Racketeering

Racketeering is often the commission of a series of criminal acts through a formal entity, such as a business, or an association of people, like the Mafia, to serve a corrupt purpose.

The term originated during the rise of labor and prohibition “rackets” in the late 1920s, as law enforcement categorized a new type of crime, one where members of an organized group engaged in illegal activities to profit a criminal enterprise.

Combatting these organized groups required new laws, and in 1970 the U.S. Congress enacted the Racketeer Influence and Corrupt Organizations (RICO) Law.

This unique statute allows prosecutors and civil attorneys to target multiple defendants and a series of sometimes disconnected crimes in one case – thereby attacking the organization instead of individually prosecuting each crime that was committed in service of the corrupt organization.

RICO can be prosecuted in two ways by the government (criminal) or by private citizens (civil):

Criminal RICO

Allows prosecutors to bring criminal charges (with enhanced penalties) against a group of individuals for a pattern of criminal activity for the purpose of accomplishing an illicit goal, if all the following elements are present:

An Enterprise – is either a formal legal entity like a corporation or an informal group of people associated with one another (like the Mafia). Any individual prosecuted under RICO must actively participate in managing the affairs of the enterprise and not merely be loosely tied to it.

Pattern of Racketeering Activity – The statute defines a pattern as committing at least two statutorily listed crimes, which RICO calls “predicate acts” within the last 10 years. But a RICO conspiracy can go back for decades, so long as the conspiracy also includes two predicate acts in the last 10 years.

Predicate Acts – the RICO statute explicitly enumerates 100 criminal acts including violent offenses, property offenses, drug offenses, and sex trafficking, as predicate acts under the law. Many state crimes can also be considered predicate acts under federal law, as well.

Interstate Commerce – under federal law, the criminal conduct must affect interstate commerce, but this is a very low standard and is easily proven in most cases.

By providing the means to prosecute and bring down criminal enterprises with a single legal action, RICO serves as a powerful hammer against organized crime.

Criminal RICO is punishable by up to 20 years in prison and large fines. If one of the crimes (i.e., predicate acts) carries a longer than 20 years’ sentence, the sentence can carry a sentence up to life (such as for murder).

Civil Rico

Allows private parties to sue in federal civil court for damages caused by an organization’s racketeering activities.

Civil RICO is defined by all the elements listed under criminal RICO, plus the added requirement that the racketeering activity involved proximately caused the loss to the plaintiff’s business or property. That means the loss suffered by the plaintiff must be directly attributable to the racketeering activity.

Civil RICO carries a penalty of treble damages and attorney’s fees and litigation costs and can include pre- and post-judgment interest. Defendants are usually held jointly and severally liable. And in some cases, a plaintiff can seek pretrial asset seizure to ensure that funds will be available to pay any final judgment.

RICO was designed with the purpose of undermining criminal organizations financially. Its use has evolved over the years. Plaintiffs’ lawyers often push RICO claims in business disputes when they can be shown to meet all the civil RICO elements. The Courts can often find ways to dismiss such RICO claims unless they are carefully crafted to meet elements.