It has been reported that two former families who attended and gave tithes and offerings to the former Mars Hill Church in Seattle, Washington are suing its former Pastor, Mark Driscoll, and several others alleging federal civil RICO claims.
Is there a viable civil RICO claim and what does this type of claim mean for Churches?
RICO is more commonly associated with high-profile criminal matters involving mobsters and organized labor that engage in “a pattern of racketeering activity or through collection of an unlawful debt in which such person has participated as a principal within the meaning of section 2, title 18, United States Code [18 USCS § 2], to use or invest, directly or indirectly, any part of such income, or the proceeds of such income, in acquisition of any interest in, or the establishment or operation of, any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce.” 18 U.S.C. § 1862; West Hills Farms, LLC v. ClassicStar Farms, Inc., 2013 U.S. App. LEXIS 14518 (6th Cir. Ky. 2013).
However, there is also a civil RICO component that permits private parties to sue other private businesses or individuals under a similar theory that the defendant has engaged in racketeering activity that has injured the private party. 18 U.S.C. § 1964. “Any person injured in his business or property by reason of a violation of section 1962 of this chapter [18 USCS § 1962] may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney’s fee.” 18 U.S.C. § 1964(c). In such instances, the courts have authority to halt “future activities or investments of any person, including, but not limited to, prohibiting any person from engaging in the same type of endeavor as the enterprise engaged in, the activities of which affect interstate or foreign commerce.” 18 U.S.C. 1964(a).
To state a claim under the civil RICO section, a plaintiff must plead the following elements: “(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.” Moon v. Harrison Piping Supply, 465 F.3d 719, 723 (6th Cir. 2006) (citing Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496, 105 S. Ct. 3275 (1985)). While the four elements seem clear, they are actually quite intricate. First, as to proof of an enterprise, there must be “an enterprise distinct from the defendants.” Id. This is a very exacting standard. “Proof that the criminal partnership was an “on-going organization, formal or informal,” with its associates functioning “as a continuing unit,” will suffice to meet the enterprise requirement.” Id. In other words, existence of two parties does not create an enterprise, as there must be some proof of ongoing activities the parties are working in conjunction to carry out.
Second, RICO defines “racketeering activity” to include numerous so-called predicate acts, including “any act which is indictable under any of the following provisions of title 18, United States Code: . . . section 1341 (relating to mail fraud), section 1343 (relating to wire fraud),” and the interstate transportation of stolen property. 18 U.S.C. § 1961(1). “An offense under the mail fraud statute may be established by showing a scheme to defraud and the use of the mails in furtherance of that scheme.” Barker v. Underwriters at Lloyd’s, London, 564 F.Supp. 352, 356 (E.D. Mich. 1983) (citing United States v. George, 477 F.2d 508 (7th Cir. 1973)). There must be at least two instances of racketeering activity. Id.; 18 U.S.C. § 1961(5). Notably, courts have held that such pleadings alleging mail fraud must meet the pleading particularity requirements of FRCP 9. Moon v. Harrison Piping Supply, 465 F.3d 719, 723 (6th Cir. 2006).
Third, and in relation to the predicate acts, there must be a “pattern” of this activity. While it is true that there must be at least two instances of the predicate act to constitute a pattern, courts will sometimes look for more than just two standalone events. In fact, the Supreme Court has held that “the term pattern itself requires the showing of a relationship between the predicates and of the threat of continuing activity. It is this factor of continuity plus relationship which combines to produce a pattern.” H.J., Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 239 (1989); Vild v. Visconsi, 956 F.2d 560, 566 (6th Cir. 1992) (“Continuity and relationship constitute two analytically distinct prongs of the pattern requirement.”). Additionally, federal courts have made clear that a plaintiff must show a causal connection between the defendant’s predicate acts and the plaintiff’s injuries. Pelletier v. Zweifel, 921 F.2d 1465, 1497 (11th Cir. 1991) (cert den 502 U.S. 855, 112 S Ct 167 (1991). The plaintiff must demonstrate that it suffered “concrete financial loss” that was proximately caused by RICO predicate acts. Burger v. Kuimelis, 325 F. Supp. 2d 1026, 1034 (N.D. Cal. 2004).
Finally, in order for a civil RICO complaint to meet the requisite standard for particularity in pleading the proprietary injury element of action under 18 USCS § 1964, the plaintiff must allege injury to business or property resulting from the violations of § 1962. Hunt v American Bank & Trust Co., 606 F. Supp. 1348, 1363 (N.D. Ala. 1985); Brown v Cassens Transp. Co., 546 F.3d 347, 352-53 (6th Cir. 2008) (Plaintiffs pleaded with sufficient particularity at least thirteen predicate acts, which were comprised of allegedly fraudulent communications by mail and wire, thus meeting the minimum two-predicate-acts requirement, 18 USCS § 1961(5)). Congress also provided that the language of the civil RICO statute should be interpreted broadly.
There is a very dangerous precedent that may arise in this case if the Plaintiffs are successful against Pastor Driscoll and Mars Hill Church. Assuming the claims go forward, any disgruntled former member of a Church could plausibly assert a civil RICO claim if donations given at the offering plate, that are not specifically designated for an event, are used for religious purposes by a Church the the donor dislikes.
This will be an interesting case to follow. Should you, or your church, have any questions concerning this issue or any related issues related to tithes and offerings, please consult with one of the professionals at Dalton & Tomich PLC.