Federal RICO Laws

In order to make it easier to prosecute organized crime, in 1970, Congress passed the Racketeer Influenced and Corrupt Organizations (RICO) law. RICO makes it a federal crime to participate in or make money from racketeering. Many states also have their own RICO laws.

This article will discuss what activities are illegal under the federal RICO law and the penalties for this criminal behavior.

What Is Racketeering?

Racketeering isn't one specific crime. Rather, it refers to a series of organized illegal activities of a criminal operation. The federal RICO law lists dozens of crimes that can make up illegal racketeering activity, from murder to bribery. This law targets not only organized crime (like the Mafia) but also otherwise legitimate businesses or associations engaged in ongoing, coordinated criminal activity (such as insider trading). Prosecutors have used RICO to reduce organized crime and to fight white-collar crime, fraud, political corruption, and even college admission scandals.

RICO allows prosecutors to bring all of an organization or enterprise's different criminal acts together in a single prosecution. The law permits both criminal prosecutions, which can include penalties of prison, fines, and forfeiture, as well as civil lawsuits, which involve monetary damages.

Federal Racketeering Influenced and Corrupt Organizations (RICO) Law

RICO prohibits several types of criminal activities. The key elements under RICO involve: (1) engaging in a pattern of racketeering activity (2) as part of, or in association with, a criminal enterprise that (3) affects interstate commerce. Below we'll discuss these elements in more detail.

What Is a Pattern of Racketeering Activity?

RICO targets a group's multiple instances of criminal wrongdoing—referred to in the law as a "pattern of racketeering activity."

Racketeering activity. The underlying crimes that make up a racketeering activity are known as predicate crimes, which can include everything from violent crimes (such as murder, kidnapping, and robbery) to drug crimes, gambling, bribery, mail fraud, money laundering, forgery, and embezzlement.

Pattern. In a RICO prosecution, the government must prove that the defendants engaged in a pattern of at least two or more predicate crimes committed within ten years of each other. In order for a pattern to exist, the predicate crimes must be related and show that the defendants did not merely commit one crime or unrelated, separate crimes but rather ongoing criminal activity. Proof of a pattern can often be shown based on the number and variety of acts, the length of time at issue, the number of victims and perpetrators, and the nature, complexity, and number of schemes. For example, one bank robbery, even if committed by a group of robbers, does not show a pattern. Several bank robberies committed over a period of months by the same people, using the same method, do show a pattern.

What Is a Criminal Enterprise?

Under RICO, a criminal enterprise may be a distinct legal entity (such as a corporation, partnership, or union) or merely a group of individuals working together informally (such as a criminal gang).

To constitute a criminal enterprise, the group must:

• be an ongoing organization that functions as a unit
• have a common purpose, and
• exist separate and apart from the members' criminal activity.

Purpose of the enterprise. The enterprise's purpose may be valid and legal, or it may only have an illegal purpose. For example, two criminals who came together one time to commit a kidnapping would not be considered a criminal enterprise. However, an association of businesspeople that met regularly and worked together for many years to, among other things, bribe several public officials in order to receive favorable city contracts, would probably be considered a criminal enterprise.

Connection to the enterprise. The prosecutor must also prove that the defendant participated in the operation, management, or conduct of the enterprise. Prosecutors do this by showing that a defendant had some level of control or investment in the criminal enterprise. Even a defendant who merely carried out orders, such as a mid-level drug dealer in a cartel, can be shown to have had control as long as the defendant acted with some discretion (decision-making power), such as by setting prices.

What Is Interstate Commerce?

In order to be prosecuted under the federal law (a jurisdictional requirement), RICO violations must involve or have some impact on interstate commerce (conducting business across state lines). Most of the time any enterprise that has a large economic effect, or that moves substantial amounts of money, goods, or people from one state to another, will meet this requirement.

What Are the Criminal Penalties for Racketeering?

Each count of racketeering is punishable by up to 20 years of incarceration. However, racketeering is punishable by life imprisonment if the predicate crime is punishable by life imprisonment (such as murder). The court can also impose a fine of up to twice the defendant's illegal profits.

RICO also permits criminal forfeiture of any assets earned or maintained through racketeering. This means that the government obtains legal title to the assets. For example, property such as land, cars, and equipment owned by a criminal enterprise can become the property of the federal government.

What Are the Civil Remedies for Racketeering?

In addition to criminal prosecutions, RICO also permits civil suits by private citizens (plaintiffs) who have suffered financial harm to their business or property because of racketeering. For example, a private nightclub owner whose business was being undercut by a competitor who engaged in illegal businesses, such as gambling and prostitution, could sue for damages.

In the lawsuit, the plaintiff must prove that a RICO violation occurred (see above elements) and that violation caused injury to the plaintiff in the form of economic harm. The link between the violation and the injury cannot be too remote or indirect.

If the plaintiff can prove a RICO violation and resulting injury, the federal court can order the defendant to:

• pay treble (triple) damages to the plaintiff
• pay the plaintiff's attorneys' fees, and
• stop engaging in certain activities or businesses (an injunction).

A court can also dissolve an organization (called equitable relief). For example, the court could order the defendant to dissolve a corporation that engaged in mail fraud.

Talk to a Lawyer

Federal RICO prosecutions or civil lawsuits associated with them can be extremely serious and include prison time, forfeiture of assets, and treble damages. If you are investigated for or charged with a RICO violation, or named as a defendant in a civil RICO suit, contact a local, experienced attorney as soon as possible. A qualified lawyer can tell you how you are likely to fare in court based on the facts, the judge in your case, and the prosecutor or plaintiff's attorney. An attorney can also help you navigate the court system and recommend the best course of action for the unique circumstances of your case.

(18 U.S.C. §§ 1961 to 1968 (2021).)