Racketeer Influenced and Corrupt Organizations Act

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The Racketeer Influenced and Corrupt Organizations Act, commonly referred to as the RICO Act or simply RICO, 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. The RICO Act focuses specifically on racketeering, and it allows for the leaders of a syndicate to be tried for the crimes which they ordered others to do or assisted them, closing a perceived loophole that allowed someone who told a man to, for example, murder, to be exempt from the trial because he did not actually do it.

RICO was enacted by section 901(a) of the Organized Crime Control Act of 1970 (Pub.L. 91–452, 84 Stat. 922, enacted October 15, 1970). RICO is codified as Chapter 96 of Title 18 of the United States Code, 18 U.S.C. § 1961–1968. While its original use in the 1970s was to prosecute the Mafia as well as others who were actively engaged in organized crime, its later application has been more widespread.

It has been speculated that the name and acronym were selected in a sly reference to the movie Little Caesar, which featured a notorious gangster named Rico. The original drafter of the bill, G. Robert Blakey, refused to confirm or deny this.[1] G. Robert Blakey remains an expert on RICO;[2] his former student Michael Goldsmith also gained a reputation as one of the nation's leading RICO experts.[3]

Contents

Summary

Under RICO, a person who is a member of an enterprise that has committed any two of 35 crimes—27 federal crimes and 8 state crimes—within a 10-year period can be charged with racketeering. 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." RICO also permits a private individual harmed by the actions of such an enterprise to file a civil suit; if successful, the individual can collect treble damages (damages in triple the amount of actual/compensatory damages).

When the U.S. Attorney decides to indict someone under RICO, he or she has the option of seeking a pre-trial restraining order or injunction to temporarily seize a defendant's assets and prevent the transfer of potentially forfeitable property, as well as require the defendant to put up a performance bond. This provision was placed in the law because the owners of Mafia-related shell corporations often absconded with the assets. An injunction and/or performance bond ensures that there is something to seize in the event of a guilty verdict.

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, as it focuses on patterns of behavior as opposed to criminal acts.[4]

There is also a provision for private parties to sue. A "person damaged in his business or property" can sue one or more "racketeers". The plaintiff must prove the existence of an "enterprise". The defendant(s) are not the enterprise; in other words, the defendant(s) and the enterprise are not one and the same. There must be one of four specified relationships between the defendant(s) and the enterprise: either the defendant(s) invested the proceeds of the pattern of racketeering activity into the enterprise; or the defendant(s) acquired or maintained an interest in, or control over, the enterprise through the pattern of racketeering activity; or the defendant(s) conducted or participated in the affairs of the enterprise "through" the pattern of racketeering activity; or the defendant(s) conspired to do one of the above. In essence, the enterprise is the illegal device of the racketeers. A civil RICO action, like many lawsuits based on federal law, can be filed in state or federal court.[5]

Both the federal and civil components allow for the recovery of treble damages.

Although its primary intent was to deal with organized crime, Blakey said that Congress never intended it to merely 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."[4]

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:

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 U.S. 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. 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." (H.J. Inc. v. Northwestern Bell Telephone Co.) 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.

Application of RICO laws

Although some of the RICO predicate acts are extortion and blackmail, one of the most successful applications of the RICO laws has been the ability to indict or sanction individuals for their behavior and actions committed against witnesses and victims in alleged retaliation or retribution for cooperating with federal law enforcement or intelligence agencies.

Violations of the RICO laws can be alleged in civil lawsuit cases or for criminal charges. In these instances charges can be brought against individuals or corporations in retaliation for said individuals or corporations working with law enforcement. Further, charges can also be brought against individuals or corporations who have sued or filed criminal charges against a defendant.

Anti-SLAPP (strategic lawsuit against public participation) laws can be applied in an attempt to curb alleged abuses of the legal system by individuals or corporations who utilize the courts as a weapon to retaliate against whistle blowers, victims, or to silence another's speech. RICO could be alleged if it can be shown that lawyers and/or their clients conspired and collaborated to concoct fictitious legal complaints solely in retribution and retaliation for themselves having been brought before the courts.

