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Judy Greenwald

Money laundering claims against RJ Reynolds, units reinstated

April 29, 2014 - 3:07pm


A federal appeals court has reinstated money laundering claims against RJ Reynolds Tobacco Co. and related entities under the Racketeer Influenced and Corrupt Organizations Act.

In the latest installment in litigation filed by the European Community and 26 of its member states against R.J. Reynolds and related entities, New York-based RJR Nabisco and its units, the 2nd U.S. Circuit Court of Appeals in New York on Tuesday overturned a ruling by a New York federal judge in European Community et al. v. RJR Nabisco Inc. et al.

RJ Reynolds is now part of Winston-Salem, N.C.-based Reynolds American Inc.

The litigation alleges that RJR “directed, managed and controlled a global money-laundering scheme with organized crime groups in violation of the RICO statute, laundered money through New York-based financial institutions and repatriated the profits of the scheme to the United States and committed various common law torts in violation of New York state law.”

The alleged scheme involved a multistep process that began with Colombian and Russian criminal organizations smuggling narcotics into Europe, according to court records.

The complaint charges that RJR “directed and controlled this money-laundering scheme utilizing other companies to handle and sell their products” and that RJR executive employees traveled from the United States to Europe, the Caribbean and Central America “to further these money-laundering arrangements.”

At issue in the litigation is whether the European Community's claims under RICO are “impermissibly extraterritorial” and whether the European community qualifies as an organ of a foreign state, thus giving the federal court jurisdiction.

A three-judge appellate panel unanimously ruled “yes” in both cases.

“We disagree with the district court's conclusion that RICO cannot apply to foreign enterprise or to extraterritorial conduct,” the three-judge panel ruled unanimously.

Congressional intent clear

“Recognizing that there is a presumption against extraterritorial application of a U.S. statute unless Congress has clearly indicated that the statute applies extraterritorially … we conclude that, with respect to a number of offenses that constitute predicates for RICO liability and are alleged in this case, Congress has clearly manifested an intent that they adopt extraterritorially,” the court ruled.

“The European Community qualifies as a foreign state,” the court ruled in saying the federal court system is the proper place for the proceedings.

 



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