Antitrust Law Daily New allegations in art looting case do not cure RICO time-bar
News
Wednesday, January 29, 2020

New allegations in art looting case do not cure RICO time-bar

By Nicole D. Prysby, J.D.

Assertions that an art collector’s daughter violated a restraining order and sold artwork to which the collector’s son and estate were entitled did not bring RICO claims over the looting of the artwork within the limitations period.

New allegations in a Racketeer Influenced and Corrupt Organizations Act (RICO) case concerning a purported scheme to misappropriate artwork belonging to a collector and his estate did not establish a timely injury for the RICO claims. Therefore, the federal district court in New York City denied leave to amend the complaint to include the new allegations as futile. One of the new allegations—the violation of a restraining order, which led to the destruction of the plaintiffs’ future opportunity to physically repossess the property—did not save the RICO claims. The injury alleged was the same injury: loss of possession and the right to reclaim property. The defendants’ improper sale of artwork subject to a restraining order was not a sufficiently "independent" injury because what defendants did with the artwork after they stole it was entirely dependent on the initial theft. Other new allegations that the defendants falsified evidence during a trial to invalidate the collector’s also did save the RICO claims. The court lacked jurisdiction over those claims under the Rooker-Feldman doctrine because the injury complained of was caused by a state court judgment (Wang v. King, January 27, 2020, Keenan, J.).

The case involved a world-class collection of ancient Chinese art. In 1997, the collector’s daughter persuaded him to remove his son as his primary assistant and to appoint her. The plaintiffs—the collector’s son and grandson—contended that between 1997 and 2003, the defendants—the collector’s daughter and her family—defrauded and looted the collection. The plaintiffs also contended that the defendants committed fraud on the court by filing an amended complaint in 2016 in a related RICO action, which contained false allegations against the plaintiffs. The plaintiffs brought RICO conspiracy and state law claims. The plaintiffs’ previous complaint (first amended complaint, FAC), was dismissed when the court found that the plaintiffs’ alleged injuries were not proximately caused by the alleged predicate acts and that the claims were time-barred. The plaintiffs sought leave to file a second amended complaint (SAC), which included additional allegations intended to demonstrate that the alleged sales of estate-owned artwork in violation of a restraining order caused a new and independent RICO injury that was within the applicable limitations period.

Amending RICO claims would be futile. The SAC reasserted the same injuries as the FAC: loss of art by the estate and collector’s son; removal of the collector’s grandson as the estate’s preliminary executor due to the jury’s decision to reject the 2003 will; and litigation expenses that plaintiffs have incurred to defend themselves against allegedly meritless claims, according to the court. The plaintiffs also added a new injury, the violation of a restraining order, which led to the destruction of the plaintiffs’ future opportunity to physically repossess the property. The court previously determined that the plaintiffs were on notice of the alleged looting of the estate by 2007 and because the action was not filed until 2018, the claims were time-barred.

Adding a claim that improper sales irreparably damaged their right to take physical possession of the artwork did not establish a new, independent, and timely injury for purposes of the RICO claims, the court held. Any cause of action related to a right to reclaim the property accrued when plaintiffs learned that defendants had improperly taken physical possession of the artwork. The SAC’s new allegations regarding the invaluable nature of the artwork did not cure the plaintiffs’ RICO claim because the injury they continued to allege was the same injury they incurred on the day of the theft: loss of possession and the right to reclaim property that belonged to them. The defendants’ improper sale of artwork subject to a restraining order was not a sufficiently "independent" injury because what defendants did with the artwork after they stole it was entirely dependent on the initial theft. Finally, the SAC’s new allegations of injury still did not establish proximate causation or cure the FAC’s untimely claims regarding "the loss of art and assets" because, once again, defendants were only able to tortuously transport and sell the property in violation of the restraining order because of the initial theft.

The SAC added allegations regarding how defendants used fraudulent evidence during the trial over the 2003 will. The plaintiffs argued that the new allegations established a factual question regarding whether the fraudulent evidence caused the jury verdict and the collector’s grandson’s removal as executor of the estate. But the court lacked jurisdiction over the claims that served as the relevant predicate acts—the falsification of evidence during the trial and the invalidation of the 2003 will and removal of the collector’s grandson as preliminary executor, pursuant to the Rooker-Feldman doctrine. The plaintiffs lost in New York Surrogate’s Court, and the injury of which they now complained was caused by that judgment. Their RICO claim premised on the defendants alleged use of fraudulent evidence was further barred by Rooker-Feldman because the claims were inextricably intertwined with the state court judgment and would require overturning the state court judgment, the court explained.

Having dismissed all federal claims, the court declined to exercise jurisdiction over the remaining state law claims.

The case is No. 1:18-cv-08948-JFK-JLC.

Attorneys: Akiva Meir Cohen (Kamerman, Uncyk, Soniker & Klein PC) for Andrew Wang and Shou-Kung Wang. Sam Peter Israel (Sam P. Israel P.C.) for Yien-Koo King., Kenneth King and Raymond King.

MainStory: TopStory RICO NewYorkNews

Back to Top

Interested in submitting an article?

Submit your information to us today!

Learn More

Antitrust Law Daily: Breaking legal news at your fingertips

Sign up today for your free trial to this daily reporting service created by attorneys, for attorneys. Stay up to date on antitrust legal matters with same-day coverage of breaking news, court decisions, legislation, and regulatory activity with easy access through email or mobile app.