law offices of duncan m. james duncan m. james; ca …

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DEFENDANT JOHN TANG'S OPPOSITION TO PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

JW GAMING DEVELOPMENT, LLC., a

California limited liability company,

Plaintiff,

v.

ANGELA JAMES; LEONA L. WILLIAMS;

MICHAEL R. CANALES; MELISSA M.

CANALES; JOHN TANG; PINOLEVILLE

POMO NATION, a federally-recognized Indian

tribe; PINOLEVILLE GAMING

AUTHORITY; PINOLEVILLE GAMING

COMMISSION; PINOLEVILLE BUSINESS

BOARD; PINOLEVILLE ECONOMIC

DEVELOPMENT, LLC; a California limited

liability company; LENORA STEELE;

KATHY STALLWORTH; MICHELLE

CAMPBELL; JULIAN J. MALDONADO;

DONALD WILLIAMS; VERONICA

TIMBERLAKE; CASSANDRA STEELE;

JASON EDWARD RUNNING BEAR

STEELE; ANDREW STEVENSON;

CANALES GROUP, LLC, a California limited

liability company; LORI J. CANALES;

KELLY L. CANALES; and DOES 1 through

20,

Defendant.

Case No: 3:18-cv-02669-WHO

DEFENDANT JOHN TANG'S OPPOSITION

TO PLAINTIFF’S MOTION FOR

SUMMARY JUDGMENT.

HEARING DATE:July 8, 2020

TIME: 2:00 p.m.

LOCATION: Courtroom 2, 17th Floor

Judge William H. Orrick

/////

LAW OFFICES OF DUNCAN M. JAMES

DUNCAN M. JAMES; CA State Bar No. 40505

DONALD J. MCMULLEN; CA State Bar No. 220840

DOUGLAS L. LOSAK; CA State Bar No. 220443

P.O. Box 1381

Ukiah, CA 95482

Telephone: (707) 468-9271 Attorneys for Defendant

John Tang

Case 3:18-cv-02669-WHO Document 219 Filed 05/27/20 of 22

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TABLE OF CONTENTS

I. INTRODUCTION 1

II. FACTS 1

III. DISPUTED MATERIAL FACTS 6

IV. LEGAL STANDARD 7

V. LEGAL ARGUMENT 8

A. SECOND CAUSE OF ACTION – DECEIT – CAL. CIV. CODE §§

1709 AND 1710: JOHN TANG DID NOT WILLFULLY DECEIVE

JIM WINNER OR JW GAMING AS HE HAD NO KNOWLEDGE

THAT THE INFORMATION HE PROVIDE MR. WINNER

WAS INACCURATE 8

B. PLAINTIFF HAS NOT ESTABLISHED THAT THERE

ARE NO DISPUTED MATERIAL FACTS REGARDING

ITS RICO CLAIMS. 11

1. Element 1 – conduct 12

2. Enterprise 13

3. Elements 3 – Pattern of Racketeering Activity 14

4. Element 4 – Racketeering Activity 15

VI. CONCLUSION 17


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TABLE OF AUTHORITIES

Cases Page(s)

Adickes v. S.H. Kress & Co.,

398 U.S. 144(1970) ..................................................................................................................... 7

Agosto v. INS,

436 U.S. 748, (1978) ................................................................................................................... 7

Anderson v. Liberty Lobby, Inc.,

477 U.S. 242(1986) ...................................................................................................................... 7,8

Avalos v. Baca,

596 F.3d 583 (9th Cir.2010) ....................................................................................................... 7

Best Deals on TV, Inc. v. Naveed,

No. C 07–1610 SBA, 2007 WL 2825652 (N.D. Cal. Sept. 26, 2007) ...................................... 16

Blake v Dierdorff,

(9th Cir. 1988) 856 F.2d 1365 .................................................................................................. 15

H.J. Inc. v. Northwestern Bell Telephone Co.,

(1989) 492 U.S. 229 .................................................................................................................. 15

In re Yahoo! Inc. Customer Data Sec. Breach Litig.,

313 F. Supp. 3d 1113 (N.D. Cal. 2018) ...................................................................................... 9

Kelmar v. Bank of Am. Corp.,

No. CV 12–6826 PSG (Ex), 2012 WL 12850425 (C.D. Cal. Oct. 26, 2012) ........................... 12

Lancaster Cmty. Hosp. v. Antelope Valley Hosp. Dist.,

940 F.2d 397 (9th Cir. 1991) .................................................................................................... 16

Living Designs, Inc. v. E.I. Dupont de Nemours & Co.,

431 F.3d 353 (9th Cir. 2005) .................................................................................................... 11

Martin v. Children's Institute International,

(1989) 212 Cal.App.3d 1393 .................................................................................................... 16

Odom v. Microsoft Corp.,

(9th Cir. 2007) 486 F.3d 541 .................................................................................................... 13

