RICO `Enterprise’Claim Against Farm Bank Rejected by Appeals Court

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By Chris Bruce

Aug. 18 — A businessman's claims that a North Dakota agricultural bank and individual defendants made up an “enterprise” under a federal anti-racketeering law were rejected Aug. 18 by a federal appeals court ( Nelson v. Nelson, 8th Cir., No. 15-cv-02610, 8/18/16 ).

The ruling by the U.S. Court of Appeals for the Eighth Circuit involved Steven Nelson, who sued his brother James Nelson, as well as an accountant and a banker, saying they violated the Racketeer Influenced and Corrupt Organizations Act (RICO) by siphoning money from the Nelson brothers’ joint farming business.

The banker’s employer, AgCountry Farm Credit Services of Fargo, N.D., also was named as a defendant.

A district court dismissed the suit, and the U.S. Court of Appeals for the Eight Circuit affirmed, saying the suit failed to plead the existence of an “association in fact” enterprise under RICO.

The appeals court said Steven Nelson never showed that his allegations could be attributed to the group as a whole, and failed to show that AgCountry “shared any common structure or understanding with the other members of the supposed enterprise.”

“Rather, Steven’s allegations show different subsets of the group pursuing their own ends separately – operating farming businesses, for example, or providing financial services for hire,” Chief Judge William J. Riley said. “They therefore do nothing to support Steven’s assertion that the group he described functioned together as a coherent unit.”

The decision came less than a week after the Tenth Circuit said plaintiffs made a “facially plausible” claim of an association-in-fact RICO enterprise in a separate case involving Bank of America and a settlement services company (158 BBD, 8/16/16).

To contact the reporter on this story: Chris Bruce in Washington at cbruce@bna.com

To contact the editor responsible for this story: Mike Ferullo at mferullo@bna.com

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