The opinion of the court was delivered by: BECHTLE
Presently before the court is defendants' motion to dismiss. For the reasons stated herein, the motion will be granted.
Plaintiffs are shareholders of WMOT Enterprises, Inc. ("WEI"). They allege that in their capacities as shareholders of WEI they were defrauded by defendants Bank Leumi Le-Israel B.M. ("Bank") and James Patterson ("Patterson") and by Mark Stewart ("Stewart").
Plaintiffs claim that as a result of the fraudulent activity WEI became insolvent.
The chronology of events leading up to the alleged fraudulent activity is as follows.
In the Spring of 1980, plaintiffs and WEI entered into a banking relationship with defendant Bank. The relationship consisted of obtaining a line of credit as well as doing general banking business. Plaintiffs personally guaranteed the payment of money borrowed on the line of credit.
In the fall of 1980 WEI was experiencing cash flow problems. At that time plaintiffs made application to defendant Bank for an increase of approximately $ 25,000.00 in their line of credit. Plaintiffs offered to secure the increase in credit with accounts receivable exceeding $ 170,000.00. This application was denied by the Bank through the person of defendant Patterson, an officer of the Bank.
Shortly thereafter, plaintiffs met with Stewart concerning a previous offer by Stewart to buy a percentage of WEI's stock. During the discussions Stewart represented that he was a wealthy entrepreneur with a number of financially successful companies under his control. In January 1981, an agreement was reached which permitted one of Stewart's companies to purchase 60% of the stock of WEI in exchange for the obligation of that company to finance the operation of WEI and assume all of WEI's liabilities.
Plaintiffs allege that contrary to Stewart's representations, Stewart and his companies were in poor financial condition. Plaintiffs allege that Stewart and his companies had loans outstanding with defendant Bank in excess of one million dollars and did not have the financial resources to fulfill the obligations of the purchase agreement.
In their complaint, plaintiffs allege that defendants, through their activities, violated the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961, et seq., as well as Pennsylvania law concerning fraud, breach of contract, and breach of fiduciary duty. Defendants now move to dismiss the complaint.
Defendants argue that the RICO count must be dismissed since plaintiffs have failed to allege that defendants have been convicted of any of the predicate acts listed in the RICO statute. See 18 U.S.C. § 1961(1). The court finds this argument persuasive and shall dismiss the complaint on that basis.