RICO (Racketeer Influenced and Corrupt Organizations Act)
RICO (RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT)
The Racketeer Influenced and Corrupt Organizations Act (RICO) is a controversial and innovative federal penal statute. Adopted as part of the Organized Crime Control Act of 1970, RICO created several new crimes, revived the concept of property forfeiture as a punishment for crimes, and instituted a new civil cause of action that has generated a large volume of litigation.
RICO grew out of concern about the infiltration of legitimate institutions by organized crime. After this problem was highlighted in the 1967 report of a presidential commission on crime, a number of bills were introduced in Congress that would have prohibited the investment of money derived from criminal activities into a legitimate business. In addition to making such investment a crime, these bills used the model of the anti-trust laws to permit civil law suits by businesses injured by such infiltration, and to divest criminals of their ill-gotten interests in legitimate businesses by requiring forfeiture of those interests to the government. Aspects of several such bills were eventually combined into what ultimately passed as RICO. The actual language adopted by Congress, however, was susceptible to much broader application.
RICO's broadest and most-used section prohibits conducting the affairs of any "enterprise" (defined broadly to include just about any form of human endeavor) through a "pattern of racketeering activity" (defined as two or more criminal acts from an extremely broad list, that are related to each other, that do or threaten to persist over a period of time). This language makes it a crime for those with a significant role in operating any business, government office, labor union, social or political organization, or informal grouping to commit a series of crimes in furtherance of that organization's goals or by using the organization's resources. Indeed, since the Supreme Court has held that enterprises are covered whether or not they are legitimate (United States v. Turkette, 452 U.S. 576 (1981)), RICO permits the prosecution of members of an organized crime family or other criminal gang or association for conducting its affairs.
Other new crimes created by RICO, which have been rarely used by prosecutors, derive from the original concept of preventing criminal elements from gaining entry into legitimate business. The relevant provisions prohibit acquiring or maintaining an interest in any "enterprise" (other than by purchase of a trivial interest via the stock market), by investing the proceeds of loansharking or a pattern of racketeering activity (for example, investing the profits from narcotics dealing in a legitimate business), or by using such criminal means (for example, by the use of threats of violence to extort an interest in a business from its owner). In addition, RICO also prohibits conspiring to commit any of these new crimes.
One might wonder what is valuable or innovative about prohibiting actions that are by definition already crimes. The answer is largely procedural. By defining as a single offense the commission of a series of distinct crimes, RICO avoids a variety of traditional procedural, evidentiary, and jurisdictional rules that tend to discourage prosecuting separate offenses together. For example, RICO includes as "predicate acts" that may form part of a pattern of racketeering such crimes as murder, robbery, bribery, and arson, which normally are violations only of state law, thus permitting them to be investigated and prosecuted by federal officials in federal court. When criminal organizations operate in several states, their offenses would normally have to be prosecuted separately in the states of federal judicial districts where the individual crimes occurred; however, by defining these offenses as part of a single pattern, the entire pattern can be prosecuted together as a single crime in any federal district where one of the predicate acts occurred. Procedural rules limiting the joinder of crimes or of defendants in a single indictment are inapplicable once the separate crimes or offenders are conceptualized as part of a single "racketeering enterprise" jointly committing the same crime. Evidentiary rules that seek to avoid "guilt by association" or easy conviction of the "usual suspects" by limiting reference to a defendant's prior convictions, other criminal acts, or associations with other criminals or criminal organizations are similarly inapplicable where the commission of a number of crimes, in association with other members of an enterprise, is the very crime to be proved. Where the statute of limitations precludes prosecution of crimes committed years ago, those crimes may often still be made part of a lengthy pattern of racketeering offenses, so long as at least one predicate racketeering act was committed within the limitations period. These and other effects of defining the RICO pattern as a single crime have facilitated the prosecution of cases involving members of the Mafia and other criminal groups. Critics of RICO have charged that the resulting "megatrials" of large numbers of defendants for a wide variety of separate crimes have diluted traditional protections against wrongful conviction, by complicating the task of jurors; making trials longer, more burdensome, and more expensive for defendants; and by permitting unfair "spill-over" of inferences of guilt from one crime or defendant to other charges that are less well established, or to other defendants against whom the evidence is weak.
RICO has not been used only against organized crime groups. Because corporations, labor unions, and government offices are also "enterprises" as defined in RICO, the law has been used in cases of business fraud, labor corruption, and bribery of police or other government officials as well. In these cases, the criminal schemes are usually less wide-ranging than in the organized crime cases, and the cases typically could be brought within conventional procedural rules. However, the serious penalties available under RICO, including forfeiture remedies, and the increased stigma of a conviction for "racketeering," have made RICO an attractive tool for prosecutors in serious white-collar criminal cases. Critics of these prosecutions have pointed out that the expansive definition of a pattern of racketeering activity provides little if any definitional limitation on the kinds of fraud or corruption cases that can be brought under RICO, thus leaving the choice of which cases are "serious" enough to merit RICO penalties entirely to the discretion of prosecutors.
RICO authorizes severe penalties of fine and imprisonment. The maximum punishment for an individual on a single RICO charge is imprisonment for twenty years (life if any of the predicate acts charged, such as murder, would permit such a punishment), and a fine of $250,000 or twice the proceeds of the offense. In addition, RICO revived the punishment of forfeiture of property, which before 1970 had been little used in American criminal law.
RICO imposes, as a mandatory penalty, a judgment of forfeiture to the United States government not only of any proceeds or property derived from the proceeds of the crime, but also of any interest the defendant holds in the enterprise, or any property of any kind that provides a source of influence over the enterprise. The latter provisions, rooted in the statute's original purpose of preventing criminal control of legitimate business, aim not only to punish the offender, but also to deny continuing power over an enterprise to anyone who has corrupted it to criminal ends.
Such forfeitures can be extremely harsh, and even disproportionate to the offense. For example, if an executive defrauds a number of customers of one division of a giant corporation, the forfeiture would encompass all of the offender's stockholdings in the company, whether the dollar value of those holdings was large or small in proportion to the losses caused by the fraud. In one Supreme Court case, the proprietor of an adult bookstore, convicted under RICO for selling a number of obscene books, forfeited to the government his entire store, including a large volume of nonobscene material. The Court held that since all the books were now property of the government, they could be destroyed, whether or not they were obscene (Alexander v. United States, 509 U.S. 544 (1993)).
A number of procedural provisions relating to forfeiture increase the impact of the forfeiture remedy. For example, RICO permits the government to obtain a restraining order in advance of trial, freezing any of the defendant's assets that are subject to forfeiture. Thus, before a jury has evaluated the case against the defendant, he can be deprived of the use of his property, and hampered from using that property to obtain legal counsel. Moreover, a judgment of forfeiture "relates back" to the time the property was obtained. Thus, if the court eventually finds that property was obtained by means of a RICO violation, the property is declared to have been the government's from the moment the violation occurred. Consequently, it can be recovered not only from the defendant, but also from anyone else to whom it had been transferred. Even someone who received a bona fide payment for legitimate goods or services from funds held to be racketeering proceeds would lose them to the government, unless he or she had no reasonable cause to believe that the property was forfeitable. Since defense lawyers in particular are on notice that the government has brought racketeering charges, legal fees paid to them could be recovered by the government. This possibility can complicate a RICO defendant's ability to retain counsel.
In addition to these criminal law provisions, RICO also authorizes civil suits, both by the government and by private individuals who are economically injured by a RICO violation. (Somewhat curiously, no provision is made for suits by plaintiffs who were physically injured by racketeering acts.)
