                           PUBLISHED

UNITED STATES COURT OF APPEALS
                 FOR THE FOURTH CIRCUIT


GE INVESTMENT PRIVATE PLACEMENT          
PARTNERS II, a limited partnership;
ARDHOUSE, LLC,
                Plaintiffs-Appellants,
                  v.
                                                No. 00-2240
TEDDY DALE PARKER; MLP
INVESTMENTS, INCORPORATED; ROBERT
W. STOUT; HENRY G. LEWIS, JR.;
DURHAM LEWIS,
              Defendants-Appellees.
                                         
            Appeal from the United States District Court
     for the Eastern District of North Carolina, at Wilmington.
                W. Earl Britt, Senior District Judge.
                         (CA-99-215-7-BR)

                       Argued: March 1, 2001
                       Decided: April 18, 2001

        Before WIDENER and MICHAEL, Circuit Judges,
     and Cynthia Holcomb HALL, Senior Circuit Judge of the
       United States Court of Appeals for the Ninth Circuit,
                      sitting by designation.


Affirmed by published opinion. Senior Judge Hall wrote the opinion,
in which Judge Widener and Judge Michael joined.


                             COUNSEL

ARGUED: Seth C. Farber, DEWEY BALLANTINE, L.L.P., New
York, New York, for Appellants. Eric Phillip Stevens, POYNER &
2      GE INVESTMENT PRIVATE PLACEMENT PARTNERS v. PARKER
SPRUILL, L.L.P., Raleigh, North Carolina, for Appellees. ON
BRIEF: Pressly M. Millen, Sean E. Andrussier, WOMBLE, CAR-
LYLE, SANDRIDGE & RICE, P.L.L.C., Raleigh, North Carolina, for
Appellants. David Dreifus, Jeffrey B. Welty, POYNER & SPRUILL,
L.L.P., Raleigh, North Carolina; Andrew O. Whiteman, HARTZELL
& WHITEMAN, L.L.P., Raleigh, North Carolina; Catharine B. Arro-
wood, R. Bruce Thompson, II, PARKER, POE, ADAMS & BERN-
STEIN, L.L.P., Raleigh, North Carolina, for Appellees.


                             OPINION

HALL, Senior Circuit Judge:

   In this appeal, we address the requirement that the plaintiffs prove
a "pattern of racketeering activity" under the RICO statute. Plaintiffs
GE Investment Private Placement Partners II ("GE Investment") and
Ardhouse, LLC, sued Defendants for violations of the Racketeer
Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C.
§§ 1962(c) and (d), violation of the federal securities laws, 15 U.S.C.
§ 78aa, and several state law claims for fraud, negligent representa-
tion, and unfair business practices. Defendants moved to dismiss the
complaint under Federal Rule of Civil Procedure 12(b)(6). The dis-
trict court referred the motion to a magistrate judge for a report and
recommendation, which the district court subsequently adopted. The
district court dismissed Plaintiffs’ RICO claims for failure to allege
a "pattern of racketeering activity," dismissed the federal securities
claim, and denied Plaintiffs leave to amend their complaint. The dis-
trict court dismissed without prejudice the pendent state law claims.

   Plaintiffs appeal only the dismissal of their RICO claims. We
affirm the judgment of the district court.

                                  I.

   Because the complaint was dismissed pursuant to Rule 12(b)(6),
we assume the facts alleged in the complaint are true. Mylan Labs.,
Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). Plaintiffs allege
as follows:
       GE INVESTMENT PRIVATE PLACEMENT PARTNERS v. PARKER            3
   Defendant Ted Parker ("Parker") founded and was the CEO and
sole shareholder of Ted Parker Home Sales ("TPHS"), a retail manu-
factured housing company that operated in North Carolina, South
Carolina, and Mississippi. The remaining defendants all held various
positions within TPHS. Plaintiffs Ardhouse and GE Investment were
investors in TPHS.

