Federal RICO Laws
In order to make it easier to prosecute organized crime, in 1970 Congress passed the Racketeer Influenced and Corrupt Organizations law (RICO). Under RICO, it is a federal crime to participate in or make money from racketeering (organized, illegal activity). The law permits both criminal prosecutions, which can result in imprisonment and forfeiture (government seizure) of ill-gotten gains; and civil lawsuits, in which those harmed financially by the illegal activity can sue the perpetrators for damages.
The federal law targets not only organized crime, such as the Mafia, but also otherwise legitimate businesses or associations engaged in criminal activity. Federal prosecutors have used RICO to reduce organized crime and to fight white-collar crime, fraud, and political corruption. RICO allows prosecutors to bring all of an organization’s different criminal acts together in a single prosecution.
Many states have their own RICO laws. For more information on state laws, see State RICO Laws.
For more information on a particular way prosecutors use the federal RICO law, see Can a Retail Theft Gang be Indicted Under the Federal RICO Statute?
Activity Targeted by RICO
Under RICO, it is a federal crime to do any of the following:
- use money earned from racketeering activity or from the collection of an unlawful debt to acquire, establish, or operate any enterprise (business or organization) that affects interstate commerce
- acquire or maintain an interest in any enterprise through racketeering activity
- conduct the legal or illegal affairs of a business or organization through racketeering activity, or
- conspire to do any of the above.
To successfully prosecute a defendant, federal prosecutors must prove to the jury all of the following:
- A pattern of racketeering. For example, if members of a street gang were engaged in drug sales and also bought guns illegally and beat up people to protect their turf from other drug dealers, that would probably be considered a pattern of racketeering.
- A criminal enterprise. In order for the gang to be considered a criminal enterprise, some gang members must work together over time and one person or a group of people must have the ability to make decisions for the group as a whole, and
- An effect on interstate commerce.
The sections below explain these elements of a RICO prosecution in more detail.
Pattern of Racketeering
RICO targets a group’s multiple instances of criminal wrongdoing. The underlying crimes that make up a racketeering charge are known as “predicate crimes.” In a RICO prosecution, the government must prove that the defendant(s) committed two or more predicate crimes within the past ten years, not including any period of imprisonment.
What is a “pattern?”
In order for a pattern to exist, the predicate acts must be related and show that the defendant(s) did not merely commit one crime, but participated in ongoing criminal activity. For example, one bank robbery, even if committed by a group of robbers, does not show a pattern. Several bank robberies over a period of months by the same people, using the same method, does show a pattern.
Whether a pattern of illegality exists (and not simply unrelated, separate crimes) will depend 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. The acts can be simultaneous and can have one victim or many, but several acts that further one criminal scheme do not constitute a pattern.
For example, two attempts to extort money will be a pattern; one attempt to bribe an official and a successful act of bribery will be a pattern; but one completed act of murder, even if there were several attempts leading up to it, will constitute only one act and not likely be a pattern.
The list of predicate crimes is long and broad. It includes everything from violent crimes such as murder, kidnapping, and robbery; to drug crimes, gambling, bribery, mail fraud, money laundering, forgery, and embezzlement.
Under RICO, a criminal enterprise may be a distinct legal entity (such as a corporation, partnership, or a union) or merely a group of individuals associated in fact (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.
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.
Operation or management
The prosecutor must also prove that the defendant participated in the operation or management of the enterprise. Prosecutors do this by showing that a defendant had some level of control over 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.
In order to be prosecuted under the federal law, RICO violations must involve or have some impact on interstate commerce. 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.
Punishment for Racketeering
Each count of racketeering is punishable by up to 20 years’ imprisonment. Racketeering is punishable by life imprisonment if the predicate crime is punishable by life imprisonment. The court can also impose a fine of up to twice the defendant’s illegal profits.
RICO also permits 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 after a civil forfeiture proceeding.
In addition to criminal prosecutions, RICO also permits civil suits by private citizens (plaintiffs) who have suffered financial harm, whether harm to their business or damage to their 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.
Civil lawsuit requirements
In a federal civil lawsuit that asks for money damages due to a RICO violation, the plaintiff must prove the same things that the federal prosecutor must prove in a criminal trial, namely:
- a pattern of racketeering
- by a criminal enterprise, with
- some impact on interstate commerce.
In addition, the civil plaintiff must prove that the RICO 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.
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.
Getting Legal Advice and Counsel
The consequences of a federal RICO prosecution or civil suit are extremely serious and can include prison, forfeiture of assets, and treble damages. If you are investigated or charged with a RICO violation, or named as a defendant in a civil RICO suit, you should contact an attorney who has experience defending these sorts of cases. An experienced attorney who is a regular practitioner in federal court 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 obtain the best possible outcome in your case.