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An International Meeting of American Accounting
Association
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The Supreme Court Has Agreed to Review the Second Circuit's Decision to Grant Standing to Pursue a Civil RICO Claim Based on the Filing of Fraudulent Sales Tax Returns by a Competitor. |
Mark Aquilio
St. John's University
Abstract: In Ideal Steel Supply Corp. v. Anza, the Second Circuit ruled that Ideal had standing to bring a civil RICO claim seeking damages caused by its competitor’s alleged racketeering activity of unlawfully selling products free of sales tax and submitting fraudulent sales tax returns in violation of mail and wire fraud statutes. It opined that the complaint pleaded proximate cause as it contained allegations that the defendant engaged in a pattern of RICO racketeering activity intending to and giving it a competitive advantage over the plaintiff and the reasonably foreseeable victims of a RICO violation are the targets, competitors and intended victims. The court granted standing even though the fraudulent communications were not relied on by Ideal. The Supreme Court granted certiorari. Its ruling will have a major impact on the scope of civil RICO claims and may serve to deter millions of dollars of sales tax fraud.