On January 5, 2026, Justice Masley of the New York County Commercial Division issued a decision in Bank of India, N.Y. Branch v. Anaya Gems, Inc., 2026 NY Slip Op. 30029(U), dismissing a RICO claim for failure adequately to allege a RICO enterprise, explaining:
The Racketeer Influenced and Corrupt Organizations Act (RICO or Act), 18 U.S.C. §§ 1961-1968, provides a private right of action for treble damages to any person injured in his business or property by reason of a violation of the Act’s criminal prohibitions. Section 1962 contains RICO’s criminal prohibitions. One such prohibition states that
it shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, 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.
Accordingly, to establish a civil RICO claim for violation of Section 1962(c), a plaintiff must show that he was injured by defendants’ (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity. RICO claims must be pleaded with particularity. Once again, plaintiffs fail to sufficiently allege an enterprise. A RICO enterprise is a group of persons associated together for a common purpose of engaging in a course of conduct, the existence of which is proven by evidence of an ongoing organization, formal or informal, and by evidence that the various associates function as a continuing unit. To state a claim under RICO, a Plaintiff must allege and prove the existence of an enterprise which is separate and distinct from the alleged pattern of racketeering activity. Thus, if the alleged enterprise would not exist but for the alleged pattern of racketeering activity, the claim must be dismissed. The enterprise must also be distinct from the person conducting the affairs of the enterprise.
The U.S. Supreme Court confirmed that an association-in-fact enterprise under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961 et seq., must have an ascertainable structure beyond that inherent in the pattern of racketeering activity in which it engages.
An association-in-fact enterprise must have at least three structural features: a purpose, relationships among those associated with the enterprise, and longevity sufficient to permit these associates to pursue the enterprise’s purpose. That an enterprise must have a purpose is apparent from the meaning of the term in ordinary usage, i.e., a venture, undertaking, or project. The concept of association requires both interpersonal relationships and a common interest. Section 1962(c) reinforces this conclusion and also shows that an enterprise must have some longevity, since the offense proscribed by that provision demands proof that the enterprise had affairs of sufficient duration to permit an associate to participate in those affairs through a pattern of racketeering activity.
Plaintiffs’ RICO claim is based on certain allegations of fraud – the customs fraud and the fraud to divest Anaya Gems of its assets. However, these are separate instances and there are no allegations connecting the actors such as to satisfy the requirement that plaintiffs plead an enterprise.
As for the customs fraud, plaintiffs merely expanded on how the customs fraud was conducted based on certain admissions made in connection with a settlement with the federal government. Even with additional details about how that scheme was conducted, plaintiffs still fail to sufficiently plead an association-in-fact between the actors outside and beyond that one fraud scheme. There are no allegations of an association-in-fact beyond the fraudulent conduct itself evidencing a purpose, relationships among those associated with the enterprise, and longevity sufficient to permit these associates to pursue the enterprise’s purpose.
As for the new allegations of fraud by SDC Designs and other actors, specifically paragraphs 146, 150-151, 162 in the SAC, again, these allegations fail to sufficiently plead that there was an association-in-fact between defendants that would be separate and apart from the fraudulent scheme itself. The fraud conduct alleged was spearheaded by SDC Designs and its shell company, Diagem; the fraud in our case is allegedly spearheaded by the Gandhi family and for their benefit. SDC Designs is not alleged to be an entity of the Gandhi family. The allegation that the principals of SDC Designs, who had operated their companies in a long-standing relationship with the companies of Anshul, Ajay and the Gandhi family is not enough to show both interpersonal relationships and a common interest. The fraud allegedly committed by SDC Designs and other actors appears to be a remote instance of fraud conducted in a manner similar to the fraud allegedly conducted in this action.
(Internal quotations and citations omitted).