People ex rel. Sepulveda v. Highland Fed. Savings & Loan,

(1993) 14 Cal.App.4th 1692 ..................................................................................................... 16

Reves v. Ernst & Young,

507 U.S. 170 (1993) .................................................................................................................. 12

Schreiber Distributing v. Serv–Well Furniture Co. (9th Cir.1986),

806 F.2d 1393 [mail and wire fraud] ........................................................................................ 16

Scott v. Harris,

550 U.S. 372 (2007) .................................................................................................................... 7

Tenant Healthsystem Desert, Inc. v. Blue Cross of Cal.,

245 Cal.App.4th 821 ................................................................................................................... 9

U.S. v. Turkette,

(1981) 452 U.S. 576 .................................................................................................................. 13

United States v. Arango,

670 F.3d 988 (9th Cir.2012) ....................................................................................................... 7

United States v. Diebold, Inc.,

369 U.S. 654 ............................................................................................................................... 7


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United States v. Fernandez,

388 F.3d 1199 (9th Cir. 2004) .................................................................................................. 12

United States v. Gordon (5th Cir.1,

986) 780 F.2d 1165 [wire fraud] ............................................................................................... 16

Walter v. Drayson,

538 F.3d 1244 (9th Cir. 2008) .................................................................................................. 12

Statutes

18 U.S.C. § 1341 ........................................................................................................................... 15

18 U.S.C. § 1342 ........................................................................................................................... 15

18 U.S.C. § 1961(5) ...................................................................................................................... 14

18 U.S.C. § 1962 ........................................................................................................................... 11

18 U.S.C. §1962(c) ................................................................................................................... 1, 11

18 U.S.C. §1972(c) ......................................................................................................................... 8

Cal. Civ. Code § 1709 ..................................................................................................................... 8

Cal. Civ. Code § 1710 ............................................................................................................. 1, 8, 9

Cal. Civ. Code § 1710(3) ................................................................................................................ 9

Rules

Fed. Rules Civ. Proc. 56 ................................................................................................................. 7

Fed. Rules Civ. Proc. 56(c)(1) ........................................................................................................ 7

Fed. Rules Civ. Proc., rule 56(d) 17


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I. INTRODUCTION

John Tang is as much a victim of the machinations of the other Defendants as was Jim

Winner and JW Gaming. Despite Plaintiff's best effort to attribute improper motive to Mr.

Tang’s actions, they cannot do so. This is because Mr. Tang did not know that Defendant

Michael Canales, or the Canales Group did not invest Five Million dollars into the Pinoleville

Pomo Tribes casino project. He also did not know that the other defendants were using the

money Mr. Winner had invested for improper purposes until he read the 2011 expenditure

review done by Ms. Ramos and the partial deposition transcript of Michael Canales, which was

attached to the Complaint.

Plaintiff in its current motion has moved for summary judgment as to the Second and

Third causes of action. The second cause of action is for alleged fraud and deceit based on

Cal. Civ. Code § 1710. The Third Cause of Action is based on 18 U.S.C. §1962(c).

II. FACTS

Mr. Tang was involved in the gaming industry since 1989 (Dec. of John Tang, par 2).

His primary role in gaming operations was in tribal gaming management (Dec. of John Tang,

par 3). Mr. Tang met Jim Winner in approximately late 2004 at the Sycuan Casino. Mr. Winner

was seeking a gaming license in his home state of Pennsylvania and was looking for a partner

with gaming expertise. Mr. Winner had heard about the Sycuan tribe’s casino operation and

requested a meeting with the tribe. Mr. Tang was the senior executive of the tribe’s casino at the

time and met with Mr. Winner. (Dec. of John Tang, par 4) Mr. Tang met Mr. Canales

sometime between 1998-99. Mr. Canales was president of the San Diego Latino Builder’s

Association and come to Sycuan to bid on a paving contract. (Dec. of John Tang, par 5)

Sometime in 2008, Mike Canales told Mr. Tang that he had a development agreement with


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Pinoleville Pomo Nation (PPN) to develop a casino and that he was looking for investment

partners. (Dec. of John Tang, par 6) Mr. Winner had previously mentioned to Mr. Tang that he

was interested in investing in a tribal gaming operation, so Mr. Tang contacted Mr. Winner and

told him about the PPN casino project. (Dec. of John Tang, par 7) Mr. Winner was interested in

learning more about the project, so Mr. Tang introduced Mr. Winner to Mr. Canales. (Dec. of

John Tang, par 8)

Mr. Tang was the intermediary between Mike Canales and Jim Winner. (Dec. of John

Tang, par 9) When Mr. Winner had questions either Mr. Winner or his attorney, Jack

Campbell, would contact Mr. Tang and Mr. Tang would pass the question on to Mr. Canales.

