History Of Rico Law: A Look Back

The Racketeer Influenced and Corrupt Organizations Act (RICO) was passed into law as part of the Organized Crime Control Act of 1970. The RICO Act was enacted on October 15, 1970, and is codified at 18 U.S.C. ch. 96 as 18 U.S.C. §§ 1961–1968.

RICO's purpose and intent

The Racketeer Influenced and Corrupt Organizations (RICO) Act was enacted on October 15, 1970, as Title IX of the Organized Crime Control Act of 1970. RICO's purpose and intent are summarised below.

Purpose

The purpose of the RICO statute is "the elimination of the infiltration of organized crime and racketeering into legitimate organizations operating in interstate commerce". However, the statute is broad enough to cover illegal activities relating to any enterprise affecting interstate or foreign commerce.

Intent

RICO's intent was to strengthen legal tools for evidence gathering by establishing new penal prohibitions and providing enhanced sanctions and new remedies for dealing with the unlawful activities of those engaged in organised crime.

RICO provides for:

• A conspiracy provision that allows for tying together apparently unrelated crimes with a common objective into a prosecutable pattern of racketeering.
• Severer penalties.
• A defendant to be convicted and separately punished for both the underlying crimes that constitute the pattern of racketeering activity and for a substantive violation of RICO.
• Injunctive relief provisions that allow for the prohibition of further involvement with the labor organization of the convicted racketeering associates.

RICO also allows for the recovery of treble damages (triple the amount of actual/compensatory damages) in both criminal and civil components.

RICO's definition of racketeering

The Racketeer Influenced and Corrupt Organizations (RICO) Act was passed in 1970 as part of a larger movement to curb organised crime and allow victims to recover. RICO's definition of racketeering is tied to the concept of an "enterprise". An enterprise can be a legal or illegal entity, such as a corporation or a mob, and must be a discrete entity.

Racketeering activity, according to RICO, includes the distribution of controlled substances, as well as any act of bribery, counterfeiting, theft, embezzlement, fraud, dealing in obscene material, obstruction of justice, slavery, gambling, money laundering, and many other offences covered under the Federal criminal code (Title 18). Embezzlement of union funds, bankruptcy fraud or securities fraud, drug trafficking, criminal copyright infringement, and money laundering-related offences are also included.

For an act to be considered racketeering under RICO, it must be part of a pattern of racketeering activity. This means that at least two separate activities classified as racketeering must have occurred within a ten-year period and be related to the enterprise in one of four specified ways. These are:

• Investing proceeds from racketeering activity into the enterprise
• Acquiring or maintaining an interest in, or control of, the enterprise through racketeering activity
• Conducting or participating in the affairs of the enterprise "through" a pattern of racketeering activity
• Conspiracies to do any of the above

RICO also allows for civil suits, wherein a private individual "damaged in his business or property" by a "racketeer" can file a civil suit. The plaintiff must prove the existence of an "enterprise", and the defendant(s) are considered separate from this enterprise.

RICO's definition of an enterprise

The Racketeer Influenced and Corrupt Organizations (RICO) Act was enacted on October 15, 1970, as Title IX of the Organized Crime Control Act of 1970. RICO provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization.

RICO defines an "enterprise" as any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity. This definition is expansive and has been interpreted broadly by courts. An "enterprise" is not the same as a "defendant" in a RICO case; they are separate entities.

For a RICO violation, there must be a relationship between the defendant(s) and the enterprise. There are four specified relationships, as outlined in 18 U.S.C. § 1962(a), (b), (c), and (d):

• The defendant(s) invested the proceeds of the pattern of racketeering activity into the enterprise.
• The defendant(s) acquired or maintained an interest in, or control of, the enterprise through the pattern of racketeering activity.
• The defendant(s) conducted or participated in the affairs of the enterprise "through" the pattern of racketeering activity.
• The defendant(s) conspired to do one of the above.

The US Supreme Court noted that a commentator described these relationships using the terms "prize", "instrument", "victim", or "perpetrator".

To be found guilty of violating RICO, the government must prove beyond a reasonable doubt:

• That an enterprise existed.
• That the enterprise affected interstate commerce.
• That the defendant was associated with or employed by the enterprise.
• That the defendant engaged in a pattern of racketeering activity.
• That the defendant conducted or participated in the conduct of the enterprise through that pattern of racketeering activity and committed at least two acts of racketeering activity as set forth in the indictment.

