RICO law on Racketeering

What is Racketeering

A racket is an organized criminal act, usually in which the criminal act is a form of business or a way to earn illegal money regularly or briefly but repeatedly. A racket is often a repeated or continuous criminal operation. Originally and often still specifically, a racket was a criminal act in which the perpetrator or perpetrators offer a service that is fraudulently offered to solve a nonexistent problem, a service that will not be put into effect, or a service that would not exist without the racket. Conducting a racket is racketeering. (1) Particularly, the potential problem may be caused by the same party that offers to solve it, but that fact may be concealed, with the specific intent to engender continual patronage for this party.

The most common example of a racket is the “protection racket”, which promises to protect the target business or person from dangerous individuals in the neighborhood and then either collects the money or causes damage to the business until the owner pays. The racket exists as both the problem and its solution, and it is used as a method of extortion.

However, the term “racket” has expanded in definition and may be used less strictly to refer to any illegal organized crime operation, including those that do not necessarily involve fraudulent practices. For example, “racket” may be used to refer to the “numbers racket” or the “drug racket”, neither of which generally or explicitly involve fraud or deception with regard to the intended clientele.

Racketeering is most often associated with organized crime, and the term was coined by the Employers’ Association of Chicago in June 1927 in a statement about the influence of organized crime in the Teamsters union. (2)

Examples of crimes that may be alleged to be part of a pattern of racketeering activity include, but are not limited to the following

A protection racket is a form of extortion whereby racketeers offer to “protect” property from damage in exchange for a fee, while also being responsible, in part or in whole, for the property damage. A fencing racket is an operation specializing in the resale of stolen goods. A numbers racket is any unauthorized lottery or illegal gambling operation. Money laundering and other creative accounting practices that are misused in ways to disguise sources of illegal funds. Theft operations, including: burglary, home invasion, robbery, identity theft, auto theft, art theft, car hijacking, truck hijacking, organized retail crime, shoplifting, and copyright infringement (including the sale of counterfeit goods) Fraud and embezzlement operations, including: credit card fraud, check fraud, health care fraud, insurance fraud, mail and wire fraud, securities fraud, bank fraud, mortgage fraud, skimming (fraud), electoral fraud, confidence tricks, and bid rigging KidnappingMurder and murder-for-hireBribery and police corruptionOrganized academic dishonesty by school administrators, as in the Atlanta Public Schools cheating scandalLoan sharking Computer crimes Drug trafficking Arms trafficking Extortion Prostitution and commercial sexual exploitation of children Human trafficking People smuggling Tax evasion and cigarette smuggling Witness tampering and intimidationSkimming (casinos) Operating chop shops Illegal gambling or bookmaking, including match fixingCriminal operation of otherwise ostensibly legal operations, such as strip clubs, casinos, and waste management firms Poaching, overfishing, illegal logging, illegal construction, and illegal mining Dog fighting, cockfighting, and bullfighting,  Tobacco and medical schemes.

 Racketeer Influenced and Corrupt Organizations Act

On October 15, 1970, the Racketeer Influenced and Corrupt Organizations Act (18 U.S.C. §§ 1961–1968), commonly referred to as the “RICO Act”, became United Stateslaw. The RICO Act allowed law enforcement to charge a person or group of people with racketeering, defined as committing multiple violations of certain varieties within a ten-year period. The purpose of the RICO Act was stated as “the elimination of the infiltration of organized crime and racketeering into legitimate organizations operating in interstate commerce”. S.Rep. No. 617, 91st Cong., 1st Sess. 76 (1968). However, the statute is sufficiently broad to encompass illegal activities relating to any enterprise affecting interstate or foreign commerce. Thus, RICO law refers to the prosecution and-or defense of anyone who engages in organized crime in the manner stated above.

Section 1961(10) of Title 18 provides that the Attorney General of the United States may designate any department or agency to conduct investigations authorized by the RICO statute and such department or agency may use the investigative provisions of the statute or the investigative power of such department or agency otherwise conferred by law. Absent a specific designation by the Attorney General, jurisdiction to conduct investigations for violations of 18 U.S.C. § 1962 lies with the agency having jurisdiction over the violations constituting the pattern of racketeering activity listed in 18 U.S.C. § 1961. (3) In the US, civil racketeering laws are also used in federal and state courts.

Exemples of Tobacco & Opiate Pharma Racketeering

Section under construction

Penalties in Criminal Court 

The RICO Act provides both criminal and civil penalties.  Claims can thus be brought by prosecutors on behalf of the government, or by private individuals. In criminal prosecutions, the jury must be convinced of the defendant’s guilt beyond a reasonable doubt and not in terms of a preponderance of the evidence. This is the highest burden of proof that exists in the American legal system. Although rare, especially for tobacco and pharmaceutical defenders, violations are punishable by up to 20 years in prison. The sentence can be increased to life in prison if authorized by the relevant statutes. Offenders also face a fine of either $250,000, or double the amount of the proceeds earned from the activity. 

