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Hindes v. Castle

filed: June 28, 1991.


On Appeal from the United States District Court for the District of Delaware; D.C. Civil No. 89-00564.

Dolores K. Sloviter, Chief Judge,*fn* Nygaard and Marvin Katz, District Judge.*fn**

Author: Sloviter


SLOVITER, Chief Judge

Gary Hindes appeals from the district court's order, 740 F. Supp. 327, dismissing his complaint for failure to state a valid claim under RICO, the Racketeer Influenced and Corrupt Organization Act, 18 U.S.C. §§ 1961-1968 (1988). Hindes was the unsuccessful Democratic candidate for Lieutenant Governor of Delaware in 1988. He brought this suit against Dale Wolf and Michael Castle, the successful Republican candidates for Lieutenant Governor and Governor respectively, as well as their separate campaign committees and several individuals associated with them.

The district court dismissed the complaint for failing to allege the requisite "pattern of racketeering activity." On appeal, Hindes argues that the court erred in determining that there was no threat of continuing criminal activity. He also argues that even if there was no future threat, the court's pattern inquiry was improper because it considered only the length of the criminal scheme while ignoring its breadth as evidenced by the number of victims, the number of perpetrators and the number of alleged acts of mail fraud. We have jurisdiction over this appeal under 28 U.S.C. § 1291.


Facts and Procedural History

Because the complaint was dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6), we must assume as true all well pleaded allegations in Hindes' complaint. See Swistock v. Jones, 884 F.2d 755, 756 (3d Cir. 1989). In essence, the complaint charges a conspiracy and scheme to solicit contributions earmarked for Castle's campaign and to funnel a substantial portion of them to Wolf's campaign for Lieutenant Governor, with the result that Hindes, Wolf's opponent, was required to spend some $350,000 more than he would otherwise have spent.

We focus in particular on the allegation of duration of the alleged scheme. The complaint alleges that Castle announced his intention to seek reelection as Governor of Delaware in January 1988, using a previously formed political committee, the Friends of Mike Castle, to solicit contributions and otherwise coordinate campaign activities. Wolf announced his candidacy for Lieutenant Governor on February 3, 1988, and formed the Committee to Elect Dale Wolf several days later. Defendants Carl Hostetter and Michael Harkins were associated with the Castle Committee, and defendant John Sargent was associated with the Wolf Committee. On March 20, 1988, Hindes, a Democrat, entered the race challenging Wolf for the office of Lieutenant Governor.

Delaware law provides for the separate election of Governor and Lieutenant Governor. The complaint alleges that in April 1988, Castle and Wolf decided to run as a team and coordinated their fund-raising activities and political advertisements. They maintained separate campaign committees, but shared a campaign chairman, defendant Bruce Winn, and a campaign manager, defendant Michael Harkins.

The crux of the complaint is that the defendants devised and implemented a scheme in which the politically well-known and popular incumbent Castle used the mails to solicit political contributions for his gubernatorial campaign while intending to use a substantial portion of the money to pay for the costs of the Wolf campaign. The complaint identifies two solicitations: the first a mass mailing on February 26, 1988 by the Castle Committee to "thousands of individuals" soliciting contributions to the Castle campaign, and the second a mass mailing in July 1988, soliciting contributions to both campaigns, which "specifically instructed contributors to make checks payable either to the Castle Committee or to the Wolf Committee depending upon which candidate they wished to support." Complaint para. at 22.

Hindes claims that implicit in the language in the July solicitation was the representation that contributions to the Castle Committee would be used for the Castle campaign and that the defendants intended and did subsidize the Wolf campaign by paying a disproportionate share of joint expenses for joint radio and television advertisements which ran from April 22 to November 1988 in Delaware, Maryland and Pennsylvania.

Hindes filed this action after Wolf was elected Lieutenant Governor. The complaint alleges that defendants used or invested money derived from racketeering activity in the Wolf Committee (the RICO enterprise) in violation of 18 U.S.C. § 1962(a). It also alleges that defendants violated 18 U.S.C. § 1962(b), (c)*fn1 and (d), which prohibit, respectively, the control of an enterprise through racketeering activity, the operation of an enterprise through racketeering activity, and conspiring to violate 18 U.S.C. § 1962(a), (b) or (c). The RICO counts were predicated upon ...

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