Rivero Mestre wins Second Circuit appeal in extraterritorial RICO case

MIAMI – Rivero Mestre successfully represented Juan Felipe Lara, a Venezuelan national and attorney, and Alhambra Investments Limited (“AIL”), a Barbadian entity, in an appeal before the U.S. Court of Appeals for the Second Circuit.

The action alleged that Venezuelan government officials and business figures, including Mr. Lara and AIL, violated the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962, in connection with the Venezuelan government’s approval of a currency exchange application and the sale of two Venezuelan banks for $150 million.

The United States District Court for the Southern District of New York dismissed the case, finding that RICO does not apply where the alleged enterprise and the impact of the alleged predicate activity are entirely foreign. U.S. District Judge Jed Rakoff relied on Morrison v. Nat’l Australia Bank Ltd., a June 2010 U.S. Supreme Court case that held when a statute gives no clear indication of an extraterritorial application—in this case, RICO—it presumably has none. The district court further rejected the argument that RICO would apply simply because of allegations of a few isolated financial transactions in the U.S. “[T]he presumption against extraterritoriality,” noted the court, “would be a craven watchdog indeed if it retreated to its kennel whenever some domestic activity is involved in the case.”

The Second Circuit, ruling in favor of Mr. Lara, AIL, and other defendants, affirmed the district court’s dismissal of the case with prejudice. The Second Circuit noted that the complaint alleged inadequate conduct in the U.S. to state a domestic RICO claim and that the alleged enterprise was “patently foreign.”

Andrés Rivero, Catherine Grieve, and Erimar von der Osten of Rivero Mestre represented Mr. Lara and AIL.

Click here to see the Second Circuit Summary Order.