Judge Paul A. Crotty
Cruz’s amended class action complaint charged foreign currency trading service FXDirectDealer LLC (FXDD) with fraudulently looting accounts through use of computer software to manipulate trades and pricing information. In addition to breaches of contract and good faith, and violations of New York’s General Business Law, Cruz alleged RICO’s violation. FXDD purportedly teamed with individual executives, its corporate parent, and two software firms to design and use specialized trading systems allowing its manipulation of the trade execution process. The court dismissed Cruz’s complaint seeking damages and relief under 18 USC §1964(c) and (a), respectively. In addition to failing to plead predicate acts of wire and mail fraud with the specificity required by Federal Rule of Civil Procedure 9(b), and failing to allege how FXDD’s scheme caused his losses—and thereby having no standing under RICO—Cruz failed to allege a distinct RICO enterprise. He alleged that the members of the purported FXDD Fraud Enterprise” came together strictly to facilitate FXDD’s allegedly deceptive trading practices. Thus, Cruz failed to allege that the FXDD Fraud Enterprise was distinct from the alleged pattern of racketeering activity.
