RICO in Russia
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

Normally we wouldn’t dispatch our business editor, Julie Satow, to Moscow to cover a civil trial. But for those of us who watched the transmogrification of American racketeering law in the 1980s, the $22.5 billion suit that the Russian Customs Service is bringing against the Bank of New York Mellon is too juicy to miss. It comes at a time when the Supreme Court of the United States is citing foreign laws in some of its own domestic jurisprudence, and has just decided to admit enemies seized on battlefield into the jurisdiction of our civilian courts. Now we have a case of foreign plaintiffs using an American law to sue an American company in a foreign court. We would say “only in America” but for the fact that it’s in Russia.
The case involves the Racketeer Influenced and Corrupt Organizations Act, which was originally designed to go after the mafia but which Rudolph Giuliani infamously used in white collar cases when he was the federal prosecutor in New York. The Russian Federation has hauled out this contraption to use against the Bank of New York Mellon in a dispute over money laundering that the bank thought it had settled years ago. The Russians want billions of dollars in damages; if they win, their lawyers could take a slice of the pie. Some of the fanciest, most learned lawyers in the world have signed up on both sides.
So far it has been a frustrating battle for the Bank of New York Mellon, which has filed several unsuccessful motions to dismiss the case and, in one instance, was summarily rebuffed when it tried to remove the judge for allegedly tampering with evidence. So far the bank has been successful in convincing Wall Street that the case will have little material effect on its business should it lose. Even were a Russian court to find the bank liable, this line of reasoning goes, how is it going to enforce the judgment? A number of stock analysts view the risk to the bank as so remote that few mention it in their investor notes, and most of the major news outlets have ignored it.
There are always risks, however, and the bank does big business in Russia with American depository receipts, which are used by many foreign companies to trade on American stock exchanges. It’s not clear what will happen to its Russian business should the bank lose the case. The case is being brought by a trial lawyer, Steven Marks, a partner at Podhurst Orseck; he is based in Miami. In 2001, he tried to sue big tobacco on behalf of some Latin American governments, but the case was dismissed. Mr. Marks helped launch the RICO case against Bank of New York Mellon in May 2007 after showing the Russian government a press release from 2005, in which the U.S. Department of Justice said the bank “accepted responsibility for its criminal conduct” in the long-ago money laundering case.
Whether in fact the bank admitted any criminal conduct is at the heart of the case, because suits under RICO are supposed to be based on some kind of predicate criminal act. Mr. Marks argues that in the agreement settling the money laundering charges, the bank accepted responsibility for its employees, some of whom admitted to laundering money, resulting in the bank itself admitting guilt. The predicate acts that are grounds for lawsuits under civil RICO, which can involve treble damages, come from a list of wrongs that includes money laundering. Bank of New York Mellon insists that it never admitted to money laundering or any criminal conduct and that the language used in the press release was simply wrong.
We haven’t read a plot this complicated since Dostoyevsky knocked out “Crime and Punishment.” What particularly interests us about this case is the precedent for using a controversial American law in foreign courts. We have come through a couple of decades in which American law enforcement agencies, and private lawyers, have sought to extend the jurisdiction of American law in myriad business disputes (and terrorism cases). If there has been a logic to this it is that we have a generally credible court system and legal code, though we fear it’s becoming less predictable. Now we have a case in which other countries are trying to extend the jurisdiction of their own courts into American law. We wouldn’t be surprised were it enough to cause the Congress to start rethinking the original logic of a law like RICO.