduciary capacity to reacquire the trust corpus by substituting other property of equal value. Plaintiff also retained a remainder interest in the trust, namely, the assets of the trust remaining upon termination of the trust term. The Menzies GRRT appointed the “Menzies Discretionary Trust” as the “Unitrust” beneficiary of the trust. According to the Menzies GRRT, the Menzies Discretionary Trust was also entitled to receive annual distributions in an amount equal to 1% of the assets of the Menzies GRRT (the “Unitrust Distributions”) for the life of the trust. The Menzies Discretionary Trust was, in turn, obligated to pay the Unitrust Distributions it received from the Menzies GRRT to Plaintiffs mother, as beneficiary of the Menzies Discretionary Trust. Plaintiff held personally the remainder interest in the Menzies Discretionary Trust. Christiana served as the trustee of both the Menzies GRRT and the Menzies Discretionary Trust. Compl. ¶¶ 51-54.

In the third step, the Menzies GRRT opened a bank account at Euram Bank. Plaintiff deposited the proceeds of the $19 million loan from Euram Bank into the Menzies GRRT account at Euram Bank as the initial funding of the Menzies GRRT. Compl. ¶ 55. On August 26, 2003, Christia-na, as trustee of the Menzies GRRT, then “invested” the loan funds deposited in the Menzies GRRT with Euram Bank (the very same party that loaned the funds to Menzies in the first place and who remained in possession of the funds at all times). The “investment” was a promissory note issued by Euram Bank paying interest of three months of LIBOR plus an equity multiplier based on the performance of gold (referred to hereafter as the “Euram Bank Structured Note”). Id. ¶ 56.

On September 24, 2003, in the fourth step, Plaintiff created a second trust named the Persephone Trust for the benefit of the Menzies Discretionary Trust, Christiana once again served as the trustee. Two days later, Plaintiff sold his remainder interest in the Menzies GRRT (which held the note from Euram Bank) to the Persephone Trust valued at approximately $18.9 million, in exchange for a promissory note of equal value from the Persephone Trust to Plaintiff (“Persephone Trust Promissory Note”). At this stage of the transactions, the Persephone Trust owned the remainder interest in the Menzies GRRT (which held the Euram Bank Structured Note), but the Persephone Trust had a note of obligation to Plaintiff in the principal amount of approximately $18.9 million (¿a, equal to the value of the remainder interest in the Menzies GRRT). Although Plaintiff no longer held the remainder interest in the Menzies GRRT, he still had the power to reacquire assets of the Menzies GRRT by substituting other assets of equal value. Under the terms of the Menzies GRRT, Plaintiff had the right to exercise this power in his absolute discretion and in a non-fiduciary capacity. In early October 2003, through various phone calls, Taylor and Harbour assured Plaintiff that this substitution of assets would be a non-taxable event. Compl. ¶¶ 57-59.

On October 10, 2003, in the fifth step, Plaintiff took a fixed number of AUI shares and substituted those shares in exchange for the assets of equivalent value in the Menzies GRRT, namely, the Euram Bank Structured Note. After the substitution of assets, the Menzies GRRT held the AUI stock and Plaintiff held the Eu-ram Structured Promissory Note as a receivable from Euram Bank and virtually identical in value to his payable to Euram Bank (ie,, the loan obligation to Euram Bank arising from Plaintiffs original loan). Later, to satisfy that original obligation on the Euram Bank loan, Plaintiff used the Euram Bank Structured Note as repayment for his personal debt obligation to Euram Bank, and thereby extinguished both the Euram Bank loan and the Euram Bank Structured Note. Compl. ¶¶ 60-62.

At this point, in the sixth step, the Persephone Trust owned the remainder interest in the Menzies GRRT, and the Menzies Discretionary Trust held the “Un-itrust” beneficial interest in the Unitrust Distributions. The Menzies Discretionary Trust then sold the Unitrust interest to the Persephone Trust, which then owned both the Unitrust interest and the remainder interest in the Menzies GRRT. The AUI stock, earlier substituted by Plaintiff, constituted the sole asset of the Menzies GRRT. On February 25, 2004, Plaintiff terminated the Menzies GRRT, The Persephone Trust, as the holder of all the legal and beneficial interest of the trust, thus received the AUI stock upon termination. (Dompl. f 68.

As of February 25, 2004, the first set of financial transactions was complete. The Persephone Trust now held the AUI stock valued at approximately $19 million and, per the Persephone Trust Promissory Note, it owed an obligation to Plaintiff personally for approximately $19 million. Compl. ¶ 64. For ease of reference, the Court will refer to the foregoing portion of the overall Tax Scheme as the 2003 Tax Shelter.

In June 2004, at Defendants’ direction and as part of the same Tax Scheme, Plaintiff performed a substantially identical series of transactions involving the same parties and steps, but this time to set-up the sale of the rest of his AUI stock worth approximately $54 million. Id. ¶¶ 65-66. The Court will refer to this portion of the overall Tax Scheme as the 2004 Tax Shelter.

To provide Plaintiff with additional assurance that the Tax Scheme was legitimate and lawful, and that Plaintiff would later be able to “sell” his stock tax-free, Taylor informed Plaintiff that Seyfarth would provide “independent” opinion letters confirming the propriety of the strategy. Taylor explained that the opinion letters would convince the IRS that the two Tax Shelters were legitimate in the unlikely event that the IRS audited Plaintiff. On September 24, 2004, Seyfarth provided a signed opinion letter for the 2003 Tax Shelter, and, on June 7, 2005, provided a signed opinion letter for the 2004 Tax Shelter. When Seyfarth issued the Opinion Letters, Seyfarth (and other Defendants) allegedly knew that their conclusions were false and misleading. Compl. ¶¶ 71-77. With Seyfarth’s issuance of the Opinion Letters, Defendants completed all necessary transactions in furtherance of the Tax Scheme, and pursuant to the conspiracy, they were all paid substantial fees and expenses from Plaintiff. Id. ¶ 76.

