What is Racketeering? The RICO Act

What is Racketeering?

Racketeering is a term used to describe any criminal conduct carried out repeatedly for financial gain, frequently under threat of or actual use of force. A person must commit at least two of the 35 predicate crimes—27 federal and eight state offenses—to qualify as a racketeer. Murder, abduction, arson, and money laundering are among these crimes, which are also referred to as "racketeering activity." The list also includes mail and wire fraud.

Racketeering Explained

Any scheme orchestrated to reap illicit gains is called a racket. It frequently refers to the types of illegal behavior listed in the Racketeer Influenced and Corrupt Organizations Act (RICO). The acquisition or ownership of a business through one of those predicated crimes or the proceeds of such crimes is prohibited by this federal law of the United States. Additionally prohibited by the legislation are conspiring to commit any of the aforementioned crimes as well as taking part, even tangentially, in specific crimes that businesses commit.

An organized company or business may illegally obtain money from a reputable company to use for illicit purposes. Rackets generally operated in fields that were blatantly unlawful, such prostitution, human trafficking, drug trafficking, the sale of illegal weapons, or counterfeiting.

Additionally, accusations of racketeering frequently target labor unions. In order to demand money from a business or contractor, organized crime groups frequently employ labor unions. In other instances, organizations use unions to manipulate employees. La Cosa Nostra, an Italian-American mafia criminal organization, was well-known for its influence on labor unions. La Cosa Nostra became so entrenched that both the labor union and the firm management needed to depend on the gangsters for security.

Prohibition in the 1920s led to a significant increase in organized crime in the US. But it wasn't until the 1970s that the US government discovered a way to punish organized crime explicitly, thanks to anti-racketeering statutes like the Racketeer Influenced and Corrupt Organizations (RICO) Act of 1970. 

Since then, RICO has developed over the past fifty years, starting with the American Mafia. Now, major corporations can be sued civilly under RICO.

The RICO act allows law enforcement officials to file charges against people or organizations engaged in a variety of racketeering activities. RICO offenders may be tried and, if proven guilty, could be sentenced to 20 years in jail or more for more serious offenses. There may also be fees and other consequences.

Although racketeering was initially linked to organized crime, it has evolved over time as the Department of Justice has given organized crime less of a priority. Due to the evolution of crime over the past 20 years, prosecutors have become more innovative.

According to the US Attorney's Office, former Illinois governor Rod Blagojevich and members of his inner circle were accused of racketeering in 2009 after plotting to "deprive the people of Illinois of honest government." Additionally, civil attorneys have filed RICO-based racketeering lawsuits against significant corporations, charging institutional misconduct.

Other Instances of Racketeering

Additionally, corporations are capable of racketeering if they engage in questionable activities. For instance, a pharmaceutical company might pay doctors to overprescribe a prescription thereby scamming the system to increase its revenues. Racketeering may also include predatory lending. This occurs when a borrower is duped into accepting a loan that willfully disregards or actively interferes with their ability to pay back it.

For instance, State Farm, a car insurance company, was charged with illegally supporting Judge Lloyd Karmeier's election campaign in 2004 by directing funds through advocacy organizations that did not declare their contributors. The lawsuit is related to a protracted legal dispute brought by State Farm customers who claimed that for more than ten years, they received generic, inferior auto components in place of original equipment.

The plaintiffs also requested interest in the amount of $1.8 billion. Nearly $8.5 billion in total damages were demanded. Just before the scheduled start of the opening arguments, State Farm agreed to pay $250 million to resolve the racketeering lawsuit in September 2018.

Operation Rescue, a pro-life organization, began adopting sit-in strategies in the 1980s to physically bar operators and women from entering abortion clinics. The National Organization for Women (NOW) and two abortion clinics filed a lawsuit against Operation Rescue, claiming that the organization had engaged in a "nationwide campaign of terror" of robbery and extortion. In 1994, the Supreme Court decided unanimously in favor of NOW, concurring that Operation Rescue's methods might be regarded as racketeering.

However, in an 8-1 majority, the court overturned the verdict in 2006, concluding that occupying property and forbidding it from being used did not equate to taking it from another person forcibly.

The RICO Act

When the Act was passed, government prosecutors mostly used it to pursue criminal gangs and organized crime. Prior to the law, although several people might have been involved in committing a crime, prosecutors were required to trial mob-related racketeering offences individually.

RICO enables law enforcement to bring charges against an entire gang. The legislation enables prosecutors to confiscate an accused person's assets, prohibiting the money and assets from being transferred and using phony businesses.

In order to file charges under RICO against a defendant, the prosecution must demonstrate five things:

·        A business existed

·        That business had an impact on interstate trade.

·        The defendant had some connection to or employment with the business.

·        The defendant committed repeated acts of racketeering.

·        The defendant participated in the business by committing at least two racketeering offenses.

The statute authorizes prosecutors to prosecute organizations or people for up to 20 years of continuous illegal behavior for each case of racketeering, giving law enforcement agencies new powers to combat the practice. Additionally, the statute enables prosecutors to bring charges against group leaders for crimes they authorized others to commit.

In order to use the RICO Act when charges are brought, federal and state prosecutors must establish beyond a reasonable doubt the scope of any offenses perpetrated and the involvement of the people concerned.

If convicted of racketeering, the defendant may also be required to pay a $250,000 fine. The maximum punishment will also include a life prison time if the defendant had perpetrated a predicate crime carrying a life sentence.