The owner of a now-shuttered music venue in Chicago's Logan Square neighborhood and other associated defendants have dodged allegations of racketeering after a federal judge determined the accusations against them don't meet the legal criteria needed to demonstrate they may have violated federal racketeering law.
U.S. District Judge Joan H. Lefkow on June 17, 2015, dismissed with prejudice three counts alleging violations of the federal Racketeer Influenced and Corrupt Organizations (RICO) Act leveled by Natara Media Group Inc. against Erineo "Eddie" Carranza, owner of the former Congress Theatre and others associated with the theater and the production of a 2012 house concert and Latin freestyle event.
Other defendants named in the complaint filed April 17, 2014, include Congress Theatre Inc., Congress Corp., 2117 N Milwaukee Property LLC and Ticketfly Inc., as well as a ticket scalper, three of the theater's managers, its business accountant and head of security.
In addition to the RICO counts, the suit also included counts alleging intentional and negligent misrepresentation, fraud, theft and civil conspiracy.
Natara is owned by Nick Huminsky, who the suit dubs as "an artist entertainer who has been at the forefront in the development and promotion of the genre of 'House Music' and 'Freestyle Music' in the Chicago area."
The suit stated Huminsky booked shows at the Congress. It accused Carranza and his associates of scalping tickets to the events in violation of an agreement and then threatening Huminsky after he showed up at the theater to investigate.
NMG's allegations involve an individual referred to as “May Day,” who the suit claims “uses his role as a Chicago Police officer to head Congress’ security and to perform as Carranza’s street enforcer. May Day is also a ghost ticket seller for Carranza and sells [Natara’s] stolen collected tickets to his ring of ticket brokers/scalpers on the street.”
According to the suit, the “History of House Music and Dance Party” event Huminsky arranged at the Congress in 2012 featured a sold-out crowd, but that tickets were not being distributed as agreed.
“In the early afternoon on the October 13, 2012, Concert, [Huminsky] visited Congress and noticed people were selling tickets on the streets, the sidewalks, parking lots, and on the train stops: all in violation of [the agreement], which gave complete control of ticket sales to [Huminsky],” the suit stated.
It adds, “As it later developed, Carranza’s staff would take the black bags full of tickets [ones customers had provided at the door to enter] and re-sell the tickets outside Congress on the street. Event attendees lined up around the block before the Congress doors were open on the evening of this concert.”
NMG asserted Huminsky met with Carranza a few weeks after the show to demand his money back, at which point Carranza talked him into doing another show with the promise of a share of liquor sales.
The second show, a “Freestyle Concert and Dance Party” slated for April 13, 2013, sold out quickly, the suit noted, adding that Ticketfly, a San Francisco-based electronic ticket seller named as a defendant charged concertgoers extra transaction fees.
“Ticket Fly Inc. systematically increased the credit card service fees to purchasers in order for Carranza to receive additional moneys to repay cash loans he made from Ticket Fly Inc. Ticket Fly Inc. would pay rebates to Carranza unbeknown to [Huminsky] and other promoters,” the suit alleged.
NMG further claimed a scalper for Carranza contacted him asking to buy tickets, which Huminsky refused, and that Carranza said he would sell tickets and make triple money on them. On the night of the show, the suit states Huminsky hired a point of sale manager to monitor sales, which Carranza allegedly prevented from occurring.
Later, the suit contended, staff from the Congress also named as defendants in the suit, “surrounded and threatened [Huminsky] with bodily harm,” and told Huminsky his address, suggesting a threat to his family.
Weeks after the second show, Huminsky again met with Carranza, at which time NMG alleged another co-defendant furnished him with “fake expenses [that] charged [Huminsky] for liquor taxes and expenses that were not legitimate.”
NMG asserted that as a result of the defendants' conduct, it "has been deprived of $42,000 on the October 13, 2012 concert, approximately $130,000 on the April 13, 2013 concert and $70,000 on an anticipated April 14th 2013 2nd concert that did not take place."
Represented by Arthur S. Gold of Gold & Associates Ltd. in Chicago, the company sought compensatory and punitive damages in an amount to be determined at trial, court costs, attorney's fees and pretrial interest.
In addition to Carranza, Congress Theater, its related companies, Ticketfly and "May Day," the suit named Alberto Solorio, Don Snow, Tyler Deroo, Athen/Atieh Irayyan and Ahmad Mahidi as defendants.
The judge declined to rule on the specific allegations against Carranza and the others associated with the concerts and the theater.
Rather, Lefkow said she was dismissing the suit on "jurisdictional grounds," notably that the claims alleged in Natara's complaint do not meet the standards needed to come under federal jurisdiction.
She said the allegations cannot demonstrate any threat of "continuity" and continuing harm to anyone, since the allegations focused on a defined period of eight months three years ago, and the theater at the center of the controversy has since closed.
"Indeed, given that the theatre is closed, it is unclear how
defendants could possibly continue to operate it through a pattern of racketeering activity," Lefkow wrote. "Because plaintiffs have failed to allege continuity, their RICO claims must be dismissed.
That dismissal will be with prejudice. Congress enacted RICO 'to combat organized,
long-term criminal activity,' and the statute was not designed to permit plaintiffs to cast run-of-the-mill,
state-law breach of contract and fraud claims as federal RICO actions."
Noting plaintiffs could still bring action under Illinois law, Lefkow dismissed the counts not related to RICO claims without prejudice, meaning plaintiffs could try again to press their conspiracy, fraud and breach of contract claims in local courts.
Congress Corporation, Ticketfly and the various defendants in the action were represented by attorneys from the firms of SmithAmundsen LLC and Carpenter, Lipps & Leland LLP, both of Chicago, and Durie Tangri LLP, of San Francisco.