Legal Definitions - Racketeering

Racketeering refers to engaging in a series of illegal activities, often over an extended period, with the primary goal of generating commercial profit. These criminal schemes frequently operate under the guise of a legitimate business, organization, or enterprise, making it challenging to distinguish them from lawful operations. The illegal acts involved can encompass a wide range of offenses, from financial crimes like fraud or money laundering to more coercive tactics such as extortion or bribery.

Here are some examples to illustrate racketeering:

• Example 1: The "Security" Company

  A group establishes a seemingly legitimate security company offering protection services to local businesses. However, they systematically approach businesses in a particular neighborhood, demanding exorbitant fees for their "protection." If a business owner refuses to pay, they might experience vandalism, theft, or other forms of intimidation, making it clear that the "security" service is actually a front for an extortion racket. The money collected is pure profit from these illegal threats.

  This illustrates racketeering because the organization uses a legitimate business facade (a security company) to engage in a pattern of illegal activities (extortion and intimidation) for financial gain.

• Example 2: The Phony Investment Firm

  An individual sets up an investment firm, complete with a professional office, website, and marketing materials. They solicit funds from unsuspecting investors, promising high returns on exclusive, complex financial products. In reality, the "investments" are non-existent, and new investor money is simply used to pay off earlier investors (a Ponzi scheme) or is directly siphoned off for the perpetrator's personal use. This continues until the scheme collapses.

  This demonstrates racketeering as it involves a pattern of fraudulent activities (misleading investors, operating a Ponzi scheme) disguised as a legitimate financial service, all for the purpose of illicit commercial profit.

• Example 3: The Corrupt Labor Union Local

  A local chapter of a labor union, while ostensibly representing workers' interests, is secretly controlled by individuals who demand kickbacks from contractors in exchange for ensuring labor peace or awarding specific contracts. They might also inflate membership numbers to collect more dues, which are then diverted to personal accounts, or use union funds for lavish personal expenses, all while maintaining the appearance of a functioning, legitimate union.

  This is an example of racketeering because a seemingly legitimate organization (a labor union) is used to conduct a pattern of illegal activities (bribery, embezzlement, fraud) to generate illicit financial benefits for those in control.