City of New York v. Venkataram

SUMMARY ORDER Pro se defendant Natarajan R. Venka-taram, a former supervisory employee in the New York City Office of the Chief Medical Examiner (“OCME”), appeals from an award of summary judgment in favor of the City on its civil racketeering claim for treble damages as a result of Venkataram’s multi-million-dollar scheme to defraud his employer. See 18 U.S.C. § 1964(c). We review an award of summary judgment de novo, “resolving all ambiguities and drawing all permissible factual inferences in favor of the party against whom summary judgment is sought.” Burg v. Gosselin, 591 F.3d 95, 97 (2d Cir.2010) (internal quotation marks omitted). Summary judgment is appropriate only if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c)(2). In applying this standard, we assume the parties’ familiarity with the facts and procedural history of this case, which we reference only as necessary to explain our decision to affirm. In awarding summary judgment, the district court relied on the undisputed fact that, in prior criminal proceedings, Venka-taram pleaded guilty to various crimes in furtherance of the fraud scheme at issue in this civil action, specifically, one count of *724 conspiracy, see 18 U.S.C. § 371, one count of embezzlement, see id. § 666, and fourteen counts of money laundering, see id. § 1956. Venkataram does not here dispute his commission of these crimes. Rather, he submits that only his money laundering crimes qualify as predicates satisfying the pattern element of racketeering, see id. §§ 1961(1), 1961(5), but only his embezzlement crime (not a racketeering predicate) qualifies as the proximate cause of the City’s claimed damages. The City asserts that Venkataram waived this argument by failing to make it in opposition to summary judgment, raising the point only in his motion for reconsideration, the denial of which he does not appeal. In fact, a liberal reading of Ven-kataram’s pro se opposition to summary judgment — which the district court entertained despite the fact that Venkataram was then represented by counsel — casts doubt on the City’s argument. We need not decide the question, however, because even if we were to identify waiver, the rule is prudential rather than jurisdictional, allowing us to consider Venkataram’s challenge in our discretion. See Official Comm. of the Unsecured Creditors of Color Tile, Inc. v. Coopers & Lybrand, LLP, 322 F.3d 147, 159 (2d Cir.2003). 1 In doing so, we conclude that the causation challenge is without merit. To be sure, the Supreme Court has recently reiterated that, “under civil RICO, the plaintiff is required to show that a RICO predicate offense not only was a ‘but for’ cause of his injury, but was the proximate cause as well.” Hemi Grp., LLC v. City of New York, — U.S. -, 130 S.Ct. 983, 989, — L.Ed.2d - (2010) (internal quotation marks omitted). To carry this burden, the plaintiff must demonstrate “ ‘some direct relation between the injury asserted and the injurious conduct alleged.’ A link that is ‘too remote,’ ‘purely contingent,’ or ‘indirec[t]’ is insufficient.” Id. (quoting Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, 271, 274, 112 S.Ct. 1311, 117 L.Ed.2d 532 (1992) (bracket in Hemi)). Venkataram urges us to hold that only a crime that creates illegal proceeds (in this case, embezzlement), not a crime to conceal those proceeds (i.e., money laundering), can bear the necessary “direct relation” to the City’s claimed loss. Compare Old Semiconductor Co. v. Wells Fargo Bank, N.A., 298 F.3d 768, 774 (9th Cir.2002) (holding predicate acts of money laundering to conceal proceeds of theft were not proximate cause of plaintiffs injury resulting from theft), with Maiz v. Virani, 253 F.3d 641, 674 (11th Cir.2001) (holding predicate acts of money laundering proximately caused plaintiffs injury resulting from underlying fraud scheme). We are skeptical of such an absolute rule given the law’s recognition that more than one factor may be a proximate cause of injury, particularly when factors operate together. See Caruolo v. John Crane, Inc., 226 F.3d 46, 56 (2d Cir.2000) (citing Voss v. Black & Decker Mfg. Co., 59 N.Y.2d 102, 109-10, 463 N.Y.S.2d 398, 403, 450 N.E.2d 204 (1983)); Moore v. M.P. Howlett, Inc., 704 F.2d 39, 43 (2d Cir.1983). We need not here decide the question, however, because there is no record support for distinguishing the acts of money laundering and embezzlement in this case in the manner Venkataram suggests. To defraud the City of the millions of dollars at issue, Venkataram did not simply have the charged enterprise, Comprehensive Computer Resources (“CCR”), file scores of its own fraudulent invoices to *725 induce undeserved payments by the City. He had CCR submit fraudulent invoices from purported “subcontractors” — in reality shell companies owned by Venkataram and his confederates. The City paid CCR, expecting that it would then pay subcontractors. In sum, the submission of subcontractor invoices and the development of a record of payment to these subcontractors were both essential to the overall scheme insofar as they covered CCR’s fraudulent dealings with the City with a veneer of bona fide business dealings that was essential to secure the payments that caused the loss at issue. Venkataram did not dispute these facts in the district court. Indeed, he effectively admitted them during his guilty plea allocution when he explained that his money laundering was designed not only “to conceal” his “fraudulent activities in embezzling money from the OCME,” but also to allow him to “receive the money without being found out” in the first place. Plea Allocution at 35, United States v. Venkataram, No. 06 Cr. 102 (S.D.N.Y. Oct. 30, 2007). These circumstances are quite different from those in Lerner v. Fleet Bank, N.A., 318 F.3d 113 (2d Cir.2003), cited by Venka-taram, and Hemi Group, in both of which the actual loss to the plaintiff was caused by a third party. See also Oki Semiconductor Co. v. Wells Fargo Bank, 298 F.3d at 774 (finding defendant’s employee’s money laundering was not proximate cause of injury occasioned by theft of plaintiff’s semiconductors by third parties). Here, but for Venkataram’s creation of a paper trail indicating CCR’s seemingly normal business dealings with “subcontractors”— both in terms of obligations incurred and payments made — the City might well have grown suspicious as to a single vendor’s ability to perform such large contracts ■without the assistance of subcontractors. See generally Maiz v. Virani, 253 F.3d at 674 (recognizing that but for money laundering, defendant could not have continued fraud scheme). In these circumstances, Venkataram’s money laundering was not a remote or indirect but a proximate cause of the City’s loss as a victim of fraud. We have considered all of Venkataram’s remaining arguments and find them to be without merit. Accordingly, the July 9, 2009, 2009 WL 1938984, judgment of the district court is hereby AFFIRMED. Footnotes [1] We do apply the waiver rule to other arguments that Venkataram raised in the district court but does not pursue on appeal. See Higazy v. Templeton, 505 F.3d 161, 168 n. 7 (2d Cir.2007); Norton v. Sam's Club, 145 F.3d 114, 117 (2d Cir.1998).