   Defendants engaged in a variety of fraudulent practices that
allowed Parker to siphon off cash from the company and inflate
TPHS’s value. TPHS purchased its mobile homes directly from man-
ufacturers, and each purchase was fully financed by a "floor plan
lender." The floor plan lender remitted the full invoice price directly
to the manufacturer in exchange for a security interest in the home,
periodic interest payments, and a promise by TPHS to repay the pur-
chase price when the house was sold. TPHS, however, had secret
arrangements with the manufacturers whereby the manufacturers gave
TPHS cash rebates and kickbacks but did not lower their invoice
prices to cover the rebates. Because it obtained financing through
floor plan lenders, TPHS did not need to have cash up front to pur-
chase new homes. Because the manufacturers gave TPHS the cash
rebates immediately, TPHS thus was able to increase its cash on hand
by purchasing inventory. TPHS recorded the rebates and kickbacks as
income upon receipt, but did not offset its liability to the floor plan
lenders, thereby creating a false impression of profitability. Parker
also siphoned off cash from TPHS through affiliated businesses and
through self-dealing.

   To keep sales going, TPHS instructed its sales personnel to engage
in the practice of "short down payments." According to this practice,
TPHS would issue checks to customers for worthless trade-in homes.
The customers would cash the checks from TPHS and use the cash
to obtain a bank check. The customers then would give the bank
check to TPHS as a phony cash down payment, which would allow
the customer to qualify for a mortgage. Ultimately, however, sales
could not keep pace with the purchase of homes from the manufactur-
ers, and the company would not be able to sustain itself under the bur-
den of massive loans by floor plan lenders.

  In spring of 1998, Parker decided to sell a majority of his invest-
ment in TPHS and hired Geneva Corporate Finance, Inc. ("Geneva")
4       GE INVESTMENT PRIVATE PLACEMENT PARTNERS v. PARKER
to find potential buyers. Defendants provided Geneva with false
financial information to include in an Offering Memorandum, which
Geneva circulated on Parker’s behalf. Ardshiel, Inc., an investment
firm that locates investments for Plaintiffs, received a copy of the
Memorandum in April 1998. In reliance on the Memorandum and its
false information, Ardshiel concluded that TPHS was a promising
investment and began negotiating for the acquisition of an interest in
TPHS by Plaintiffs.

   During the negotiations, Defendants provided false information
concerning TPHS’s average and projected sales. Defendants success-
fully concealed their fraudulent revenue recognition practices and the
nature of the inflated rebates received by TPHS from home manufac-
turers. On December 14, 1998, Plaintiffs executed agreements
whereby they acquired ownership of a substantial interest in TPHS.
Through a series of holding companies, Plaintiffs acquired 60% of the
common stock of TPHS and a $3 million note. In return, Parker,
through a holding company, received $32 million in cash plus notes
with a potential value of $69 million, $7 million in preferred stock,
and $5 million in TPHS assets. TPHS itself received $10 million in
cash. Some of the defendants received new employment contracts that
included stock options in TPHS. After the closing, TPHS paid Defen-
dants substantial bonuses.

   After the closing, Defendants remained involved in TPHS’s opera-
tions and continued to conceal TPHS’s declining financial condition.
As a result, in summer 1999, Plaintiffs loaned $5,655,000 to TPHS
and related companies to help TPHS through what Plaintiffs believed
were temporary liquidity problems. Defendants hoped to conceal their
fraud long enough to conduct an initial public offering. TPHS and the
holding companies were unable to stay afloat, however, and filed for
bankruptcy protection in June and July of 1999. In September 1999,
TPHS liquidated most of its assets for $1.2 million and the assump-
tion of various liabilities.

   On November 12, 1999, GE Investment and Ardhouse filed the
instant suit against Defendants in federal district court.1 They filed
    1
    Ted Parker and the other defendants in this case had previously filed
a related suit against GE Investment and Ardhouse in a North Carolina
state court on August 23, 1999. That case is ongoing.
       GE INVESTMENT PRIVATE PLACEMENT PARTNERS v. PARKER              5
their First Amended Complaint on December 22, 1999. On August
22, 2000, the district court granted Defendants’ motion to dismiss
under Rule 12(b)(6) and denied Plaintiffs leave to amend their com-
plaint.

