USA Law and Practice Contributed by: Steven Molo, Robert Kry, Megan Cunniff Church and Walter Hawes, MoloLamken LLP
Civil Causes of Action: Federal Federal law does not establish a general private right of action for bribery. Private litigants may file suit under the civil provisions of the Racketeer Influenced and Corrupt Organizations Act (18 USC Section 1964) (RICO) if the bribe payments were made as part of a pattern of “racketeering activity”. If the bribery was part of a scheme to induce anti-competitive conduct such as price-fixing, a private litigant may sue under the Clayton Act (15 USC Section 13 (c)). RICO and the Clayton Act provide for treble damages and attorney’s fees to successful plaintiffs. Most often, however, businesses injured by bribery sue for damages using common law fraud claims. 1.3 Claims Against Parties Who Assist or Facilitate Fraudulent Acts Under most state laws, facilitating or assisting the commission of fraud gives rise to an independent cause of action for aiding and abetting fraud. The typical elements of a claim for aiding and abetting fraud are: • an underlying fraud; • the defendant’s knowledge of that fraud; and • the defendant’s substantial assistance in the achievement of the fraud. Actual Knowledge Allegations that the defendant should have known about the fraud are not enough. Instead, state law typically requires the plaintiff to show actual knowl - edge of the fraud. Substantial Assistance To succeed with an aiding and abetting claim, the plaintiff must also show that the defendant provided substantial assistance. Substantial assistance exists where the defendant takes an affirmative action that allows the fraud to proceed, and that action proxi - mately causes the harm alleged. Providing routine business services for an alleged fraudster ordinarily does not constitute substantial assistance. Examples In one case, the plaintiff, a business investor, sued a bank that allowed its customer to deposit USD750,000 he stole from the plaintiff. The customer defrauded the
under federal law, a party must establish the elements of conspiracy and its underlying fraudulent purpose. The typical elements of a conspiracy to commit fraud are: • an agreement between two or more people to commit a fraudulent act; • an overt act in furtherance of the conspiracy; and • damages or injury resulting from the overt act. A victim of a conspiracy may sue and recover dam - ages from each participant involved in the conspiracy, regardless of the participant’s level of participation. A civil conspiracy claim allows a victim to pursue par - ticipants in the conspiracy who may have more funds or higher insurance policy limits, even if those partici - pants played a minor role in the conspiracy. Misappropriation Misappropriation is the intentional use of another per - son’s funds for unauthorised purposes. Misappropria - tion most commonly refers to situations in which the defendant was in a position of trust or a fiduciary, such as a trustee of a trust or an administrator of an estate. 1.2 Causes of Action After Receipt of a Bribe If a party comes to the unfortunate realisation that its agent has accepted a bribe, it may pursue certain civil claims against its agent as the recipient of the bribe, as well as the payor of the bribe. For example, if a US corporation learns that its CEO has accepted bribes from a vendor in exchange for steering contracts to that vendor, it may file suit against its CEO and the vendor. It could allege claims for fraud or fraudulent misrepresentation, conspiracy to commit fraud, breach of fiduciary duty, or induce - ment to breach fiduciary duty, among others. Civil Causes of Action: State While there is no express private right of action under most federal and state anti-bribery statutes, many states recognise a civil cause of action for fraud based on bribery-related allegations.
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