Rare racketeering suits filed in Mahoning Valley

Ohio’s racketeering law is seldom used in civil cases. But for the second time this year, a Racketeer Influenced and Corrupt Organizations civil lawsuit has been filed in the Mahoning Valley.

An architectural firm in Canfield sued current and former officials with Beaver Local Schools in Mahoning County, claiming the district received from the company, ”through a pattern of corrupt activity,” services related to the design and construction of a new building.

In Trumbull County earlier this year, the owner of the prominent Sunrise Inn restaurant in downtown Warren filed a civil RICO lawsuit against the owner of a bar across the street and two other businessmen he claims are associates. The complaint alleges a pattern of corrupt activity designed to damage the Sunrise Inn.

These lawsuits are so rare that the Ohio Attorney General’s Office, which is required to be notified in some RICO cases, reports that the notifications ”are submitted less than once a year.”

Part of the explanation for why so few RICO claims are made is because the law is written broadly, meaning there are multiple elements to prove.

Cleveland-area attorney John Climaco, who has experience in defending federal civil and criminal RICO cases, said, ”They are complicated. They take a lot of background information.”

Climaco, who National Law Journal named one of the 100 most powerful lawyers in the United States, defended the Teamsters union in a high-profile case in the 1980s involving many reputed mafia figures. He also served as infamous former Teamsters president Jackie Presser’s personal lawyer.

”You need a good, thorough background investigation and an understanding of civil RICO law,” Climaco said.

Another reason civil RICO cases are rare is that, beginning around 1985 and lasting a decade or so, federal and appeals courts began issuing decisions limiting how RICO can be applied.

The courts did this after an ”explosion” of such lawsuits, one RICO expert said. That spooked a lot of civil lawyers, and racketeering claims began to fade, said Jeffrey Grell, a Minnesota attorney who specializes in RICO cases.

”It’s there. Certainly people know about it,” Grell said. ”After what happened in the decade of evolution, a lot of lawyers were scared off and don’t want to use it again.”

In some states, RICO is attractive because of a triple damages provision. Another element that makes RICO appealing is ”fee shifting,” which allows prevailing plaintiffs to recover reasonable attorney fees and costs.

In Ohio, however, reverse fee shifting makes RICO less attractive. A defendant who wins the case may recover attorney fees from the plaintiff, who may also be required to pay court costs.

In the two local cases, the plaintiffs are seeking triple damages under the state’s RICO statute. That’s where the similarities in the lawsuits end, however.

The lawsuit filed in Mahoning County Common Pleas Court claims ”false and misleading statements” were made dating back to 2008 when, according to the lawsuit, Team 8e Architecture was first approached by a former school superintendent in Columbiana County for services for passage of a bond issue.

Team 8e claims it prepared conceptual school plans, which were displayed to the public during a January 2012 meeting, and performed other services while being promised to be paid once voters approved a bond levy to help fund the new school.

Voters approved funding for the building in March 2012, but afterward, the defendants ”failed to take any action to compensate the plaintiff for his services, including those materials which the school system and defendants used to pass the bond levy,” according to the lawsuit.

Subsequently, the board voted June 29 to award architect and engineering services to Olsavksy Jaminet in Youngstown and Fanning Howey, which has offices in Celina.

Neither firm is named in the lawsuit.

Beaver Local Superintendent Kent Polen deferred comment to board attorney Karrie M. Kalail of Britton, Smith Peters and Kalail in Cleveland. She declined to comment.

The lawsuit seeks more than $25,000 in compensatory damages and ”treble damages” of more $25,000.

In Trumbull County, the RICO lawsuit alleges that businessmen Bob Cregar, Joseph Sankey Sr. and LaShawn Ziegler engaged in a pattern of activity to wreck the Sunrise Inn and cost it a large amount of money.

It also claims that money from the Sunset Lounge – managed by Ziegler’s company, Dream Team Promotions, in a building Sankey owns across from Sunrise Inn – was redirected to Cregar’s bail bonding business and other businesses he owns.

The lawsuit asks for as much as $3.7 million in damages and to dissolve businesses owned by Cregar, Dream Team Promotions and Blue Magoo’s Ventures LLC, which is Sankey’s company that did business at the former Sunset Lounge, 480 E. Market St.

The lawsuit also seeks permanent revocation of Blue Magoo’s liquor license.

Attorneys for the three defendants say the allegations Sunrise Inn owner Ken Haidaris made are ”preposterous.”

Attorney Marty White, who represents Cregar, and attorney Gli Blair, who represents Sankey, filed answers in the case denying the claims. In addition, White has filed for summary judgment to have Cregar removed from the lawsuit.