By late 2005, Berkshire Hathaway Inc. (“BHI”) planned to acquire AUI. By early 2006, AUI agreed to sell its shares to BHI. BHI agreed to buy AUI stock from its stockholders in exchange for a cash payment. As part of the deal, BHI agreed to keep senior executives, including Plaintiff, at their positions at AUI. In May 2006, and consistent with the stock purchase agreement between the AUI shareholders and BHI, BHI purchased the AUI stock held by the Persephone Trust for $64,328,160 in cash. Id. ¶¶ 79-82.

Thereafter, the Persephone Trust used the $64,328,160 in proceeds to repay Plaintiff the amounts owed under the promissory notes it had issued to him when it acquired his remainder interest through the Menzies GRRT device. Consequently, when filing his 2006 federal income tax returns in 2007, and relying upon Defendants’ investment and legal advice, Plaintiff did not report the sale of the $64 million in AUI stock to BHI as a taxable event, because the AUI stock was “owned” by the Persephone Trust at the time of sale, and the Persephone Trust had a full tax basis in the AUI stock and thus recognized little or no gain on disposition of the stock. Compl. ¶¶ 83-84.

C. Resolution of the IRS Audit

In October 2009, the IRS advised Plaintiff of its intention to audit his 2006 tax filings. The IRS audit occurred from October 2009 through most of 2012. Near the end of its audit, the IRS focused on BHI’s purchase of the AUI stock from the Persephone Trust. Despite Defendants’ assertions that the Tax Scheme was legitimate, the IRS audit deemed the plan to be an unlawful tax avoidance maneuver, because Plaintiffs transfer of AUI stock to “Grant- or Retained Remainder Interest Trusts (GRRTs) did not represent arm’s length transactions.” Compl. ¶88. As such, the 2006 disposition of AUI stock was actually a “sale” that should have been reported by Plaintiff as a long-term capital gain. Specifically, the IRS found that the transfer and substitution of assets and the various trusts were designed as elements of an abusive tax shelter with “the primary purpose” to disguise the ownership of the stock, inflate Plaintiffs basis, and allow him to evade the 2006 tax liabilities related to the stock sale. Id. ¶ 89. The IRS determined that Plaintiff, not the Persephone Trust, had sold the AUI stock to BHI for $64,828,160; and therefore, the IRS recalculated the basis of the AUI stock as $19,436,324. Upon this basis, the IRS determined that Plaintiff unlawfully failed to report $44,891,836 of capital gains from the sale of his AUI stock. Id. ¶¶ 85-90.

In December 2012, Plaintiff agreed to settle with the IRS and later paid $10,427,201.98, in capital gains taxes, penalties and interest for the disposition of the AUI stock to BHI. Id. ¶¶ 91-92. Thereafter, Plaintiff sued Defendants.

III. Analysis

Because each Defendant has echoed, or even incorporated by reference, the arguments raised by the other Defendants in their motions to dismiss, this Court addresses the motions collectively, and begins with Counts I and II of the Complaint.

A. Counts I and II: Sufficiency of the RICO Allegations

In 1970, Congress enacted the Organized Crime Control Act containing Title IX, otherwise known as “RICO.” 18 U.S.C. §§ 1961-68. Creating enhanced criminal and civil remedies, Congress drafted RICO to address “enterprise criminality,” that is, “patterns” of unlawful conduct, including: (1) acts of violence and terrorism; (2) the provision of illegal goods and services; (3) corruption in labor or management relations; (4) corruption in government; and (5) criminal fraud by, through, or against various types of licit or illicit enterprises. St. Paul Mercury Insurance Co. v. Williamson, 224 F.3d 425, 439 (5th Cir.2000) (summary restatement of RICO’s elements).

As part of RICO’s remedial scheme, a private civil plaintiff may sue under § 1964(c) for a violation of the statute that proximately causes an injury to his business or property. Holmes v. Sec. Inv’r Prot. Corp., 503 U.S. 258, 265-68, 112 S.Ct. 1311, 117 L.Ed.2d 532 (1992). In Counts I and II of his Complaint, Plaintiff alleges both a substantive RICO violation under § 1962(c) and a RICO conspiracy violation under § 1962(d). Compl. ¶¶ 104-36.

Under § 1962(c), RICO makes it unlawful for any “person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt.” 18 U.S.C. § 1962(c). Thus, in order to establish a violation of § 1962(c), Plaintiff must allege: (1) conduct; (2) of an enterprise; (3) through a pattern; (4) of racketeering activity. Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985).

Likewise, because § 1962(d) prohibits any person from conspiring to violate subsections (a), (b) and (c) of § 1962, the overall objective of the RICO conspiracy claim often mirrors the underlying RICO substantive claim. This case is no exception. Hence, as to § 1962(d), Plaintiff must establish that each Defendant joined an agreement to participate in “an endeav- or which, if completed, would satisfy all of the elements” of a substantive violation of RICO, here, the elements of the § 1962(c) offense noted above. Brouwer v. Raffensperger, Hughes & Co., 199 F.3d 961, 964 (7th Cir.2000).