                  II. STANDARDS OF REVIEW

   This court reviews the dismissal of claims pursuant to Rule
12(b)(6) de novo. Mylan Labs., 7 F.3d at 1134. On a Rule 12(b)(6)
motion to dismiss, a court must accept the factual allegations of the
complaint as true and must view the complaint in the light most favor-
able to the plaintiff. Id. The court should not affirm a motion to dis-
miss for failure to state a claim for relief unless "‘it is clear that no
relief could be granted under any set of facts that could be proved
consistent with the allegations.’" H.J. Inc. v. Northwestern Bell Tel.
Co., 492 U.S. 229, 249-50 (1989) (quoting Hishon v. King & Spal-
ding, 467 U.S. 69, 73 (1984)).

   We review the district court’s denial of leave to amend the com-
plaint for an abuse of discretion. HCMF Corp. v. Allen, 238 F.3d 273,
276-77 (4th Cir. 2001). Leave to amend may properly be denied
where amendment would be futile. Id. at 276.

                         III. DISCUSSION

   The RICO statute creates civil liability for those who engage in a
"pattern of racketeering activity." 18 U.S.C. §§ 1962, 1964. The stat-
ute defines racketeering activity to include, among other acts, acts of
mail and wire fraud. 18 U.S.C. § 1961(1). The district court struck
several of Plaintiffs’ allegations of predicate acts of mail and wire
fraud for failure to satisfy the specificity requirement of Federal Rule
of Civil Procedure 9(b). The district court then denied Plaintiffs leave
to amend their complaint on the ground that amendment would be
futile. We do not reach Plaintiffs’ challenge to the district court’s
Rule 9(b) determinations because, as we explain below, even when all
the allegations in Plaintiffs’ complaint are considered, they nonethe-
less fail to establish a pattern of racketeering activity. Thus, amend-
ment to cure the Rule 9(b) deficiencies, if any, would be futile, and
we need not reach the issue.
6      GE INVESTMENT PRIVATE PLACEMENT PARTNERS v. PARKER
   The district court also struck Plaintiffs’ allegations of fraud against
the floor plan and consumer lenders because Plaintiffs did not rely to
their detriment on Defendants’ misrepresentations to the lenders. In
Chisolm v. Transouth Financial Corp., 95 F.3d 331 (4th Cir. 1996),
we held that where a RICO plaintiff alleges predicate acts of mail and
wire fraud as a proximate cause of the plaintiff’s injury, the plaintiff
also "must have justifiably relied to his detriment on the defendant’s
material misrepresentation." Id. at 337. Plaintiffs do not allege such
reliance. Yet although Plaintiffs could not recover based solely on
predicate acts of fraud directed at the lenders, it does not follow that
Plaintiffs are barred from using such allegations of fraud to establish
a pattern of racketeering activity. Where, as here, the plaintiffs allege
acts of fraud for which they satisfy Chisolm’s reliance requirement,
the plaintiffs properly may allege acts of related fraud against other
victims to establish a pattern of racketeering activity. See, e.g.,
Menasco, Inc. v. Wasserman, 886 F.2d 681, 685 (4th Cir. 1989) (rec-
ognizing that the RICO plaintiff could allege a pattern of racketeering
activity if the plaintiff alleged that the defendants had used similar
fraudulent schemes to defraud over twenty other investors). We there-
fore consider Plaintiffs’ allegations of mail and wire fraud against the
lenders in analyzing whether Plaintiffs allege a pattern of racketeering
activity.

   A "pattern of racketeering activity" requires "at least two acts of
racketeering activity." 18 U.S.C. § 1961(5). While a minimum of two
predicate acts is required, two acts alone do not necessarily establish
a pattern. Sedima v. Imrex Co., Inc., 473 U.S. 479, 496 n.14, 497
(1985). To establish a pattern of racketeering activity, the plaintiff
must show that the predicate acts are related and that they "amount
to or pose a threat of continued criminal activity." H.J. Inc., 492 U.S.
at 239. The parties do not dispute whether the predicate acts of mail
and wire fraud in this case are related, and we agree that the acts sat-
isfy the relatedness requirement. The question is whether Plaintiffs
establish the requisite continuity.