The government has found civil RICO to be a valuable tool against labor racketeering and other forms of criminal corruption. Once the government establishes that an enterprise has been the subject of RICO offenses, courts are permitted to enter wide-ranging equitable orders, including banning individuals from participating in the management of the enterprise, or reorganizing or even dissolving the enterprise itself. Unlike these provisions, corrupt labor unions have been ordered to democratize, and to operate under the supervision of court-appointed independent monitors with the power to investigate its affairs, and officials found to be corrupt or to have associated with organized crime have been banned from holding union office.
Private civil actions under RICO have become extremely common and extremely controversial. Unlike most ordinary civil suits, suits for violation of RICO permit recovery not merely of compensation for losses, but for treble damages and attorneys' fees. The attraction of these enhanced remedies, as well as of obtaining access to federal court, has led plaintiffs in ordinary business disputes to exercise considerable ingenuity to cast their claims not in ordinary terms of contract, tort, or common law fraud, but as violations of the federal mail, wire, bank, and securities fraud statutes, which are predicate acts under RICO. The broad coverage of these statutes permits many claims to be formulated in this fashion, leading to the escalation of many ordinary business disputes into "racketeering" cases. (Such claims became so widespread in the securities industry that Congress amended RICO in 1995 to prohibit civil suits based on securities fraud, except where the defendants had previously been criminally convicted.)
Civil RICO actions have also been brought against political activist groups, such as anti-abortion demonstrators and animal rights activists, whose tactics sometimes verge on or cross over into violence (National Organization for Women, Inc. v. Scheidler, 510 U.S. 249 (1994)). Critics of such actions argue that the potential for imposing extensive litigation costs and treble damages on activists who may have a tenuous connection to actual perpetrators of violence, poses a threat to legitimate dissent. Defenders point out the violent activity is as dangerous in pursuit of a political enterprise as of an economic one, and that RICO actions can be an effective tool against organizations that encourage terrorism.
RICO was little noticed, and little used, in the first ten years after its adoption. During the 1980s, however, as prosecutors and civil plaintiffs discovered its potential, the number of RICO cases increased dramatically. The many successful RICO prosecutions of organized crime figures and corrupt civil servants and businessmen, and the use of civil RICO as a tool of labor law reform, provided significant law enforcement benefits. Moreover, RICO has had an influence in the creation of other laws. The use of forfeiture as a punishment for crime, pioneered in RICO, has been extended more broadly to narcotics and money laundering offenses. The extensive use of RICO forfeiture also led to a renewal of interest in civil forfeiture remedies, which have also been greatly expanded. RICO's original concern with the introduction of criminal proceeds into the legitimate economy was developed further in the money-laundering statutes, which also follow the RICO pattern of using traditional crimes as the predicates for more complex prohibitions. Finally, the increased use of proactive investigative techniques, such as electronic surveillance and infiltration by undercover agents and informants, coupled with RICO prosecutions that present the results of such investigations in full context, has contributed to a more effective understanding of crime in terms of enterprises and criminal careers, rather than simply as isolated instances of illegal behavior.
On the debit side, RICO is complex and overbroad. The private civil action has generated excessive litigation, while having little effect on serious criminal conduct. Because RICO defines its prohibitions not in terms of specific behaviors, but in terms of differing relationships of broad abstract concepts like the "enterprise" and the "pattern of racketeering," its coverage is broad and somewhat elusive. In the area of fraud and corruption cases, the severe penalties and federal jurisdiction provided by RICO can be invoked or declined by prosecutors almost at will. Even with respect to criminal groups, the existence of an organized enterprise, as distinct from shifting combinations of loosely acquainted offenders who join and dissolve to commit ad hoc, opportunistic offenses, is sometimes in the eye of the beholder. It is hardly clear that the severe penalties and dangerous dilutions of traditional procedural rights are justified in all such cases.
Gerard E. Lynch
See also Blackmail and Extortion; Civil and Criminal Divide; Conspiracy; Criminal Careers; Federal Criminal Law Enforcement; Guns, Regulation of; Organized Crime; White-Collar Crime: History of an Idea.
Blakey, G. Robert. "Foreword to Symposium: The Twentieth Anniversary of the Racketeer Influenced and Corrupt Organizations Act: Debunkers RICO's Myriad Myths." St. John's Law Review 701, no. 64 (1990).
Blakey, G. Robert, and Gettings, B. "Racketeer Influenced and Corrupt Organizations (RICO) Basic Concepts—Criminal and Civil Remedies." Temple Law Quarterly 1009, no. 53 (1980).
Brenner, Susan W. "RICO, LLE, and Other Complex Crimes: The Transformation of Criminal Law." 2 vol. Bill of Rights Journal 239 (1993).
Coffey, Paul E. "The Selection, Analysis and Approval of Federal RICO Prosecutors." Notre Dame Law Review 1035, no. 65 (1990).
Lynch, Gerard E. "RICO: The Crime of Being a Criminal." Parts 1 and 2: Columbia Law Review 87 (1987): 661. Parts 3 and 4: Columbia Law Review 87 (1987): 920.
Tarlow, Barry. "RICO Revisited." Georgia Law Review 291, no. 17 (1983).
"RICO (Racketeer Influenced and Corrupt Organizations Act)." Encyclopedia of Crime and Justice. . Encyclopedia.com. 17 Sep. 2018 <http://www.encyclopedia.com>.
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"RICO (Racketeer Influenced and Corrupt Organizations Act)." Encyclopedia of Crime and Justice. . Retrieved September 17, 2018 from Encyclopedia.com: http://www.encyclopedia.com/law/legal-and-political-magazines/rico-racketeer-influenced-and-corrupt-organizations-act
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RICO. In 1970, Congress passed the Organized Crime Control Act, Title Nine of which is called the Racketeer Influenced and Corrupt Organizations Act, or RICO. RICO was the outgrowth of congressional studies of organized crime and the recommendations of a presidential commission. Although RICO was endorsed by President Richard Nixon and the American Bar Association, the American Civil Liberties Union raised concerns with its possible use against antiwar protesters.
The study of the Mafia was the occasion for RICO's enactment, but the statute is not limited to the classic mobster; it applies to all persons who engage in "patterns" of "predicate crimes" committed by, through, or against "enterprises" including legitimate and illegitimate organizations. Its "predicate crimes" include violence, such as murder, the provision of illegal goods or services, such as drugs, corruption in labor unions and government, such as extortion bribery, and commercial fraud, such as securities. Its criminal sanctions include fines, imprisonment, and forfeitures; its civil sanctions include injunctions, treble damages, and attorney fees for those injured in their property.
At first, the Department of Justice moved slowly to implement criminal RICO. By the end of the twentieth century, however, it was the prosecutor's tool of choice against sophisticated forms of crime. Of the 150 RICO prosecutions brought each year out of the 50,000-plus criminal prosecutions, 48 percent are brought in the area of white-collar crime (such as political corruption and Wall Street fraud), 39 percent are brought in the area of organized crime (not just the Mafia, but drug organizations, and so on.), and 13 percent are brought in the area of violent crimes (street gangs, white hate groups). Members of Congress, governors, mayors, and other governmental figures have been convicted under RICO. Wall Street securities firms have been convicted. Significant criminal groups (Mafia families, drug organizations, and white-hate groups) have been put out of business.
While RICO is not limited to the Mafia, it was one of RICO's targets. The Mafia's membership in the United States in 1963 was approximately 5,000 people, 2,500 of whom were in five families in New York City; 300 or more were in one family in Chicago. The other sixteen families were found in major cities throughout the nation. Not equal in power or status, the Mafia families were under the jurisdiction of a "commission," composed of the heads of four families in New York City and the bosses of the families in Chicago, Buffalo, Philadelphia, and Detroit.