In moving to dismiss Counts I and II, all Defendants attack the Complaint’s allegedly insufficient showings under RICO of: (1) an “enterprise”; (2) “pattern”; (3) “conduct” (otherwise known as the “operation-management” test); and (4) the purported non-existence of a RICO conspiracy generally. They also argue that (5) Plaintiffs RICO claim is precluded by the statutory exception of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). This Court considers each challenge in turn below.

1. Elements of a RICO Enterprise

Under 18 U.S.C. § 1961(4), 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. These examples are illustrative, not exhaustive. See Helvering v. Morgan’s, Inc., 293 U.S. 121, 125 n. 1, 55 S.Ct. 60, 79 L.Ed. 232 (1934) (distinguishing the non-exhaustive statutory term “includes,” which is used in RICO, from its counterpart “means”). The entities comprising a RICO enterprise can also play different roles in the case, including the roles of victim, prize, instrument or perpetrator of the violation. National Organization for Women, Inc. v. Scheidler, 510 U.S. 249, 259 n. 5, 114 S.Ct. 798, 127 L.Ed.2d 99 (1994); see Prof. G. Robert Blakey, The RICO Civil Fraud Action in Context: Reflections on Bennett v. Berg, 58 Notre Dame L. Rev. 237, 307-25 (1982).

Relevant here, for “association-in-fact” enterprises in particular, the Supreme Court defines the term as a “group of persons associated together for a common purpose of engaging in a course of conduct.” United States v. Turkette, 452 U.S. 576, 583, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981). These enterprises, licit or illicit, may be “proved by evidence of an ongoing organization, formal or informal, and by evidence that the various associates function as a continuing unit.” Id. In this regard, Congress has broadly defined the “enterprise” concept to mean any group of persons “whose association, however loose or informal, furnishes a vehicle for the commission” of two or more predicate crimes (or the collection of unlawful debt). United States v. Elliott, 571 F.2d 880, 898 (5th Cir.1978).

Although an “association-in-fact” enterprise must have some ascertainable structure, it need not be “much” more than a bare-bones conspiracy to commit the predicate acts themselves. Boyle v. United States, 556 U.S. 938, 948-49, 129 S.Ct. 2237, 173 L.Ed.2d 1265 (2009) (explaining the “breadth” of RICO’s enterprise concept). In the Boyle case, the Supreme Court outlined the three essential features of an “association-in-fact” enterprise: (1) a purpose; (2) relationships among those associated with the enterprise; and (3) longevity sufficient to permit the associates to pursue the enterprise’s purpose. Id. at 946-48, 129 S.Ct. 2237. The Court then gave examples of how such an enterprise might satisfy this broad structural requirement:

Such a group need not have a hierarchical structure or a “chain of command”; decisions may be made on an ad hoc basis and by any number of methods— by majority vote, consensus, a show of strength, etc. Members of the group need not have fixed roles; different members may perform different roles at different times. The group need not have a name, regular meetings, dues, established rules and regulations, disciplinary procedures, or induction or initiation ceremonies. While the group must function as a continuing unit and remain in existence long enough to pursue a course of conduct, nothing in RICO exempts an enterprise whose associates engage in spurts of activity punctuated by periods of quiescence. Nor is the statute limited to groups whose crimes are sophisticated, diverse, complex, or unique; for example, a group that does nothing but engage in extortion through old-fashioned, unsophisticated, and brutal means may fall squarely within the statute’s reach.

Id. at 948, 129 S.Ct. 2237; see also Jay E. Hayden Foundation v. First Neighbor Bank, N.A., 610 F.3d 382, 388 (7th Cir.2010). Given the flexibility of RICO’s statutory language, a single “association-in-faet” enterprise can even exist when its members and associates constitute opposing factions. United States v. Orena, 32 F.3d 704, 710 (2d Cir.1994) (finding that internal divisions did not undermine the existence of a single “association-in-fact” enterprise under RICO). As with all RICO enterprises, however, the existence of an association-in-fact “enterprise” is a “separate” element from the “pattern” of racketeering activity itself. Turkette, 452 U.S. at 583, 101 S.Ct. 2524 (finding that RICO requires “separate” or distinct elements, even though the proof at trial may “coalesce”); see United States v. Torres, 191 F.3d 799, 805-06 (7th Cir.1999) (general discussion of sufficient RICO “association-in-fact” allegations).

Applying such standards at this preliminary stage of the proceedings, the Complaint here properly alleges a RICO enterprise. The allegations, and the reasonable inferences drawn therefrom, establish both common purposes under RICO and various relationships among those associated with the enterprise. Compl. ¶¶ 104-36. Among such purposes and relationships, the allegations here show that Defendants joined together to enrich themselves and further the common interests of the group as a whole—not just their own, otherwise unrelated self-interests. Compl. ¶¶ 44-47, 104-36. Thus, the alleged interactions among the members of the enterprise here extend beyond those typical of normál commercial relationships. The alleged enterprise also exhibits sufficient longevity (at least 31 months or more) to permit its associates to pursue its purposes. Compl. ¶¶ 44-47, 104-36. No further features or other ascertainable structures beyond those inherent in the predicate activity are required. Boyle, 556 U.S. at 943-49, 129 S.Ct. 2237; St. Paul Mercury Insurance, 224 F.3d at 440-41.

