The opinion of the court was delivered by: SWEET
ROBERT W. SWEET, U.S.D.J.
Defendant Alan Kaplan ("Kaplan"), joined by defendants Robert C. Wurdeman and Robert C. Wurdeman, Inc. (collectively "Wurdeman"), has moved under Rule 12(c), Fed.R.Civ.P., for judgment on the pleadings, alleging the inadequacy of the complaint of plaintiff The Philatelic Foundation (the "Foundation") with respect to its allegations of "pattern of racketeering activities" as required by 18 U.S.C. § 1962(a), (b), (c), the Racketeer Influenced Corrupt Organizations Act ("RICO"). For the reasons stated below the motion is granted, and judgment will be entered dismissing the RICO claims.
Most relevant to this decision is the denial of Mildred Wurdeman's similar motion on May 9, 1986 in a memorandum opinion which concluded that her acts constituted "racketeering activity" under RICO. That conclusion is now reversed and is no longer the law of this case.
No change has occurred with respect to the factual allegations since May and the earlier statement of the facts applies equally here.
By leave of this court the Foundation filed the First Amended Complaint ("complaint") on February 21, 1986. The complaint alleges violations of RICO and New York common law and prays for monetary damages and injunctive relief. A summary of the factual allegations follows.
The primary function of the Foundation is to issue opinions regarding the authenticity of stamps and other philatelic items in the form of a certificate. When a collector, dealer or auction house submits a stamp, the Foundation's experts examine it and render an opinion as to its quality and authenticity. Defendant Alan Kaplan ("Kaplan"), an employee of the Foundation, entered these opinions into the computer that printed the certificates. The Foundation asserts that such certificates greatly influenced the value of the stamps.
The Foundation's complaint alleges that in March, 1983, defendant Robert Wurdeman ("Wurdeman"), a stamp dealer, solicited Kaplan's cooperation in a scheme to fraudulently alter the Foundation's certificates. Under the scheme, Wurdeman and other dealers submitted stamps to the Foundation for an opinion of authenticity. When Kaplan received the expert committee's final opinion, he changed certain words (e.g., "not genuine" became "genuine" and produced a fraudulent certificate. Wurdeman, or the other dealers, sold these stamps at inflated prices due to the false certificates. Kaplan altered over 220 certificates before the Foundation discovered his activities in May, 1985. Defendant Robert Wurdeman, Inc., Barry J. Rieger ("Rieger"), Barry J. Rieger, Ltd., John Peters ("Peters") and Peters & Vogt, Inc. were all allegedly involved in this conspiracy to alter certificates and sell them at fraudulently inflated prices. The complaint alleges that defendant Mildred Wurdeman also knew of, and participated in, the conspiracy to alter certificates.
Between May, 1985 and October, 1985, defendants Wurdeman, Kaplan, Rieger and Peters were indicted by grand juries on charges arising out of this scheme. Kaplan pleaded guilty to mail fraud and fraudulently altering certificates, and Wurdeman pleaded guilty to mail fraud and conspiracy. Peters was acquitted after a jury trial conducted by this court, United States v. Peters, 84 Cr. 977 (RWS).
The general averments of a "pattern of racketeering activity" in paragraphs 418, 419 and 420 of the amended complaint are supported by paragraphs 30 through 355 in which the Foundation has alleged 328 separate criminal episodes involving mail fraud, wire fraud, violations of the Federal Travel act" and the interstate transportation of property procured by fraud. These "predicate acts" are alleged to have been performed pursuant to an organized, open-ended criminal conspiracy over a period of 26 months from March, 1983 until May, 1985.
Kaplan was indicted in the Southern District of New York and charged with wire fraud in connection with his role in the fraudulent alteration and procurement of "over" 200 certificates of authenticity from the Foundation from March, 1983 until May, 1985 and pleaded guilty to all charges in the indictment. United States v. Kaplan, 85 Cr. 548 (WCC). The criminal activities engaged in by Kaplan to procure the 200-plus fraudulent certificates underlying his indictment are included among the 328 predicate acts in the complaint.
Wurdeman was indicted in the Southern District of New York and charged with mail fraud and conspiracy in connection with his role in the fraudulent alteration and procurement of "approximately 247" certificates of authenticity from the Foundation from March, 1983 until May, 1985. Wurdeman pleaded guilty to all charges in the indictment. United States v. Wurdeman, 85 Cr. 548 (PKL). The criminal activities engaged in by Wurdeman to procure the ...