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Indiana RICO Act applies to 'foot soldiers'

Jennifer Nelson
January 1, 2008
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An Indiana Supreme Court decision Feb. 27 regarding the state's racketeering laws creates a larger net of potential defendants that can be charged under it.

The Indiana Supreme Court ruled that under Indiana's RICO (Racketeer Influenced and Corrupt Organizations) Act, a person can be implicated under the state act even if he or she doesn't participate in directing the racketeering activity.

In Linda Keesling, Harold Lephart, et al. v. Frederick Beegle III, John Bucholtz, et al., No. 18S04-0704-CV-150, the high court accepted transfer to rule on whether liability under the Indiana RICO Act extends only to people who direct racketeering activity, the "generals," or whether it extends below the managerial or supervisory level to the "foot soldiers."

The Supreme Court ruled that the Indiana RICO Act uses "significantly broader" language than the federal act, which states that it's unlawful for anyone employed by or associated with an enterprise to "conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt."

Under Indiana's act, a person can be charged if he or she "knowingly or intentionally conducts or otherwise participates in the activities of that enterprise through a pattern of racketeering activity."

As a result of this difference in language, the Supreme Court overturned summary judgment in favor of defendants Dennis Baugher; Baugher's company, Florida Underwriting; and William Jones with respect to the Indiana RICO Act, finding Indiana's act imposes liability on both persons at or below a racketeering enterprise's level of manager or supervisor.

The plaintiffs are Indiana residents who purchased pay telephones and entered into service agreements to install, service, and maintain the phones. The plaintiffs were passive investors in the program that targeted investors across the country, relying upon the promoters of the deal to select locations, install, and service phones, as well as obtain all regulatory certifications.

Kelley Johnson, associate at Cohen & Malad and an attorney on the case, described the program as a pyramid scheme in which the only way people could receive money was to recruit more people into the program.

The promoters violated federal security laws by not registering the pay-telephone program with the Securities and Exchange Commission.

Baugher, president of Florida Underwriting, was not one of the ultimate promoters of the program but did have an agreement with the promoters to recruit sales representatives and receive commission on the sales made by his recruits. Baugher recruited Jones; Jones in turn recruited another person, who made the sales to plaintiffs Keesling and the Lehparts.

The plaintiffs sued, alleging violations of the Indiana Securities Act, the Indiana RICO Act, fraud, conversion, and theft. The Court of Appeals affirmed the trial court grant of summary judgment in favor of Baugher, Florida Underwriting, and Jones with respect to the fraud, conversion, and theft allegations; however, the court reversed the grant of summary judgment in their favor with respect to the Indiana Securities and Indiana RICO Act allegations.

The Court of Appeals had previously ruled that in order for someone to be charged under the Indiana RICO Act, the person must do more than just participate in the activities of the enterprise but actually participate in the operation or management of it, Yoder Grain, Inc. v. Antalis, 722 N.E.2d 840, 846 (Ind. [Ct.] App. 2000).

However, in this case, the Court of Appeals took a different approach, finding Indiana's RICO Act is broader than the federal statute and that merely participating in the activities of an enterprise can allow a person to be charged under the act.

The Supreme Court agrees with the Court of Appeal's decision in this case, ruling that the scope of liability under the Indiana act is broader than the federal act because it imposes liability not only on the person who "conducts" the activities, but also one who "otherwise participates in the activities," wrote Justice Frank Sullivan.

The legislature intended for the Indiana act to reach "a racketeering enterprise's 'foot soldiers' as well as its 'generals,'" he wrote.

The Supreme Court vacated the trial court's grant of summary judgment in favor of Baugher, Florida Underwriting, and Jones with respect to the Indiana RICO Act allegations and remanded to the trial court for further proceedings. In all other respects, the high court affirms the Court of Appeals' ruling.

"This definitely solidifies that the Indiana act is different from the federal act, which I think has been a question for some time," Johnson said.

Bradley Skolnik, attorney at Stewart & Irwin and former Indiana Securities commissioner, said this ruling will give plaintiffs more opportunities to file RICO cases in Indiana.

"I would characterize this as an investor-friendly decision of the court," he said. "It certainly broadens the scope of potential defendants in any security fraud or RICO action."
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  1. Have been seeing this wonderful physician for a few years and was one of his patients who told him about what we were being told at CVS. Multiple ones. This was a witch hunt and they shold be ashamed of how patients were treated. Most of all, CVS should be ashamed for what they put this physician through. So thankful he fought back. His office is no "pill mill'. He does drug testing multiple times a year and sees patients a minimum of four times a year.

