District Court (Va.) Allows Student Loan Servicer’s RICO (and other) Claims Proceed Alleging Efforts by the Defendants to Manufacture TCPA litigation and Arbitration Claims

Lastly, defendants argue that even if their first eight arguments are unpersuasive, plaintiff has still failed to state a RICO claim upon which relief can be granted. “The Supreme Court has explained that a civil RICO claim [under 18 U.S.C. § 1962(c)] has four essential elements: (1) conduct; (2) of an enterprise; (3) through a pattern; (4) of racketeering activity.” Whitney, Bradley & Brown, Inc. v. Kammermann, 436 F. App’x 257, 258 (4th Cir. 2011). Defendants specifically argue that plaintiff has not alleged engagement in a pattern of racketeering activity or the existence of an enterprise. Neither argument is persuasive.  With regard to engagement in a pattern of racketeering activity, “[t]o prove a pattern of [*23]  racketeering activity, the evidence must show that the racketeering predicates are related, and that they amount to or pose a threat of continued [racketeering] activity.” United States v. Pinson, 860 F.3d 152, 161 (4th Cir. 2017). “Racketeering acts are related if they have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events.” Id. “To constitute or threaten continued [racketeering] activity, racketeering acts may either be close-ended, i.e., a closed period of repeated conduct, or open-ended, i.e., naturally projecting into the future with a threat of repetition.” Id.  Here, plaintiff has plainly alleged that defendants engaged in a pattern of mail and wire fraud whereby they, directly or through their affiliate marketing companies, recruited student loan debtors into the scheme by making false statements as to the scope, efficacy, and risk entailed in the debt-relief program they purported to offer. See, e.g., Compl. ¶¶ 305, 325. These alleged acts were related in that they had the same or very similar purposes, results, participants, victims, and methods of commission. See, e.g., id. ¶¶ 2-10. The Complaint also alleges that these acts were open-ended in that defendants “continue to market and profit from the [s]cheme” to this day. Id. ¶ 134. With regard to the existence of an enterprise, “a RICO enterprise is a group of persons associated together for a common purpose of engaging in a course of conduct.” Pinson, 860 F.3d at 161. “It includes not only legal entities but also any union or group of individuals associated in fact.” id. “An association-in-fact enterprise must have at least three structural features: a purpose, relationships among those associated with the enterprise, and longevity sufficient to permit these associates to pursue their enterprise’s purpose.” Id. The Complaint has plainly alleged the existence of an association-in-fact enterprise of which defendants were a part by describing that the purpose of the scheme was to defraud plaintiff through manufactured TCPA litigation and arbitration claims, that defendants were part of the marketing arm of the scheme, as opposed to the legal arm, and that the scheme has been ongoing since at least 2015. See, e.g., Compl. ¶¶ 4, 58-59, 134. Although defendants portray themselves as “outsiders to the enterprise,” that claim does not appear to be correct, at [*25]  least as the enterprise has been alleged. Defendants’ Brief in Support at 25. Defendants’ only arguments to the contrary merely reiterate their view that plaintiff has impermissibly used both “information and belief pleading as well as group pleading throughout the Complaint. As previously discussed, those arguments are without merit. The Complaint has adequately alleged claims upon which relief can be granted. Defendants’ concern about the lack of evidence of their involvement in the scheme can be addressed after discovery has been completed.