Rico Statute

Patrick O'Connell

Business Law Paper

18 November 2010

Prof. Plumb

RICO Statute

The Racketeer Influenced and Corrupt Organizations Act, also known as the RICO Act, was enacted by the Organized Crime Control Act on October 15, 1970. The RICO Act took many years to be passed, and took a few years for the Department of Justice to gear up for the enforcement of the statute. Civil RICO claims did not become common until sometime in the 1980's. The RICO Act was passed by the United States Congress to allow persons who are financially injured by criminal activity to seek redress through the United State court system, whether it would be through state or federal courts. It was "an effort to curb the entry of organized crime into the legitimate business world" (Business Law textbook 192). Additionally, this statute makes it a federal crime to "(1) use income obtained from racketeering activity to purchase any interest in an enterprise, (2) acquire or maintain an interest in an enterprise through racketeering activity, (3) conduct or participate in the affairs of an enterprise through racketeering activity, or (4) conspire to do any of the preceding activities" (Business Law textbook 192-193). The RICO statute has been applied in cases that don't have anything to do with organized crime, for example, in the Major League Baseball and Catholic Sex Abuse cases. More often than not, RICO is actually used against white-collar crimes.

Under this statute, anyone who is a member of an enterprise and has committed two of thirty five crimes within a ten year span (twenty seven of these being federal and eight being state) can be charged with racketeering. The punishments are very severe for a violation of the statute, including a fine of up to $25,000 per violation, and a possible 20 years in prison. Additionally, illegal gains earned through illegal activities must be forfeited, and the guilty party could be subject to civil suits as well. Racketeering activity can include state violations such as gambling, extortion and robbery; federal violations such as embezzlement, fraud and money laundering; and also include matters such as bankruptcy fraud, drug trafficking, aiding illegal aliens for financial gain, and acts of terrorism.

In the RICO statute, Section 1962(c) "prohibits any defendant person from operating or managing an enterprise through a pattern of racketeering activity. So long as a civil RICO plaintiff is injured by reason of the defendant's operation or management of the enterprise through a pattern of racketeering, the plaintiff is entitled to treble damages, attorneys' fees and costs under section 1964(c) (commonly referred to as RICO's civil liability provision)" (http://ricoact.com/ricoact/nutshell.asp#1962c). In order to be able to establish a claim under this section (which is much more broad then Section 1962(a) and 1962(b), the plaintiff has to be able to prove that someone was either employed or associated with an enterprise that continued to deal with or affect interstate commerce, and the person operated the enterprise through illegal activity, and that the plaintiff was injured by reason of this illegal activity. If a company unknowingly facilities someone's criminal activities and just a single person commits the crimes, the company is free from the liability attached to the person committing the actual crime.

In terms of an enterprise, to establish liability under section 1962, a plaintiff must argue for the existence of any illegitimate enterprise, such as the mafia or a corporation. An "enterprise" can be a legal entity, or just simply a loose-knit group of people. A loose knit group would be referred to as an "association-in-fact" under the RICO statute. Originally, it is likely that an "association-in-fact" enterprise would be considered the Mafia, but of the lack of a formal entity formed by these individuals. However now,

...