Virendra Rajput, et al. v. City Trading, LLC, et al.

FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
APRIL 17, 2012
JOHN LEY
CLERK
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 10-15405
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D. C. Docket No. 1:10-cv-21654-JLK
VIRENDRA RAJPUT,
a.k.a. Vedant Rajput,
MANSINGH RAJPUT,
Plaintiffs-Appellants,
versus
CITY TRADING, LLC,
a Florida company,
CHAND REALTY, LLC,
a Florida company, et al.
Defendants-Appellees.
_________________________________________
Appeal from the United States District Court
for the Southern District of Florida
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(April 17, 2012)
Before EDMONDSON, BARKETT, and SUHRHEINRICH, Circuit Judges.*
Honorable Richard F. Suhrheinrich, United States Circuit Judge for the Sixth Circuit*
sitting by designation.

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PER CURIAM:
This case involves an alleged investment fraud committed in India.
Racketeer Influenced and Corrupt Organizations Act (“RICO”) claims and an
unjust enrichment claim against a U.S.-based affiliate of the alleged fraudsters are
involved.
Plaintiffs invested in Indian businesses promising extraordinarily high rates
of return. But in the end, Plaintiffs were left with less money than they had
originally invested. Plaintiffs then filed this suit against the U.S.-based affiliate of
the Indian companies. Plaintiffs alleged that the affiliate U.S. business committed
RICO violations as part of a scheme to launder funds obtained through the
supposed Indian fraud. The district court granted Defendants’ motion to dismiss.
We vacate the District Court’s decision and remand the case.
BACKGROUND
Plaintiffs Virendra Rajput -- a/k/a Vedant Rajput -- and Mansingh Rajput
each invested significant sums of money with certain companies within an
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interrelated network of firms -- mainly based in India and closely connected to the
Masood family -- called City Group. This investment required a large up-front
investment with the promise of significant investment appreciation accomplished
through monthly payments back to shareholders over the course of several years.
Within only a few years though, the payments to investors faltered; and neither
Rajput received even their initial investment back. Plaintiffs contend that the
Masood family kept the invested funds for themselves, that they never intended to
pay out the promised returns, and that the entire scheme was a fraud.
Plaintiffs do not allege that Defendants in this case were involved in the
investment phase of the alleged fraud. Instead, Plaintiffs contend the Defendants
committed RICO violations as part of a scheme to launder the funds obtained in
the alleged fraud. Broadly speaking, Plaintiffs allege that Defendant Chand
Masood moved to Florida to found Chand Realty LLC and to establish City
Trading, LLC (“City Trading”) as the U.S.-based arm of City Group. Plaintiffs
allege these U.S. companies had no legitimate customers and instead engaged in
sham dealings involving rugs, diamonds, and real estate to launder money that
City Group obtained through its fraud in India.
To support their claims, Plaintiffs spent much of their complaint explaining
a system of money laundering that involved fake purchases of diamonds by City
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Group in India, the funneling of cash obtained through the alleged investment
fraud to “hawala person” intermediaries, and the use of this cash by the hawala
intermediaries to make fake purchases of the non-existent diamonds from different
City Group companies. Plaintiffs allege that City Trading participated in these
sham transactions and that, in doing so, aided in laundering the fraudulently
obtained investment money in furtherance of the Indian fraud.
Beyond explaining City Trading’s role, Plaintiffs also offered specifics to
connect City Trading to the alleged diamond transactions and the Indian fraud.
Plaintiffs claim to have interviewed certain diamond dealers who admitted to
faking diamond transactions with City Group. Plaintiffs also attached allegedly
fake diamond invoices from one of the Indian City Group companies, a
spreadsheet allegedly obtained from City Group that listed City Trading in the
“Remitting info” column for diamond purchases, and bank correspondence that
raised concerns with the remittance arrangement for certain diamond transactions
involving City Trading. In addition to these specifics relating to diamond
transactions, Plaintiffs also included documentation showing financing
transactions that occurred between City Trading and certain Indian City Group
companies before the Plaintiffs’ investments.
