The Racketeer Influenced and Corrupt Organizations (RICO) Act is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization.
RICO was enacted by Title IX of the Organized Crime Control Act of 1970 (Pub. L. 91–452, 84 Stat. 922, enacted October 15, 1970), and is codified at 18 U.S.C. ch. 96 as 18 U.S.C. §§ 1961–1968.
This article primarily covers the federal criminal statute, but since 1972, 33 U.S. states and territories have adopted state RICO laws, which although similar, cover additional state crimes and may differ from the federal law and each other in several respects.
History
G. Robert Blakey, an adviser to the United States Senate Government Operations Committee, drafted the law under the close supervision of Senator John L. McClellan, the Chairman of the Criminal Law and Procedures Subcommittee of the Senate Judiciary Committee.
It was signed into law by U.S. President Richard Nixon. Prosecutors in the 1970s used it to prosecute the Mafia as well as others who were actively engaged in organized crime.
In subsequent decades, courts recognized that Congress had drafted the statute broadly, and prosecutors increasingly applied it to a wide range of criminal enterprises, including public corruption, securities fraud, street gangs, and white-collar crime.
Summary
Under RICO, a person who has committed "at least two acts of racketeering activity" drawn from a list of 35 crimes (27 federal crimes and eight state crimes) within a 10-year period can be charged with racketeering if such acts are related in one of four specified ways to an enterprise.
Those found guilty of racketeering can be fined up to $25,000 and sentenced to 20 years in prison per racketeering count.
In addition, the racketeer must forfeit all ill-gotten gains and interest in any business gained through a pattern of racketeering activity.
A US Attorney who indicts someone under RICO has the option of seeking a pre-trial restraining order or an injunction to temporarily seize a defendant's assets and prevent the transfer of potentially forfeitable property as well as to require the defendant to put up a performance bond. An injunction or performance bond ensures that there is something to seize in the event of a guilty verdict.
This provision prevented the owners of Mafia-related shell corporations from absconding with assets. In many cases, the threat of a RICO indictment can force defendants to plead guilty to lesser charges, in part because the seizure of assets would make it difficult to pay a defense attorney.
Despite its harsh provisions, a RICO-related charge is considered easy to prove in court because it focuses on patterns of behavior as opposed to criminal acts.
RICO predicate offenses
Under the law, the meaning of racketeering activity is set out at 18 U.S.C. § 1961. As currently amended, it includes:
- Any violation of state statutes against gambling, murder, kidnapping, extortion, arson, robbery, bribery, dealing in obscene matter, or dealing in a controlled substance or listed chemical (as defined in the Controlled Substances Act);
- Any act of bribery, counterfeiting, theft, embezzlement, fraud, dealing in obscene matter, obstruction of justice, slavery, racketeering, gambling, money laundering, commission of murder-for-hire, and many other offenses covered under the Federal criminal code (Title 18);
- Embezzlement of union funds;
- Bankruptcy fraud or securities fraud;
- Drug trafficking; long-term and elaborate drug networks can also be prosecuted using the Continuing Criminal Enterprise Statute;
- Criminal copyright infringement;
- Money laundering and related offenses;
- Bringing in, aiding or assisting aliens in illegally entering the country (if the action was for financial gain);
- Acts of terrorism.
A pattern of racketeering activity requires at least two acts of racketeering activity, one of which occurred after the effective date of this chapter and the last of which occurred within ten years (excluding any period of imprisonment) after the commission of a prior act of racketeering activity. The US Supreme Court has instructed federal courts to follow the continuity-plus-relationship test in order to determine whether the facts of a specific case give rise to an established pattern. The illegal acts forming a pattern are called "predicate" offenses. Predicate acts are related if they "have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events." Continuity is both a closed and open ended concept, referring to either a closed period of conduct, or to past conduct that by its nature projects into the future with a threat of repetition.
Enterprise relationships
There must be one of four specified relationships between the defendants and the enterprise. Either the defendants:
- invested the proceeds of the pattern of racketeering activity into the enterprise (18 U.S.C. § 1962(a)); or
- acquired or maintained an interest in, or control of, the enterprise through the pattern of racketeering activity (subsection (b)); or
- conducted or participated in the affairs of the enterprise "through" the pattern of racketeering activity (subsection (c)); or
- conspired to do one of the above (subsection (d)).
The US Supreme Court noted that a commentator had used the terms prize, instrument, victim, or perpetrator for these four relationships.
Civil provisions
18 U.S.C. § 1964 provides for civil remedies in cases of violations outlined in 18 U.S.C. § 1962. The following are established:
- District Courts may issue court orders appropriate to the restriction or dissolution of entities involved in section 1962 violations.
- The Attorney General may start civil proceedings which allow for further court action pending final decision (i.e., injunctions, restraining orders, and acceptance of satisfactory performance bonds).
- Allows for the commencement of a civil action by a private party to recover damages sustained as a result of the commission of a RICO predicate offense.