Having considered Defendants’ arguments, this Court’s conclusion about the legal sufficiency of the enterprise allegations remains firm. For example, Defendants’ reliance on the Walgreen case is misplaced. United Food & Commercial Workers Unions & Employers Midwest Health Benefits Fund v. Walgreen Co., 719 F.3d 849 (7th Cir.2013). Like the defendants in Walgreen, which involved a scheme to fraudulently fill prescriptions for generic drugs with differentials in dosage and price from those actually prescribed, Defendants here claim that the alleged interactions among the co-conspirators show only “a commercial relationship” and not that they had “joined together to create a distinct entity” for RICO purposes. Id. at 855-56. This theory does not get Defendants far.

In Walgreen, unlike here, the Seventh Circuit assumed that the complaint had pled the “existence of an association-in-fact enterprise under Boyle,” and only then affirmed dismissal of the complaint because the pled allegations failed to establish that the defendants “were conducting the affairs” of that enterprise, rather than them “own affairs” under the requisite operation-management test. Id. at 854; see Reves v. Ernst & Young, 507 U.S. 170, 185, 113 S.Ct. 1163, 122 L.Ed.2d 525 (1993) (holding that RICO requires compliance with the “operation-management” test). This Court will address the sufficiency of the Complaint under Reves in Section 111(A)(3) below, but, for the purposes of pleading the existence of a RICO enterprise under Rule 12(b)(6), the Complaint passes muster. Unlike Walgreen, Plaintiff here has alleged much more than “parallel uncoordinated fraud” among Defendants. 719 F.3d at 855.

In contrast to Walgreen, a more recent Seventh Circuit decision—Bible—confirms that the allegations here satisfy the “enterprise” pleading requirements. Bible v. United Student Aid Funds, Inc., 799 F.3d 633 (7th Cir.2015). In that ease, the plaintiff brought RICO claims based upon the managing of accounts as part of an unlawful loan rehabilitation process. In doing so, the plaintiff, as here and unlike in Walgreen, alleged facts permitting the “reasonable inference” that the defendants worked as a “single” enterprise. Id. at 655-57. For example, the alleged “economic interdependence” among the enterprise membership in Bible included allegations that the violators referred defaulting loans to one another. Id. The Seventh Circuit thus concluded that the members of the RICO enterprise in Bible did “not operate as completely separate entities” in managing the loan rehabilitation process. Id. The same conclusion must be drawn here.

Like the Seventh Circuit in Bible, this Court can distinguish the allegations here from “run-of-the-mill” commercial activity, because the Complaint establishes a “truly joint enterprise” in which each individual entity acted in concert with the others to “pursue a common interest.” Bible, 799 F.3d at 655-56. Here, Defendants planned and worked in concert, even referring business to one another vital to the fraud. Defendants then performed other services, such as issuing opinion letters and conducting trust activities, all in aid of a single overall scheme that generated sustained profits for the enterprise membership. As in Bible, these allegations, when taken together, show a common purpose, relationships among the entities associated with the enterprise, and longevity sufficient to permit these associates to pursue the enterprise’s purposes. 799 F.3d at 656; see also Crichton v. Golden Rule Insurance Co., 576 F.3d 392, 400 (7th Cir.2009) (distinguishing a normal marketing arrangement among distinct entities from a RICO enterprise); Sykes v. Mel Harris & Associates, LLC, 757 F.Supp.2d 413, 426-27 (S.D.N.Y.2010) (finding that the complaint alleged a plausible RICO enterprise comprising of a debt-buying company, debt collection agency, process service company and others).

Defendants fare no better by citing Guaranteed Rate, Inc. v. Barr, 912 F.Supp.2d 671 (N.D.Ill.2012). In that case, the court found no “common purpose” in the allegations to establish any enterprise relationships among the violators as required by Boyle, nor any “conduct” that otherwise satisfied the Reves test. Guaranteed Rate, 912 F.Supp.2d at 686-89. Indeed, Defendants here misread Guaranteed Rate to argue that RICO requires the enterprise members to share the profits of their illegal scheme. There is no such requirement. Although sharing profits (or otherwise comingling illicit proceeds) might show a “common purpose” under RICO, the law after Boyle is clear that such allegations are merely relevant and possibly sufficient—but in no event necessary—for liability. This Court rejects Defendants’ efforts to extend Guaranteed Rate, and declines to create a new and unfounded “profit-sharing” test for establishing membership within a RICO enterprise.

2. Elements of a RICO Pattern

For substantive violations, a RICO “pattern” under § 1961(5) requires the commission of at least two acts of “predicate” activity enumerated in § 1961(1) that occur within ten years of each other (excluding any period of imprisonment), with at least one act occurring after the enactment of RICO itself on October 15, 1970. 18 U.S.C. §§ 1961(1) and (5).

In H.J. Incorporated v. Northwestern Bell Telephone Company, the Supreme Court set forth the process for determining what conduct meets this “pattern” requirement under RICO. H.J., 492 U.S. 229, 236-50, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989). The Court began with the proposition that proof of two acts of racketeering activity, without more, does not establish a pattern. Instead, the Court found that the “pattern” element requires a showing of continuity plus relationship. H.J., 492 U.S. at 237-39, 109 S.Ct. 2893 (pattern reflects relation and continuity (or its threat)). Although these two constituents of a RICO offense are discussed separately for analytic purposes, their proof often will overlap in practice. Id. at 239, 109 S.Ct. 2893.

