International Law

Aspiring Monk Could Base RICO Action on Monastery?s Affiliation Claims

This posting was written by Mark Engstrom, Editor of CCH RICO Business Disputes Guide.

An individual who sought to become a Benedictine monk could amend his complaint to add federal RICO claims against a monastery and two monks who allegedly misrepresented the monastery's affiliation with the Order of St. Benedict, the federal district court in Buffalo, New York, has ruled.

In doing research on the Internet, the individual discovered the Most Holy Family Monastery in Fillmore, New York. He spoke with the supervising monk, who allegedly represented himself as a member of the Benedictine order.

In September 2005, the individual entered the monastery with the intention of becoming a Benedictine monk. He allegedly made cash contributions of nearly $66,000 and transferred stock valued at $1.2 million to the monastery in reliance on the claim that it was affiliated with the Order of St. Benedict. In the late spring/early summer of 2006, he executed a document specifying that he would receive $750,000 if he left the monastery.

Subsequently, the individual learned that the supervisor was not a Benedictine monk and the monastery was neither founded nor operated by the Order of St. Benedict. He left the monastery on December 31, 2007. Although he demanded that funds he transferred to the monastery be returned, the defendants refused to do so.

RICO Conspiracy Claim

The individual filed an action against the defendants for fraud, negligent misrepresentation, and unjust enrichment. He later filed a motion to amend the complaint to add counts of deceptive trade practices, false advertising, false accounting, and civil RICO. The defendants filed a motion to dismiss the action and to deny amendment of the complaint.

Although the defendants argued that the plaintiff failed to adequately assert a claim for RICO conspiracy, the court found that the plaintiff stated "in specific detail" the acts that the defendants allegedly committed (1) in making false representations to the public through the monastery's website; (2) in the sale and distribution of publications and other media; (3) in the solicitation of donations while representing themselves as members of the order of St. Benedict; and (4) in inviting the plaintiff to join the monastery?and to donate personal property?based on the representation that the monastery was a Benedictine community. These statements were sufficient to allege an agreement between the defendants to commit at least two predicate acts, the court held.

First Amendment

The defendants argued that the First Amendment precluded subject matter jurisdiction in matters that required a court to interpret religious doctrine. The court, however, characterized the defendants' purported affiliation with the recognized Order of St. Benedict as a "neutral" factual issue that did not require the interpretation of religious doctrine. Therefore, the First Amendment was not implicated and the court had subject matter jurisdiction to adjudicate the plaintiff's claim.

Undue Delay

The motion to amend was not precluded by undue delay, according to the court, even though the individual had filed it two months after his complaint. Discovery had not commenced and the proposed amendment would not have resulted in prejudice to the defendants, the court held.

The decision is Hoyle v. Diamond, CCH RICO Business Disputes Guide ¶11,656.

Full post as published by Trade Regulation Talk on May 01, 2009 (boomark / email).