The Mafia of the early twenty-first century is a tattered remnant of the 1963 organization. Membership is down to 1,150; 750 are in New York City, where the five families are mere shells; 40 to 50 are in Chicago. Segments of the economy that were once infiltrated by the Mafia (such as the garment industry in New York or its fish market) are now free of criminal domination. Garbage removal is now competitive. The families in cities besides New York and Chicago are basically destroyed, reduced to little more than street gangs. The reasons are various—death, old age, the rise of rival groups, changes in economic and social life—but most significant, law enforcement pressure brought about by criminal and civil prosecutions under RICO, the wiretapping of criminal conversations for evidence in court cases, and the witness protection program, which helps convince insiders to turn against higher figures in the family without fear of retribution. As of 2002, the "commission" had not met in ten years. In short, the Mafia no longer possessed any edge in an underworld teeming with Asians, Russians, South Americans, and others of varied ethnic background.
The Department of Justice also moved slowly to use RICO's civil provisions, it is using its injunctive provisions to deal with Mafia-dominated unions, placing them in trusteeships and forcing democratic elections. Federal courts are requiring reforms designed to weed out criminal influence in the Teamsters Union, the Hotel and Restaurants Worker's Union, the Laborer's Union, and the Longshoremen's Union.
RICO's private treble damage provisions were largely ignored until about 1985. When they were first used, a firestorm of controversy broke out. Objections were made to RICO's use beyond "organized crime" in "garden variety fraud." Fear was expressed that the statute would open a "floodgate" of new litigation and inundate already crowded court dockets. In H. J. Inc. v. Northwestern Bell Telephone Co. (1989), the U.S. Supreme Court clarified the scope of RICO's "pattern" requirement, holding that it is limited to systematic conduct, not isolated acts. Civil suits occur at about 750 per year out of about 275,000 civil filings. The flood did not happen.
Repeatedly challenged in court, RICO has been uniformly upheld. Defense attorneys sought to limit it to "organized crime." In its H. J. Inc. decision, the Supreme Court held: "The occasion for Congress' action was the perceived need to combat organized crime. But Congress for cogent reasons chose to enact a more general statute. … Congress drafted RICO broadly enough to encompass a wide range of criminal activity, taking many different forms and likely to attract a broad array of perpetrators." Defense lawyers, too, challenged its forfeiture provisions, alleging that they interfere with a defendant's right to counsel. In Caplin & Drysdale v. United States, (1989), the Court held: "A robbery suspect has no Sixth Amendment right to use funds he has stolen … to retain an attorney. … The privilege to practice law is not a license to steal." Vagueness challenges under due process are uniformly turned aside. In Fort Wayne Books, Inc. v. Indiana (1989), the Court observed that if RICO's predicate offenses were "not unconstitutionally vague, then RICO cannot be vague either." In short, since a violation of RICO depends on a violation of the predicate offense, fair notice is marked out by the predicate offense. Avoid such offenses and you avoid RICO. Abortion protesters are complaining that its use against them is unlawful. In Now v. Scheidler (1994), the Court held that the statute was broad enough to apply to unlawful protests. The American Civil Liberties Union was prescient.
Blakey, G. Robert, and Brian Gettings. "Racketeer and Corrupt Organizations (RICO): Basic Concepts–Criminal and Civil Remedies." Temple Law Quarterly 53 (1980): 1009. Overview of the law at its inception.
Griffin, Joe, and Don DeNevi. Mob Nemesis: How the F.B.I. Crippled Organized Crime. Amherst, N.Y.: Prometheus Books, 2002. Personal story of F.B.I. efforts against Mafia families by a knowledgeable insider.
Jacobs, James B., et al. Busting the Mob : United States v. Cosa Nostra. New York: New York University Press, 1994. Best academic study of success of RICO in New York City.
Luccaro, Daniel et al. "Racketeer Influenced and Corrupt Organizations." 38 American Criminal Law Review (2001): 1212. Overview of the law as it has developed in the modern period.
President's Commission on Law Enforcement and Administration of Justice, Task Force: Organized Crime. Washington, D.C.: U.S. Government Printing Office, 1967. Comprehensive analysis of organized crime at the beginning of the modern period.
President's Commission on Organized Crime. Washington, D.C.: U.S. Government Printing Office, 1986. Comprehensive analysis of organized crime and RICO after the beginning of the modern period.
Raab, Selwyn. "A Battered and Ailing Mafia Is Losing Its Grip on America." New York Times. 22 Oct. 1990, p. A1. Popular presentation of the decline of the Mafia and RICO's use against the families of the Mafia in New York City.
G. Robert Blakey
See also Organized Crime Control Act .
"RICO." Dictionary of American History. . Encyclopedia.com. (September 17, 2018). http://www.encyclopedia.com/history/dictionaries-thesauruses-pictures-and-press-releases/rico
"RICO." Dictionary of American History. . Retrieved September 17, 2018 from Encyclopedia.com: http://www.encyclopedia.com/history/dictionaries-thesauruses-pictures-and-press-releases/rico
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"RICO." The Oxford Dictionary of Abbreviations. . Encyclopedia.com. (September 17, 2018). http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/rico
"RICO." The Oxford Dictionary of Abbreviations. . Retrieved September 17, 2018 from Encyclopedia.com: http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/rico
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A set of federal laws (18 U.S.C.A. § 1961 et seq. ) specifically designed to punish criminal activity by business enterprises.
Anza v. Ideal Steel Supply Corporation
In June 2006, the U.S. Supreme Court held that New York company Ideal Steel Supply (Ideal) could not maintain its RICO (Racketeer Influenced and Corrupt Organizations Act) claims against its competitor, National Steel Supply (National), and its owners, the Anzas. Anza v. Ideal Steel Supply Corp., 126 S. Ct. 1991 (2006). The high court premised its decision on insufficient proximate cause, i.e., the remoteness of Ideal's alleged damages to the alleged illegal con-duct: National's filing of false or fraudulent tax returns and its failure to pay certain taxes. In ruling on the present case, the Court reiterated its holding in Holmes v. Securities Investor Protection Corporation, 503 U.S. 258, 268 (1992) to wit, that only a plaintiff whose injury is "proximately caused" by an alleged RICO violation (18 USC §1962) could bring a civil suit. In the present case, ruled the Court, Ideal's alleged damages of lost market share and lost sales were too remote, indirect, and speculative.
Ideal, a supplier of steel milled products, operated two stores in Queens and the Bronx in New York. Its principal competitor, National, owned by Joseph and Vincent Anza, also operated two stores, one in Queens and one in the Bronx, New York. Ideal sued National and the Anzas in federal district court, claiming that National failed to charge New York sales tax to its cash-paying customers, thus allowing it to offer products similar to Ideal's at an artificially-reduced price without affecting its profit margin. Ideal also alleged that National submitted fraudulent state tax returns to conceal its conduct. This allegedly involved committing mail and wire fraud, —proscribed forms of "racketeering activity" under RICO, which also provides for a private cause of action to "[a]ny person injured in his business or property by reason of a violation." (18 USC §1962)
Ideal was specific in alleging that the Anzas violated §1962(c) by "conducting or participating in the conduct" of an enterprise's affairs through a pattern of racketeering activity. Second, the complaint alleged that the defendants violated §1962(a) for using or investing income derived from a pattern of racketeering activity in an enterprise engaged in or affecting interstate or foreign commerce. Specifically, the complaint alleged, defendants used funds generated by the fraudulent tax scheme to pay for National's Bronx location. The damages suffered, according to the complaint, were Ideal's loss of business and market share.
The federal district court granted defendants' motion to dismiss for failure to state a claim under which relief could be granted. It found that Ideal had not shown proximate cause because there was no specific reliance by Ideal on defendants' alleged fraudulent misrepresentations, as required in RICO mail and wire fraud claims.
