In the
 United States Court of Appeals
              For the Seventh Circuit
                         ____________

No. 06-1160
PHOENIX BOND & INDEMNITY CO. and
BCS SERVICES, INC.,
                               Plaintiffs-Appellants,
                       v.

JOHN BRIDGE, et al.,
                                         Defendants-Appellees.
                         ____________
       Appeal from the United States District Court for the
          Northern District of Illinois, Eastern Division.
       No. 05 C 4095—James F. Holderman, Chief Judge.
                         ____________
 ARGUED JANUARY 16, 2007—DECIDED FEBRUARY 20, 2007
                    ____________

 Before EASTERBROOK, Chief Judge, and POSNER and
EVANS, Circuit Judges.
  EASTERBROOK, Chief Judge. Failure to pay property
taxes creates a lien for the amount of the unpaid tax
(including interest), plus a penalty. Cook County, Illinois,
sells tax liens at auction. The bids are stated as per-
centage penalties that the owner must pay (on top of the
taxes and interest) to the winning bidder to clear the lien.
The bidder willing to accept the lowest penalty wins the
auction; the winner pays the back taxes to the County
and receives the tax lien plus the right to collect the
penalty. If the owner does not pay up, the lien holder can
obtain a tax deed and thus become the parcel’s owner.
2                                              No. 06-1160

   State law sets the maximum penalty at 18%, see 35
ILCS 200/21-215, and the County’s regulations set the
minimum penalty at zero. Most parcels attract multiple
bids at 0% penalty. The bidders expect to make their
profits not by collecting surcharges from owners but from
reselling (for more than the amount paid to the County
in back taxes) the parcels of owners who do not pay.
Vigorous competition among bidders has driven the
winning penalty down to the floor, and from the County’s
perspective this is all to the good: it recovers the taxes,
and owners need not pay extra. But multiple, identical
bids pose a problem: who wins the auction? The County
might allow negative bids (so the owner could redeem by
paying less than the face amount of the tax), and then
the market would clear, but the regulations forbid such
bids—perhaps because a negative penalty would lead
rational owners not to pay their taxes until after the
liens had been sold.
  The County’s solution to the problem of multiple bids at
0% is allocation by lot. If X bids 0% on ten parcels, and
each parcel attracts five bids at that penalty rate, then
the County awards X two of the ten parcels. Winners
share according to the ratio of their bids to other iden-
tical bids. This creates an incentive to submit multiple
bids per parcel, either directly or through agents. If Y
submits two bids per parcel, then its take from the auc-
tion will be double that of X. To prevent this, the County
promulgated what it calls the “Single, Simultaneous
Bidder Rule": each “tax buying entity” must submit bids
in its own name, and no “related entity” may bid. A
“related entity” is any other person or firm that either (a)
has a shareholder, partner, principal, or officer in com-
mon with the “tax buying entity,” or (b) has a “contractual
relationship with” the “tax buying entity.” Thus if Jones
is a partner in Y, a bidder at the sale, any other business
in which Jones has an ownership or management role is
No. 06-1160                                                3

forbidden to participate; likewise Z can’t participate if it
has a contractual relation with Y (for example, if Z has
agreed to sell to Y any of the tax liens that Z receives at
the auction). Before each auction, every potential bidder
must furnish the County with an affidavit that no agent
or other related entity will participate in that auction.
  Phoenix Bond and BCS Services, two regular partici-
pants in Cook County’s tax sales, contend that Sabre
Group, LLC, and its principal Barrett Rochman regularly
violate the Single, Simultaneous Bidder Rule by arrang-
ing for related firms to bid, and that as a result Sabre
Group obtains an extra portion of profitable liens. If this
is so, then Sabre Group’s affidavit must be false; and if
it is false, the Sabre Group knows that it is false and
hence has committed fraud. Because the tax-sale process
employs the mail—perhaps to send affidavits, and cer-
tainly to send notices to owners that the liens have been
sold and the taxes must be paid or the property for-
feited—any fraud that affects which bidders obtain how
many liens is “mail fraud.” See Schmuck v. United States,

(1989). And because Sabre and its affiliates
have engaged in a pattern of mail fraud, the argument
goes, a private treble-damages remedy is available under
the Racketeer Influenced and Corrupt Organizations
Act, 18 U.S.C. §1964. The damages would be set by the
value of the liens that would have gone to Phoenix Bond
and BCS Services had Sabre Group and its affiliates
complied with the Single, Simultaneous Bidder Rule.
  This at any event is the theory that plaintiffs advance.
They did not get very far, however. The district court
dismissed the complaint under Fed. R. Civ. P. 12(b)(1) for
lack of standing, and thus absence of federal jurisdiction.

