Federal Court Awards $4.06 Million RICO Judgment Against the Money Network Behind an Online Romance Scam

The Ruling

The U.S. District Court for the Central District of California entered a $4,061,829 default judgment for a client of Sari Law Firm. The client lost more than $1.5 million to an online romance and "frozen funds" scam. The defendants were not the scammer. They were the people in Southern California whose bank accounts received the money.

The Court held the account holders jointly and severally liable under the federal RICO statute, trebled the damages, added $312,875.41 in prejudgment interest, imposed a constructive trust over traceable assets, and ordered a full accounting. The message is direct. Lending your bank account to a fraud scheme can make you liable for three times the victim's loss.

How the Scheme Worked

In late 2022, our client met a man online who said he was a U.S. subcontractor on an oil rig in Qatar. He claimed millions of dollars owed to him were frozen by "banking restrictions." To release them, he said, certain "regulatory" payments had to be made first. Every payment would be refunded once his roughly $5.2 million was released.

The story was supported by fake bank portals impersonating a major international bank, "frozen account" emails, and screenshots of balances that never existed. Over the next two years, our client was directed to wire money to U.S. accounts labeled as "tax payments," "bank activation fees," and "legalization fees."

1. Sixteen wires totaling $1,294,943 went to one defendant and two business names tied to his home address, over eleven months.
2. A single $59,000 wire went to a second defendant.
3. A third defendant supplied her driver's license and a bakery business license to make the recipients look legitimate.
4. A fourth defendant made his own bank account, at the same address, available to receive funds.

The scammer's true identity was never discovered. So we pursued the people who held the accounts.

Procedural path. The Court dismissed the original complaint with leave to amend, finding it did not tie the scammer to the account holders with enough particularity. We filed an amended complaint. All remaining defendants then defaulted. A first default motion was denied under the Frow rule, which bars default judgment against some defendants while others are still litigating. We narrowed the case to the four defaulted defendants and refiled. The Court also asked us to explain why some wires came from a family joint account. Declarations from the co-owners confirmed the money was our client's, and the Court found standing.

What the Court Decided

The Court granted judgment on five claims and declined the rest. Because every claim rested on one fraudulent scheme, the Court applied the heightened particularity standard of Federal Rule of Civil Procedure 9(b) to all of them.

RICO, 18 U.S.C. § 1962(c) and (d). The Court found an association-in-fact enterprise. The links were a shared address, related business names, coordinated bank accounts, and supporting identity documents. The two defendants who received money "participated in the operation or management" of the enterprise by providing and controlling the receiving accounts (Reves v. Ernst & Young, 507 U.S. 170 (1993)). The two defendants who only supplied documents or an account were liable for RICO conspiracy, because the facts plausibly showed they agreed to facilitate the scheme (Salinas v. United States, 522 U.S. 52 (1997)). Sixteen related wires over eleven months established a pattern of racketeering activity.

Aiding and abetting fraud. This is the most useful holding for fraud victims. The Court relied on cases imposing liability on banks that ignored "red flags." It reasoned that if a bank serving thousands of customers can be charged with actual knowledge, an individual who personally received sixteen large wires, labeled as "tax" and "activation" fees, from a stranger with no business relationship can be as well.

Civil conspiracy and the UCL. The Court found each defendant committed an overt act in furtherance of a common design. It also upheld the claim under California's Unfair Competition Law, Bus. & Prof. Code § 17200.

The award.

The Court also imposed a constructive trust over all assets traceable to the transfers. It ordered each defendant to account for funds received, where they went, and what remains.

Why It Matters

Online romance and investment scams usually end with an unknown fraudster overseas and no one to sue. This ruling shows another path. The money had to land somewhere in the United States, and the people who opened and maintained those accounts can be held responsible.

For victims, three points stand out.

1. The account holder is a viable defendant. Repeated, oddly labeled wires from a stranger can support an inference of actual knowledge, even without direct communication between the victim and the account holder.
2. RICO multiplies the recovery. Treble damages and joint and several liability let a victim collect the full award from any liable defendant.
3. Equitable remedies follow the money. A constructive trust and a court-ordered accounting help trace and reach funds that were moved after receipt.

For anyone asked to "receive a payment" for a friend, relative, or online contact, the lesson is equally clear. Letting your account be used in a scheme can expose you to a judgment many times larger than the money you touched.

For background on how civil RICO claims work, see Think You’ve Been Defrauded? Understanding the RICO Framework.

If You Have Lost Money to an Online Scam

1. Preserve every wire confirmation, cashier's check, email, chat, and screenshot.
2. Identify the U.S. receiving accounts and beneficiary names on your wire records. Those names are often the starting point.
3. Act promptly. Fraud and RICO claims carry limitations periods, and funds move quickly.
4. Expect the court to demand specifics. Here, the first complaint was dismissed for lack of particularity. The amended complaint, tied to documents, succeeded.

Sari Law Firm, A.P.C. represents individuals and businesses in fraud recovery, RICO, and business litigation in state and federal courts throughout California. We practice in English and Turkish. To discuss a potential claim, contact us.

This post discusses a single ruling for general information. It is not legal advice, and results depend on the facts of each case. Prior results do not guarantee a similar outcome. Attorney Advertising.