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Deeming an allegation of a complaint to be admitted based on the invocation of the Fifth Amendment privilege without requiring the complainant to produce evidence in support of its allegations would impose too great a cost.
LaSalle Bank Lake View sued its former Assistant Teller Manager, Ellen Seguban, under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c) & (d), asserting that she embezzled $940,000 from the bank during twelve years of her employment there. The action, which was filed on September 29, 1993, also named as a defendant Ellen's husband, Rafael Seguban, alleging that he accepted and used the funds with full knowledge of their illegal source. Along with its RICO claims, the bank brought supplemental state law claims for breach of fiduciary duty, conversion, and fraud. In addition to this civil action, the Bank's allegations spawned a criminal investigation by the United States Attorney for the Northern District of Illinois. That investigation was underway on February 4, 1994, when the Bank moved for summary judgment in this action. The Segubans therefore asserted their Fifth Amendment privilege against self-incrimination in response to the Bank's motion and offered no evidence to rebut the Bank's statement of material facts. Finding that the Segubans had thereby failed to show the existence of a material factual dispute, the district court granted the Bank's motion and entered judgment against the Segubans in the amount of $ 2,820,000, three times the Bank's damages of $940,000, in accordance with RICO's trebling provision, 18 U.S.C. § 1964(c). The Segubans now appeal, arguing that the district court improperly drew an inference of guilt based on their assertion of the Fifth Amendment privilege, and that without that inference the evidence did not entitle the bank to judgment as a matter of law.
Did the district court improperly draw an inference of guilt based on the Segubans’ assertion of the Fifth Amendment privilege?
The court held that a complaint, no matter how detailed, was not evidence because it contained only averments and claims that, unless admitted, had to be proved in order to support a judgment and, therefore, summary judgment had not been proper. The court concluded that the district court had drawn impermissible inference of liability based only on the Segubans’ assertion of their Fifth Amendment privilege. The court also held that there was an issue as to whether the Bank was entitled to summary judgment on a RICO claim because there was an issue as to whether Ellen was in a managing position and whether the Bank was considered a RICO enterprise.