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While Plaintiffs’ pleadings showed potential connections between City
Trading, diamond transactions with City Group in India, and potential money
laundering, no fact alleged established directly an irrefutable connection between
City Trading and the Indian investment fraud. Based on what the district court
saw as absence of a connection between City Trading and the Indian fraud, the
district court concluded that the RICO claims and unjust enrichment claim failed
and that Defendants’ motion for dismissal must be granted.
STANDARD OF REVIEW
We review a district court’s dismissal of a case pursuant to Federal Rule of
Civil Procedure 12(b)(6) de novo. Catron v. City of St. Petersburg, 658 F.3d 1260,
1264 (11th Cir. 2011).
A “complaint must contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 129 S.Ct.
1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1974
(2007)). To state a plausible claim for relief, Plaintiffs must go beyond merely
pleading the “sheer possibility” of unlawful activity by a defendant and so must
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offer “factual content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.” Id.
DISCUSSION
Plaintiffs’ complaint asserts claims under three sections of RICO --
substantive violations of 18 U.S.C. §§ 1962(a) and 1962(c) and a conspiracy claim
under 18 U.S.C. § 1962(d) -- as well as an unjust enrichment claim. Section
1962(a) prohibits the use or investment of funds derived “from a pattern of
racketeering activity,” and section 1962(c) prohibits persons employed by an
enterprise from conducting the enterprise’s business “through a pattern of
racketeering activity.” Section 1962(d) makes it unlawful to conspire to violate
the other provisions of section 1962.
RICO CLAIMS
To prove a pattern of racketeering in a civil RICO case, a plaintiff must
show at least two related racketeering predicates that amount to continued criminal
activity over time or pose a threat of continued criminal activity. Am. Dental
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Ass’n. v. Cigna Corp., 605 F.3d 1283, 1290-91 (11th Cir. 2010). To establish a
RICO conspiracy, a plaintiff must show either agreement with the objective of the
conspiracy or agreement to commit two racketeering predicates. Direct evidence
of agreement is not necessary as “the existence of conspiracy may be inferred from
the conduct of the participants.” Id. at 1293 (internal quotation omitted).
Plaintiffs pleaded multiple racketeering predicates, including (1) money
laundering in violation of 18 U.S.C. § 1956; (2) transportation of money obtained
by conversion or fraud in violation of 18 U.S.C. § 2314; (3) sale or receipt of
money obtained by conversion or fraud in violation of 18 U.S.C. § 2315; (4)
engaging in monetary transactions in property derived from specified unlawful
activity in violation of 18 U.S.C. § 1957. The underlying fraud for purposes of
these acts was the alleged Indian investment fraud committed by certain City
Group companies. The specifics presented with Plaintiffs’ pleadings sufficiently
connect Defendants to the alleged Indian fraud to qualify as factual content that
allows the district court to draw the reasonable inference that Defendants
committed the alleged RICO violations and engaged in a RICO conspiracy.
UNJUST ENRICHMENT CLAIM
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To state a claim for unjust enrichment, a plaintiff must sufficiently plead (1)
that the plaintiff conferred a benefit on the defendant; (2) that the defendant had
knowledge of the benefit; (3) that the defendant accepted or retained the benefit
conferred; and (4) that the circumstances are such that allowing the defendant to
retain the conferred benefit without paying fair value would be inequitable.
Golden v. Woodward, 15 So. 3d 664, 670 (Fla. Dist. Ct. App. 2009). The
specifics presented with Plaintiffs’ pleadings connect the Defendants to the
alleged Indian fraud enough to support a claim of unjust enrichment based on
Defendants’ control of funds illicitly gained through the fraud and prevent
dismissal of the claim.
Plaintiffs’ pleadings include sufficient factual content to allow the drawing
of a reasonable inference that the defendants are liable for the misconduct alleged
and to state properly a claim to relief that is plausible on its face. We therefore
VACATE the district court’s dismissal and REMAND for further proceedings.
VACATED and REMANDED.
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