Following a conviction the government is given a forfeiture of all of the defendant’s interest in the organization. So not only do defendants lose all their money and property that can be traced back to the criminal conduct, but the organization itself can be dismantled. Furthermore, the government does not need to wait until after a guilty verdict. More often then not, without prompt preventive action, the property expected to become subject to forfeiture is usually difficult to locate. Thus, the rules of procedure in a RICO prosecution allow the government to preliminarily freeze the defendant’s assets, way before the cas goes to trial and the Jury members give a verdict. 

Civil Remedies for Victims 

For civil claims brought by private parties who have been victimized by a criminal organization, the burden of proof is not as high standard as in a criminal court. In these cases, a preponderance of the evidence standard applies. This means the jury must find that it is at least slightly more likely than not that the racketeering activities did in fact happen as alleged. Despite the lower burden of proof, civil RICO lawsuits are difficult and expensive to pursue. Tobacco defendants often make expenses rise high in order to prevail.  Successful plaintiffs however can recover “treble damages,”,  that means three times the amount of money they lost due to the defendant’s abuses.

Constituent Elements needed to satisfy a RICO Claim 

Liability for a RICO violation requires that a person be involved in an enterprise that operates through a pattern of racketeering activity. Thus, the first element to  satisfy requires the establishment of proof that the defendant is operating under the guise of an enterprise, be it a corporations, partnerships, and other businesses.   The Supreme Court considered the issue, and determined that an enterprise can be any group with members who are associated in a relationship in order to achieve a common purpose, provided the relationship lasts long enough to allow them to pursue that purpose. In the terminology of RICO law, such groups are known as “association-in-fact” enterprises. Thus for potential defendants like tobacco or pharmaceutical corporations, this element is easily satisfied.

Another relevant element to satisfy is the showing  of “a pattern of racketeering activity”. The RICO Act itself defines the term pattern as two or more acts of racketeering activity within a 10-year period. The US Supreme Court has weighed in on this question and determined that to qualify as a pattern, the criminal activities must be related and continuous. Relatedness can be established if the crimes have similar characteristics such as the same perpetrators, victims, and methods of commission. Continuity is established if the crimes occurred over a substantial period of time. Some courts have interpreted this to mean at least one year. 

Conclusion

While it’s difficult for a plaintiff to prevail with this type of cause of action (claim), with enough funds, organization and motivation, a plaintiff (class action or individually) can be successful.  When Congress passed the Racketeer Influenced and Corrupt Organizations (RICO) Ac, it was especially  to combat Mafia groups. Since that time, the law has been expanded and used to go after a variety of organizations, from corrupt police departments to motorcycle gangs, tobacco corporations. RICO law  establishes severe consequences for those who engage in a pattern of wrongdoing as a member of a criminal enterprise. As we saw, Title 18, Section 1961 of the United States Code sets forth a long list of racketeering activities, the repeated commission of which can form the basis of a RICO Act claim. These underlying federal and state offenses exist independently of the act, and include the crimes of homicide, kidnapping, extortion, and witness tampering. Racketeering activities also include property crimes such as robbery and arson. A number of financial crimes are also listed, such as money laundering, counterfeiting, securities violations, as well as mail and wire fraud. Companies like Monsanto, Philip Morris and the Opiate pharmaceuticals may one day be potential defendants. Holistic practitioners should stay tune as criminal prosecution on the basis of RICO can be an effective way to improve the Nation’s public health system.

References

 1. “Racketeering”. Dictionary.com. Retrieved 2012-06-29.
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2. David Witwer, “‘The Most Racketeer-Ridden Union in America’: The Problem of Corruption in the Teamsters Union During the 1930s”, in Corrupt Histories, Emmanuel Kreike and William Chester Jordan, eds., University of Rochester Press, 2004. ISBN 1-58046-173-5
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Additional Reading

RICO Law 

Organizations Related to RICO Law

National Criminal Justice Reference Service – Organized Crime

Source Watch – Transnational Organized Crime

RICO Law – International

Centre for International Crime Prevention

CIA Annual Strategic Intelligence Review – International Organized Crime

Europol – European Law Enforcement Agency

International Association for the Study of Organized Crime (IASOC)

Interpol – Organized Crime

United Nations Convention against Transnational Organized Crime and its Protocols

Publications Related to RICO Law

Guide to the RICO Act

Text under construction, more later

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