(Dec. of John Tang, par 10) Mr. Tang would sometimes provide answers to Mr. Winner on

questions specific to Indian gaming. (Dec. of John Tang, par 10) Mr. Canales would then either

answer the question directly, copying Mr. Tang, or would provide Mr. Tang with the requested

information and Mr. Tang would send it on to Mr. Winner or Mr. Campbell. (Dec. of John Tang,

par 11)

Mr. Winner insisted that Mr. Tang become an equity partner in the project. Mr. Winner

told Mr. Tang he and Mr. Canales would each give Mr. Tang ten percent interest in the deal.

(Dec. of John Tang, par 16) Mr. Tang was working fulltime at Buena Vista tribe at that time,

developing another Indian casino, and told Mr. Winner he could provide gaming expertise on

the project once it was fully operational. (Dec. of John Tang, par 12 and 14) Mr. Winner knew

that since Mr. Canales had no gaming experience, he needed someone with gaming experience

on the team in order to secure permanent financing. (Dec. of John Tang, par 15)

Mr. Tang was involved in the PPN casino project from 2009 to 2013. (Dec. of John

Tang, par 13) During this time, Mr. Tang received four payments in the amount of Seventeen


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Thousand dollars ($17,000.00) from the PPN. (Dec. of John Tang, par 19 and Exhibit 1 attached

thereto). The four checks were all drawn on an account owned by PPN and signed by Leona

Williams. (Dec. of John Tang, par. 20) In order to file his tax return for the year 2010, Mr.

Tang asked Mike Canales to request that the tribe provide him with a 1099 for the payment from

PPN. (Dec. of John Tang, par. 21) Despite repeated requests to Mr. Canales for a 1099 from

the tribe, Mr. Canales was unable to obtain one from the tribe. (Dec. of John Tang, par. 22)

Eventually, Mr. Canales provided Mr. Tang with a 1099 from the Canales group LLC for the

amount of $51,000, although Mr. Tang only received $34,000.00 from the PPN for tax year

2010. Mr. Canales said Mr. Tang could use that 1099 to report his income. (Dec. of John Tang,

Paragraph 23 and Exhibit 2 thereto).

Mr. Tang also received a check dated October 20, 2008 from James E. Winner Jr. in the

amount of Two Hundred Eighty Thousand dollars ($280,000.00). (Dec. of John Tang, par 24)

The check was for an advance payment to the PPN. (Dec. of John Tang, par 25) It was made

out to Mr. Tang because Mr. Winner did not know to whom the check should be made out to.

Mr. Winner told Mr. Tang that Mike Canales would provide Mr. Tang with the information so

the check could be signed over and deposited. (Dec. of John Tang, par 26) Mr. Tang deposited

the check in to a bank account owned by the PPN. (Dec. of John Tang, par 27)

It was Mr. Tang’s understanding during the time he was acting as an intermediary

between Jim Winner and Mike Canales that the Canales Group did invest Five Million dollars in

the PPN casino project. (Dec. of John Tang, par 28) Mike Canales represented to Mr. Tang that

Mike Canales and/or the Canales group had invested over Five Million Dollars in the PPN

casino project. (Dec. of John Tang, par 29) Mike Canales never informed Mr. Tang that neither

he, nor the Canales Group, had invested Five Million dollars in the PPN casino project. (Dec. of


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John Tang, par 30) No one informed Mr. Tang that neither Mike Canales nor the Canales Group

invested Five Million dollars in the PPN casino project. (Dec. of John Tang, par 31) Mr. Tang

was never provided any documents that would have informed him that neither Mike Canales,

nor the Canales Group invested Five Million dollars in the PPN casino project. (Dec. of John

Tang, par 32) Mr. Tang did not learn that neither Mike Canales, nor the Canales Group invested

Five Million dollars in the PPN casino project until he read the transcript of Mr. Canales

deposition on September 19, 2017 in another lawsuit. (Dec. of John Tang, par 33)

Mr. Tang was not involved in any meetings between the Tribe, or any tribal defendants

and Mike Canales or any member of the Canales Group regarding Mike Canales, or the Canales

Group’s investment in the PPN casino project. (Dec. of John Tang, par 34) Mr. Tang was not

involved in negotiations regarding the 2008 Promissory Note in which the Pinoleville Economic

Development, LLC (PED) promised to pay the Canales Group $5,352,000.00 nor was he

involved in drafting the Promissory Note. (Dec. of John Tang, par 35) At all times relevant to

the acts complained of in this lawsuit, Mr. Tang believed that the 2008 Promissory Note was a

lawful and valid instrument and affirmed that the Canales Group did in fact invest Five Million

dollars in the PPN casino project. (Dec. of John Tang, par 36) When Mr. Tang introduced Mr.

Winner to Mike Canales, Mr. Canales already had a Development agreement with the PPN.

