Introduction: Intent and Scope of RICO
The Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §1962 et seq., was enacted by the U.S. Congress as part of Title IX of the Organized Crime Control Act of 1970 to eradicate organized crime and to combat the infiltration of legitimate businesses and labor unions by organized crime. Due to its liberal application, however, criminal RICO has been used not just against organized crime but against other illegal activities, including white collar crime, government corruption, and prostitution rings.
In addition to criminal prosecution, RICO permits the government to bring a civil action seeking equitable relief in a form of dissolution of an enterprise, restriction of future activities by the defendant, or divestiture of the defendant’s interest in the enterprise. 18 U.S.C. §1963. Although the burden of proof in a criminal RICO action is high because the government must prove each element beyond a reasonable doubt, the burden of proof in a civil RICO action is lower at a preponderance of evidence. Thus, civil RICO actions can also be an effective way for the government to cripple organized crime. Additionally, a private person injured in his business or property by a RICO violation may file a civil action and seek treble damages, costs, and attorney’s fees. 18 U.S.C. §1964(c).
States have also adopted their own anti-racketeering laws. However, state anti-racketeering laws vary from the federal version and from state to state. This chapter will focus mainly on federal criminal RICO actions.
RICO Violations and Elements of the Offense
There are four enumerated RICO violations in 18 U.S.C. §1962. Subsection (a) of §1962 prohibits a person or entity from using income derived from a pattern of racketeering activity or collection of an unlawful debt to acquire an interest in an enterprise engaged in or affecting interstate or foreign commerce. Subsection (b) prohibits a person or entity from acquiring an interest in an enterprise engaged in or affecting interstate or foreign commerce by way of a pattern of racketeering activity or collection of an unlawful debt. Subsection (c) prohibits a person or entity associated with an enterprise engaged in or affecting interstate or foreign commerce from conducting or participating “directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity or collection of an unlawful debt.” Subsection (d) prohibits a person or entity from conspiring to commit any of the three prohibitions just listed.
The majority of the criminal RICO cases are charged under subsections (c) and (d) of §1962, and thus it is worthwhile reviewing the elements of those subsections in more detail. To establish the elements of a RICO violation under subsection (c), the government must prove that (1) an enterprise existed; (2) the enterprise affected interstate or foreign commerce; (3) the defendant associated with the enterprise; (4) the defendant participated, directly or indirectly, in the conduct of the affairs of the enterprise; and (5) the defendant participated in the enterprise through a pattern of racketeering activity by committing at least two racketeering (predicate) acts within a ten-year period. U.S. v. Darden 70 F. 3d 1507, 1518 (8th Cir. 1995).
To establish the charge of conspiracy under subsection (d) of §1962, the government must prove that (1) an enterprise existed; (2) the enterprise affected interstate or foreign commerce; (3) the defendant associated with the enterprise; and (4) the defendant ”objectively manifested an agreement to participate in the affairs of the enterprise” through a pattern of racketeering activity. Id. It is not necessary for the government to prove that the defendant entered into an explicit agreement. The government can demonstrate merely that there was a tacit understanding between the parties. A tacit understanding may be shown entirely through the circumstantial evidence of defendant’s actions. Id.
The government must obtain an indictment within five years of the last predicate act or racketeering activity under RICO. Thus, a criminal RICO prosecution would be barred if the last predicate act or racketeering activity was committed more than five years prior to the indictment.
What Constitutes a Pattern of Racketeering Activity?
A wide range of state and federal crimes constitutes a predicate act or racketeering activity under RICO as delineated in §1961 subsection (1). State crimes that can constitute racketeering activity under RICO are an act or threat involving murder, kidnapping, gambling, arson, robbery, bribery, extortion, dealing in obscene matter, or trafficking a controlled substance or chemical.
Federal offenses that can constitute racketeering activity include offenses indictable under Title 18 of the United States
Code and specifically listed in §1961(1)(B), such as bribery, counterfeiting, theft from interstate shipment, embezzlement from pension and welfare funds, mail fraud, wire fraud, falsifying citizenship or naturalization, or obstruction of justice. Federal offenses under Title 29 relating to payments and loans to labor organizations or embezzlement from union funds may also constitute racketeering activity. Other offenses that can qualify as racketeering activity are (1) any offense involving fraud connected with a case under Title 11; (2) any act that is indictable under the Currency and Foreign Transactions Reporting Act; (3) a violation of the Immigration and Nationality Act for financial gain; and (4) any act indictable under any provision listed in 18 U.S.C. §2332b(g)(5)(B) relating to terrorism.
RICO does not apply to one predicate act or racketeering activity. A defendant in a RICO case must have committed a ”pattern” of racketeering activity, which consists of at minimum two acts of racketeering activity committed within ten years of each other. However, under case law, the two acts of racketeering activity cannot be isolated acts but rather they must be both related and amount to a continuous criminal activity. This is referred to as the ”continuity plus relationship” test. Thus, to prove a pattern of racketeering activity the government must show that (1) the predicate acts or racketeering activities are related and (2) they amount to or pose a threat of continued criminal activity.
Predicate acts or racketeering activities are related if they have ”the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics.” H.J. Inc. v. Northwestern Bell Telephone Co. 492 U.S. 229, 240 (1989). A pattern under RICO cannot be established by sporadic activities such as two widely separated and isolated criminal offenses.
The government may show ”continuity over a closed period by proving a series of related predicates extending over a substantial period of time. Predicate acts extending over a few weeks or months and threatening no future criminal conduct do not satisfy this requirement: Congress was concerned in RICO with long term criminal conduct.” Id., at 242. If continuity cannot be established by proving a series of related predicates over a substantial and closed period of time, the government must show that there is a threat of continuity. Id. A RICO pattern may be established if the related predicates themselves include a specific threat of repetition extending into the future; for example, extortion and threat of future extortion on a regular basis have a threat of continuity. The threat of continuity is also established by showing that the predicate acts are part of the entity’s regular way of doing business. Id., at 242-243.
What Is an Enterprise Engaged in or Affecting Interstate or Foreign Commerce?
Under RICO, an ” ‘enterprise’ includes any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.” 18 U.S.C. §1961(4). To prove the existence of an enterprise in the majority of the federal circuits, the government must prove that the enterprise had a common purpose, a formal or informal organization of the participants in which they functioned as a unit, and an ascertainable structure. U.S. v. Darden 70 F. 3d 1507, 1518 (8th Cir. 1995).
In addition to the entities statutorily identified under RICO, courts have held that an enterprise may also include government units such as a judicial office, police department, state legislature, fire department, office of the prosecuting attorney, and state department of transportation.
RICO also requires that the enterprise engages in or affects interstate or foreign commerce. This requires minimal interstate or foreign activity, and in the case of interstate commerce, it would be sufficient to show interstate travel, buying equipment made in another state, and making or receiving interstate telephone calls.
Criminal Penalties
RICO provides for drastic remedies in the form of severe criminal penalties and forfeiture of illegal proceeds. A defendant found guilty of violating RICO can be imprisoned for up to twenty years or ”for life if the violation is based on a racketeering activity for which the maximum penalty includes life imprisonment.” §1963(a). Additionally, the court can order the defendant to pay a fine in the amount of twice the gross profits made from a RICO violation and to forfeit to the United States any interest in an enterprise that was the subject of the RICO case. §1963(a).