On Ideal's appeal, the Second Circuit Court of Appeals vacated the judgment of the district court. The appellate court held that where a complaint alleges a pattern of racketeering activity "that was intended to and did give the defendant a competitive advantage over the plaintiff, the complaint adequately pleads proximate cause, and the plaintiff has standing to pursue a civil RICO claim." 373 F.3d 251 at 263. The appellate court opined that the district court had erroneously relied on other cases generally alleging fraudulent transactions, but that RICO did not require the fraudulent communications to be specifically directed at plaintiff. Finally, the appellate court found that Ideal had articulated a cognizable claim by alleging injury resulting from National's use and investment of racketeering proceeds "as distinct from injury traceable simply to the predicate acts of racketeering alone or to the conduct of the business of the enterprise." 373 F.3d 251 at 264. The Supreme Court granted certiorari.
Justice Kennedy delivered the opinion of the Court, which found the issue resolved through a straightforward application of its Holmes requirement that there be a direct relation between the injury asserted and the injurious conduct alleged. According to the Supreme Court, Ideal did not establish that link. The Court concluded that New York, not Ideal, was the direct victim of defendants' alleged tax fraud scheme. Moreover, defendant National's lower prices do not directly prove fraud, and fraud would not necessarily lead to lower prices. Even assuming that National's goal was to take market share away from Ideal, the means chosen to achieve that end would more directly injure New York, not Ideal.
Contrary to the rationale employed by the Second Circuit, said the Court, a RICO plaintiff cannot avoid the proximate cause requirement simply by claiming the defendants' aim was to increase market share at the expense of plaintiff.
Justice Scalia filed a separate concurring opinion, noting that it was "inconceivable" that the type of injury alleged in the complaint was within the zone of contemplated interests protected by RICO. Justice Breyer concurred in part, but dissented in the remand, opining that he believed RICO did not cover injuries by one competitor engaging in legal pro-competitive activities that may cause injury to another competitor. Justice Thomas took the opposite view. He concurred in the remand of the §1962(a) claim, but filed a lengthy dissent arguing that the injury alleged by Ideal was sufficiently direct under RICO because it was neither duplicative nor derivative of New York's interest.
The case was remanded to the Second Circuit for determination as to whether plaintiff's alleged injuries were proximately caused by defendants' alleged §1962(a) violations.
Mohawk v. Williams
In June 2006, the U.S. Supreme Court dismissed (as "improvidently granted") the previously-granted writ of certiorari in Mohawk Industries v. Williams, 126 S. Ct. 2016; 164 L. Ed. 2d 776 (2006) and remanded the matter to the 11th Circuit Court of Appeals. It did this in connection with another decision issued that same day, Anza v. Ideal Steel Supply Corp., No.04-433, 547 U.S. ____ (2006). The high court vacated the previous judgment of the 11th Circuit in Mohawk (411 F.2d 1252, 2005) and instructed the appellate court to further consider the merits in light of Anza.
Mohawk Industries, located in Georgia, is the second largest manufacturer of rugs and carpeting in the country, and has been in business for 120 years. It employs over 30,000 people.
In 2004, plaintiff Shirley Williams and several coworkers filed a class action law suit in federal court against their employer, Mohawk Industries, Inc. The suit alleged that Mohawk hired illegal/undocumented immigrants, causing plaintiffs' wages to be depressed and costing them thousands of dollars in workers' compensation. Importantly (at least, as later deemed under Anza, which was not yet decided), Williams and her fellow employees alleged that Mohawk's improper hiring practices reduced the number of available jobs for legal employees, and put significant pressure on them to work for similarly low wages. They also claimed that the hiring of undocumented workers caused plaintiffs to avoid reporting work-related injuries or filing workers' compensation claims, for fear of losing their jobs to other undocumented immigrants.
Included in the complaint was the claim that Mohawk had violated both state and federal racketeering (RICO) laws (see below) when it colluded with a hiring agency in Brownsville, Texas to hire the undocumented workers and arrange for them to be housed with legal Mohawk employees. These undocumented workers were hired at a reduced hourly pay rate. The complaint alleged that Mohawk hid evidence by destroying several documents and records along the way.
Specifically, the complaint alleged that (1) Mohawk entered into contracts with outside recruiters with the purpose of violating the Immigration and Nationality Act; (2) Mohawk and the recruiters together constitute a RICO "enterprise" as an "association-in-fact" (see below); and (3) Mohawk participated in the affairs of the enterprise.
The definition of enterprise under the federal Racketeer Influenced and Corrupt Organizations Act (RICO), 18 USC 1961–1968, "includes any individual, partnership, corporation, association or other legal entity, and any union or group of individuals associated in fact, though not a legal entity." It is well settled law (not at issue here) that a RICO defendant must have conducted or participated in the affairs of some larger enterprise and not just its own.
For its part, Mohawk defended that (1) a corporation cannot be part of an association-in-fact enterprise under RICO; (2) there was no separate enterprise because it was simply engaged in internal functions (hiring) through an external agent (the recruiting agency); and (3) it was conducting and participating in its own affairs, and not that of some larger enterprise.
The district court held that Mohawk's collaboration with the recruiters constituted an "enterprise" and denied Mohawk's motion to dismiss. The 11th Circuit Court of Appeals affirmed, calling the relationship between Mohawk and the recruiters an "association-in-fact" functioning as a separate enterprise. Mohawk Industries v. Williams, 411 F.3d 1252 (11th Cir. 2005).
Legal scholars and case-watchers assumed that the Supreme Court would affirm or reverse that holding, as, in fact, this was the question upon which the writ of certiorari had been granted. Moreover, there was conflict with another appellate decision Baker v. IBP, Inc., 357 F.3d 685, in which the Seventh Circuit Court of Appeals ruled to the contrary in a similar case.
But the Supreme Court side-swept this issue altogether. The remand, predicated upon the Court's decision in Anza, addressed an issue of proximate cause for plaintiffs' injuries. In Anza, (decided the same day), the Court held that a RICO plaintiff must prove that the alleged RICO violation was the proximate cause of the plaintiff's injury, which required "some direct relation between the injury asserted and the injurious conduct alleged" (citing Holmes v. Securities Investor Protection Corporation, 503 U.S. 258 at 268).
Scheidler v. National Organization For Women, Inc.
The National Organization for Women (NOW) engaged in a 20-year effort to use federal criminal and civil laws to curtail the alleged efforts of abortion opponents to disrupt through violence and other illegal activities health care clinics that performed abortions. The Supreme Court examined the case in 1994 and 2003. In its 2003 decision it returned the case to the lower courts with a strong suggestion that it be dismissed. However, the Seventh Circuit Court of Appeals did not order the district court to end the case but instead directed it to examine new legal grounds proposed by NOW. The Supreme Court, in Scheidler v. National Organization For Women, Inc., ___U.S.___, 126 S.Ct. 1264, 164 L.Ed.2d 10 (2006), overturned this ruling, finding that the language of the federal statute in question did not apply to the anti-abortion activities in question.
NOW filed its lawsuit in Illinois federal district court in 1986, alleging that certain individuals and organizations had violated the Hobbs Act, 18 U.S.C.A. § 1851, a federal criminal law that outlaws extortion, as well as the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C.A. § 1962. NOW contended that the defendants' clinic-related protests amounted to extortion; that these acts of extortion created a pattern of racketeering activity banned by RICO. It sought a permanent nationwide injunction as well as damages. Ultimately the Supreme Court ruled that NOW could use RICO to pursue its claims because the law did not require a defendant to have an economic motive for its actions. The case went to trial and NOW was awarded damages and was granted a nationwide injunction forbidding the activities. However, in 2003 the Court reversed the verdict, finding that the Hobbs Act required as an element of extortion the improper "obtaining of property from another." The claimed property rights of women seeking services from a clinic and the doctors and staff performing the services could not be used to characterize the defendants' actions as the obtaining of property from them. Therefore, the defendants did not commit extortion under the Hobbs Act and the RICO violation was reversed. The Court concluded that without the RICO violation "the injunction issued by the District Court must necessarily be vacated."
