Legal Definitions - Racketeer Influenced and Corrupt Organizations Act

The Racketeer Influenced and Corrupt Organizations Act, commonly known by its acronym RICO, is a powerful federal law in the United States designed to combat organized crime and protect legitimate businesses from criminal infiltration and influence. Enacted in 1970, RICO allows for both criminal prosecution and civil lawsuits against individuals who engage in a "pattern of racketeering activity" connected to an "enterprise."

Here's a breakdown of its key components:

• Purpose: RICO aims to dismantle criminal organizations by targeting their financial structures and leadership, rather than just individual criminal acts. It seeks to preserve the integrity of the marketplace by preventing criminals from using legitimate businesses for illicit purposes.
• "Racketeering Activity": This refers to a long list of specific illegal acts, known as "predicate acts," which include crimes like bribery, extortion, fraud (mail fraud, wire fraud), money laundering, drug trafficking, illegal gambling, murder, kidnapping, and many others.
• "Enterprise": This can be any group of individuals associated in fact, whether it's a legitimate corporation, a partnership, a union, a criminal gang, or even an informal association. The enterprise is the vehicle through which the criminal activity is conducted.
• "Pattern of Racketeering Activity": To be prosecuted under RICO, an individual must have committed at least two related "racketeering acts" within a ten-year period. These acts must show a continuity of criminal conduct or a threat of continued criminal activity.
• Scope: The criminal activity must involve interstate or foreign commerce, meaning it crosses state lines or involves other countries.
• Enforcement: RICO allows for severe criminal penalties, including lengthy prison sentences and substantial fines. Crucially, it also permits victims of racketeering to file civil lawsuits against the perpetrators. In such civil cases, successful plaintiffs can recover "treble damages," meaning three times the actual financial harm they suffered, plus attorney's fees. Many states have also adopted their own versions of RICO, often called "little RICO" acts.

Here are some examples illustrating how RICO might apply:

• Example 1: Construction Company Extortion Scheme

  A seemingly legitimate construction company, "Build-It-Right Inc.," is secretly controlled by a criminal organization. Over several years, the company's executives (the "enterprise") repeatedly engage in a scheme where they threaten smaller subcontractors with violence or blacklisting if they don't pay a percentage of their contract value (a "kickback"). These threats constitute acts of extortion (a "racketeering act"). They also use mail and wire fraud to inflate invoices for government contracts, siphoning off public funds. Since these activities involve multiple acts of extortion and fraud over time, are connected to the "Build-It-Right Inc." enterprise, and impact projects across state lines, the individuals involved could face RICO charges. Victims, such as the extorted subcontractors, could also file a civil RICO lawsuit to recover triple their losses.

• Example 2: Investment Fraud Ring

  A group of financial advisors working for a reputable investment firm (the "enterprise") conspire over several years to defraud their clients. They repeatedly use wire transfers and mail (wire fraud and mail fraud are "racketeering acts") to move client money into shell companies they control, misrepresenting the investments as legitimate opportunities. They create fake financial statements and use high-pressure tactics to convince new investors to join, perpetuating the scheme across multiple states. This ongoing pattern of fraudulent activity, conducted through the investment firm, could lead to RICO charges against the advisors. The defrauded investors could also pursue a civil RICO claim to seek substantial compensation.

• Example 3: Environmental Crime and Bribery

  An industrial waste disposal company, "Clean Earth Solutions" (the "enterprise"), systematically bribes local government officials in multiple counties and states over a five-year period to obtain permits for illegal dumping of hazardous waste. These bribes (a "racketeering act") allow the company to avoid proper, more expensive disposal methods, significantly increasing their profits. When an environmental inspector attempts to expose their activities, the company's management threatens the inspector's family (another "racketeering act" related to obstruction of justice). The repeated acts of bribery and threats, forming a pattern of criminal activity conducted through the company and affecting multiple jurisdictions, could trigger a RICO investigation and prosecution against the company's leadership.