(N.D. Ill. Dec. 21, 2005). The
County is the proper plaintiff, the district court concluded.
  Standing is not a problem in this suit. Plaintiffs suffer
injury in fact, and that injury can be redressed by dam-
4                                               No. 06-1160

ages. Extra bids reduce plaintiffs’ chance of winning any
given auction, and loss of a (valuable) chance is real injury.
So the Supreme Court held in Northeastern Florida
Chapter, Associated General Contractors of America v.
Jacksonville, 

(1993). Thousands of liens are
sold at each auction. Plaintiffs suffer an actual (and
substantial) reduction in the number of liens they take
away. No more need be said about standing.
  Injury in fact is not sufficient under RICO, however; the
plaintiff also must establish that its injury was proxi-
mately caused by the defendants’ scheme. See Anza v.
Ideal Steel Supply Corp., 

(2006); Holmes v.
SIPC, 

(1992). The Court acknowledged in
Holmes that “proximate causation,” a term long used
in tort law, poses a set of questions to ask; it is not a
formula that may be applied 

. Is someone else a distinctly better enforcer? Does
the presence of intermediate parties make it too hard to
calculate damages—or create a risk that recovery by this
plaintiff will come at the expense of someone with a better
claim? If so, then suit by the remotely injured person
should not be allowed.
  In Holmes, for example, manipulation supposedly
caused the price of shares in six firms to decline substan-
tially; broker-dealers that had specialized in those firms’
securities for their own accounts went bankrupt and were
liquidated; when the broker-dealers failed, customers
whose funds had been invested in other securities suf-
fered because the broker-dealers could not keep promises
to their customers (for example, could not pay in full for
other securities that the customers had sold); the Securi-
ties Investor Protection Corp., which paid off the custom-
ers’ claims against the broker-dealers, then sued the
persons supposedly responsible for the manipulation
that set off this chain of events. The Court held that the
broker-dealers (or their trustees in bankruptcy) that had
No. 06-1160                                                 5

invested in the securities subject to the manipulation, and
not persons who suffered derivative injury when the
broker-dealers failed, were the right plaintiffs. SIPC
was subrogated to the customers’ claims, but the cus-
tomers did not suffer immediate injury and could not
use RICO to recover ahead of the broker-dealers’ other
customers. See also Mid-State Fertilizer Co. v. Exchange
National Bank, 

(7th Cir. 1989) (favorably
cited in 

). Any money that the
broker-dealers recovered could be used to satisfy all
claims against them. Recovery by the SIPC would cut
out the broker-dealers’ other creditors.
  In Anza the plaintiffs were business rivals of retailers
that allegedly had cheated on their taxes. The theory of
causation was that, by not paying sales taxes, defendants
reduced their costs of doing business and thus could cut
the retail price; consumers then bought less from the
plaintiffs (and for less per unit, as plaintiffs had to com-
pete with defendants’ low prices). The entity directly
injured by the fraud was the polity entitled to the taxes,
and the Court thought that it would be too difficult to
determine how much (if any) of the tax savings had been
passed on to customers. Cf. Kansas v. Utilicorp United
Inc., 

(1990); Illinois Brick Co. v. Illinois, 

(1977). Instead of trying to determine what had
been passed on—and to apportion damages if the gov-
ernmental bodies also sued—the Court thought it best to
allocate the entire claim to the immediate victim.
  Defendants maintain that Cook County is the victim of
their fraud (supposing, as they must at the pleading
stage, that they have committed fraud). Yet Cook County
did not lose even a penny: each winning bidder always
pays all back taxes and interest. The bidding at these
auctions concerns how much the owners must pay in
penalties, not how much the County receives. And as long
as competition drives the bidding down to 0% penalty,
6                                             No. 06-1160

property owners are indifferent to who acquires the tax
lien. The only injured parties are the losing bidders, who
acquire fewer tax liens than they would if the Single,
Simultaneous Bidder Rule were followed.
   To see this, suppose the FCC decides to award 500 radio
licenses for $10,000 each by lottery and insists that each
person submit only one entry directly or through any
related entity. If Jones arranges for friends, family, and
a raft of newly formed corporations to submit 1,000
entries, honest entrants would be crowded out, while
Jones could end up with multiple licenses. The honest
entrants would be the only losers: the federal Treasury
would still receive $10,000 per license, and the general
population would be indifferent (presumably all winners
would resell their licenses to whoever could make best
use of the frequencies).
  It is possible to imagine circumstances under which the
County (or at least its taxpayers) would be a victim
of cooperation among bidders. If all of the potential bid-
ders get together and agree to raise the penalty to 10% or
even 18%, that would constitute a monopsony cartel, and
the taxpayers would be the worse for it. But defen-
dants (understandably) do not contend that they have
organized a cartel, a line of argument that would win this
suit at the expense of establishing the Antitrust Division
and the property owners as potential plaintiffs. For their
part, plaintiffs do not allege that defendants have formed
a cartel, for a cartel would be to their benefit. If defen-
dants raised the penalty bid even to 1%, plaintiffs and
anyone else outside the group could bid 0% and obtain
all of the liens. Even a few non-cooperating bidders
would spoil the cartel. On the allegations of plaintiffs’
complaint there is no cartel, and therefore plaintiffs
rather than the County or the property owners are the
immediately injured parties.
No. 06-1160                                                7

