Legal Definitions - Racketeer Influenced Corrupt Organization (RICO) statue

The Racketeer Influenced and Corrupt Organizations (RICO) Act is a powerful federal law designed to combat organized crime by targeting individuals and groups who engage in a pattern of criminal activity (known as "racketeering activity") through an ongoing "enterprise."

An "enterprise" can be any group of individuals associated in fact, or a legal entity like a corporation, partnership, or government agency. "Racketeering activity" refers to a long list of specific federal and state crimes, including bribery, extortion, fraud, drug trafficking, money laundering, and murder. The law makes it illegal to acquire, operate, or profit from an enterprise through a pattern of these criminal activities, or to conspire to do so. This allows prosecutors to pursue not just the individual crimes, but the entire criminal organization or scheme.

Here are some examples of how the RICO Act might apply:

• Example 1: Construction Company Fraud

  A criminal syndicate establishes a seemingly legitimate construction company. Over several years, they use this company to secure government contracts through bribery, then inflate costs and submit fraudulent invoices for work never performed. They also extort protection money from smaller subcontractors, threatening to delay their payments or deny them future work if they don't comply. The construction company serves as the enterprise, and the repeated acts of bribery, fraud, and extortion constitute the pattern of racketeering activity. RICO allows prosecutors to target the entire criminal operation, not just individual instances of fraud or bribery.

• Example 2: Investment Scheme

  A group of financial advisors forms an investment firm that, on the surface, appears reputable. However, they systematically defraud clients by selling them worthless or highly speculative securities, churning accounts to generate excessive commissions, and misappropriating client funds through a series of complex transactions. This fraudulent activity occurs repeatedly over several years, affecting numerous investors. The investment firm acts as the enterprise, and the ongoing acts of securities fraud, wire fraud, and mail fraud form the pattern of racketeering activity. RICO enables authorities to dismantle the entire fraudulent firm and prosecute those who participated in the scheme.

• Example 3: Public Corruption Ring

  A city council member, along with several close associates, creates a system where they demand kickbacks from developers and businesses seeking zoning permits, building approvals, or city contracts. They funnel these illicit payments through a shell corporation they control, disguising them as legitimate consulting fees. This scheme operates for an extended period, involving multiple instances of bribery and extortion. In this scenario, the city council office and the network of associates form the enterprise, and the repeated acts of bribery and extortion constitute the pattern of racketeering activity. RICO provides a tool to prosecute the entire corrupt network, rather than just isolated acts of bribery.