(Dec. of John Tang par. 37) Mr. Tang did not assist in drafting the Development Agreement

between Mike Canales and the PPN. (Dec. of John Tang par. 38)

Mr. Tang was a member of the Canales Group from approximately December 2010 to

November 2011. (Dec. of John Tang, par 39) The only reason Mr. Tang became a member of

the Canales Group was to be eligible for the group health plan for himself and his wife. (Dec. of

John Tang, par 40) Mr. Tang never received any payment for any services rendered from the


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Canales Group LLC. (Dec. of John Tang, par 41) Mr. Tang did not own twenty percent interest

in the Canales Group LLC. (Dec. of John Tang, par 42) Mr. Tang did not attend any meetings

of the Canales Group LLC. (Dec. Tang par 43) Mr. Tang had no knowledge that the Tribe did

not make all of the payments listed in the 2011 Accounting. (Dec. of John Tang, par 48) Mr.

Tang also had no involvement in the making of the 2011 Accounting. (Dec. of John Tang, par

49)

One thing of import to note is that under the Joint Venture Agreement, Mr. Tang was not

to receive profits from the Casino project until after Mr. Canales and Mr. Winner were repaid

the money they loaned to the PPN casino project, and after Mr. Canales was paid an additional

Two Million Five Hundred Thousand dollars ($2,500,000) (Joint Venture Agreement, section

2.3, Exhibit 10 to Complaint) Therefore, Mr. Tang had every reason to ensure the casino project

was a success, because if it failed, as it did, he would receive nothing, which he did.

As to the gratuitous mention of a cannabis business, Mr. Tang was never involved in any

business with Mike Canales, the Canales Group or the tribe to cultivate marijuana and/or

manufacture and sell derivative products. (Dec. of John Tang, par 50). It was months after Mr.

Tang had ceased any active involvement with Canales and PPN when he was first introduced to

Mr. Barry Brautman (Foxbarry). (Dec. of John Tang, par 51) Mr. Tang then introduced Mr.

Brautman to Mike Canales as a potential investor for the PPN casino project. (Dec. of John

Tang, par 52) Mr. Tang subsequently learned that at some point after he introduced Mr.

Brautman to Mike Canales that Mr. Brautman, Mike Canales and the PPN decided to enter into

the cultivation of marijuana. (Dec. of John Tang, par 53) Mr. Tang was never a part of that

business. (Dec. of John Tang, par 54)

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III. DISPUTED MATERIAL FACTS

The following material facts are disputed by Defendant John Tang:

1. That John Tang knew or should have known that the neither Mike Canales nor the

Canales Group LLC invested Five Million dollars in the PPN casino project.

2. That John Tang knew or should have known that the 2008 Promissory Note from PED to

the Canales Group was a sham.

3. That John Tang helped prepare the 2008 Promissory Note, or provided any language

regarding sovereign immunity to Mr. Canales for use in the agreement.

3. That John Tang knew the 2011 accounting was inaccurate in anyway.

4. That John Tang managed or directed any “scheme” to defraud Plaintiff.

5. That John Tang concealed or suppressed a material fact related to his interaction with

Jim Winner and/or JW Gaming and JW Gaming’s investment in the PPN casino project.

6. That John Tang intentionally concealed or suppressed a material fact with the intent to

defraud the plaintiff.

7. John Tang’s term as a member of the Canales Group LLC.

8. John Tang’s role and authority as a member of the Canales Group LLC.

9. That John Tang knew, or should have known, that the Promissory Note from the PPN to

Canales Group LLC was fraudulent.

10. John Tang’s interest in the Canales Group.

11. John Tang’s interest in J2M LLC.

12. That John Tang assisted in drafting the Development Agreement between the PPN and

Mike Canales.


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13. That John Tang provided Mike Canales with language relating to waiving of sovereign

immunity to be inserted in the Development agreement between Mike Canales and the PPN.

IV. LEGAL STANDARD

“A party may move for summary judgment, identifying each claim or defense--or the

part of each claim or defense--on which summary judgment is sought. The court shall grant

summary judgment if the movant shows that there is no genuine dispute as to any material fact

and the movant is entitled to judgment as a matter of law.” Fed. Rules Civ. Proc. 56.

The moving party has the burden of persuading the court as to the absence of a genuine issue of

material fact.” Avalos v. Baca, 596 F.3d 583, 587 (9th Cir.2010) citing Adickes v. S.H. Kress &

Co., 398 U.S. 144, 157(1970). Summary Judgment is not warranted if “a reasonable jury could

return a verdict for the nonmoving party.” United States v. Arango, 670 F.3d 988, 992 (9th

Cir.2012) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248(1986).

Under Rule 56, a “party asserting that a fact cannot be or is genuinely disputed must

support the assertion,” either by “citing to particular parts of materials in the record” or by

“showing that the materials cited do not establish the absence or presence of a genuine dispute,

or that an adverse party cannot produce admissible evidence to support the fact.” Fed. Rules Civ.

Proc. 56(c)(1). When evaluating a motion for summary judgment, the court must “view the

facts and draw reasonable inferences in the light most favorable to the party opposing the

summary judgment motion.” Scott v. Harris, 550 U.S. 372, 377 (2007) citing United States v.

