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Racketeering/RICO

Racketeering

What Is Racketeering?

Racketeering is not a single crime or a single criminal act, but an organized scheme. It may include many different crimes occurring over a period of time. When the Racketeer Influenced and Corrupt Organizations Act (RICO Act) was passed in 1970, Congress used it to fight organized crime in the traditional sense, as depicted in movies like "Scarface" and popular television shows like "The Sopranos," but the law has also been used in a variety of other ways. Many states have enacted laws similar to the federal RICO Act.

This article explains the crime of racketeering. It discusses the scope of the law used to bring racketeers to justice. It shares examples of criminals charged under RICO and the civil and criminal punishments.

What is Racketeering?

According to the U.S. Department of Justice:

"It is unlawful for anyone employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt."

While this does not completely define racketeering, it identifies key requirements:

  • It affects commerce
  • It occurs at an organizational level
  • It involves a pattern of activity

Federal racketeering charges cover crimes committed using extortion or coercion, not just physical violence.

RICO also introduced the concept of "predicate acts": criminal offenses that are used to carry out a more serious crime. Blackmail, extortion, and wire fraud, for example, may be needed to carry out a later theft crime. They are therefore predicate acts.

These crimes involve the operation or use of a business. While the business itself may be legitimate, it may be used to run an illegal scheme. The business may be a "front" for laundering money or other concealed criminal activity.

Why is this Crime Called Racketeering?

According to the Old English Dictionary, the term first appeared in England in 1810. It referred to pickpockets who used loud diversions to distract their victims. The word appeared again in the U.S. during Prohibition. It referred to a dishonest or fraudulent line of business or swindling scheme.

During Prohibition, the production and distribution of illegal alcohol created a new class of criminal mobs. Skyrocketing profits from alcohol and related crimes led to the rise of the infamous mafia families of New York: the Gambinos, Genoveses, Luccheses, Bonnanos, and Colombos.

Before Congress enacted RICO, state and federal prosecutors found it very difficult to end these rackets. They could easily convict lower-ranking members of the gangs because they were the ones who actually performed the illegal activities. However, the masterminds behind the organized crime rings were harder to prosecute because they lacked direct connections to any of the crimes.

The RICO statute was designed to change that.

What Are RICO Charges?

In 1970, Congress enacted the Racketeer Influenced and Corrupt Organizations Act, or RICO (18 U.S.C. section 1961). It (and equivalent state laws) provided prosecutors with the tools they needed to fight organized crime. It was no longer necessary to prove that a mob leader personally committed the crime.

Racketeering charges are often used to bring down criminal operations and crime rings. The RICO Act applies to thirty-five different criminal offenses. It covers crimes frequently associated with organized crime, such as illegal gambling, prostitution, collection of unlawful debt (protection money), counterfeiting, money laundering, kidnapping, and murder for hire.

RICO extends far beyond that, covering a diverse array of federal crimes, such as:

  • Slavery and human trafficking
  • Trafficking in controlled substances (drug trafficking) and weapons
  • Tampering with a witness and obstruction of justice
  • Copyright infringement
  • False use of a passport
  • Acts of terrorism

Recently, the federal government used RICO to prosecute college test administrators involved in admissions cheating. The Justice Department even debated using RICO to charge defendants in the January 6 coup attempt on the U.S. Capital.

Prosecuting Racketeers for RICO Violations

There are four ways to violate the criminal provisions of RICO laws.

  1. Invest or spend money earned from a criminal racketeering enterprise (designed to stop money laundering)
  2. Acquire or control an enterprise through racketeering
  3. Participate directly or indirectly in racketeering activity or collection of unlawful debt
  4. Directly or indirectly conspire to commit certain criminal acts as part of a criminal enterprise

According to the U.S. Justice Department, in order to successfully convict someone on federal racketeering charges, federal prosecutors must prove that:

  • A criminal enterprise existed
  • The enterprise affected interstate commerce
  • The defendant was associated with or employed by the enterprise
  • The defendant engaged in a pattern of racketeering activity
  • The defendant participated in at least two acts of racketeering activity over a ten-year period

Examples of Racketeering

Wherever there is money, there are people looking for ways to steal that money.

With the rise of labor unions in America, organized crime found ways to infiltrate unions. Using bribery, coercion, extortion, and embezzlement they gained control over employee benefit plans. This is known as labor racketeering. It deprives workers of their union rights, robs them of wages and benefits, and damages business competitiveness.

The Offices of Inspector General and the Department of Labor investigate labor racketeering and union corruption.

Organized crime evolved beyond street crime. In 1997, New York law enforcement believed that mob families were turning to healthcare fraud. Now, organized crime rings have been tied to credit card fraud and other white-collar crimes.

Organized crime families are not the only ones facing criminal charges under RICO laws. American politicians found guilty of racketeering charges include:

  • Robert Asher, chair of the Republican State Committee of Pennsylvania, was convicted of perjury, racketeering, conspiracy, and bribery in 1987.
  • U.S. congressman from Massachusetts, Nicholas Mavroules was indicted in 1992 on 17 charges of bribery, racketeering, and extortion.

Law enforcement and the officials in the criminal justice system are not immune from racketeering.

  • Federal judge, Robert P. Aguilar, was the first judge to be charged with racketeering. In 1990 the indictment against him said he improperly sought to overturn the embezzlement conviction of an associate. He also informed another associate of government surveillance.
  • Judge Mark Ciavarella was convicted in 2011 of racketeering, conspiracy, and money laundering. The judge accepted $2.8 million in kickbacks from a developer and builder. He oversaw the closure of the county's juvenile detention facility. Then he funneled some 4,000 Pennsylvania children into private facilities built and owned by his associates. Many were first-time offenders with no legal representation, some as young as 12.
  • Six Baltimore police officers were charged in 2017 with robbery and extortion.

Criminal and Civil Provisions of RICO

RICO allows for both civil remedies and criminal punishments. Companies and individuals can use civil RICO to sue criminal enterprises to recover financial losses. The civil RICO statute allows a successful plaintiff to recover treble damages—that is, three times their losses.

Government lawsuits can achieve equitable or injunctive relief — orders that stop parties from continuing harmful activity or force them to make corrective action. For example, when tobacco companies were found in violation for misleading the public about the health risks of their products, they had to pay into a fund for victims.

When a person is charged with racketeering, they are often also charged with a variety of other crimes. They will face a criminal penalty for the racketeering charge: up to twenty years in prison and a fine of $250,000, in addition to penalties for the other criminal charges. Racketeering combined with drug trafficking or murder could easily amount to life imprisonment.

RICO also allows the Attorney General to seize the assets of both the convicted person and the criminal organization. They can seize assets or interests acquired from the use of criminal activity, including homes and businesses.

Learn More About Racketeering. Get Legal Help.

If you believe racketeering has affected your life or your business, or if you are being investigated for potential involvement in a problematic business scheme, contact a local criminal defense attorney.

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