On remand, NOW argued to the Seventh Circuit that the jury's RICO verdict had been based not only on incidents of extortion but also four instances or threats of physical violence unrelated to extortion. The appeals court found that the Supreme Court had not considered this Hobbs Act theory, so it remanded the cases to the district court for examination. The defendants appealed to the Supreme Court and the Court agreed to hear the case for a third time.
The Court, in an 8-0 decision (newly confirmed Justice Samuel Alito did not participate in the consideration of the case), reversed the Seventh Circuit ruling. Justice Stephen Breyer, writing for the Court, reviewed the language of the Hobbs Act makes it a crime to affect, obstruct, or delay interstate commerce by robbery, extortion, or "commit[ting] or threaten[ing] physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section." The core of the dispute was the meaning of "in furtherance of a plan or purpose to do anything in violation of this section." Did it refer to violence committed to aid in the furtherance of robbery or extortion or did it refer to violence committed to assist the purposes that affect interstate commerce in general? The former interpretation would limit the statute to behavior only associated with robbery or extortion, while the latter interpretation would allow the statute to govern "a far broader range of human activity, namely, all violent actions (against persons or property) that affect interstate commerce." The Court opted to take the former, more restrictive reading of the Hobbs Act.
Justice Breyer based this conclusion on a review of the statute's language as well as the legislative history of the Hobbs Act. A reading of the text confirmed that the violence committed or threatened "in furtherance of a plan or purpose" referred to a plan or purpose to engage in robbery or extortion. Moreover, the term "affecting commerce" should not be read to broaden reach of the act because Congress often intended this to be read as a term of art "connecting the congressional exercise of legislative authority with the constitutional provision (here, the Commerce Clause ) that grants Congress that authority." This type of jurisdictional language could limit but not define the "behavior that the statute calls a 'violation' of federal law."
The Court also noted the history of the Hobbs Act. Its predecessor was enacted in 1934 and barred coercion and extortion connected to interstate commerce. In another provision it introduced the "furtherance of a plan or purpose" clause but it explicitly linked it to the clauses dealing with coercion and extortion. In 1946, Congress passed the Hobbs Act, which modified the 1934 criminal law. The Hobbs Act added robbery and deleted coercion as crimes. It also linked the "furtherance" clause to the section that made it a felony to commit robbery or extortion. Nowhere in the legislative history was it suggested that Congress intended to make physical violence "a freestanding crime." The current Hobbs Act language was written in 1948 as part of a general revision of the federal criminal code. The 1948 revision was not meant to create any new crimes but merely to recodify those in existence. Therefore, the 1948 revision, while less clear than the 1946 version, did not change the substance of the crimes covered by the Hobbs Act. The linguistic changes were, according to the Reviser's Notes, "changes in phraseology and arrangement necessary to effect consolidation."
Justice Breyer rejected the broadening of the Hobbs Act urged by NOW because it would make federal crimes out of ordinary criminal behavior that is subject to state prosecution. Congress would not have intended to give the Hobbs Act an expansive reading. Finally, Congress addressed the issue of abortion clinic violence in the 1994 Freedom of Access to Clinic Entrances Act, 18 U.S.C.A. § 248(a)(3). If Congress had believed the Hobbs Act would cover the actions addressed in the NOW litigation, it would not have found it necessary to pass this legislation.
"Rico." American Law Yearbook 2006. . Encyclopedia.com. (September 17, 2018). http://www.encyclopedia.com/law/legal-and-political-magazines/rico-1
"Rico." American Law Yearbook 2006. . Retrieved September 17, 2018 from Encyclopedia.com: http://www.encyclopedia.com/law/legal-and-political-magazines/rico-1
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A set of federal laws (Racketeer Influenced and Corrupt Organizations Act) (18 U.S.C.A. §1961 et seq. ) specifically designed to punish criminal activity by business enterprises.
Gamboa v. Velez
The Racketeer Influenced and Corrupt Organizations Act (RICO) contains civil provisions that are designed to punish illegal activity through the recovery of damage awards. Plaintiffs find RICO attractive because it enhances the award by allowing treble damages. This means that after the jury awards the plaintiff damages the court automatically triples that amount. In addition, the defendant must pay the plaintiff's legal fees and costs. Though RICO was originally targeted at organized crime, the courts have broadened its reach to any enterprise that conducts illegal acts through a pattern of racketeering activity. The federal courts were called on to decide whether a person falsely accused of murder by a group of detectives could sue the police officers using RICO. The Seventh Circuit Court of Appeals, in Gamboa v. Velez, 457 F.3d 703 (7th Cir. 2006), ruled that he could not use RICO because he failed to establish a pattern of racketeering activity that went beyond the conduct focused on him.
In 1997 the Chicago police department assigned Carlos Velez and three other detectives to investigate the murder of Sindulfo Miranda. The fruits of this investigation led to the arrest of Ronny Gamboa for murder and solicitation of murder for hire. The evidence against Gamboa included an allegation that Miranda was in a bar owned by Gamboa the night of the murder, and the suggestion that Gamboa participated in the kidnapping, beating, and murder of Miranda. Gamboa went on trial in 2000 and was acquitted. Four other defendants implicated in Miranda's murder either were convicted or pleaded guilty to lesser charges. However, each of the convictions and guilty pleas were later overturned and the killers of Miranda have never been identified.
In 2003 Gamboa sued the City of Chicago and the four detectives responsible for his apparently erroneous prosecution. He sued using RICO, federal civil rights law 42 U.S.C.A. §1983, and two state law claims involving malicious prosecution and intentional infliction of mental distress. The federal district court dismissed the §1983 and state claims on statute-of-limitations grounds; this meant Gamboa had waited too long to file these claims. The RICO claim went forward against the detectives (Gamboa voluntarily dismissed the city from the lawsuit). The detectives asked the court to dismiss this count, arguing that Gamboa had not adequately alleged a pattern of racketeering activity. The court denied the motion to dismiss but allowed the defendants to file an immediate appeal that asked the Seventh Circuit Court of Appeals "whether a single scheme that ends without indication that it will be repeated establishes a pattern of racketeering activity merely because the scheme occurs over several years."
The Seventh Circuit answered in the negative, ruling that a single scheme did not establish a pattern merely because it unfolds over several years, involves a number of acts, and targets more than one victim. Judge Daniel Manion, writing for the three-judge panel, agreed that the detectives fell under three of the four RICO elements needed to support a civil claim: There was (1) conduct (2) of an enterprise (3) involving racketeering activity. The fourth element, the need for a pattern of activity, was the only issue before the court. For this element to be satisfied, Gamboa had to show that the alleged acts were not only related but must "amount to or pose a threat of continued criminal activity." Isolated instances of criminal activity that do not present the threat of future harm did not meet the RICO pattern element. Judge Manion concluded that Gamboa failed to meet his burden under RICO, for all he alleged was a "single, nonrecurring scheme (a frame-up of five individuals for a single murder)" which did not carry a threat of continued criminal activity.
Gamboa alleged the detectives had made false arrests, tampered with witness statements, procured perjured testimony, committed perjury, and engaged in malicious prosecution in order to intimidate and retaliate against him. He further alleged that the officers had filed false reports and coerced witnesses to testify against Gamboa at the grand jury in order to cover up the false arrests of Gamboa and the four other individuals. Despite these and other specific allegations the appeals court found that these acts were part of a "one-time endeavor." Gamboa did not allege that the detectives had committed misconduct beyond this one murder investigation nor did he indicate that the detectives would repeat their alleged unlawful conduct. Absent this type of evidence the case lacked the "continuity" required of a RICO claim. Despite the multiple acts occurring over several years, the detectives participated in a "non-reoccurring scheme with a built-in termination point."