Diebold, Inc., 369 U.S. 654, 655. “A court “generally cannot grant summary judgment based on

its assessment of the credibility of the evidence presented.” Agosto v. INS, 436 U.S. 748, 756,

(1978). “[A]t the summary judgment stage the judge's function is not himself to weigh the

evidence and determine the truth of the matter but to determine whether there is a genuine issue


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for trial.” Anderson, 477 U.S. at 249. Accordingly, if “reasonable minds could differ as to the

import of the evidence,” summary judgment will be denied. Anderson, 477 U.S. at 250-51.

V. LEGAL ARGUMENT

Plaintiff’s Motion for Summary Judgment fails to establish that there are no disputes

regarding material facts and therefore must fail. Plaintiff’s Second Cause of Action is brought

under Cal. Civ. Code § 1710. In order to prevail on a summary judgment motion on this issue,

Plaintiff must establish that there is no dispute that Mr. Tang concealed or suppressed a material

fact with the intent to defraud the plaintiff, as required under Civil Code §1710. Mr. Tang, in

his sworn declaration states that he believed his statements to Mr. Winner regarding Mr. Canales

investing 5.3 million dollars in the PPN casino project were accurate.

Plaintiff ‘s Third Cause of Action alleges Mr. Tang’s acts violated section 18 U.S.C.

§1972(c). However, Plaintiff cannot establish that there are no disputed material facts

regarding the five elements required to find a person violated said law.

A. SECOND CAUSE OF ACTION – DECEIT – CAL. CIV. CODE §§ 1709

AND 1710: JOHN TANG DID NOT WILLFULLY DECEIVE JIM

WINNER OR JW GAMING AS HE HAD NO KNOWLEDGE THAT THE

INFORMATION HE PROVIDE MR. WINNER WAS INACCURATE.

Under Cal. Civ. Code §1709, “[o]ne who willfully deceives another with intent to induce

him to alter his position to his injury or risk, is liable for any damage which he thereby suffers.”

Cal. Civ. Code §1709 (emphasis added). Cal. Civ. Code § 1710 defines deceit, for the purposes

of section 1709, as either:

1. The suggestion, as a fact, of that which is not true, by one who does not believe it to

be true;

2. The assertion, as a fact, of that which is not true, by one who has no reasonable

ground for believing it to be true;


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3. The suppression of a fact, by one who is bound to disclose it, or who gives

information of other facts which are likely to mislead for want of communication of

that fact; or,

4. A promise, made without any intention of performing it.

Cal. Civ. Code § 1710

Under California law, a plaintiff may assert a claim for deceit by concealment based on “[t]he

suppression of a fact, by one who is bound to disclose it, or who gives information of other facts

which are likely to mislead for want of communication of that fact.” Cal. Civ. Code § 1710(3).

An action for fraud and deceit based on concealment has five elements:

(1) the defendant must have concealed or suppressed a material fact, (2) the defendant must

have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have

intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4)

the plaintiff must have been unaware of the fact and would not have acted as he did if he

had known of the concealed or suppressed fact, and (5) as a result of the concealment or

suppression of the fact, the plaintiff must have sustained damage.

In re Yahoo! Inc. Customer Data Sec. Breach Litig., 313 F. Supp. 3d 1113, 1133 (N.D. Cal.

2018) citing Tenant Healthsystem Desert, Inc. v. Blue Cross of Cal., 245 Cal.App.4th 821,844.

In this case, as to Mr. Tang, he had no knowledge that any of the information he

provided to Mr. Winner was not accurate. (Dec. of Tang, par. 26–32) Mr. Tang was not

involved in any meetings between the Tribe, or any tribal defendants and Mike Canales or any

member of the Canales Group regarding Mike Canales’, or the Canales Group’s investment in

the PPN casino project. (Dec. of Tang P 33) Mr. Tang was not involved in negotiations

regarding the 2008 Promissory Note in which the PED promised to pay the Canales Group

$5,352,000.00 nor was he involved in the drafting of the Promissory Note. (Dec of Tang P 34)

Mike Canales represented to Mr. Tang that Mike Canales and/or the Canales group had invested

over Five Million Dollars in the PPN casino project. (Dec of Tang P 27) Therefore, as far as

Mr. Tang knew, the 2008 Promissory Note was a lawful and valid instrument and affirmed that


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the Canales Group did in fact invest Five Million dollars by the Canales Group in the PPN

casino project. (Dec. of Tang, par. 35)

Plaintiff has not established that there are no disputed material facts relating to its second

cause of action. The documents that Plaintiff relies on only establish that Mr. Tang acted as an

intermediary. They do not establish that Mr. Tang knew the information he was providing to

Mr. Winner was false. For example, in paragraph 112 of the Complaint, Plaintiff mentions an

August 25, 2008 e-mail from Mr. Tang to Mr. Winner. In the email, John Tang stated “I want to

emphasize again that the $5m that you and Mike put into this deal is a loan to the Pinoleville.

