RICO — proximate cause

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United States Court of Appeals

Civil

RICO — proximate cause

Where an employee was terminated after reporting an alleged tax fraud scheme, it was error to dismiss the employee’s RICO claim for lack of proximate cause.

“The district court found that the alleged acts of retaliation (including his termination, the lawsuit, and defamation) were unrelated to the alleged acts of fraud (including mail fraud, destroying records, and corrupt persuasion to get DeGuelle to sign a confidentiality agreement). The district court noted the different victims, participants, and motives. But the district court’s interpretation overlooked key allegations linking the predicate acts. First, the district court overlooked DeGuelle’s allegation that Eckhardt participated in both the mail fraud and retaliatory acts. The complaint alleges that Eckhardt signed a fraudulent tax return before submitting it to the IRS in March of 2009. The appellees argue that this allegation lacks sufficient particularity to demonstrate that Eckhardt played a role in the fraud scheme. But even if this is true, the district court also did not recognize that Kosterman, Camilli, and Eckhardt were responsible for the first act of tampering in December of 2008. These three actors offered DeGuelle an increase in salary and payment of attorney’s fees if he agreed to sign a confidentiality agreement and release all claims. This offer occurred after DeGuelle informed human resources he planned to file a whistleblower complaint. The district court clearly identified this act as part of the fraud scheme, and rightly so, as it was intended to prevent DeGuelle from disclosing the company’s alleged wrongdoing. Yet the district court did not recognize that these same three actors were also responsible for DeGuelle’s termination, thus providing a link between the fraud scheme and the retaliation scheme.”

Reversed and Remanded.

10-2172 DeGuelle v. Camilli

Appeal from the United States District Court for the Eastern District of Wisconsin, Stadtmueller, J., Kanne, J.