Although the RICO laws may cover drug trafficking crimes in addition to other more traditional RICO predicate acts such as extortion, blackmail, and racketeering, large-scale and organized drug networks are now commonly prosecuted under the Continuing Criminal Enterprise Statute, also known as the "Kingpin Statute". The CCE laws target only traffickers who are responsible for long-term and elaborate conspiracies; whereas the RICO law can be charged for a variety of organized criminal behavior.[6]

Famous cases

Hells Angels Motorcycle Club

In 1979, the United States federal government went after Sonny Barger and several members and associates of the Oakland charter of the Hells Angels using RICO. In United States v. Barger, the prosecution team attempted to demonstrate a pattern of behavior to convict Barger and other members of the club of RICO offenses related to guns and illegal drugs. The jury acquitted Barger on the RICO charges with a hung jury on the predicate acts: "There was no proof it was part of club policy, and as much as they tried, the government could not come up with any incriminating minutes from any of our meetings mentioning drugs and guns."[7][8]

Frank Tieri

On November 21, 1980, Genovese crime family boss Frank "Funzi" Tieri was the first Mafia boss to be convicted under the RICO Act.[citation needed]

Catholic sex abuse cases

In some jurisdictions, RICO suits have been filed against Catholic dioceses, using racketeering laws to prosecute the highers-up in the episcopacy for abuses committed by those under their authority. A Cleveland grand jury cleared two bishops of racketeering charges, finding that their mishandling of sex abuse claims did not amount to criminal racketeering. Certain lawyers and abuse advocates[who?] have openly wondered why a similar suit was not filed against archbishop Bernard Law prior to his getting reassigned to Vatican City.[9][10]

Key West PD

About June 1984, the Key West Police Department located in the County of Monroe, Florida, was declared a criminal enterprise under the federal RICO statutes after a lengthy United States Department of Justice investigation. Several high-ranking officers of the department, including Deputy Police Chief Raymond Cassamayor, were arrested on federal charges of running a protection racket for illegal cocaine smugglers.[11] At trial, a witness testified he routinely delivered bags of cocaine to the Deputy Chief's office at City Hall.[12]

Michael Milken

On March 29, 1989, American business magnate Michael Milken was indicted on 98 counts of racketeering and fraud relating to an investigation into an allegation of insider trading and other offenses. Milken was accused of using a wide-ranging network of contacts to manipulate stock and bond prices. It was one of the first occasions that a RICO indictment was brought against an individual with no ties to organized crime. Milken pled guilty to six lesser, non-RICO, securities fraud offenses rather than risk spending the rest of his life in prison, and ended up serving 22 months in prison.

On September 7, 1988, Milken's employer, Drexel Burnham Lambert, was alleged to have participated in committing an element of RICO. They were later indicted under the legal doctrine that corporations are responsible for their employees' crimes. Drexel avoided RICO charges by pleading no contest to lesser felonies. While many sources say that Drexel pleaded guilty, in truth the firm only admitted it was "not in a position to dispute the allegations." If Drexel had been indicted, it would have had to post a performance bond of up to $1 billion to avoid having its assets frozen. This would have taken precedence over all of the firm's other obligations—including the loans that provided 96 percent of its capital. If the bond ever had to be paid, its shareholders would have been practically wiped out. Since banks will not extend credit to a firm indicted under RICO, an indictment would have likely put Drexel out of business.[13]

Major League Baseball

In 2002, the former minority owners of the Montreal Expos baseball team filed charges under the RICO Act against Major League Baseball commissioner Bud Selig and former Expos owner Jeffrey Loria, claiming that Selig and Loria deliberately conspired to devalue the team for personal benefit in preparation for a move.[14] If found liable, Major League Baseball could have been responsible for up to $300 million in punitive damages. The case lasted for two years, successfully stalling the Expos' move to Washington or contraction during that time. It was eventually sent to arbitration where the arbiters ruled in favor of Major League Baseball,[15] permitting the move to Washington to take place.

