U.S. Court of Appeals Affirms Dismissal of Lower Court Case Against Venezuelan Government Officials and Businessmen Accused of Violating U.S. RICO Statutes

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Attorneys for Miami based international law firm Diaz Reus & Targ, LLP, represent defendant in closely watched international case.

This case was important because it tested the outer limits of a federal court’s jurisdiction to hear a RICO case based on conduct occurring almost entirely outside of the U.S.

The U.S. Court of Appeals affirmed on January 25, 2012, a lower court ruling on behalf of several Venezuelan government officials and businessmen accused of violating the U.S. Racketeer Influenced and Corrupt Organizations Act (RICO).

“The appellate court determined that the allegations in the complaint, which alleged conduct occurring almost entirely in Venezuela, did not trigger U.S. jurisdiction,” said Miami attorney Michael Diaz, Jr. managing partner of the global law firm of Diaz Reus and Targ, LLP. Diaz led the firm’s defense team, which included partners Carlos F. Gonzalez and Gary Davidson.

“This case was important because it tested the outer limits of a federal court’s jurisdiction to hear a RICO case based on conduct occurring almost entirely outside of the U.S.,” added Gonzalez.    

Gonzalez, who heads up the firm’s appellate practice, presented oral argument to the U.S. Court of Appeals for the Second Circuit in December in the case (# 10-3861) which had been filed by plaintiff Eligio Cedeño, a Venezuelan banker who is now in exile in Miami. Cedeño’s complaint alleged a conspiracy between several high-ranking Venezuelan government officials and businessmen who used a combination of official pressure and threats to extort the plaintiff’s interest in two Venezuelan banks. Gonzalez noted that “the Plaintiffs never even got to first base with this case—either before the District Court or the Court of Appeals”.

In an August 24, 2010, opinion, the U.S. District Court held that Cedeño’s complaint alleged an extraterritorial violation of RICO and therefore the U.S. statute did not apply (case # 1:09-cv-09716-JSR). In today’s ruling, the appellate panel held that the business enterprise in question was Venezuelan and the facts were “insufficient to support extraterritorial application of the RICO statute.”

The court added, “We have considered all of Cedeño’s remaining arguments and find them to be without merit.” Explained Davidson: “This case had enormous importance because it was one of the first to address the possible extension to RICO of very recent U.S. Supreme Court precedent admonishing the lower courts about extending the reach of U.S. laws extraterritorially in the absence of a clear mandate from Congress to do so”.

About Diaz Reus

Diaz Reus represents dealmakers around the world with a focus on emerging markets. With experienced lawyers in Latin America, Asia, Europe, and the Middle East, the firm is uniquely suited to handle a wide range of commercial, business, and financial transactions across international borders. Diaz Reus lawyers have experience in government relations, trade, compliance, customs, tax, and immigration matters, as well as internal investigations, litigation, and arbitration. Diaz Reus operates offices in Miami and Orlando, Florida; Caracas, Venezuela; Shanghai, China; Dubai, U.A.E.; Frankfurt, Germany; Bogota, Colombia; Panama, Republic of Panama; Mexico City, Mexico; Buenos Aires, Argentina; Santiago, Chile; and an affiliate office in Sao Paulo, Brazil. For more information, visit http://www.diazreus.com.


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