The court also noted that this analysis made "particular sense in the context of a frame-up claim against police detectives." Some criminal defendants who are acquitted may have causes of action against under state tort law and federal civil rights laws. If Gamboa had filed these claims in a timely fashion he would have had his day in court. The court was unwilling to reformulate RICO to revive untimely claims and make it a substitute for tort and civil rights actions. To permit Gamboa to go forward would open up RICO to "garden variety" cases involving police investigations that develop over the course of several years. Therefore, the RICO claimed could not go forward.
Wilkie v. Robbins
"Racketeering" more generally means the extortive demand, solicitation, or receipt of anything of value, by means of a threat or promise, in order to cause persons with an interest in something of value to compromise that interest. Because the most pervasive instances of racketeering were at one time associated with "mob activity," Congress passed the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 USC 1961 et seq., to help officials break up, then prosecute activities associated with organized crime. Since then, RICO has been invoked in all sorts of cases alleging some form of conspiratorial activity to extort, bribe, or otherwise illegally pressure persons against their own interests.
In Wilkie v. Robbins, No. 06-219, 551 U.S. ___ (2007), Harvey Frank Robbins charged individual government officials from the Bureau of Land Management (BLM) with RICO violations for allegedly attempting to extort an easement of land from him. He also brought a private Bivenscause of action (after Bivens v. Six Unknown Federal Narcotics Agents, 403 U.S. 388 (1971)) (a claim seeking monetary damages from federal agents for constitutional violations), alleging retaliation for exercising his Fifth Amendment right to exclude government officials from his land. The U.S. Supreme Court ultimately ruled, 7-2, that "neither Bivens nor RICO [gave] Robbins a cause of action."
Robbins owned a private dude ranch in Wyoming, which had state and federal land surrounding much of it. The previous owner of his ranch had granted the BLM a right-of-way easement along a road on the ranch to access federal land. However, BLM failed to have the easement recorded, and therefore, Robbins had no notice of it when he purchased the land and recorded his interest in it. Under Wyoming law, Robbins took title to the ranch unencumbered by the unrecorded easement, and the easement was extinguished.
When BLM officials learned of the extinguished easement, they contacted Robbins to negotiate a new right-of-way easement, but he refused. According to Robbins and his complaint, BLM officials then attempted to extort a right-of-way from him by refusing to maintain the road providing access to his ranch; by threatening to cancel and then canceling his right-of-way across federal lands; by canceling his special recreation use permit and grazing privileges on federal lands; by stating they "would bury Frank Robbins"; by trespassing on his land; and by bringing unfounded criminal charges against him.
At the district court level, the defendants filed a motion to dismiss the RICO claim based on qualified immunity. The district court refused to dismiss based on immunity, and also allowed one of Robbins' Fifth Amendment claims of retaliation to go forward. The Tenth Circuit Court of Appeals affirmed, and the government appealed.
Justice Souter, in delivering the opinion of the Court, first explained why Robbins had no private action for damages under Bivens. Asking whether any alternative process exists for protecting the interest at stake, the Court noted that this would be convincing reason alone for the Judicial Branch to refrain from creating a new remedy under case common law. The Court found that Robbins indeed had other viable administrative and judicial remedies to use for the government's alleged violations, albeit "patchwork," because each of the instances of alleged misconduct was grounded in a different theory. Notwithstanding, the Court needed to weigh reasons for and against creating a new cause of action.
The Court looked to the essence of Robbins' complaint. Robbins had conceded that any single action taken by the government might have been negligible, but for the fact that when aggregated, they amounted, in his mind, to true retaliation and coercion to extract an easement.
Then the Court looked to the government's alleged actions. Although the government was no ordinary landowner, when its lands bordered those of private parties, it could be expected to negotiate and engage in deals like any other landowner. Thus, since the government had the authority to withhold or withdraw permission for Robbins to use government lands, and authority to enforce trespass and land-use rules on federal lands, it was within its rights to make it plain to Robbins that his willingness to give an easement would determine how forgiving BLM would be about his trespasses.
Further, extending a Bivens cause of action to facts like these would open a floodgate of ostensible actions against legitimate governmental actions affecting property rights. The Court concluded that it would not expand Bivens to create a cause of action based on these facts.
Likewise, the Court ruled that RICO did not give Robbins a claim against defendants in their individual capacities. Noting that extortion has not normally been understood to include the actions of government officials, even arguendo, RICO would not apply to individual government officials who were seeking to obtain property for the government and not for themselves. The cases that Robbins cited in support of his argument were obscure and off-point, said the Court. The decision of the Tenth Circuit was reversed and the case remanded.
Justice Ginsburg filed a separate opinion, concurring in part and dissenting in part, in which she was joined by Justice Stevens. She characterized Robbin's Fifth Amendment claim as this: "Does the Fifth Amendment provide an effective check on federal officers who abuse their regulatory powers by harassing and punishing property owners who refuse to surrender their property to the United States without fair compensation? The answer should be a resounding 'Yes."'
"RICO." American Law Yearbook 2007. . Encyclopedia.com. (September 17, 2018). http://www.encyclopedia.com/law/legal-and-political-magazines/rico-0
"RICO." American Law Yearbook 2007. . Retrieved September 17, 2018 from Encyclopedia.com: http://www.encyclopedia.com/law/legal-and-political-magazines/rico-0
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Chicago Mobsters Convicted of Decades-Old Murders
Three reputed Chicago mobsters were convicted in September 2007 for their involvement in a series of murders, some of which dated back to the 1970s. The convictions were the result of a lengthy operation by federal authorities trying to resolve these murders. The men face life sentences for these convictions.
In April 2005, following a massive federal investigation of organized crime activities in Chicago, federal authorities charged 14 alleged members of the Chicago mob with a variety of unsolved crimes, including 18 murders and one attempted murder. The list included Joey “The Clown” Lombardo, who had the reputation as one of Chicago's top gangsters.
“This unprecedented indictment puts a ‘hit’ on the mob,” said Patrick J. Fitzgerald, U.S. Attorney. “After so many years, it lifts the veil of secrecy and exposes the violent underworld of organized crime.” The Federal Bureau of Investigation (FBI) and Internal Revenue Service (IRS) ran the investigation, which was dubbed “Operation Family Secrets” by the investigators. The mob family targeted in the case is known as “The Outfit.”
Among the crimes allegedly committed by the Chicago mob was the killing of Tony Spilotro and his brother Michael. Tony Spilotro was the top mob man in Las Vegas at the time of his death. The brothers' bodies were found buried in a cornfield in Indiana eight days after they went missing in 1986. Tony Spilotro was portrayed by actor Joe Pesci in the movie “Casino” in 1995.
In July 2005, prosecutors announced that they had 28,000 taped conversations involving several of the defendants. The recording, which had been reduced to several CDs, contained
some 300,000 minutes of conversations. Most of these had been captured from a telephone wiretap during the prolonged investigation.
In November 2006, about seven months prior to trial, several of the defendants claimed that they were in bad health. At least two of the original fourteen defendants had died by that time, while the others complained of such ailments as back problems and bad teeth. One of the alleged crime bosses, Frank Calabrese, Sr., asked to be moved from the Metropolitan Correctional Center in downtown Chicago to another facility that would offer him more privacy while awaiting trial.
In January 2007, deputy U.S. marshal John Thomas Ambrose was charged with using his position to obtain information about Nicholas Calabrese, the brother of Frank Calabrese. Nicholas Calabrese was hidden as part of the U.S. Marshal's Witness Security Program and was a key witness for the prosecution. Ambrose allegedly passed on information about Calabrese to mob boss John “No Nose” DiFronzo in an effort by Ambrose to locate another defendant, Lombardo. After the indictments were sealed, Lombardo and alleged extortionist Frank “The German” Schweihs went missing, prompting a massive manhunt. Lombardo was later found when he set up a dentist appointment for a decaying tooth. Schweihs was found in the Kentucky hill country in December 2005.
