Racketeering and RICO Violations Under the Law
A service that is offered through false pretenses or fraud, usually to solve a specific problem, is often known as a “racket.” Rackets can involve various different financial crimes. One example is a “protection racket,” in which one or more individuals offer to protect a person or business in exchange for payment, but then cause injury or damage to the person or business if payment is not made. In effect, the only protection needed is from the person who offered protection in the first place. When one or more rackets are conducted through or on behalf of an organization, it is known as racketeering.
What Is Racketeering?
The federal Racketeer Influenced and Corrupt Organizations (RICO) Act sets out a broad definition of “racketeering activity” that includes various offenses associated with organized crime. These include fraud offenses, violent crimes like murder and kidnapping, drug trafficking, and offenses related to public corruption. In total, RICO identifies 27 federal offenses and eight state crimes as “racketeering activity.” Many states have enacted their own statutes similar to RICO to enable police and prosecutors to go after organized criminal activity. Pennsylvania, for example, has a statute regarding the activities of “corrupt organizations,” and Washington has a law against “criminal profiteering.” They each include similar lists of offenses in their definitions of racketeering.
Elements of Racketeering
Racketeering can encompass a wide range of criminal activities that are directed towards generating a profit. The actual income-generating activities may constitute a criminal offense, such as extortion or bank fraud. In many cases, the methods by which an organized criminal enterprise pursues an activity may expose it to prosecution under the federal mail and wire fraud statutes. Efforts to conceal the criminal nature of these activities may also constitute criminal offenses. This includes public corruption offenses like bribery, as well as financial crimes like money laundering and tax evasion.
RICO Statute
Congress enacted RICO in 1970 as part of a larger organized crime bill. The law enables federal prosecutors to charge a person with racketeering if, during a 10-year period, the defendant has received income from three or more of the offenses defined as “racketeering activity.” RICO also allows prosecutions for using an enterprise, such as a corporation or partnership, to engage in racketeering activities that affect interstate or foreign commerce. Private parties may bring civil suits under RICO for both monetary and injunctive relief.
A single count of racketeering under RICO can result in a fine of up to $25,000 and a maximum of 20 years in prison. Prosecutors may also seek forfeiture of money and other property obtained through criminal activity.
RICO Prosecutions
The initial purpose of RICO was to give prosecutors tools to use against organized crime. Federal prosecutors obtained a conviction in 1980 against Frank Tieri, reportedly their first RICO conviction of a Mafia boss. Since then, prosecutors have used RICO in numerous organized crime cases, including one that resulted in convictions of several members of the Gambino crime family in 2006.
Federal prosecutors have also used RICO in cases that did not involve “organized crime,” in the way it is commonly perceived. In 1989, for example, the government charged Wall Street financier Michael Milken and others with several counts of RICO violations in connection with securities fraud, insider trading, and other offenses. The $1.8 billion forfeiture request was the largest ever sought in a RICO case.