Pro-life activists

RICO laws were successfully cited in NOW v. Scheidler, 510 U.S. 249, 114 S. Ct. 798, 127 L.Ed. 2d 99 (1994), a suit in which certain parties, including the National Organization for Women, sought damages and an injunction against pro-life activists who physically block access to abortion clinics. The Court held that a RICO enterprise does not need an economic motive, and that the Pro-Life Action Network could therefore qualify as a RICO enterprise. The Court remanded for consideration of whether PLAN committed the requisite acts in a pattern of racketeering activity.

Mohawk Industries

On April 26, 2006, the Supreme Court heard Mohawk Industries, Inc. v. Williams, 547 U.S. 516 (2006), which concerned what sort of corporations fell under the scope of RICO. Mohawk Industries had allegedly hired illegal aliens, in violation of RICO. The court was asked to decide whether Mohawk Industries, along with recruiting agencies, constitutes an 'enterprise' that can be prosecuted under RICO, but in June of that year dismissed the case and remanded it to Court of Appeals.[16]

Latin Kings

On August 20, 2006, in Tampa, Florida, most of the state leadership members of the street gang, the Latin Kings, were arrested in connection with RICO conspiracy charges to engage in racketeering and currently await trial. The operation, called "Down Crown", targeted statewide leadership of the Latin Kings. The raid occurred at the Caribbean American Club. Along with Hillsborough County Sheriff’s Office, Tampa Police Department, the State Attorney’s Office, the FBI, Immigration and Customs Enforcement, and the federal Bureau of Alcohol, Tobacco and Firearms were involved in the operation. Included in the arrest were leader Gilberto Santana from Brooklyn NY, Captain Luis Hernandez from Miami FL, Affiliate Celina Hernandez, Affiliate Michael Rocca, Affiliate Jessica Ramirez, Affiliate Reinaldo Arroyo, Affiliate Samual Alvarado, Omari Tolbert, Edwin DeLeon, and many others, totaling 39.

Gambino crime family

Also, in Tampa, on October 16, 2006, four members of the Gambino crime family (Capo Ronald Trucchio, Terry Scaglione, Steven Catallono and associate Kevin McMahon) were tried under RICO statutes, found guilty and sentenced to life in prison.

Chicago Outfit

In 2005, the U.S. Department of Justice's Operation Family Secrets indicted 15 Outfit members and associates under RICO predicates. As of 2009 Joseph Lombardo and James Marcello have been sentenced to life imprisonment.

Michael Conahan and Mark Ciavarella

A federal grand jury in the Middle District of Pennsylvania handed down a 48-count indictment against former Luzerne County Court of Common Pleas Judges Michael Conahan and Mark Ciavarella.[17] The judges were charged with RICO after allegedly committing acts of Wire fraud, Mail Fraud, Tax Evasion, Money Laundering, and honest services fraud. The judges were accused of taking kickbacks for housing juveniles, that the judges convicted for mostly petty crimes, at a private detention center. The incident was dubbed by many local and national newspapers as the "Kids for cash scandal".[18] On February 18, 2011, a federal jury found Michael Ciavarella guilty of racketeering because of his involvement in accepting illegal payments from Robert Mericle, the developer of PA Child Care, and Attorney Robert Powell, a co-owner of the facility. Ciavarella is facing 38 other counts in federal court.[19]