   Continuity refers "either to a closed period of repeated conduct, or
to past conduct that by its nature projects into the future with a threat
of repetition." Id. at 241. Closed-ended continuity may be established
by a "series of related predicates extending over a substantial period
of time." Id. at 242. "Predicate acts extending over a few weeks or
       GE INVESTMENT PRIVATE PLACEMENT PARTNERS v. PARKER               7
months and threatening no future criminal conduct do not satisfy this
requirement." Id. Open-ended continuity may be established where,
for example, the "related predicates themselves involve a distinct
threat of long-term racketeering activity," or where the predicate acts
"are part of an ongoing entity’s regular way of doing business . . . or
of conducting or participating in an ongoing and legitimate RICO
enterprise." Id. at 242-43. We are "cautious about basing a RICO
claim on predicate acts of mail and wire fraud because it will be the
unusual fraud that does not enlist the mails and wires in its service at
least twice." Al-Abood v. El-Shamari, 217 F.3d 225, 238 (4th Cir.
2000) (internal quotations and citations omitted). RICO liability is
reserved for "ongoing unlawful activities whose scope and persistence
pose a special threat to social well-being." Menasco, 886 F.2d at 684.

   After considering all of the allegations in Plaintiffs’ complaint, we
conclude that the complaint does not establish the requisite continuity.
This case presents, as Plaintiffs themselves describe it, a scheme "to
defraud potential investors and plaintiffs by misleading them into
believing that [TPHS] . . . was a thriving, financially successful busi-
ness when in fact it was nothing more than a sophisticated Ponzi
scheme." Defendants’ conduct was all designed for the single goal of
allowing Defendants to profit from their interests in TPHS. Through
fraud, Defendants inflated TPHS’s cash position and value, then
"cashed out" by selling a controlling interest in the company. The
courts, however, have repeatedly recognized that such schemes
involving fraud related to the sale of a single enterprise do not consti-
tute, or sufficiently threaten, the "long-term criminal conduct" that
RICO was intended to address. See, e.g., Vicom, Inc. v. Harbridge
Merchant Serv., Inc., 20 F.3d 771, 782-83 (7th Cir. 1994) (finding no
pattern where the defendants engaged in fraud against thousands of
merchants but the fraud was designed to inflate the company’s net
worth); Banks v. Wolk, 918 F.2d 418, 423 (3d Cir. 1990) (finding no
pattern where the defendant engaged in fraud to affect the purchase
price of a single building). Where the fraudulent conduct is part of the
sale of a single enterprise, the fraud has a built-in ending point, and
the case does not present the necessary threat of long-term, continued
criminal activity. See id.; see also Thompson v. Paasche, 950 F.2d
306, 311 (6th Cir. 1991) (finding no pattern where the defendant’s
fraudulent scheme was made inherently short-lived by the limited
number of lots that the defendant had to sell). Further, there is no alle-
8      GE INVESTMENT PRIVATE PLACEMENT PARTNERS v. PARKER
gation in this case that Defendants have engaged in a similar scheme
involving any other enterprise. Compare Menasco, 886 F.2d at 685
(recognizing that the plaintiffs could allege a pattern if they alleged
that the defendants engaged in similar schemes to defraud over twenty
other investors).

   Plaintiffs argue that open-ended continuity is established by their
allegation that the fraud against the lenders was Defendants’ "regular
way of doing business." Plaintiffs thus attempt to fit their case into
the statement in H.J. Inc. that open-ended continuity may be estab-
lished by showing that the predicate acts "are part of an ongoing enti-
ty’s regular way of doing business." H.J. Inc., 492 U.S. at 242. The
predicate acts of fraud directed at the lenders are relevant in this case
only insofar as they are related to the acts of fraud directed at Plain-
tiffs, however. Further, the other allegations in the complaint belie
Plaintiffs’ contention that the fraud against the lenders was Defen-
dants’ regular way of doing business. As Plaintiffs explain, the very
nature of the lender fraud was such that Defendants could not con-
tinue the fraud beyond a limited period of time. Further, even though
Defendants continued to manage TPHS after Plaintiffs invested, the
lender fraud stopped with Plaintiffs’ investment, thus demonstrating
that the fraud was not Defendants’ regular way of doing business.
Instead, the lender fraud was a way for Defendants to temporarily
increase TPHS’s cash position, but was not the sort of fraud that
presented a particular threat of continuing into the future.