In its analysis in H.J., the Supreme Court developed a six-step process for determining if a “pattern” is present within the meaning of RICO. To determine whether the goals of relationship and continuity are met, up to six questions must be asked. The first two questions are:

1. Are the acts in a series (at least two) related to one another, for example, are they part of a single scheme?

2. If not, are they related to an external organizing principle, for example, to the affairs of the enterprise?

H.J., 492 U.S. at 238, 109 S.Ct. 2893; see also Elliott, 571 F.2d at 899; United States v. Sinito, 723 F.2d 1250, 1261 (6th Cir.1983). When analyzing a RICO pattern, a broad range of criminal conduct can exhibit relationship, including unlawful acts that have the same or similar purposes, results, participants, victims or methods of commission, or acts that are otherwise interrelated by distinguishing characteristics. In this way, RICO’s pattern element can be shown with either a “horizontal” relationship between the predicate acts themselves or a “vertical” relationship of the predicate acts to the RICO enterprise itself. If both of the above questions are answered in the negative, no relationship is present and this Court need not proceed further.

If either question is answered “yes,” however, relationship is present and the following additional questions must be asked:

3. Are the acts in the series open-ended, that is, do the acts have no obvious termination point?

4. If not, did the acts in the closed-ended series go on for a substantial period of time, that is, more than a few weeks or months?

H.J., 492 U.S. at 241-43, 109 S.Ct. 2893. Generally, if either question is answered in the affirmative, continuity is present.

If both questions are answered in the negative, however, up to two additional questions must be asked:

5. May a threat of continuity be inferred from the character of the illegal enterprise?

6. If not, may a threat of continuity be inferred because the acts represent the regular way of doing business of a lawful enterprise?

H.J., 492 U.S. at 242-43, 109 S.Ct. 2893; Torres, 191 F.3d at 808. If either question is answered in the affirmative, a threat of continuity is present.

As to a “threat” of continuity (Questions 5 and 6), the Seventh Circuit in Toms emphasized that, as “other courts of appeal have noted, in cases where the acts of the defendant or the enterprise were inherently unlawful” or “were in pursuit of inherently unlawful goals,” then courts generally have “concluded that the requisite threat of continuity was adequately established by the nature of the activity, even though the period spanned by the racketeering activity was short.” 191 F.3d at 808 (internal quotations omitted). As such, the continuity requirement may be satisfied by showing past conduct which “by its nature projects into the future” with a “threat” of repetition. Midwest Grinding Co., Inc. v. Spitz, 976 F.2d 1016, 1023 (7th Cir.1992) (internal quotations omitted); see also Shields Enterprises, Inc. v. First Chicago Corp., 975 F.2d 1290,1296-97 (7th Cir.1992) (finding that a threat of continuity may be shown by establishing that the conduct is a “regular way” of doing business) (internal quotations omitted); United States v. Aulicino, 44 F.3d 1102, 1112 (2d Cir.1995) (observing that continuity is assessed prospectively and not from hindsight, after the pattern ends).

When assessing a RICO pattern as a whole, the Seventh Circuit includes among the relevant factors “the number and variety of predicate acts and the length of time over which they were committed, the number of victims, and the presence of separate schemes and the occurrence of distinct injuries.” Morgan v. Bank of Waukegan, 804 F.2d 970, 975 (7th Cir.1986). In Morgan, however, the court also cautioned that “the mere fact that the predicate acts relate to the same overall scheme or involve the same victim does not mean that the acts automatically fail to satisfy the pattern requirement” because the pattern requirement is “a standard, not a rule.” Id. at 975-76. Thus, the determination “depends on the facts and circumstances of the particular ease, with no one factor being necessarily determinative.” Id. at 976. Elements of the RICO violation beyond the racketeering activity itself also may be considered in assessing relatedness and continuity.

In the end, this Court must evaluate all the allegations with the goal of “achieving a natural and commonsense result, consistent with Congress’ concern with long-term criminal conduct.” Roger Whitmore’s Automotive Services, Inc. v. Lake County, Illinois, 424 F.3d 659, 673 (7th Cir.2005) (internal quotations omitted); see also 120 East Ohio Ltd. Partnership v. Cocose, 980 F.2d 1122, 1124 (7th Cir.1992) (finding that the Seventh Circuit still examines the Morgan factors posts'./. when assessing continuity “with an eye towards achieving a natural and common sense result”) (internal quotations omitted).

a) Pattern Allegations Are Not Strictly Construed

Here, Defendants claim the Complaint fails to allege a proper RICO pattern. Defendants begin this challenge by misreading the holding of Midwest Grinding for the proposition that the federal courts must strictly construe the pleading requirements for civil RICO in order to prevent it from supposedly becoming a federal surrogate for “garden-variety fraud actions properly brought under state law.” 976 F.2d at 1019, 1022.

No strict-construction rule, however, exists for RICO cases in general or for civil RICO in particular.' The Seventh Circuit applies “ordinary civil standards to pleadings' in civil RICO cases” and sees “no reason to depart from that practice.” Haroco, 747 F.2d at 404. Nor could any such judicially-created rule for civil RICO cases be reconciled with the Supreme Court’s admonition to read the statute’s provisions the same way in both a criminal or civil context. Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 239, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987) (“a pattern for civil purposes is a pattern for criminal purposes”) (internal quotations omitted); Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 489, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985) (same). Nor could any special “strict construction” rule withstand Congress’ mandate to “liberally” construe the statute in light of its broad remedial purposes. Pub. L. No. 91-452, § 904(a), 84 Stat. 947; Sedima, 473 U.S. at 497-98, 105 S.Ct. 3275. As the Supreme Court has repeatedly warned, such narrow distortions of RICO must be rejected based upon the “self-consciously expansive language and overall approach” of Congress in enacting RICO. Sedima, 473 U.S. at 497-98, 105 S.Ct. 3275 (citing Turkette, 452 U.S. at 586-87, 101 S.Ct. 2524 and Russello v. United States, 464 U.S. 16, 26-29, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983)); see also H.J., 492 U.S. at 236-50, 109 S.Ct. 2893.

