fraudulent representations in the Offering Memorandum and particular defendants is necessary where, as here, defendants are insiders or affiliates participating in the offer of the securities in question"). Plaintiffs have therefore sufficiently pled mail fraud with particularity.
4. Injury to Business or Property
Defendants' third attack on plaintiffs' RICO claim concerns plaintiffs' alleged injury to business or property.
Defendants maintain that, since plaintiffs request an audit or accounting as to the amount of contributions which were withheld, plaintiffs' alleged injuries are speculative.
Defendants are correct in asserting that a RICO plaintiff may not recover for speculative losses or where the amount of damages is unprovable. See First Nationwide, 27 F.3d at 768 (citing Bankers Trust Co. v. Rhoades, 859 F.2d 1096, 1106 (2d Cir. 1988), cert. denied, 490 U.S. 1007, 109 S. Ct. 1642, 104 L. Ed. 2d 158 (1989)). Specific damages are required because the purpose of a civil RICO award is to return the plaintiff to the same financial position he would have enjoyed absent the illegal conduct. See Bankers Trust Co., 859 F.2d at 1106.
Here, notwithstanding the fact that plaintiffs have not specified an exact dollar amount of damages, plaintiffs' allegations that defendants withheld contributions and other payments sufficiently state a RICO injury. This is not an instance where the RICO injury is mere conjecture because plaintiffs may ultimately recover their losses through alternate or independent means.
Rather, plaintiffs have alleged a non-speculative loss; they simply cannot ascertain the precise amount of that loss at this time because information is peculiarly within defendants' knowledge. The fact that plaintiffs have requested an audit and accounting does not render their losses speculative. See Gregory v. American Guild of Musical Artists, 1993 U.S. Dist. LEXIS 6971, 1993 WL 179110 (S.D.N.Y. 1993) (plaintiffs' allegations that they were induced to accept lower pension benefits than they could otherwise have obtained due to defendants' fraudulent concealment sufficiently stated a RICO injury). In addition, dismissing the RICO claim at this stage only to have plaintiffs move to reinstate the claim after the audit is completed does not promote judicial efficiency. Accordingly, the motion to dismiss the RICO claim is denied. Of course, defendants may move for summary judgment after the audit is completed if the audit shows that plaintiffs have not suffered any injury.
Defendants' motion to stay this case until the resolution of the Criminal Case is granted. The motion to stay until the resolution of the Brenner case is denied. The motion to dismiss is denied.
Dated: New York, New York
May 25, 1995
United States District Judge