The trial of the alleged mobsters began in June 2007. Facing trial in addition to Frank Calabrese, Sr. and Lombardo were reported boss James Marcello and retired Chicago policeman Anthony Doyle. Doyle was alleged to have provided information about a prosecution witness to Calabrese. Others pleaded guilty to the charges, including Nicholas Calabrese, James Calabrese (brother of Nicholas and Frank Sr.), and Michael Marcello (brother of James Marcello). Schweihs was dropped from the trial for health reasons prior to the trial.
One of the more well-reported murders involved Tony Accardo, a powerful mob boss by the early 1970s. In 1977, some burglars decided to break into Accardo's home, which contained a vault in the basement. Accardo was less than amused, and members of The Outfit swiftly hunted down the burglars and killed each of them. Accardo died at the age of 86 in 1992.
Nicholas Calabrese served as one of the star witnesses in the case. In July, he testified about his murder of fellow hitman John Fecarotta. According to Calabrese, he took Fecarotta along on a mission under the guise that the two were going to bomb a dentist's office. Calabrese muffed the hit, and Fecarotta caught on that Calabrese was going to murder him. Calabrese accidentally shot himself during a scuffle between the two, and Fecarotta fled. Calabrese caught up and shot Fecarotta in the head. After the shooting, Calabrese dropped a pair of gloves he was wearing, and the gloves were later retrieved by police, who matched the blood with that of Calabrese. Another star witness was Frank Calabrese's son, Frank Jr. The son at one time wore a wiretap to help federal authorities collect evidence about the senior Calabrese. Frank Jr. testified about growing up in an organized crime household, including an incident where Frank Sr. told his son, “I'd rather have you dead than disobey me.”
The trial consisted of two parts. The first part, which lasted from June until September, focused on racketeering charges. On September 11, 2007, a federal jury convicted Calebrese Sr., Lombardo, Marcello, and Schiro on the racketeering conspiracy charges. Doyle was also convicted on these charges, though he had not also been accused of murder. The racketeering charges alone could have led to life sentences for the defendants.
Less than three weeks after the initial verdicts were announced, the jury concluded that three of the defendants were guilty of 10 of the alleged murders. The three included Calabrese Sr., Marcello, and Lombardo. Schiro, best known as a jewel thief, was acquitted on the murder charges.
Family members of several of the victims expressed relief about the verdicts. “Today was the anniversary of my dad's death so it was very sweet for us,” said Joe Seifert, the son of businessman Daniel Seifert, who was gunned down just yards away from his wife and son in 1974. “It's a travesty I waited 26 years to hear this.”
"RICO." American Law Yearbook 2008. . Encyclopedia.com. (September 17, 2018). http://www.encyclopedia.com/law/legal-and-political-magazines/rico
"RICO." American Law Yearbook 2008. . Retrieved September 17, 2018 from Encyclopedia.com: http://www.encyclopedia.com/law/legal-and-political-magazines/rico
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Excerpt from the Racketeer Influenced and Corrupt Organizations (RICO) Act of 1970
Reprinted from United States Statutes at Large, 1970–1971, Volume 84, Part 1
Published in 1971
Organized crime is defined as any group that has an organized structure of bosses, advisors, and committed working members whose key goal is to obtain money and property through illegal activities. Organized crime groups thrive on supplying goods and services that are not legally available but for which a large number of people are willing to pay. Gambling, prostitution, pornography, and dealing in illegal drugs have long been moneymakers for organized crime.
At the beginning of the twenty-first century drug trafficking was the largest illegal organized crime activity in the United States and worldwide. The term "trafficking" means dealing in illegal drugs—smuggling, buying with the intent to sell, and selling. The money received is called "dirty" money and needs to be "laundered." Money laundering means banking and investing the dirty money through a complicated series of financial networks until it can no longer be traced and appears to be legally earned or "clean" money invested in legal businesses. Money laundering is another key activity of organized crime groups.
"It shall be unlawful for any person who has received income derived, directly or indirectly, from a pattern of racketeering activity."
From the late 1920s through the mid-1980s, U.S. organized crime was dominated by the American Mafia or mob
families, descendants of the Italian and Sicilian Mafia. Many families have become legendary. New York City was divided amongst the Bonnano, Columbo, Gambino, Genovese, and Lucchese families. Approximately nineteen more prominent crime families were located in other U.S. cities. The highly popular movie The Godfather debuted in 1972 and popularized the notion of a secretive, tightly knit mob underworld.
To assist law enforcement in curtailing organized crime, the U.S. Congress passed the Organized Crime Control Act of 1970. The central part of the act is the Racketeer Influenced and Corrupt Organizations (RICO) section. RICO defines the term racketeering as the act of participating in a pattern (more than one action) of criminal offenses commonly engaged in by organized crime. RICO makes it illegal to receive an income from a racketeering activity and sets punishments. RICO is law enforcement's most powerful tool against organized crime. During the 1980s and 1990s many bosses and members of organized crime were convicted and sent to prison under RICO.
Section 1961 of RICO lists many criminal offenses that fall under the definition of racketeering activity. Some of these include murder, kidnapping, illegal gambling, arson (intentionally setting a fire), robbery, bribery (promising a person money or a favor in return for certain action), extortion (threatening harm if one does not comply with a crime group's request or plan), dealing in obscene matter (pornography), smuggling aliens (moving illegal immigrants across the nation's borders); counterfeiting, embezzlement (to secretly steal money or property for one's own use), mail fraud (fake offers through the mail between different states), obstructing criminal investigations, prostitution, sexual exploitation of children, theft, drug trafficking, and money laundering.
Things to remember while reading excerpts from the Racketeer Influenced and Corrupt Organizations (RICO) Act of 1970:
- By the time RICO was passed many different types of organized crime activities were well known. These activities were costing the U.S. economy billions of dollars each year.
- Racketeering crimes were hidden under many confusing layers of secrecy. They took years to investigate once RICO became law.
- Even though RICO required that all illegal gains from racketeering be turned over to authorities once a gangster was convicted, most was never recovered due to the "laundering" process.
Excerpt from the Racketeer Influenced and Corrupt Organizations (RICO) Act of 1970
Sec. 1962. Prohibited activities
(a) It shall be unlawful for any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity or through collection of an unlawful debt in which such person has participated as a principal . . . to use or invest . . . any part of such income, or the proceeds of such income, in acquisition of any interest in , or the establishment or operation of, any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce . . . .
(b) It shall be unlawful for any person through a pattern of racketeering activity or through collection of an unlawful debt to acquire or maintain, directly or indirectly, any interest in or control of any enterprise, which is engaged in, or the activities of which affect, interstate or foreign commerce.
Why RICO Was An Appropriate Name
On January 17, 1920, Prohibition became law in the United States. The states had ratified (passed) the Eighteenth Amendment to the U.S. Constitution banning the manufacture, sale, and distribution of alcoholic beverages in the United States. Only about one-third of the adult population was willing, however, to not drink alcoholic beverages. Americans remained thirsty and beating Prohibition became a national pastime.
Gangsters who before 1920 had limited their activities to gambling, thievery, and vendettas against rival gang members transformed into organized groups of "bootleggers." Bootlegging gangs illegally brought liquor into the country and sold it to eager Americans. The most prominent bootlegger was Alphonse "Al" Capone (1899–1947) who became a legendary character as a Chicago organized crime boss. His income in the late 1920s and early 1930s was over $100 million a year. By comparison the average American family's income was roughly $1,500 to $2,000 a year. Americans became fascinated with the powerful gangsters whose activities were often reported on the same newspaper pages with reports of glamorous Hollywood stars.
