Derwick says Reich’s racketeering case is garbage (UPDATED)

Derwick Associates, which was sued by former ambassador Otto Reich for alleged defamation and racketeering, finally comes to its own defense. As I said at the start, the case doesn’t look like a slam dunk. And Derwick is mounting a vigorous defense. Here’s a letter the Venezuelan electricity contractor’s principals, Pedro Trebbau and Leopoldo Betancourt, filed last week in US court. A few excerpts:

We and Tew Cardenas LLP, on behalf of defendants Leopoldo Alejandro Betancourt Lopez and Pedro Jose Trebbau Lopez (the “Derwick Defendants”), write … to request a pre-motion conference to seek permission to move to dismiss the complaint…

This case is nothing more than an effort by plaintiffs to transform legally insufficient state law tort claims, primarily sounding in defamation, into a claim under the Racketeer Influenced and Corrupt Organizations Act (“RICO”). Plaintiffs’ claims fail because:

• Plaintiffs lack standing to assert a RICO claim because they do not — and cannot — allege injury caused by any well-pleaded predicate acts;

• Plaintiffs fail to allege any “pattern” of racketeering activity as required under RICO;

• RICO is inapplicable to the extraterritorial Venezuelan scheme alleged by plaintiffs; and

• Plaintiffs have not pled the requisite elements for their state law tort claims.

Plaintiffs lack standing to bring a RICO claim because they have not alleged that they suffered injury resulting from either a pattern of racketeering activity or from individual RICO predicate acts.… Neither of the two alleged schemes — a scheme to pay bribes in Venezuela to Venezuelan officials in connection with Venezuelan construction contracts and a scheme to “discredit” plaintiffs by tortious conduct — provides plaintiffs with standing under RICO.

The alleged bribery scheme, which defendants deny, cannot provide plaintiffs with RICO standing because plaintiffs do not allege that the bribery caused them any injury.…

Dismissal of the alleged RICO claim is also required because the central allegations relate to a Venezuelan-based scheme and it is well-established that RICO does not apply to extraterritorial schemes.…

The central allegations in the complaint — concerning acts in Venezuela, by actors who are Venezuelan citizens and residents, involving the Venezuelan government, in connection with foreign contracts for the construction of Venezuelan power plants — cannot be transformed into a domestic scheme based on scant and conclusory allegations of some de minimis U.S. contacts.

In addition, because of the above legal deficiencies in the complaint and numerous critical factual inaccuracies in the complaint, which the Derwick Defendants have pointed out to plaintiffs’ counsel, by letters dated August 27, and October 4, 2013, the Derwick Defendants intend to seek Rule 11 sanctions for plaintiffs’ filing of this clearly meritless complaint for the improper purpose of damaging defendants’ reputations and injuring their existing and prospective business and banking relationships.

You get all that? Among other things, they say that an ex-ambassador claiming to have been hurt by a smear campaign can’t turn his lawsuit into a racketeering case, especially because the supposed racketeering didn’t happen in the US. We’ll see what the court says. US courts have been pretty open to lawsuits alleging Venezuelan corruption, but no question, the Reich case is a stretch.

PS: Bonus for reading this far — Francisco D’Agostino’s additional defense letter.

UPDATE: Reich answered the letters late last week, and I just noticed. Two letters! One here. And another here. Don’t get used to this service, kids. I pay good money for this stuff!

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3 thoughts on “Derwick says Reich’s racketeering case is garbage (UPDATED)

  1. gustavo Coronel

    The defense is, as it should be doing from a legal perspective, emphasizing that RICO claims do not apply. I believe the legal action has two objectives: Applying RICO to this case and publicly exposing the defendants for what the plaintiffs think them to be.

  2. juris doctor

    Gustavo Coronel un extorsionador de primera opinando. Coronel usted de leyes no sabe nada. lo que si sabe de leyes es como romperlas y robar en Venezuela. por eso anda fugado en Miami trabajando con los gusanos…

  3. juris doctor

    whats up setty you are not posting my comments??? i thought you believed in freedom of speech… I guess you are in business with coronel.

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