Defamation/Impersonation Campaign as RICO Violation (with $9M in RICO Trebled Damages)

My sense is that such claims are often made but nearly never win—yet here they did.  From Hartman v. Does 1-2, decided earlier this month, Eleventh Circuit Judges Adalberto Jordan, Robin Rosenbaum, and Barbara Lagoa upheld a $12.5M verdict (including $9M under RICO) in such a case:

In this action, Plaintiffs-Appellees real-estate professional Jason Hartman and his companies accused Defendants—a rival real estate investor and his associates—of committing a wide variety of misconduct as part of a smear campaign to harm Plaintiffs' reputation and steal their clients. The allegations asserted federal and state RICO violations, false advertising, invasion of privacy, trademark infringement, and unfair competition. The case proceeded to trial, and the jury returned a verdict for Plaintiffs and awarded substantial damages, including for counts on which the court had already determined liability at summary judgment….

Hartman is a real-estate investment professional and podcaster who formed two companies, Platinum Properties Investor Network Inc. and The Hartman Media Company LLC, to promote real estate investment through his investor network. Hartman Media owns the valid, registered service marks "Jason Hartman" and "jasonhartman.com."

Charles Sells ("Sells") owned and operated a competing real-estate investment advisory company, the PIP Group, LLC, along with his wife, Elena Sells ("Lena"), PIP's director of operations and 49% owner.

In 2018, Hartman's businesses were on a "steady upward trajectory," earning a spot on Inc. Magazine's list of the 5,000 fasting growing companies. Sells, meanwhile, was trying to combat negative online reviews of PIP, which he blamed in part on Hartman, who previously had invested in and was openly critical of PIP's tax-lien investment business. Sells was convinced that Hartman was behind some negative reviews, though Sells admitted at trial he had no evidence to support those claims. Sells and Hartman were also involved in separate litigation.

In May 2018, Sells began a smear campaign against Hartman, intending to "crush[ ] this douche" and "put[ ] him out of business completely." Sells testified that his goal was not only to destroy Hartman's business, but also to destroy him personally and emotionally. To accomplish these goals, Sells set out to create a "very documented, very exposing website" to disseminate negative information about Hartman and his companies. For the "technical side" of things, he relied on Young Chung, the founder of digital marketing agency Blindspot Digital, whom Sells had hired to improve PIP's own website a few months earlier. With Chung's help, Sells registered multiple online domain names that were confusingly similar to Hartman's name or his companies, so that they would show up on internet searches for Hartman. Chung then built a website hosted on the domain "jasonhartmanproperties.com," where the other [similarly named] domains Sells bought redirected. Sells used offshore entities and false contact information to register the domains and host the jasonhartmanproperties.com website. And he created content for the site with assistance from Stephanie Putich, PIP's sales and marketing coordinator.

After the jasonhartmanproperties.com website went live at the end of May 2018, Sells, Chung, and Putich distributed links to the site, at times using fake names, via internet forums, social media, and emails. At Sells's direction, Chung and Putich compiled a contact list of anyone with potential connections to Hartman to send email "blasts" with negative information about Hartman and a link to the website. Many of the emails purported to be from Hartman at the email address [e-mail], which was created by Sells using false contact information.

The emails and website contained false and misleading statements of material fact relating to Hartman's businesses, financial history, litigation history, commercial dealings, alleged prurient nature, credibility, and trustworthiness. When Hartman took action to have the [e-mail] account and jasonhartmanproperties.com website shut down for infringement, Sells tasked Chung and Putich with transferring the contents of the website to a new domain, www.thebrokeguru.com, and hiding any connections. Once the transfer was complete, Sells sent additional rounds of emails and links to the new "Broke Guru" website, which contained essentially the same false and misleading statements as the original website, as well as links to PIP's own website. The Broke Guru website remained active until August 2019.

During the fiscal year from 2018 to 2019, the gross revenue of Hartman's companies, Hartman Media and Platinum Properties, collectively fell more than 40%. Consistent with that drop off, Hartman testified that due to the smear campaign, he lost speaking gigs at conferences and former clients stopped communicating. In addition, some clients used the scheme's false information as leverage to renegotiate deals, and others simply refused payment. Over the same period, PIP's gross revenue nearly doubled. Sells was aware of the positive effect on PIP's business. For instance, a June 2018 email from Sells to Putich noted that, while the scheme against Hartman was not "a savory project," it was "already helping us tremendously" in marketing.

Plaintiffs sued under various claims, and "the district court granted summary judgment [for plaintiffs] as to liability … [as to] federal service-mark counterfeiting[,] … federal cybersquatting[,] … federal unfair competition and false designation of origin[,] and common-law unfair competition through use of Plaintiffs' service marks." The jury also found for plaintiffs as to "false advertising under federal and Florida law" and "Florida civil conspiracy and invasion of privacy," as well as RICO violations." Plaintiffs were awarded $9M under RICO (the jury $3M verdict trebled), plus $3M+$500K punitives as to invasion of privacy.

Regarding the RICO claims, Plaintiffs argued to the jury that Defendants' "predicate acts" of racketeering activity included wire fraud, knowingly using a counterfeit service mark, and retaliating against Hartman for notifying police of the possible commission of a federal offense. In particular, according to Plaintiffs' theory of the case, Defendants committed mail fraud "[e]very time they sen[t] out an e-mail blast," "disseminat[ed] this out on websites," or lied to service providers to obtain access to services, so there were "hundreds of instances of wire fraud" before the jury.

The Eleventh Circuit rejected defendants' various objections, but noted that "Defendants have not developed any argument specific to the predicate acts, such as mail fraud, or to the other elements of the RICO claims. We express and imply no opinion as to whether the evidence was otherwise sufficient to satisfy those elements."

Ryan Santurri, Ava K. Doppelt, Brian R. Gilchrist (Allen Dyer Doppelt & Gilchrist, PA), Jeffrey E. Grell (Grell Feist PLC), and Steven Pollack (Pollack Law, PC) represent plaintiffs.