RICO claims premised on usurious loans dismissed.

Byline: Barry Bridges

A Superior Court judge has dismissed RICO claims brought by a plaintiff receiver against several defendants, including an attorney, his law firm, and a Florida limited liability company, finding insufficient allegations of the requisite RICO "enterprise" or pattern of racketeering activity.

However, the question of whether the defendants engaged in the conduct underlying the purported RICO violations the collection of usurious debt was among the counts that survived the motions to dismiss weighed by Judge Brian P. Stern.

In 2018, Richard L. Gemma, the receiver for BR Asset Management, LLC, formerly known as Benrus, filed a multi-count action against the company's former lawyer, Michael F. Sweeney, and his Providence law firm, Duffy & Sweeney. Anchoring the suit was BRAM's contention that loans extended to BRAM by the defendants to cover the production costs of its consumer products were at an interest rate exceeding the maximum allowed in Rhode Island, 21 percent per year.

BRAM also cited RICO violations based on those alleged usurious transactions.

In considering the defendants' ensuing motions to dismiss, Stern determined that the usury counts could proceed, but dismissed the RICO claims in their entirety.

"Plaintiff has alleged defendants made three advances to the same debtor to fund the debtor's backpack production, watch production, and shipping and delivery costs," the judge wrote. "Faced with no allegations of a pattern, a description of a usurious loan, and threadbare allegations of a structure, this court must intervene to prevent the simple practice of usury from becoming the logical equivalent of RICO based on the collection of an unlawful debt."

Max R. Wistow of Providence was counsel for the receiver. Representing the various defendants were John B. Daukas of Boston, and William M. Dolan and W. Mark Russo, both of Providence. Wistow and Dolan declined to comment on the decision; Daukas and Russo did not respond by press time.

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CASE: Gemma v. Sweeney, et al., Lawyers Weekly 61-115-19 (31 pages)

COURT: Superior Court

ISSUE: Did a plaintiff put forth sufficient facts to withstand the defendants' motions to dismiss RICO claims predicated on the alleged collection of usurious debt?

DECISION: No[/box]

Lending transactions

Plaintiff BRAM was a retailer that designed and sold products such as watches and backpacks. Defendants Sweeney and his law firm, Duffy &amp...