Scott W. Rothstein

Scott W. Rothstein is a disbarred lawyer and the former managing shareholder, chairman, and chief executive officer of the now-defunct Rothstein Rosenfeldt Adler law firm. He is accused of funding his philanthropy, political contributions, law firm salaries, and an extravagant lifestyle with a massive 1.2 billion dollar Ponzi scheme. On December 1, 2009. Rothstein turned himself in to federal authorities and was subsequently arrested on charges related to the Racketeer Influenced and Corrupt Organizations Act (RICO).[20] Although his arraignment plea was not guilty, Rothstein cooperated with the government and reversed his plea to guilty of five federal crimes on January 27, 2010. Bond was denied by U.S. Magistrate Judge Robin Rosenbaum, who ruled that due to his ability to forge documents, he was considered a flight risk.[21] On June 9, 2010, Rothstein received a 50-year prison sentence after a hearing in federal court in Fort Lauderdale.[22]

AccessHealthSource

On August 31, 2010, eleven defendants were indicted on RICO charges for allegedly assisting AccessHealthSource, a local health care provider, in obtaining and maintaining lucrative contracts with local and state government entities in the city of El Paso, Texas, “through bribery of and kickbacks to elected officials or himself and others, extortion under color of authority, fraudulent schemes and artifices, false pretenses, promises and representations and deprivation of the right of citizens to the honest services of their elected local officials” (see indictment).[23]

International equivalents to RICO

The US RICO legislation has other equivalents in the rest of the world. In spite of Interpol having a standardized definition of RICO-like crimes, the interpretation and national implementation in legislation (and enforcement) widely varies. Most nations do cooperate with the US on RICO enforcement only where their own related laws are specifically broken, but this is in line with the Interpol protocols for such matters.

By nation, alphabetically

Without other nations enforcing similar legislation to RICO many cross border RICO cases would not be possible. In the overall body of RICO cases that went to trial, at least 50% have had some non-US enforcement component to them. The offshoring of money away from the US finance system as part racketeering (and especially money laundering) is typically a major contributing factor to this.

However, other countries have laws that enable the government to seize property with unlawful origins. Mexico and Colombia both have specific laws that define the participation in criminal organizations as a separate crime (see Ley Federal contra la Delincuencia Organizada),[24] and separate laws that allow the seizure of goods related with these crimes. (see Ley de Extinción de Dominio).[25] This latter provides a specific chapter titled "International Cooperation", which instructs Mexican authorities to cooperate with foreign authorities with respect to organized crime assets within Mexico, and provides the framework by which Mexican authorities may politely request the cooperation of foreign authorities with respect to assets located outside of Mexico, in terms of any international instruments they may be party to.

Arguably, this may be construed as allowing the application of the RICO Act in Mexico, provided the relevant international agreements exist among Mexico and countries with RICO or RICO-equivalent provisions.