Instead, when read properly, Midwest Grinding and its precedents merely require what RICO already requires, namely, a showing of pattern that can satisfy the well-settled “continuity plus relationship” test. H.J., 492 U.S. at 237, 109 S.Ct. 2893; Jennings v. Auto Meter Products, Inc., 495 F.3d 466, 473 (7th Cir.2007). To the degree “garden-variety” fraud in the marketplace otherwise meets the well-settled elements of a RICO claim, Congress intended the RICO statute to address such fraud and “weed” it out of the garden,

b) Plaintiffs Pattern Allegations Lack Continuity

As to the pattern requirement, Defendants next attack Plaintiffs continuity showing. Here, the Complaint alleges a closed-ended pattern involving multiple acts of mail and wire fraud in violation of 18 U.S.C. §§ 1341 and 1343 in furtherance of the overall scheme to defraud, and all within the affairs of the alleged RICO enterprise. Compl. ¶¶ 1-136; [41] at 5 (Plaintiff concedes he has alleged a “closed-ended” pattern). When, as here, mail and wire fraud form the alleged pattern, each requisite element of the underlying predicate activity must be set forth with the particularity and specificity required by Rule 9(b). Slaney, 244 F.3d at 599. At a minimum, this requires Plaintiff to show: (1) a scheme to defraud; (2) the intent to defraud; and (3) the use of the mails or wire communications in furtherance of the scheme to defraud. See Corley v. Rosewood Care Center, Inc. of Peoria, 388 F.3d 990, 1005 (7th Cir.2004); Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639, 656, 128 S.Ct. 2131, 170 L.Ed.2d 1012 (2008) (finding that civil RICO plaintiffs need not show reliance on any misrepresentation to establish proximate causation).

Given the numerous predicate acts and their duration over 31 months, the allegations here initially seem to present a sufficient pattern but, upon further inspection, the Complaint ultimately fails to make a proper showing. U.S. Textiles, Inc. v. Anheuser-Busch Cos., Inc., 911 F.2d 1261, 1267-68 (7th Cir.1990); Sutherland v. O’Malley, 882 F.2d 1196, 1205 n. 8 (7th Cir.1989). Specifically, Counts I and II of the Complaint, even when considered as a whole, do not allow this Court to draw the reasonable inference that Defendants can be found liable under RICO, because the showing of continuity remains insufficient.

(1) Plaintiff’s Pattern Allegations Lack Closed-Ended Continuity

First, Plaintiff makes a weak showing of “closed-ended” continuity, because the predicate acts all occurred in furtherance of a single scheme to defraud a single victim, whose injuries all stem from a single tax planning product. Lacking any variety in the nature of the underlying criminal offenses, the predicate activity here involves only two substantive crimes (wire fraud and mail fraud) in the execution of a single tax avoidance plan for the disposition of a single person’s ownership of stock. Although Defendants staged the complex tax plan over time, the totality of the circumstances alleged here still constitutes “one dishonest undertaking” for pattern purposes. U.S. Textiles, 911 F.2d at 1267-69.

This case tracks U.S. Textiles. There, the alleged RICO violators (Anheuser-Busch and others) extorted a discounted sales contract from a t-shirt manufacturing company and then, over an approximately two-year span, engaged in various acts of mail and wire fraud as orders and shipments were made under the contract. U.S. Textiles, 911 F.2d at 1264. Although the number-of-victims factor “cannot be dis-positive of any ‘pattern’ determination,” the Seventh Circuit still found “highly significant” the presence of only a single victim with no apparent threat of repetition. Id. at 1268-69; Uniroyal Goodrich Tire Co. v. Mutual Trading Corp., 63 F.3d 516, 523 (7th Cir.1995) (finding that the existence of a single victim remains a relevant factor even though it does not, by itself, preclude the existence of a pattern of racketeering activity). As here, the allegations in U.S. Textiles gave “no indication that this is a type of activity” in which the defendant “normally engages or, indeed, that there are other potential Busch victims waiting in the wings.” 911 F.2d at 1268-69. The Seventh Circuit thus found the alleged pattern insufficient.

Although the existence of a single “dishonest undertaking” (even one directed against a single victim incurring ostensibly non-distinct injuries) is not necessarily a determinative factor, the entirety of Plaintiffs allegations here put the existence of RICO continuity in doubt. In this case, like U.S. Textiles, despite the “pure happenstance” that the predicate acts included a significant “raw number of transactions” over a substantial length of time, which at “first glance” would seem to otherwise mandate a finding of pattern, Plaintiff alleges a single victim (himself) whose injuries all flowed from a single scheme. 911 F.2d at 1268-69. Without more (and there is nothing more here), these allegations fail to establish a sufficient showing of closed-ended continuity. This is especially true in the absence of any showing of a potential threat of continuity, as explained further in Section 111(A)(2)(d) below.