  2. Brian W, I fear I have not been sufficiently entertaining to bring you back. Here is a real laugh track that just might do it. When one is grabbed by the scruff of his worldview and made to choose between his Confession and his profession ... it is a not a hard choice, given the Confession affects eternity. But then comes the hardship in this world. Imagine how often I hear taunts like yours ... "what, you could not even pass character and fitness after they let you sit and pass their bar exam ... dude, there must really be something wrong with you!" Even one of the Bishop's foremost courtiers said that, when explaining why the RCC refused to stand with me. You want entertaining? How about watching your personal economy crash while you have a wife and five kids to clothe and feed. And you can't because you cannot work, because those demanding you cast off your Confession to be allowed into "their" profession have all the control. And you know that they are wrong, dead wrong, and that even the professional code itself allows your Faithful stand, to wit: "A lawyer may refuse to comply with an obligation imposed by law upon a good faith belief that no valid obligation exists. The provisions of Rule 1.2(d) concerning a good faith challenge to the validity, scope, meaning or application of the law apply to challenges of legal regulation of the practice of law." YET YOU ARE A NONPERSON before the BLE, and will not be heard on your rights or their duties to the law -- you are under tyranny, not law. And so they win in this world, you lose, and you lose even your belief in the rule of law, and demoralization joins poverty, and very troubling thoughts impeaching self worth rush in to fill the void where your career once lived. Thoughts you did not think possible. You find yourself a failure ... in your profession, in your support of your family, in the mirror. And there is little to keep hope alive, because tyranny rules so firmly and none, not the church, not the NGO's, none truly give a damn. Not even a new court, who pay such lip service to justice and ancient role models. You want entertainment? Well if you are on the side of the courtiers running the system that has crushed me, as I suspect you are, then Orwell must be a real riot: "There will be no curiosity, no enjoyment of the process of life. All competing pleasures will be destroyed. But always — do not forget this, Winston — always there will be the intoxication of power, constantly increasing and constantly growing subtler. Always, at every moment, there will be the thrill of victory, the sensation of trampling on an enemy who is helpless. If you want a picture of the future, imagine a boot stamping on a human face — forever." I never thought they would win, I always thought that at the end of the day the rule of law would prevail. Yes, the rule of man's law. Instead power prevailed, so many rules broken by the system to break me. It took years, but, finally, the end that Dr Bowman predicted is upon me, the end that she advised the BLE to take to break me. Ironically, that is the one thing in her far left of center report that the BLE (after stamping, in red ink, on Jan 22) is uninterested in, as that the BLE and ADA office that used the federal statute as a sword now refuses to even dialogue on her dire prediction as to my fate. "C'est la vie" Entertaining enough for you, status quo defender?

  3. Low energy. Next!

  4. Had William Pryor made such provocative statements as a candidate for the Indiana bar he could have been blackballed as I have documented elsewhere on this ezine. That would have solved this huuuge problem for the Left and abortion industry the good old boy (and even girl) Indiana way. Note that Diane Sykes could have made a huuge difference, but she chose to look away like most all jurists who should certainly recognize a blatantly unconstitutional system when filed on their docket. See footnotes 1 & 2 here: http://caselaw.findlaw.com/us-7th-circuit/1592921.html Sykes and Kanne could have applied a well established exception to Rooker Feldman, but instead seemingly decided that was not available to conservative whistleblowers, it would seem. Just a loss and two nice footnotes to numb the pain. A few short years later Sykes ruled the very opposite on the RF question, just as she had ruled the very opposite on RF a few short years before. Indy and the abortion industry wanted me on the ground ... they got it. Thank God Alabama is not so corrupted! MAGA!!!

  5. OK, take notice. Those wondering just how corrupt the Indiana system is can see the picture in this post. Attorney Donald James did not criticize any judges, he merely, it would seem, caused some clients to file against him and then ignored his own defense. James thus disrespected the system via ignoring all and was also ordered to reimburse the commission $525.88 for the costs of prosecuting the first case against him. Yes, nearly $526 for all the costs, the state having proved it all. Ouch, right? Now consider whistleblower and constitutionalist and citizen journalist Paul Ogden who criticized a judge, defended himself in such a professional fashion as to have half the case against him thrown out by the ISC and was then handed a career ending $10,000 bill as "half the costs" of the state crucifying him. http://www.theindianalawyer.com/ogden-quitting-law-citing-high-disciplinary-fine/PARAMS/article/35323 THE TAKEAWAY MESSAGE for any who have ears to hear ... resist Star Chamber and pay with your career ... welcome to the Indiana system of (cough) justice.

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