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Court Discusses RICO Claim


Ideal Steel Supply Corporation is the plaintiff in this case. The defendants in the case are Marshall H. Beil, et al. the case is being heard in the Supreme Court of the State of New York located in Queens County. Judge Peter Joseph Kelly is presiding over the hearing.

The defendants have moved for an order to have the complaints made against them by the plaintiff dismissed.

Case Background

Around the 11th of December, 2001, the plaintiff, Ideal Steel Supply Corporation retained the defendants for a legal action against the National Steel Supply Inc., one of their competitors. A New York Criminal Lawyer said both Ideal and National operate stores located in Queens and the Bronx. Ideal states that a wrongful action by National cost them approximately $10,000,000.

Ideal signed a retainer with the defendant R&H. The retainer stated that the defendant Marshall Beil would represent the company in the matter at a rate of $400 per hour. Allegedly, Ideal paid approximately $1,000,000 in legal fees to the defendants.

In June of 2002, R&H started an action on behalf of the plaintiff in the United States District Court for the Southern District of New York. The action was against National and the owners of National Vincent and Joseph Arza. The action claimed a breach of a previous settlement agreement and violating the Racketeer influenced and Corrupt Organizations Act.

Ideal claimed that National was not charging the combined 8.25% New York State and New York City sales taxes to their consumers who paid in cash and therefore they gained an unfair competitive advantage through mail and wire fraud.

Ideal alleges that National used mail and wire fraud (white collar crime) through a pattern of racketeering activity. Ideal also alleged that National violated 18 USC sections 1962 which prohibits a person of using or investing income that is derived from a pattern of racketeering activity.

The Federal District Court ruled in favor of National and dismissed the complaints being made against them by Ideal. The court based this decision on a failure by Ideal to plead adequately transaction causation in the matter. Ideal alleges that National did not charge sales tax, but has failed to prove these allegations.

Ideal appealed the dismissal of the case and the United States Court of Appeals reversed the order that dismissed the case. A Queens Criminal Lawyer said the court upheld the RICO claim based on mail and wire fraud that had been directed by the plaintiff.

Case Discussion and Decision

The plaintiff in this case is accusing the defendant of increased expenses from the RICO case being mismanaged in the beginning of the case. This claim is sufficient to survive a motion for CPLR 3211, but it is not determined if the case made by the plaintiff will withstand the motion for summary judgment.

The defendant’s motion for an order to dismiss the third cause of action that is made against them is granted as it only pertains to the selection of a RICO cause of action.

In regard to the treble damages, the complaint made by the plaintiff does not allege negligent conduct by the defendants. A Westchester County Criminal Lawyer said the demand being made for triple damages is denied.

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