Contrary to Plaintiffs assertions, the mere “multiplicity” of mailings or wire communications does not automatically translate into a pattern of racketeering activity; and although a RICO pattern may be established on the basis of a single scheme, “it is not irrelevant, in analyzing the continuity requirement, that there is only one scheme” as the allegations here show. Sutherland v. O’Malley, 882 F.2d 1196, 1204-05, 1205 n. 8 (7th Cir.1989). The complexity of the transaction itself sometimes creates the potential for a greater number of possible fraudulent acts, but the sheer number of mail or wire fraud acts alone does not, by itself, establish the requisite threat of continued criminal activity. Lipin Enterprises Inc. v. Lee, 803 F.2d 322, 324 (7th Cir.1986); see also Midwest Grinding, 976 F.2d at 1024-25 (finding that, given the nature of the scheme, the mere multiplicity of mail and wire fraud acts by itself “may be no indication of the requisite continuity of the underlying fraudulent activity”) (internal quotations omitted); Jennings, 495 F.3d at 475 (same); Vicom, 20 F.3d at 781 (same).

That the alleged pattern occurred over a lengthy period of time does not alter this Court’s conclusion regarding RICO continuity. Although the Seventh Circuit does not employ any bright-line rule for how long a closed period must be to satisfy continuity, this Court does not hesitate to find that, in appropriate cases like this one, “closed periods of several months to several years” will sometimes fail to qualify as “substantial” enough to satisfy RICO’s continuity requirement. Roger Whitmore’s Automotive Services, 424 F.3d at 672-73 (affirming summary judgment and dismissing the plaintiffs’ RICO claim because of a lack of continuity, even though the defendants’ predicate activity lasted for approximately two years). As in Rogers Whitmore’s Automotive Services, the “natural and commonsense” result here is to find a lack of continuity.

(2) Plaintiff’s Pattern Allegations Lack Threat of Continuity

Second, the current allegations present no showing of any “threat” of continuity because the Complaint sets forth a single victim with a “clear and terminable” goal. Vicom, 20 F.3d at 782. In this way, the Complaint creates a “natural ending point” for the alleged pattern of criminal activity that dispels any “threat” of repetition. Id. In fact, the Complaint here states that, by June 7, 2005, Defendants “completed all necessary transactions in furtherance of the Tax Shelters, and pursuant to the Defendants’ Conspiracy were paid substantial fees and expenses from Menzies.” Compl. ¶76. On the Complaint’s own terms, the alleged pattern does not project into the future in any way, either from the character of the enterprise, or from the regular manner in which the enterprise allegedly did business. Compl. ¶¶ 104-36.

In these respects (and more), this case follows the Seventh Circuit’s findings in Olive Can Co., Inc. v. Martin, 906 F.2d 1147, 1150 (7th Cir.1990). In Olive Can, the defendants set up a sham corporation to divert money from their own failing cookie manufacturing business. They concealed the corporation’s existence from the plaintiffs, who had provided defendants with supplies on credit. The district court found that the scam lacked sufficient RICO continuity, because the entire scheme to pay off one of the defendants’ personal obligations possessed a clear and natural ending point with no threat of ongoing criminal activity. The Seventh Circuit agreed, affirming the dismissal of the RICO counts. Id. at 1151-52. The Complaint here warrants a similar finding.

Plaintiff claims that he is “not yet privy” to the underlying facts as to how broadly Defendants “marketed” the tax shelter at issue, but avers that “discovery will likely reveal” whether Defendants promoted the scheme to others, thus suggesting the existence of a potential threat of ongoing criminal activity. [42] at 10; [41] at 14. Counsel for Plaintiff reiterated this theory at the hearing on the motions to dismiss, suggesting that discovery might uncover other sales by Defendants of the purportedly abusive tax plan to other victims. Transcript of Proceedings of 1/28/16 [52]. Nevertheless, no details of any such sales or victims appear in either Count I or II the Complaint, and no such facts have otherwise arisen during discovery due to the parties’ joint request to stay discovery pending resolution of the present motions. See Order issued 6/24/15 [40] (granting the parties’ joint request to stay).

Falling short of the requirements of Rules 9(b) and 12(b)(6), the Complaint merely states that:

Defendants, comprising of lawyers, bankers, and financial planners, conspired to develop, market and promote to, among others, Menzies, an abusive tax avoidance scheme—disguised as a tax savings plan that would lawfully shield capital gains from the sale of his AUI stock from tax liability.

Compl. ¶ 1 (emphasis added). Similarly, the Complaint elsewhere makes references to unnamed “others” and “participants,” noting, for example, that Defendants disguised their abusive tax scheme as a legitimate tax plan to purportedly reduce “capital gains tax on a participant’s, such as Menzies, disposition of stock.” Compl. ¶¶ 16, 20, 28-30, 34-36, 42, 112-113 and 126 (examples of Plaintiff’s vague references to “participants” or “others”). Yet, the Complaint never states when, why, how, or even if, such “other” unnamed participants were actually defrauded, nor how they might have suffered any economic injury or might otherwise be connected at all to the alleged RICO violations. To be sure, Plaintiff does reference Taylor’s 2008 conviction for tax fraud, and Senate hearings about Euram Bank’s purportedly abusive tax shelters. But Plaintiff then fails to identify any other victims or otherwise connect these two facts to the RICO counts in this case. Compl. ¶¶7, 26. To survive a motion to dismiss, Rules 9(b) and 12(b)(6) require more than mere allusions about the prospect of other fraud victims.