A "pattern of racketeering activity" requires at least two acts of racketeering activity within ten years of each other. The racketeering predicates must be related and pose a threat of continued criminal activity. They are considered related if they have similar purposes, results, participants, victims, or methods of commission, or if they are otherwise interrelated and not isolated events.

The RICO statute also allows for conspiracy charges, where the government need not prove that the defendant knew all the conspirators or had full knowledge of the conspiracy. It is sufficient to show that the defendant agreed to commit the substantive racketeering offense, agreed to participate in two racketeering acts, knew the general status of the conspiracy, and knew that the conspiracy extended beyond their individual role.

RICO's criminal penalties

The Racketeer Influenced and Corrupt Organizations (RICO) Act, passed in 1970, provides for extended criminal penalties for acts performed as part of an ongoing criminal organization. The Act was signed into law by US President Richard Nixon and was aimed at tackling organized crime, particularly the Mafia.

RICO allows for the prosecution of all individuals involved in a corrupt organization, from top leadership to hitmen and capos. The law defines 35 offenses as constituting racketeering, including gambling, murder, kidnapping, arson, drug dealing, bribery, and mail and wire fraud.

To violate RICO, a person must engage in a pattern of racketeering activity connected to an enterprise. This could be a crime family, a street gang, or a drug cartel, but it may also be a corporation, a political party, or a managed care company. The enterprise must be a discrete entity, separate from any individual.

The criminal RICO statute provides for prison terms of up to 20 years and severe financial penalties of up to $25,000 per racketeering count. Those found guilty of racketeering must also forfeit all ill-gotten gains and interest in any business gained through a pattern of "racketeering activity."

In addition, prosecutors can seek a pre-trial restraining order or an injunction to temporarily seize a defendant's assets and prevent the transfer of potentially forfeitable property. This ensures that there are assets to seize in the event of a guilty verdict and can force defendants to plead guilty to lesser charges as they may not be able to afford a defense attorney.

RICO also has a civil component, allowing anyone injured by a RICO violation to bring a civil suit and, if successful, receive treble damages.

RICO's civil provisions

The Racketeer Influenced and Corrupt Organizations (RICO) Act was enacted in 1970 as Title IX of the Organized Crime Control Act. RICO provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization.

To establish a RICO violation, four basic elements must be proven: a pattern of racketeering activity, a culpable person with the requisite mens rea, an enterprise, and an effect on interstate commerce. The burden of proof in a civil RICO case is satisfied by a preponderance of the evidence, meaning the jury must find that it is more likely than not that the racketeering activities did occur.

There are two ways to establish a "pattern" of racketeering activity: closed-ended continuity and open-ended continuity. Closed-ended continuity is demonstrated by a series of related predicate acts committed over a substantial period of time, while open-ended continuity requires a threat of continuing criminal activity beyond the initial period. The prohibited acts must be continuous and interrelated, with similar goals, purposes, methods, or results.

A "culpable person" is an individual or entity capable of holding a legal or beneficial interest in property, who has the requisite mens rea and has engaged in prohibited acts. The plaintiff must be able to demonstrate that the culpable person possessed the mental state required to commit the alleged predicate offenses, meaning they intended to commit the acts despite knowing they were illegal.

Under RICO, an "enterprise" can be any legal entity, individual, or group of associated individuals. Even informal associations can be considered enterprises if the individuals involved worked together in furtherance of a common illegal interest, as long as the enterprise is distinct and separate from the culpable individual(s).

"Predicate acts" are independently illegal, racketeering activities. Under RICO, certain federal crimes and state offenses are prohibited and deemed predicate acts, including wire or mail fraud, money laundering, counterfeiting, embezzlement, illegal gambling, extortion, and bribery.

Civil RICO claims provide additional remedies beyond criminal RICO claims, including treble damages, court costs, attorney's fees, and equitable relief such as divestiture and permanent injunctions. Other advantages include the choice of a federal forum, broader venue provisions, potentially nationwide service of process, and more liberal discovery and evidentiary rules.

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