The tribe is paying it back to each of you at financing. . .” This does not establish that Mr. Tang

knew that Mr. Canales or the Canales Group did not invest Five Million dollars in the PPN

casino project. Mr. Tang believed that everything he stated in the email was accurate. Another

example is in paragraph 114 of Plaintiff’s Complaint, which quotes from an e-mail from Mr.

Tang, which supposedly establishes fraud. However, upon reading the e-mail, there is no

fraudulent statement.

114. John Tang’s August 26 email stated, in part:

. . .

Mike Canales had kept this deal alive for over 7 years. He can sell

his interest for much more than what we are talking about. . . . The

$2.5m that he’s asking for as a success fee, to me, is a token.

Remember, the Pinoleville tribe itself is repaying the $5m to you

and Mike. The tribe has already agreed to repay Mike $5m plus

interest. The tribe needs no further verification of that.

It’s been almost two months since your visit to Pinoleville. . . .

However, I think Mike needs to move quickly to secure a financing

partner. . . . Mike only needs to know that you are in as his partner.

Again, Mr. Tang believed everything he stated in the email was truthful and accurate

and Plaintiff has provided no evidence to establish the contrary.


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In paragraph 118 of the Complaint, Plaintiff states that in an email dated January 30,

2009, John Tang furnished Mr. Winner with documents related to the negotiations between the

parties. Attached to the e-mail was a promissory note from PED to the Canales group. Again,

these statements do not establish that Mr. Tang was committing fraud, instead it simply shows

that he was an intermediary between the Canales Group and Mr. Winner. (Dec. of Tang pars.

26-35). Nowhere in the Complaint or Plaintiff’s Summary Judgment Motion, does Plaintiff

establish that Mr. Tang knew the promissory note was a "fraud".

Based on the above, as well as the declaration of John Tang, there is a disputed material

fact – whether or not Mr. Tang knew that neither Mike Canales nor the Canales Group invested

Five Million dollars in the PPN casino project. Therefore, Plaintiff’s motion for Summary

Adjudication as to the second cause of action should be denied.

B. PLAINTIFF HAS NOT ESTABLISHED THAT THERE ARE NO

DISPUTED MATERIAL FACTS REGARDING ITS RICO CLAIMS.

Plaintiff’s second cause of action is brought under the Racketeering Influenced and

Corrupt Organizations Act, 18 U.S.C. §1962(c), which states:

(c) It shall be unlawful for any person employed by or associated with

any enterprise engaged in, or the activities of which affect, interstate or

foreign commerce, to conduct or participate, directly or indirectly, in the

conduct of such enterprise's affairs through a pattern of racketeering

activity or collection of unlawful debt. 18 U.S.C. § 1962

The elements of a civil RICO claim are “(1) conduct (2) of an enterprise (3) through a

pattern (4) of racketeering activity (known as ‘predicate acts’) (5) causing injury to plaintiff’s

‘business or property.” Living Designs, Inc. v. E.I. Dupont de Nemours & Co., 431 F.3d 353,

361 (9th Cir. 2005) (quotation omitted); 18 U.S.C. § 1962

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1. Element 1 – conduct:

To satisfy the conduct element, the defendant “must have some part in directing [the]

affairs” of the enterprise. See United States v. Fernandez, 388 F.3d 1199, 1228 (9th Cir. 2004)

(emphasis added) (quoting Reves v. Ernst & Young, 507 U.S. 170, 184 (1993)). “… more is

required than ‘simply being involved,’ and ‘[s]imply performing services for the enterprise does

not rise to the level of direction.’ ” Kelmar v. Bank of Am. Corp., No. CV 12–6826 PSG (Ex),

2012 WL 12850425, at 7 (C.D. Cal. Oct. 26, 2012) (quoting Walter v. Drayson, 538 F.3d 1244,

1249 (9th Cir. 2008)). In evaluating whether a defendant “had some part in directing the affairs”

of the enterprise, the Ninth Circuit has considered whether that defendant (1) gave or took

directions; (2) occupied a position in the “chain of command” through which the affairs of the

enterprise are conducted; (3) knowingly implemented decisions of upper management; or (4)

was indispensable to the achievement of the enterprise's goal. See Walter v. Drayson, 538 F.3d

1244, 1249 (9th Cir. 2008). “It is not enough that [a defendant] failed to stop illegal

activity.” Walter, 538 F.3d at 1248.

In this case, Mr. Tang’s sole role was to act as a liaison between Mr. Winner and Mike

Canales and the Canales Group. (Dec. Tang pars. 10-12) Mr. Winner wanted Mr. Tang to be

involved in J2M LLC because of Mr. Tang’s experience with operation of a gaming business.

