Bridge v. Phoenix Bond & Indemnity
Phoenix Bond & Indemnity sued Bridge and others alleging that they engaged in a pattern of mail fraud while bidding for liens in Cook County's tax sales. In district court, Phoenix argued that it was entitled to a private treble-damages remedy under
the Racketeer Influenced and Corrupt Organizations Act, (RICO), 18 U.S.C. ยง1964. The district court ruled against Phoenix, holding that Cook County is the proper plaintiff in a mail fraud action based on the abuse of its tax lien auction rules.
The Seventh Circuit Court of Appeals reversed, holding that Phoenix was the proper party to sue because it, not Cook County, was directly injured by the alleged scheme of mail fraud. Bridge further aruged that Phoenix could not sue because the allegedly false statements in affidavits were made to Cook County, not to Phoenix, and mail fraud requires that the plaintiff rely on the false statements. The Seventh Circuit also rejected this argument, reasoning that the mail fraud statute defines a fraudulent scheme, rather than a particular false statement, as the crime. It is illegal to obtain money by a scheme that entails fraud if use of the mail is integral to the scheme, and thus it is unnecessary to show that the false statement was made to the victim.
Question Presented:
Whether reliance is a required element of a RICO claim predicated on mail fraud and, if it is, whether that reliance must be by the plaintiff.