   Plaintiffs also contend that because Defendants intended an initial
public offering of TPHS stock, open-ended continuity is established.
We disagree. An IPO would merely be the culmination of Defen-
dants’ scheme to "cash out" by selling TPHS. While an IPO might
increase the number of victims of Defendants’ fraud, those victims
would be in the same class as Plaintiffs—other investors. The nature
of Defendants’ scheme would not change. The IPO would simply
complete what was started with Plaintiffs’ investment.

   Plaintiffs also point to the July 1999 loan that Defendants induced
Plaintiffs to make as demonstrating a threat of continued fraud. Yet
the loan appears to be nothing more than part of a failed coverup. Fur-
ther, when the loan is viewed in conjunction with the alleged IPO, the
       GE INVESTMENT PRIVATE PLACEMENT PARTNERS v. PARKER               9
loan is simply part of Defendants’ plan to keep the company’s finan-
cial problems concealed long enough to finish "cashing out."

   Finally, Plaintiffs argue that even if Defendants’ conduct was noth-
ing more than "a scheme to defraud potential investors" and involved
only a single business, such a scheme may nonetheless establish
closed-ended continuity under Morley v. Cohen, 888 F.2d 1006 (4th
Cir. 1989). In Morley, the plaintiffs were investors in the defendants’
coal mining operations. As a result of the defendants’ misrepresenta-
tions, the plaintiffs were induced to make repeated investments in the
mining operations and were lulled into leaving their investments with
the defendants for five years. The court concluded that the five-year
duration of the defendants’ fraudulent conduct established the requi-
site continuity. Id. at 1010. In this case, however, Plaintiffs allege
predicate acts of fraud spanning only seventeen months. Even if
Plaintiffs establish that the lender fraud began as early as April 1997,
the duration of the fraudulent conduct is only about two years. This
case does not present the type of persistent, long-term fraudulent con-
duct that the court faced in Morley or in other cases addressing
closed-ended continuity. See Walk v. Baltimore & Ohio R.R., 890
F.2d 688, 690 (4th Cir. 1989) (finding the requisite continuity estab-
lished only by the ten-year duration of the defendants’ fraudulent con-
duct); Flip Mortgage Corp. v. McElhone, 841 F.2d 531, 538 (4th Cir.
1988) (finding no pattern even though the defendants’ conduct took
place over seven years).

   We recognize that Plaintiffs suffered a significant loss as a result
of Defendants’ fraud. As we have repeatedly noted, however, RICO
treatment is reserved for conduct "whose scope and persistence pose
a special threat to social well-being." Menasco, 886 F.2d at 684. After
considering all of the allegations in Plaintiffs’ complaint, we are satis-
fied that Defendants’ conduct does not fall "sufficiently outside the
heartland of fraud cases to warrant RICO treatment." Al-Abood, 217
F.3d at 238. We thus conclude that the district court did not err in dis-
missing Plaintiffs’ RICO claims under Rule 12(b)(6), and did not
abuse its discretion in denying Plaintiffs leave to amend.2 Further,
  2
   Because the pleadings do not state a substantive RICO claim under
§ 1962(c), Plaintiffs’ RICO conspiracy claim fails as well. Efron v.
Embassy Suites (Puerto Rico), Inc., 223 F.3d 12, 21 (1st Cir. 2000), cert.
denied, 121 S.Ct. 1228 (2001).
10     GE INVESTMENT PRIVATE PLACEMENT PARTNERS v. PARKER
because the district court dismissed Plaintiffs’ federal law claims, the
court did not abuse its discretion in dismissing Plaintiffs’ pendent
state law claims. See 28 U.S.C. § 1367(c)(3).

                        IV. CONCLUSION

  Accordingly, we affirm the district court’s dismissal of Plaintiffs’
RICO claims and its dismissal of Plaintiffs’ pendent state law claims.

                                                           AFFIRMED