See also

References

  1. ^ "RICO Suave". Snopes.com. 2004-12-21. http://www.snopes.com/language/acronyms/rico.asp. Retrieved 2006-03-26.
  2. ^ G. Robert Blakey, William and Dorothy O’Neill Professor of Law, http://law.nd.edu/people/faculty-and-administration/teaching-and-research-faculty/g-robert-blakey, retrieved 2009-09-30
  3. ^ Michael Goldsmith, Woodruff J. Deem Professor of Law, http://www.law.byu.edu/Law_School/Faculty_Profile?122, retrieved 2009-09-30
  4. ^ a b Sanders, Alain; Painton, Priscilla (1989-08-21), Law: Showdown At Gucci, TIME, http://www.time.com/time/magazine/article/0,9171,958402-1,00.html, retrieved 2009-09-30
  5. ^ Van Over, Gil, Can You Be Subject to a RICO Claim?, Dealer Magazine, http://www.dealer-magazine.com/index.asp?article=481, retrieved 2009-09-30[dead link]
  6. ^ Carlson, K (1993), "Prosecuting Criminal Enterprises", National Criminal Justice Reference Series (United States: Bureau of Justice Statistics Special Report): 12, http://www.ncjrs.gov/App/publications/abstract.aspx?ID=142524, retrieved December 28, 2009.
  7. ^ Hell's Angel: The Life and Times of Sonny Barger and The Hell's Angels Motorcycle Club, Ralph 'Sonny' Barger, with Keith and Kent Zimmerman, 2000
  8. ^ "Organized Crime Research". Klaus von Lampe. 2000. http://www.organized-crime.de/revbar01sonnybarger.htm. Retrieved 2007-12-08.
  9. ^ Weigel, David. "But Why Isn't Bernard Law in Jail? (Part 2)". Slate.com. http://www.slate.com/id/2075831/. Retrieved 2012-04-24.
  10. ^ Mitered in the Mob?[dead link]
  11. ^ Key West Police Department Called a 'Criminal Enterprise', New York Times, 1984-07-01, http://query.nytimes.com/gst/fullpage.html?res=9D07E4D71539F932A35754C0A962948260&n=Top%2fReference%2fTimes%20Topics%2fOrganizations%2fF%2fFederal%20Bureau%20of%20Investigation%20, retrieved 2009-09-30
  12. ^ Klingener, Nancy (2005-05-22), From wrecking to smuggling to development, corruption, investigations have long history, Key West Citizen, archived from the original on 2007-03-20, http://web.archive.org/web/20070320075248/http://www.livableoldtown.com/from_wrecking_to_smuggling_to_de.htm, retrieved 2009-09-30
  13. ^ Stone, Dan G. (1990), April Fools: An Insider's Account of the Rise and Collapse of Drexel Burnham, New York City: Donald I. Fine, ISBN 1-55611-228-9
  14. ^ Chass, Murray (2002-07-17), BASEBALL; A Group's Racketeering Suit Brings Baseball to Full Bristle, New York Times, http://www.nytimes.com/2002/07/17/sports/baseball-a-group-s-racketeering-suit-brings-baseball-to-full-bristle.html, retrieved 2009-09-30
  15. ^ Ruling clears way for move to D.C., ESPN.com and Associated Press, 2004-01-15, http://sports.espn.go.com/mlb/news/story?id=1923417, retrieved 2009-09-30
  16. ^ "Mohawk Industries, Inc. v. Williams, Shirley, et al." (PDF). Supreme Court of the United States. http://www.supremecourt.gov/opinions/05pdf/05-465.pdf. Retrieved 2008-05-27.
  17. ^ Indictment - USA v. Conahan and Ciavarella, 2009-09-09, http://media.theweekender.com/documents/INDICTMENT.pdf, retrieved 2009-09-12
  18. ^ Morgan-Besecker, Terrie (2009-09-10), Ex-judges hit with 48 counts, Times Leader, http://www.timesleader.com/news/Ex-judges_hit_with_48_counts_09-10-2009.html, retrieved 2009-09-11
  19. ^ Jury finds Ciavarella guilty on first of 39 counts, Times Leader, 2011-02-18, http://www.timesleader.com/news/Deliberations-resume-in-CIavarella-trial.html, retrieved 2011-02-18
  20. ^ "Scott Rothstein Charging Document". Scribd.com. http://www.scribd.com/doc/23448019/Scott-Rothstein-Charging-Document. Retrieved 2012-04-24.
  21. ^ http://www.sun-sentinel.com/media/acrobat/2009-12/50820067.pdf
  22. ^ Weaver, Jay (2010-06-09). "Ponzi schemer Scott Rothstein gets 50-year sentence". Miami Herald. http://www.miamiherald.com/2010/06/09/1671305/ponzi-schemer-scott-rothstein.html. Retrieved 2010-06-10.
  23. ^ Bracamontes, Ramon. "Public corruption: Feds allege bribery, kickbacks". El Paso Times. http://www.elpasotimes.com/news/ci_15979435. Retrieved 2012-04-24.
  24. ^ http://www.diputados.gob.mx/LeyesBiblio/pdf/101.pdf
  25. ^ http://www.diputados.gob.mx/LeyesBiblio/pdf/LFED.pdf

Further reading

External links