In sum, by setting forth a single scheme to defraud only Plaintiff, the Complaint here fails to establish any threat of continuity. Compl. ¶¶ 104-36. As alleged in Paragraph 109 of the-Complaint, Defendants’ course of conduct “operated as a fraud upon Menzies”—not anyone else. See also U.S. Textiles, 911 F.2d at 1269 (allegations fail to indicate other potential victims are “waiting in the wings”),

c) Plaintiffs Pattern Allegations Must Be Dismissed

Because Plaintiff failed to make a proper showing of continuity or its threat, the RICO counts are dismissed without prejudice. This Court nonetheless gives Plaintiff leave to file an Amended Complaint re-alleging Counts I and II, provided he can do so consistent with his obligations under Federal Rule of Civil Procedure 11. Because mail and wire fraud presumably will still form the basis of Plaintiff’s alleged pattern of predicate activity, this Court will later address whether any Amended Complaint sets forth each requisite element of mail or wire fraud with the specificity required by Rule 9(b). Slaney, 244 F.3d at 599. Although any Amended Complaint need only provide a general outline of the unlawful scheme, it “must, at minimum, describe the predicate acts with some specificity and state the time, place, and content of the alleged communications perpetrating the fraud.” Midwest Grinding, 976 F.2d at 1020 (internal quotations omitted).

In its analysis, this Court will also review any Amended Complaint to ascertain whether Plaintiff has alleged the existence of other victims, or the manner in which he or others suffered distinct injuries resulting from Defendants’ alleged scheme. Liquid Air Corp. v. Rogers, 834 F.2d 1297, 1300-05 (7th Cir.1987) (repeated infliction of separate economic injuries upon a single victim of a single scheme over seven months was sufficient to establish a pattern of racketeering activity for purposes of civil RICO); Corley v. Rosewood Care Center, Inc. of Peoria, 142 F.3d 1041, 1048-49 (7th Cir.1998) (finding a 14-month closed-ended pattern sufficient based in part upon the presence of other victims); Gagan v. American Cablevision, Inc., 77 F,3d 951, 962-64 (7th Cir.1996) (RICO jury verdict upheld and pattern found sufficient, in part, due to the presence of “separate and distinct injuries”) (internal quotations omitted). But as currently pled, the RICO counts cannot survive Defendants’ motions to dismiss.

3. Elements of RICO Conduct: The “Operation-Management” Test

In Reves, the Supreme Court resolved a circuit split, holding that for a substantive violation under § 1962(e), the phrase “conduct or participate” requires “some part in directing those affairs” through “operation or management.” Reves, 507 U.S. at 177-86, 113 S.Ct. 1163. In other words, a person conducts or participates in the conduct of the affairs of an enterprise only if that person uses his position in, or association with, the enterprise to perform acts which are involved in some way in the operation or management of the enterprise, directly or indirectly, or if the person causes another to do so. To be associated with an enterprise, a person must be involved with the enterprise in a way that is related to its affairs or common purpose, although the person need not have a stake in the goals of the enterprise and may even act in a way that subverts those goals. A person may be associated with an enterprise without being so throughout its existence. The Reves “operation-management” test, as it has become known, is deployed to include and exclude certain RICO defendants.

In a conspiracy case like this one, the law adjusts the Reves concept. Specifically, a RICO conspiracy does not require violators to meet the “operation or management” test themselves, but instead a conspiracy defendant must “knowingly agree to perform services of a kind which facilitate” the activities of those who are operating or managing the RICO enterprise. Brouwer v. Raffensperger, Hughes & Co., 199 F.3d 961, 967 (7th Cir.2000); see also United States v. Quintanilla, 2 F.3d 1469, 1485 (7th Cir.1993) (Reves does not “address the principles of conspiracy law undergirding § 1962(d)”); Goren v. New Vision International, Inc., 156 F.3d 721, 731 (7th Cir.1998) (“a defendant can be charged under § 1962(d) even if he cannot be characterized as an operator or manager of a RICO enterprise under Reves”).

Thus, Defendants here cannot be held liable for RICO violations unless they exercised some direction over the named enterprise or helped to operate it, or otherwise conspired knowingly to facilitate the activities of anyone who was a manager or operator of the enterprise. United States v. Cummings, 395 F.3d 392, 397-98 (7th Cir.2005).

For purposes of the motions to dismiss, the Complaint satisfies the Reves test. As either a principal offender or as an aider and abettor, each Defendant personally operated, or otherwise exerted control over, the affairs of the enterprise. This participation included the planning and commission of the predicate activity and the active concealment of their prior relationships as part of the fraudulent scheme as a whole. Compl. ¶¶ 44-47, 104-36. By way of example, this alleged conduct includes: (1) luring Plaintiff into the bogus tax shelter plan; (2) referring business to other violators by convincing Plaintiff to hire co-conspirators; (3) participating in various telephone conversations (without Plaintiff) to plan the scheme; (4) structuring the legal instrumentalities of the scheme; (5) defrauding Plaintiff and supporting the appearance of legitimacy of the scheme with false statements and opinion letters; and (6) otherwise controlling the instrumentalities of the scam through active service as a trustee for the relevant assets and legal instrumentalities used to injure Plaintiff. Compl. ¶¶ 104-36. These allegations suffice, because the class of potential RICO violators entails, of course, not only “upper management” but also “lower-rung participants in the enterprise who are under the direction of upper management,” or “others associated with the enterprise who exert control” over its affairs. MCM Partners, Inc. v. Andrews-Bartlett & Associates, Inc., 62 F.3d 967, 977 (7th Cir.1995) (citing Reves) (internal quotations omitted).

Unlike Crichton, 576 F.3d at 399, and Goren, 156 F.3d at 727-28, which Defendants cite, each of the alleged violators in this case did far more than just perform otherwise “legitimate” services. Therefore, Defendants’ alleged conduct consti