Following the crash of the New York stock market in October 1929, Americans were thrown into an economic crisis known as the Great Depression. Banks failed, businesses folded, factories closed their doors, and increasing numbers of Americans lost their jobs or had their incomes severely cut.
During this time, approximately 60 percent of the population, 60 to 75 million people, paid a few pennies to enter movie houses and escape their desperate lives for a short time. In the early 1930s gangster films enjoyed incredible success. Surrounded by social and economic woes, these dynamic, successful, and flamboyant gangsters contrasted with the hardship and despair of most people. Little Caesar, produced by Warner Brothers Studios and released in 1930, was the first great gangster "talkie," a movie with sound.
The film followed the story of Rico Bandello, or "Little Caesar," played by Edward G. Robinson as he climbed the ladder of the criminal underworld. Rico was a thinly disguised version of Al Capone. Rico's activities were obviously outside the law so the movie had to end his life to stay on high moral ground. Rico was a wildly popular character with Depression era audiences. Most all Americans were familiar with the character and the name Rico.
When Congress passed the Organized Crime Control Act forty years later in 1970, lawmakers cleverly named the central portion of the act the R acketeer I nfluenced and C orrupt O rganizations Act. Abbreviated, the title of the act is RICO.
(c) It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt.
(d) It shall be unlawful for any person to conspire to violate any of the provisions of subsections (a), (b), or (c) of this section.
Sec. 1963 Criminal penalties
(a) Whoever violates any provision of section 1962 of this chapter shall be fined not more than $25,000 or imprisoned not more than twenty years, or both, and shall forfeit to the United States (1) any interest he has acquired or maintained in violation of section 1962. . . .
(b) In any action brought by the Untied States under this section, the district courts of the United States shall have jurisdiction to enter such restraining orders or prohibitions . . . in connection with any property or other interest subject to forfeiture under this section, as it shall deem proper.
(c) Upon conviction of a person under this section, the court shall authorize the Attorney General to seize all property or other interest declared forfeited under this section upon such terms and conditions as the court shall deem proper. . . .
Sec. 1964. Civil remedies
(a) The district courts of the United States shall have jurisdiction to prevent and restrain violations of section 1962 of this chapter by issuing appropriate orders, including, but not limited to: ordering any person to divest himself of any interest, direct or indirect, in any enterprise; imposing reasonable restrictions on the future activities or investments of any person, including, but not limited to, prohibiting any person from engaging in the same type of endeavor as the enterprise engaged in, the activities of which affect interstate or foreign commerce; or ordering dissolution or reorganization of any enterprise, making due provision for the rights of innocent persons.
(b) The Attorney General may institute proceedings under this section. In any action brought by the United States under this section, the court shall proceed as soon as practicable to the hearing and determination thereof. . . .
(c) Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefore in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney's fee.
(d) A final judgment . . . in favor of the United States in any criminal proceeding brought by the United States under this chapter shall estop the defendant from denying the essential allegations of the criminal offense in any subsequent civil proceeding brought by the United States.
What happened next . . .
Due to the complexity of bringing organized crime members to justice, ten years passed before the first RICO convictions were obtained. Throughout the 1970s crime families continually fought for power over the many racketeering enterprises that brought in huge sums of money. The National Conference on Organized Crime in 1975 estimated mobrelated racketeering reached about $50 billion a year in the United States.
Battles for power and control between crime families resulted in numerous murders. Members of one family would assassinate another's boss. The family of the assassinated boss sought revenge by murdering a member of the offending family. Murders were also committed to prevent a crime member from testifying in a trial.
The first convictions of American Mafia members under RICO began in 1980. Numerous gangsters were convicted for a variety of racketeering offenses. In 1985 the bosses of all five New York City Mafia families were convicted under RICO and each received at least one hundred years in prison.
In 1992 Salvatore "Sammy the Bull" Gravano testified in court against his boss John Gotti, head of the Gambino crime family. In doing so he broke the sacred code of the Mafia—the code of silence barring every Mafia member from ever testifying against another Mafia member. Gotti was sentenced to life in prison. His brother Peter Gotti took over the family but was sentenced in April 2004 to nine years in prison.
Three decades of arrests and convictions weakened the old American organized crime families, disrupting their criminal activities. RICO proved a powerful, effective law for convicting crime family members and for tough, long sentences. By 2000 criminal gangs of "bikers" (Hells Angels, Outlaws, and Bandidos), young Hispanics, and young black Americans had become organized, profitable, and rivaled the weakened American mob families.
International crime groups had also come to America, partnering with U.S. organized crime. They include the Russian Mafia, Japanese Yakuza, Chinese Triads, South American drug groups, West Africa crime groups, Mexican Mafia, and Southeast Asian crime groups.
Did you know . . .
- Organized crime family members who broke the code of silence and testified in RICO proceedings received much shorter prison sentences than if they had not cooperated.
- By the 1990s with many Mafia leaders convicted under RICO and in prison, the life of traditional organized crime members became less attractive. A considerable number of young people from Mafia families chose to attend college and adopt lawful careers and lifestyles. The face of American organized crime changed significantly as crime bosses were forced to recruit uneducated youth from impoverished backgrounds. These new recruits had neither loyalty to the crime families nor skilled leadership qualities.
- While drug trafficking continues to be a top moneymaker, weapons, diamonds, luxury cars, and even natural resources such as Russian oil are smuggled and illegally bought and sold by organized crime groups.
Consider the following . . .
- When passed, RICO was aimed at twentieth century organized crime groups. What major new challenges face law enforcement agencies at the beginning of the twenty-first century, considering the rise of the Internet and World Wide Web?
- Research one of the five New York City crime families from its beginnings. How has this family been affected by RICO by the end of the twentieth century?
- Go to the Web site of the Federal Bureau of Investigation (FBI) at http://www.fbi.gov. Research FBI units devoted to the investigation of organized crime in the United States and worldwide.
Unlawful debt: Money owed from illegal gambling activity.
Principal: A person highly involved in its operations.
Interest in: Ownership of.
Enterprise: A business partnership, corporation, or union.
Interstate or foreign commerce: Trade across state or national boundaries.
Conspire: Agree together.
Jurisdiction: The geographic area or type of crime that the court has legal authority to prosecute.
Restraining orders: Court orders to temporarily stop an activity being challenged.
Divest: To withdraw from.
Essential allegations: Charges.
Civil proceeding: A lawsuit separate from the criminal prosecution seeking compensation.
For More Information
Lunde, Paul. Organized Crime: An Inside Guide to the World's Most Successful Industry. New York: DK Publishing, Inc., 2004.
Lyman, Michael D., and Gary W. Potter. Organized Crime. Upper Saddle River, NJ: Pearson Prentice Hall, 2004.
Sullivan, Robert, ed. Mobsters and Gangsters: Organized Crime in America, from Al Capone to Tony Soprano. New York: Life Books, 2002.
Thompson, Hunter S. Hell's Angels: A Strange and Terrible Saga. New York: Modern Library, 1999.
"Gangsters and Outlaws." Court TV's Crime Library: Criminal Minds and Methods.http://www.crimelibrary.com/gangsters-outlaws-gmen.htm (accessed on August 19, 2004).
"Investigative Programs: Organized Crime." Federal Bureau of Investigation.http://www.fbi.gov/hq/cid/orgcrime/ocshome.htm (accessed on August 19, 2004).
"RICO." Crime and Punishment in America Reference Library. . Encyclopedia.com. (September 17, 2018). http://www.encyclopedia.com/law/encyclopedias-almanacs-transcripts-and-maps/rico
"RICO." Crime and Punishment in America Reference Library. . Retrieved September 17, 2018 from Encyclopedia.com: http://www.encyclopedia.com/law/encyclopedias-almanacs-transcripts-and-maps/rico