(Dec. Tang par. 13 and 15) Mr. Tang was not involved in any business decisions of the Canales

Group, nor did he attend any business meetings of the Canales Group LLC, or meetings with the

PPN or any of PPN’s businesses. (Dec. Tang pars. 33 and 42) Mr. Tang did not give or take

directions from Mike Canales or the Canales Group or PPN or its businesses. (Dec. Tang par.

43) Nor did Mr. Tang occupy a position in the chain of command, or knowingly implemented

decisions of upper management. (Dec. Tang pars. 44)


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2. Enterprise:

The “enterprise” is not the “pattern of racketeering activity”; it is an entity separate and

apart from the pattern of activity in which it engages. The existence of an enterprise at all times

remains a separate element which must be proved by the Government. U.S. v. Turkette (1981)

452 U.S. 576, 583. The key to determining that an enterprise exists is “that the various

associates function as a continuing unit.” Id. There are two categories of “enterprises:” (1)

organizations constituting legal entities, such as corporations, and (2) any group of individuals

associated in fact. See id. at 581–82. The factors courts look for to determine if there is an

associated-in-fact enterprise include (1) a common purpose; (2) an ongoing organization; and (3)

a continuing unit. Odom v. Microsoft Corp. (9th Cir. 2007) 486 F.3d 541, 552 citing U.S. v.

Turkette (1981) 452 U.S. 576, 583

Here, Plaintiff argues that the common purpose was to defraud third parties. However,

as to Mr. Tang, Plaintiff is unable to establish this element with undisputed facts. Plaintiff, in its

Summary Judgment motions alleges that the “evidence fully supports the Complaints description

of each defendant’s role on the fraudulent scheme.” Then, regarding Mr. Tang, Plaintiff cites to

paragraphs 488-498 of the Complaint. However, in those eleven paragraphs, Mr. Tang is

mentioned only twice. The first time, in paragraph 488, it alleges Mr. Tang has been a member

of the Canales Group, which Mr. Tang does not dispute. However, it goes on to assert that Mr.

Tang participated in “the operation and management of Canales Group.” Mr. Tang disputes this.

He had no role in the operation or management of the Canales Group. Mr. Tang was a member

of the Canales Group for just over a year, from December 2010 until November 2011. (Dec.

Tang par. 38) The sole reason he joined the Canales Group was for the purpose of obtaining

health insurance for himself and his wife. (Dec. of Tang, par. 39) In addition, Mr. Tang also did


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not own twenty percent of the Canales Group LLC (Dec. Tang par. 41), nor did he ever attend

meetings of the Canales Group LLC. (Dec. of Tang par. 42)

Mr. Tang is then mentioned again in paragraph 495 of the complaint, where it is alleged

that Mr. Tang and others met with prospective financiers, developers, architects, and slot

machine manufactures of the Pinoleville Casino Project. However, there is no allegation that

Mr. Tang intended to defraud any of the individuals he met with on this trip. Instead, as drafted,

the paragraph simply describes a business meeting.

Plaintiff then goes on to list all of the allegedly fraudulent activities of the other

defendants, and the money they made doing so, but only mentions Mr. Tang again on page

twenty of Plaintiff’s motion. Mr. Tang acknowledges that he made the statements attributed to

him, however, he believed the statements to be true and accurate. Mr. Tang also admits being

paid Sixty-Eight Thousand dollars from the tribe for his consulting work. (Dec. Tang par. 17)

Mr. Tang was not an employee of the Canales group, and worked as a consultant on the PPN

casino project. (Dec. Tang, Pars 52, 53) The Sixty-Eight Thousand dollars was for work he

performed over approximately a two- year period of time. Mr. Tang also denies that he had any

involvement with the tribe or others regarding the tribe entering into the cannabis business.

(Dec. of Tang, par. 47-51) Based on the above, there are several disputed material facts relating

to the first sub-prong of the “enterprise” prong.

3. Elements 3 – Pattern of Racketeering Activity:

To support a claim under RICO, it is not enough that the defendant engaged in a

racketeering activity; rather, the plaintiff must also establish a pattern of racketeering activity.

Regarding what constitutes a pattern, RICO is vague, stating only that a pattern requires at least

two predicate acts of racketeering activity. (18 U.S.C. § 1961(5). In this case, Plaintiff must


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establish a pattern of racketeering activity done by Mr. Tang himself. Blake v Dierdorff (9th Cir.

1988) 856 F.2d 1365.

In H.J. Inc. v. Northwestern Bell Telephone Co. (1989) 492 U.S. 229, The Supreme

Court stated that “[t]he text of RICO conspicuously fails anywhere to identify, however, forms

of relationship or external principles to be used in determining whether racketeering activity

falls into a pattern for purposes of the Act. H.J. Inc. v. Northwestern Bell Telephone Co. (1989)

492 U.S. 229, 238. Therefore, the Court held that the determination of a pattern of racketeering

activity requires case-specific analysis of the facts with emphasis on the relationship and

continuity of the predicate acts.