- Any individual or organization found guilty during a RICO criminal proceeding may not deny allegations brought forth in criminal proceedings in any civil cases.
The civil provisions of the RICO Act provide versatility in how the government may work to dissolve criminal entities. Due to the lessened burden of proof in civil court (i.e., preponderance of evidence), the United States may circumvent restrictions set forth in criminal proceedings. Discovery tools, permitted use of illegally obtained evidence, and adverse inferences broaden government intervention in combatting U.S.C. § 1962 violations.
Civil suits
RICO also permits a private individual "damaged in his business or property" by a racketeer to file a civil suit. The plaintiff must prove the existence of an enterprise. The defendants are not the enterprise; in other words, the defendants and the enterprise are not one and the same.
A civil RICO action can be filed in state or federal court.
Both the criminal and the civil components allow the recovery of treble damages (triple the amount of actual/compensatory damages). If the United States government is the plaintiff in civil court, treble damages may be replaced with a request for equitable remedies and preliminary injunctive reliefs.
Organized crime
Although its primary intent was to deal with organized crime, Blakey said that Congress never intended it merely to apply to the Mob. He once told Time, "We don't want one set of rules for people whose collars are blue or whose names end in vowels, and another set for those whose collars are white and have Ivy League diplomas." In the years following its passage, RICO had been criticized for its extensive use against entities other than organized crime. One critic pointed towards the number of civil suits that were brought against businesses, labor unions, and other private parties, which made up for 90% of all civil RICO cases, according to the American Bar Association.
On December 1, 1977, the federal grand jury in the Eastern District of Louisiana indicted thirteen defendants, Robert J. L'Hoste & Company, Inc. for conspiracy and racketeering activity. After the defendants moved to dismiss the indictment for overbreadth and vagueness, the grand jury returned a superseding indictment on February 27, 1978, charging the same offenses and naming eleven defendants, including the appellants. The district court denied a motion to dismiss the superseding indictment, and the first RICO trial commenced on March 13, 1978. The jury convicted the four appellants and another corporation on both the conspiracy and racketeering counts.
In May 1979, prosecutor Mark L. Webb, Northern District of California, conducted RICO trial, United States v. Sam Bailey Gang. The successful prosecution used the RICO statute to allege that a gang of postal burglars and a Nevada fence collaborated criminally in an organized crime fashion. The case did not involve a Mafia crime family.
Subsequently, the US Attorney's office for the Eastern District of Arkansas used the RICO Act on October 2, 1978, to indict officers of Local 1292 of the Laborers International Union of North America. Special Assistant United States Attorney, Samuel A. Perroni, prosecuted the first labor union official trial that began on June 5, 1979. Perroni's successful prosecution used RICO to convict the defendants of conspiracy, murder for hire, perjury and embezzlement of union property in United States v. Allison, et al.
The US Attorney's Office in the Southern District of New York employed the RICO Act on September 18, 1979, in United States v. Scotto. Scotto, who was convicted on charges of racketeering, accepting unlawful labor payments, and income tax evasion, headed the International Longshoremen's Association.
During the 1980s and the 1990s, federal prosecutors used the law to bring charges against several Mafia figures. In 1985, United States Attorney Rudy Giuliani (who would be indicted under Georgia RICO laws in August 2023) indicted 11 organized crime figures in United States v. Anthony Salerno, et al, also known as Mafia Commission Trial. Using the RICO Act, Giuliani charged the heads of New York's so-called "Five Families" with extortion, labor racketeering, and murder for hire.
Three Assistant United States Attorneys assisted in the trial: Michael Chertoff, the eventual second United States Secretary of Homeland Security and co-author of the Patriot Act; John Savarese, later a partner at Wachtell Lipton Rosen & Katz; and Gil Childers, a later deputy chief of the criminal division for the Southern District of New York and later managing director in the legal department at Goldman Sachs.
Time magazine called the "Case of Cases" possibly "the most significant assault on the infrastructure of organized crime since the high command of the Chicago Mafia was swept away in 1943" and quoted Giuliani's stated intention: "Our approach is to wipe out the five families."
Three heads of the Five Families were sentenced to 100 years in prison on January 13, 1987. The Genovese and Colombo leaders, Tony Salerno and Carmine Persico received additional sentences in separate trials, with 70-year and 39-year sentences to run consecutively. The Gambino crime family boss Paul Castellano and his underboss, Thomas Bilotti, were murdered on the streets of Midtown Manhattan on December 16, 1985.
State laws
As of 2014, 33 states as well as Puerto Rico and the United States Virgin Islands had adopted state RICO laws to cover state offenses under a similar scheme.
Famous cases
The Lucchese crime family was one of the "Five Families" that dominated organized crime activities in New York City. Prosecuting attorneys Gregory O'Connell and Charles Rose used RICO charges to break up the family over an 18-month period.
Several members of the Latin Kings have been convicted of RICO offenses.