5: Paragraph 15 Besides being a criminal law, the statute also provides that anybody "injured in his business or property" by a violation of the RICO statute can sue in federal court and "shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney's fee." The so-called "predicate acts" that form the pattern of racketeering activity include mail and wire fraud ("wire" usually means "telephone"), embezzling from union funds (which some of the pension funds were), and securities fraud.
5: Paragraph 16 I said in my complaint that Hutton Group had set up Hutton Trust to allow Hutton Group to collect trustees' fees from the same accounts it was collecting brokerage commissions from, through Hutton & Co., but that Hutton Group never made or let Hutton Trust perform the trustees' duties to earn the fees, and that violated the RICO statute. I said that they hired me and the other employees by making us think Hutton Trust was a legitimate company when it wasn't, and that was fraud on us in furtherance of their RICO conspiracy against the trust clients, and firing me to keep me from answering the bank examiners' questions injured me, and therefore I'd been injured in my business or property by their RICO violation, and I was entitled to recover. Judge Longobardi didn't agree.
5: Paragraph 17 I appealed the dismissal to the federal appeals court, which sits in Philadelphia, and served the notice of appeal on Hunt, but then Hutton switched lawyers. That was probably a practical rather than a tactical decision — Hutton had been bought by Shearson Lehman in 1988, and in fact I'd filed a suit in Chancery Court complaining, among other things, that Shearson didn't pay us shareholders enough for our Hutton stock in their merger because of Hutton's legal liabilities, which Shearson bought along with Hutton's assets — because Richards, Layton & Finger, the firm that replaced Morris Nichols, had been working for Shearson for some time. Replacing Morris Nichols was a strategic error on Hutton's part, though.
5: Paragraph 18 Although we were litigating a federal claim in federal court, they assigned the case to Anne C. Foster, a lawyer with virtually no experience in federal court who wasn't even admitted to practice in the federal courts yet — most of her experience was in Chancery Court, in cases alleging breach of the corporate directors' fiduciary duties to the shareholders, where all the corporation has to prove is it had a business reason for doing what it did, and it wins. She has never seemed to grasp the idea that in a RICO suit it doesn't matter why you did it: If you did it, you're guilty. But it probably didn't matter what she thought, because Hutton was always an extremely sexist organization (and Shearson seems to be upholding that tradition), and they would never pay much attention to anything a woman said anyhow — that was always my problem with Hutton: I couldn't get their attention because they've never to this day taken me seriously.
5: Paragraph 19 There are no trials in appellate court: Both sides submit written briefs, and the court may hold oral argument, but the hearing is just for argument, no testimony or evidence. In this case the court didn't ask for oral argument; we sent in our briefs, and in September 1989 the court issued a published opinion reversing the dismissal and saying I did so have standing to sue Hutton under RICO. Given the appellate court's opinion on the law, all I had to do was prove the facts I'd alleged in my complaint, and I had to win.
5: Paragraph 20 Any reasonable defendant would have settled the case right then, but not Hutton. Two years later, in September 1991, we finally went to trial; not only had Hutton kept sniping at me and squabbling about stuff that didn't matter, but Longobardi had been so cranky to me as to border on hostility.
5: Paragraph 21 Take the famous forged U-4, for example: In the fall of 1985, when I was trying to find another job either inside Hutton or outside it, managers of several Hutton & Co. units were talking to me about coming to work for them, but to share in commissions I'd have to have a "Series 7" license. By then my relationship with Abbes was rather brittle — because he'd asked me to quit, and I'd not only refused but also told several Hutton & Co. "heavy hitter" AEs who owed me favors, and they'd told Abbes they didn't want me fired because I was helping them so much — so I sent a memo to Lynch asking him if I could be licensed, and he said I could and forwarded it to the Hutton & Co. department that handled licensing.
5: Paragraph 22 They not only registered me for the exam but also sent me the materials to study for it, as well as the Form U-4 that is the application to be a "registered representative," which is what an AE is and what you have to be to get paid a brokerage commission. You also have to be employed by a member of the Stock Exchange, which Hutton & Co. was, but Hutton Group wasn't, and of course Hutton Trust wasn't. The form had a part the applicant was supposed to fill in, with name, address, employer's name and address, and recent employment history in it, and then there was a part the employer was supposed to fill in and sign; above where the applicant was supposed to sign it recited, among other things, that the applicant agreed to binding arbitration, under the NYSE rules, of any dispute between the applicant and the employer.
5: Paragraph 23 The instructions said fill it in in black ink and print, and we couldn't find a black pen anywhere at Hutton Trust, so Abbes told me to fill it in in blue ink and then make a photocopy and sign that as the original; he also told me to fill in the part he was supposed to do, and when I said the employer was supposed to do that part, he said he was doing it, by having his employee (me) do it, and he was right, so I did. I made the photocopy, and he and I signed it, then I sent it to Hutton in New York.
5: Paragraph 24 After I filed suit, Hutton moved to dismiss on the grounds that I'd agreed to binding arbitration, and they submitted a copy of the U-4 they'd sent to the securities authorities when they registered me. But, lo and behold, where I had accurately printed Hutton Trust's name and address in the block for my employer, someone at Hutton in New York had whited that out and written in Hutton & Co.'s name and address. I still had the original blue-ink version, so I figured I had Hutton by the short hairs: They'd just produced evidence they lied to the securities authorities by mail and telephone, and that was mail and wire fraud, actionable under RICO. But Longobardi keeps saying that I was equally at fault in falsifying the U-4 because I filled in the employer's section!