Cash advance
Otto Candies, LLC v. Citigroup, Inc..
Date: May 8, 2025
Issue: Whether the Eleventh Circuit should reverse the district court’s ruling that Citigroup did not operate a cash advance fraud scheme.
Case Summary: In a unanimous decision, an Eleventh Circuit panel reversed and remanded a district court’s dismissal of a lawsuit alleging Citigroup operated a cash advance fraud scheme.
In 2016, 39 vendors, creditors, and bondholders (plaintiffs) sued Citigroup in the Southern District of Florida, alleging it ran a cash advance fraud scheme involving the now-defunct Mexican oil and gas company Oceanografía S.A. de C.V. (OSA). Plaintiffs claimed Citigroup’s U.S.-based Institutional Clients Group advanced over $1 billion to OSA, based on the company’s contract with Pemex, Mexico’s state-owned oil firm. According to the plaintiffs, Citigroup collected tens of millions in interest by withholding a portion of Pemex’s payments and continued issuing advances even after learning they were based on forged documents. Plaintiffs alleged Citigroup conspired with OSA to inflate the company’s profits and boost its own interest revenue.
In 2018, the district court granted Citigroup’s motion to dismiss based on forum non conveniens, finding that another court would better serve the parties and the interests of justice. The Eleventh Circuit reversed and remanded, holding that the district court failed to properly defer to plaintiffs’ choice of forum. After amending their complaint, the district court dismissed again, concluding the amended complaint was an “impermissible shotgun pleading” that failed to meet the heightened standard for alleging fraud. In 2022, plaintiffs filed a third amended complaint, asserting claims of aiding and abetting, violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), and vicarious liability. The district court again dismissed the case for failure to state a claim.
First, the panel found that the district court erred by dismissing plaintiffs’ aiding-and-abetting fraud claim. The panel explained to support an aiding-and-abetting fraud claim, a plaintiff must satisfy three elements. The plaintiff must prove: the existence of underlying fraud; that the defendant had knowledge of the fraud; and that the defendant provided substantial assistance to advance the commission of the fraud. Neither party disputed the existence of underlying fraud. Turning to the other two elements, the panel concluded that Citigroup knew about the fraud and substantially assisted it. As a result, the panel allowed plaintiffs’ aiding-and-abetting fraud claim to proceed.
Next, the panel concluded that the district court wrongly dismissed plaintiffs’ RICO claim against Citigroup. Plaintiffs alleged that Citigroup and OSA formed an enterprise to defraud Pemex and mislead investors about OSA’s financial health through a pattern of wire fraud executed via phone and email. The panel found that plaintiffs met Rule 9(b) of the Federal Rule of Civil Procedure’s heightened pleading standard by specifying the misrepresentations, dates, and individuals involved. It also rejected Citigroup’s argument that securities laws barred the RICO claim, explaining that inducing leases, sales, and credit extensions did not constitute securities fraud. Finally, the panel held that plaintiffs plausibly alleged a racketeering pattern from 2008 to 2014, satisfying the continuity requirement under RICO.
The panel also ruled that the district court wrongly dismissed plaintiffs’ fraud claim against Citigroup. Plaintiffs alleged that Citigroup knowingly made or facilitated false statements and omissions about OSA’s financial condition, liquidity, and the reliability of its cash-advance facility. According to the complaint, Citigroup either directly made these misrepresentations or channeled them through third parties such as financial consultants and investor presentations. The panel again found that plaintiffs satisfied Rule 9(b). The panel also concluded that Citigroup could face liability for third-party misstatements if it knew of and intended for those falsehoods to reach investors.
Additionally, the panel reinstated the vicarious liability claims after finding that plaintiffs plausibly alleged Citibank and Banamex acted as Citigroup’s agents and made false statements. Plaintiffs claimed Citigroup was liable for its agents’ fraudulent misrepresentations and omissions under actual and apparent agency theories. While the district court dismissed the claims for lacking the specificity required, the panel held that plaintiffs included sufficient factual detail to meet the standard. The panel pointed to specific examples — such as false statements made to ICE and Rabobank — that led investors to rely on the misinformation.
Finally, the panel reversed the dismissal of plaintiffs’ RICO and common-law fraud conspiracy claims against Citigroup. Plaintiffs alleged that Citigroup knowingly conspired with OSA to mislead investors through a coordinated scheme involving fraudulent financial statements, forged documents, and false assurances. The court found that plaintiffs provided sufficient evidence — such as Citigroup’s internal misconduct, regulatory findings, and direct involvement in OSA’s operations — to plausibly allege an agreement. The panel also concluded that plaintiffs sufficiently detailed overt acts and financial incentives linking Citigroup to the conspiracy.
Bottom Line: The Eleventh Circuit revived the case for the district court to again consider whether Citigroup unlawfully orchestrated a cash advance scheme.
Documents: Opinion