  Doubtless the County could enforce its own rule, even
though it loses nothing financially from the submission of
multiple bids by related bidders. But of course the com-
plaint alleges that defendants are lying to the County,
which makes enforcement difficult—defendants’ affidavits
assure the County that the Rule is being complied with.
Anyway, the proposition “G can penalize fraud” differs
from the proposition “G is the immediate victim of fraud.”
If a government’s ability to penalize fraud knocked out
private litigation, then §1964 would no longer apply when
the predicate act is fraud, for governments always have
some ability to detect and penalize frauds.
   According to defendants, the suit should be dismissed
even if plaintiffs are the immediate and principal (if not
the only) losers. That’s so, defendants say, for two reasons:
first, no false statements were made to plaintiffs; the
affidavits were filed with the County. Second, plaintiffs
are not in the “zone of interests” protected by the statute
making mail fraud a federal crime. These come to largely
the same thing, and the argument is not sound which-
ever way it is put.
  The mail fraud statute, 18 U.S.C. §1341, defines a
fraudulent scheme, rather than a particular false state-
ment, as the crime. It is illegal to obtain money by a
scheme that entails fraud, if use of the mail is integral to
the scheme. That’s why it is unnecessary to show that
the false statement was made to the victim. A scheme
that injures D by making false statements through the
mail to E is mail fraud, and actionable by D through
RICO if the injury is not derivative of someone else’s. So
we held in both In re EDC, Inc., 

, 1279-80
(7th Cir. 1991), and Israel Travel Advisory Service, Inc. v.
Israel Identity Tours, Inc., 

, 1257 (7th Cir.
1995), and we see no reason to change course. Three other
circuits that have considered this question agree with our
conclusion that the direct victim may recover through
8                                               No. 06-1160

RICO whether or not it is the direct recipient of the false
statements. See Mid Atlantic Telecom, Inc. v. Long Dis-
tance Services, Inc., 

, 263-64 (4th Cir. 1994);
Systems Management, Inc. v. Loiselle, 

, 103-
04 (1st Cir. 2002); Ideal Steel Supply Corp. v. Anza, 

, 263 (2d Cir. 2004), reversed on other grounds,
Anza v. Ideal Steel Supply Corp., 

(2006).
But see Vandenbroeck v. CommonPoint Mortgage Co., 

, 701 (6th Cir. 2000) (plaintiffs must show that
they “in fact relied upon [the defendant’s] material misrep-
resentation”); Sikes v. Teleline, Inc., 

, 1360-
61 (11th Cir. 2002) (same). The box score is thus four
circuits on one side and two on the other; we shall ad-
here to the majority position. (Changing sides could not
eliminate the conflict.)
  Defendants say that Phoenix Bond and BCS Services
are not in the zone of interests protected by the mail
fraud statute because they weren’t taken in by any false
statement. That’s just a different take on the proposition
that only recipients of the untruth have a remedy. When
we articulated a zone-of-interests approach in EDC and
Israel Travel, it was to drive home the point that the
injury must be direct rather than derivative. We said, for
example, that “business rivals may not use RICO to
complain about injuries derivatively caused by mail
frauds perpetrated against customers” (61 F.3d at 1258)
and that “victims of fraud are the object of solicitude;
§1341 does not establish a regime of truth-telling without
regard to details like who is losing out and why” (ibid.). We
summed up: “firms suffering derivative injury from
business torts . . . must continue to rely on the common
law . . . rather than resorting to RICO” (ibid.). Because a
zone-of-interests approach so closely overlaps the law as
developed in Holmes and Anza, it serves no independent
role. When the injury satisfies the requirements of Holmes
and Anza, it cannot be knocked out by a zone-of-interests
No. 06-1160                                            9

requirement that has no purchase in the text of either
§1341 or RICO.
                              REVERSED AND REMANDED
A true Copy:
      Teste:

                     ________________________________
                      Clerk of the United States Court of
                        Appeals for the Seventh Circuit




                 USCA-02-C-0072—2-20-07