2012-08-24 15:19:06

The Racketeer Influenced and Corrupt Organizations Act (RICO), passed in 1970 as part of omnibus anticrime legislation, was enacted to combat organized crime. As the title suggests, its goal was to prevent organized crime from influencing an organization, and to purse then-existing corrupt organizations, usually unions. Although hardly a concern today, when RICO was passed, members of organized criminal gangs, known as the Mafia, had used threats and violence to infiltrate and seize control of legitimate businesses. Members of these criminal organizations would then use these formerly legitimate businesses to forward unlawful ends.Union dues would often serve as capital for mobsters to run loan-sharking operations.

RICO was drafted much more broadly, however, and many of its provisions were vague. Civil libertarians feared that RICO’s application would soon expand beyond organized crime. Ira Glasser of the American Civil Liberties Union called RICO ‘‘the most comprehensive assault on civil liberties principles of any statute I’ve seen in many years.’’ In Sedima, S.P. R.L. v. Imrex Co., Inc. (1985), these fears were soon realized: the Supreme Court held that RICO could be applied against legitimate businesses.

RICO also provides civil remedies, and as Professor Pamela Bucy has correctly observed, ‘‘RICO can be a prosecutor’s powerhouse and a civil plaintiff’s dream’’ since RICO’s language is extremely broad. The Supreme Court said in Sedima, S.P.R.L. v. Imrex Co., Inc., that RICO must be ‘‘read broadly.’’ Almost the only thing limiting RICO’s expansion into new areas of law is lawyerly and prosecutorial creativity.

RICO prohibits any person or organization from (1) using or investing proceeds from a pattern of racketeering activity; (2) acquiring or maintaining control of an organization through a pattern of racketeering activity; (3) conducting affairs through a pattern of racketeering activity; or (4) conspiring to do (1) to 3 (3). ‘‘Racketeering activity’’—referred to usually as predicate acts—includes over fifty-five felonies, ranging from traditional conduct associated with racketing, such as murder, arson, and loan sharking, to the extremely broad mail and wire fraud statutes. What constitutes a pattern of racketeering activity is not specifically defined, but courts have generally held that two predicate acts are required over at least a seven-month period. Thus, a ‘‘pattern’’ of racketeering activity is generally understood to be two racketeering acts over a seven-month to ten-year period.

RICO also requires there to be an enterprise affecting interstate commerce, although the commerce requirement is de minimus. A RICO enterprise includes any person or other legal entity. Any formal business and almost any informal network of individuals will fall under this requirement. In sum, RICO prevents someone from using a business to commit a crime, or to commit a crime to take control of a business.

RICO provides stiff criminal and civil penalties. A person convicted under RICO can face twenty years in prison, substantial fines, and forfeiture of any property obtained from illegally obtained proceeds. A defendant also faces having his assets seized pretrial, thus preventing him from mounting a successful defense. A person found civilly liable under RICO is responsible for treble damages and attorney’s fees.

There are several civil liberties–related concerns with RICO. One criticism of RICO is that a RICO defendant faces greater punishment than if he or she had been convicted only of the underlying predicate acts. That is, a RICO defendant who is alleged to have committed two counts of wire fraud faces greater punishment than if he or she had been prosecuted under the wire fraud statutes. Moreover, RICO allows the government to turn a garden variety mail and wire fraud case into a RICO case, even though RICO was directed at organized crime. Given that courts have, as Judge Newman of the Second Circuit noted, ‘‘tolerated an extraordinary expansive of mail and wire fraud statutes,’’ RICO thus allows ‘‘federal prosecution for conduct that some thought was subject only to state criminal and civil law.’’

A RICO prosecution also allows the government to avoid the double jeopardy clause, which prohibits successive prosecutions for acquitted or convicted conduct. Thus, courts generally treat the elements of underlying predicate acts as separate elements from the underlying elements of a RICO claim. The government can also bring both a civil and criminal RICO case against the same actor for the same conduct.

Finally, RICO allows private parties to become de facto prosecutors. Justice Thurgood Marshall potently noted in Sedima, S.P.R.L. v. Imrex Co., Inc: ‘‘[T]wo fraudulent mailings or used of the wires occurring within 10 years of each other might ... lead[] to civil RICO liability.’’ In other words, RICO allows a litigant to bring a private enforcement action, that is, to enforce federal laws. Indeed, private litigants have sought to use RICO to chill protected expression. In Scheidler v. National Organization for Women, Inc. (2003), abortion protestors were sued under the theory was that by blocking abortion clinic entrances, they deprived the clinic of property within the meaning of the Hobbs Act. Since the Hobbs Act was a predicate act under RICO, the clinics sought to hold the protestors liable for money damages, and they sought to enjoin them from further protests.

Had the plaintiffs’ interpretation been accepted, many protests would be at danger. During oral argument the solicitor general, arguing as amicus for this expansive interpretation, conceded that many of the civil rights sit-ins of the 1960s would fall under RICO. That Martin Luther King and others could have been prosecuted or sued for sitting at lunch counters amply demonstrates RICO’s problems. Thus, Rachel King, legislative counsel at the American Civil Liberties Union (ACLU), testified before Congress that the ACLU ‘‘has had a long-standing concern about the RICO statute’’ since its sweeping conspiracy provision allows for prosecution under a theory of ‘guilty by association.’’’

Moreover, RICO provides the prosecution a way around to turn a state case into a federal case. During the first RICO prosecution of mobster John Gotti, the federal government used acquitted state court conduct as a predicate act under RICO. Although John Gotti is hardly a sympathetic example, his prosecution illustrates how easily a state offense can become federal, and how creative lawyers and prosecutors can stifle free speech and find exceptions to constitutional restrictions on government conduct.


References and Further Reading

  • Bucy, Pamela H., and Steven T. Marshall, An Overview of RICO, Alabama Lawyer 51 (1990): 238–9.
  • Giventer, Lorrie. Crime and Punishment in Business: A Conference, Civil Justice Memo No. 17. Washington, D.C.: Manhattan Institute, October 1989.
  • King, Rachel. Testimony by Legislative Counsel Rachel King before the House Judiciary Committee on the Anti-Terrorism Act of 2001. Washington, D.C., September 24, 2001.
  • Lynch, Gerald, RICO: The Crime of Being a Criminal, Parts I and II. Columbia Law Review 87 (1987): 661.
  • ———, RICO: The Crime of Being a Criminal, Parts III and IV. Columbia Law Review 87 (1987): 920.
  • United States v. Weiss, 752 F.2d 777, 791 (2d Cir. 1985) (Newman, J., dissenting).

Cases and Statutes Cited

  • Scheidler v. National Organization for Women, Inc., 537 U.S. 393 (2003)
  • Sedima, S.P.R.L. v. Imrex Co., Inc. 473 U.S. 479, 479–98 (1985)(Marshall, J., dissenting)
  • Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C., Section 1961 et seq.

See also Criminalization of Civil Wrongs; Federalization of Criminal Law