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Racketeering/RICO

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 Congress passed the Racketeer Influenced and Corrupt Organizations Act (RICO) in 1970, it planned to use federal law to fight organized crime in the traditional sense. In other words, it planned to go after the Mob or the Mafia, as depicted in films like "Scarface" and television shows like "The Sopranos." 

The law's design permitted federal prosecutors to go after many corrupt enterprises. This included white-collar crime groups and rogue governmental officers and units. 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 RICO cases, including both civil and criminal penalties.

What Is Racketeering?

The U.S. Department of Justice (DOJ) summarizes the crime of racketeering as follows:

"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 elements present in a federal RICO case:

  • The crime affects interstate or foreign commerce
  • The crime occurs at an organizational level
  • The crime involves a pattern of activity

Federal racketeering charges may include many crimes. RICO cases don't always rely on physical violence. They often involve coercion or extortion.

RICO law introduced the concept of predicate acts as criminal offenses used to carry out a more serious crime. For example, blackmail, extortion, or wire fraud, may be necessary before a major theft or drug crime, which makes them predicate acts.

These crimes involve the operation or use of a business or enterprise. While the business itself may be legitimate, its use may cover up an illegal scheme. The business may be a front for laundering money or other concealed federal or state crimes.

Why Is This Crime Called Racketeering?

In England, racketeer referred to a member of a street gang. The word brought to mind the loud noise or racket that pickpockets used to distract their victims. The use of racketeer grew in the U.S. during Prohibition. It described those engaging in a dishonest or fraudulent line of business or swindling scheme.

During Prohibition, the production and distribution of illegal alcohol increased. It created a new class of criminal mobs. Skyrocketing profits led to the rise of infamous crime figures and crime families in Chicago and New York.

Before Congress enacted RICO, state and federal prosecutors struggled to shut down rackets. They could convict lower-ranking members of these organizations who actually carried out the illegal activities, but the masterminds behind the enterprise were harder to convict. They often lacked direct connection to any of the crimes. The structure of the RICO statute sought to change that.

What Are RICO Charges?

The enactment of the federal RICO law (18 U.S.C. section 1961-1968) and similar state laws gave prosecutors better tools to fight organized crime. The corrupt leader of a gang or organized crime unit could face charges of racketeering, including conspiracy to commit the crimes of the enterprise.

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, counterfeiting, money laundering, kidnapping, and murder for hire.

RICO extends further, 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
  • Mail fraud
  • Wire fraud
  • Copyright infringement
  • False use of a passport
  • Acts of terrorism

In recent years, the federal government used RICO to convict key figures and parents in the "Varsity Blues" admissions cheating scandal. In Georgia, Fulton County District Attorney Fani Willis brought state RICO charges against former President Donald Trump, former New York City Mayor Rudy Giuliani, and several others for an alleged scheme to overturn Georgia's election results in the 2020 election. A Georgia Grand Jury issued an indictment in 2023 and the case remains pending at this time.

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 interest in 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 racketeering enterprise

According to the U.S. Department of Justice, to convict someone of racketeering, 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 10-year period

Examples of Racketeering

Wherever there is money, there are people looking for ways to steal it. 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. Such labor racketeering deprives workers of their union rights. It robs them of wages, benefits, and damages business competitiveness. The Office of Inspector General and the Department of Labor investigate labor racketeering and union corruption.

Over the decades, organized crime evolved beyond street crime. By the 1990s, law enforcement believed that mob families were turning to healthcare fraud. More recently, organized crime rings have engaged in 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, a jury convicted him of perjury, racketeering, conspiracy, and bribery in 1987.
  • Nicholas Mavroules — The former Congressional Representative from Massachusetts pled guilty to charges of bribery, racketeering, and extortion in 1992.

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

  • State judges Mark Ciavarella and Michael Conahan were at the center of the "Kids for Cash" scandal in Pennsylvania in 2008. The judges faced federal RICO charges for accepting kickbacks from the developers of two private, for-profit juvenile prisons for sending young offenders to the facilities. In 2010, Conahan pled guilty to one count of racketeering conspiracy. He received a sentence of 17 years. Ciavarella went to trial. A jury convicted him of multiple crimes. He received a sentence of 28 years. Although a federal judge later threw out many of Ciavarella's convictions on technical grounds, no reduction was granted in his sentence.
  • A RICO investigation led to the conviction of eight Baltimore police officers in 2017-18. Prosecutors exposed a widespread corruption scandal. They obtained convictions for racketeering, robbery, extortion, and overtime fraud. The defendants were members of the Gun Trace Task Force, a unit within the police department designed to take guns and drugs off the streets.

Criminal and Civil Consequences Under 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, which is three times their losses.

Government lawsuits can seek injunctive relief. This includes court orders that stop parties from continuing harmful activity or force them to make corrective action. For example, when a federal judge found tobacco companies in violation of the law for misleading the public about the health risks of their products, they had to make corrective statements. 

State attorneys general brought civil lawsuits as well. The financial settlement led to annual payments to the states from the tobacco companies. One goal of the payments was to support smoking cessation programs. States could also use funds to offset state healthcare expenses for smoking-related illnesses. Some question how well the states have followed through on such plans.

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 of up to 20 years in prison and a fine of $250,000. The racketeering sentence can be consecutive to penalties for other criminal charges, so racketeering combined with drug trafficking or murder may lead to life imprisonment.

RICO also allows the attorney general to both seize the assets of both the convicted person and the criminal organization and seek forfeiture. This includes assets or interests derived from the criminal activity, including homes and businesses.

Learn More About Racketeering. Get Legal Help

Although people associate racketeering with the mob and organized crime, RICO laws can snare many types of criminal enterprises. If you believe racketeering has affected your life or your business, you can seek legal advice and determine what steps you can take to address the matter. If you believe you are a target of a RICO investigation, you should consider contacting a local criminal defense attorney. You can discuss your rights and any legal defenses available to you.

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