Here, as to Mr. Tang, there is only one alleged predicate act, the alleged act of

convincing Mr. Winner to invest in the PPN Casino project, which included the alleged

misrepresentations by Mr. Tang regarding Mr. Canales’ and Canales Group LLC.’s investment

of Five Million dollars into the project (which Mr. Tang believed was factually accurate at the

times he made them.) All of the other allegedly fraudulent activity in Plaintiff’s Complaint and

Motion for Summary Judgment were done by other Defendants, and not by Mr. Tang.

4. Element 4 – Racketeering Activity

Plaintiff, in its Summary Judgment Motion, states that the predict act – the racketeering

activity” on which the motion is based in wire fraud. (SJM, page 10 footnote 2). “In pleading

a violation of the mail fraud statute (18 U.S.C. § 1341) [or the wire fraud statute (18 U.S.C. §

1342) ] as a predicate act under a RICO scheme, plaintiffs must allege that (1) defendants

devised a scheme or artifice to defraud, (2) defendants used the mails [or wires] in furtherance

of the scheme, and (3) defendants did so with the specific intent to deceive or defraud.


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[Citation.]” People ex rel. Sepulveda v. Highland Fed. Savings & Loan (1993) 14 Cal.App.4th

1692,1715 citing Martin v. Children's Institute International (1989) 212 Cal.App.3d 1393,

1407; accord, Schreiber Distributing v. Serv–Well Furniture Co. (9th Cir.1986) 806 F.2d 1393,

1399–1400 [mail and wire fraud]; see also, United States v. Gordon (5th Cir.1986) 780 F.2d

1165, 1171 [wire fraud].)

If an alleged predicate act, such as fraud, requires a plaintiff to prove intent, then a

defendant will not be liable under RICO unless the plaintiff proves intent. (See Lancaster Cmty.

Hosp. v. Antelope Valley Hosp. Dist., 940 F.2d 397, 404 (9th Cir. 1991) dismissing RICO claims

against government entities because a “specific intent to deceive [was] an element of the

predicate act,”; Best Deals on TV, Inc. v. Naveed, No. C 07–1610 SBA, 2007 WL 2825652, at

*8 (N.D. Cal. Sept. 26, 2007) (dismissing RICO claim where plaintiff could not prove

an intent to commit the predicate act of money laundering).

In this case, Mr. Tang disputes that he had the intent to defraud Mr. Winner and/or JW

Gaming. Plaintiff alleges that Mr. Tang knew neither Michael Canales, nor the Canales Group

invested Five Million dollars into the PPN casino project as Mr. Tang represented to Jim

Winner. However, other than Plaintiff’s assertions in their Complaint and Motion for Summary

Judgment, they have failed to establish that this alleged, and material, fact is true and

undisputed. Nowhere in the declarations or deposition transcripts provided by Plaintiffs in

support of their motion, do they have anyone with first hand knowledge stating that, yes, Mr.

Tang knew no such investment occurred. Mr. Tang vehemently denies that he was aware that

the information he provided to Mr. Winner was inaccurate. (Dec. of Tang, Paragraphs 26-35)

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VI. CONCLUSION

The Plaintiff has failed to meet its burden of proof – that is, Plaintiff has failed to

establish that there is no disputed material facts and that it is entitled to judgment and a matter of

law – or put another way, a reasonable jury, based on the facts as set forth by Mr. Tang, could

come back with a finding in Mr. Tang’s favor.

The disputed material facts are as follows: (1) That John Tang knew or should have

known that the neither Mike Canales or the Canales Group LLC did not invest Five Million

dollars in the PPN casino project. (2) That John Tang knew or should have known that the 2008

Promissory Note from PED LLC to the Canales Group was a sham. (3) That John Tang knew

the 2011 accounting was inaccurate in anyway. (4) That John Tang managed or directed any

“scheme” to defraud Plaintiff. (5) That John Tang concealed or suppressed a material fact

related to his interaction with Jim Winner and/or JW Gaming and JW Gaming’s investment in

the PPN casino project. (6) That John Tang intentionally concealed or suppressed a material fact

with the intent to defraud the plaintiff. (7) John Tang’s term as a member of the Canales Group

LLC. (8) John Tang’s role and authority as a member of the Canales Group LLC. (9) That John

Tang knew or should have known that the 2012 JW Gaming Note was a sham. (10) John Tang’s

interest in the Canales Group. (11) John Tang’s interest in J2M LLC.

Finally, no depositions have been taken in this case as of today’s date and only limited

written discovery has been propounded by the various parties. Therefore, if the Court is

considering granting this motion, Defendant John Tang is requesting that, pursuant to Fed. Rules

Civ. Proc., rule 56(d) the court either defer consideration of the motion until discovery is

completed by all parties, or deny the motion.

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DATED: May 27, 2020 Respectfully submitted,

By /s/Douglas L. Losak

DOUGLAS L. LOSAK,

Attorney for Defendant Tang


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