CAN A PATTERN OCCUR THROUGH MULTIPLE ENTERPRISES?

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The enterprise is a key part of any RICO case. In many cases the RICO defendants commit their pattern of violations through a single enterprise such as a business entity or an association-in-fact. But in many cases the RICO defendant uses more than one enterprise to do so. Can the pattern be committed through multiple enterprises? The answer, surprisingly, is unclear. The statute provides that “it shall be unlawful for any person employed by or associated with any enterprise engaged in…” The word is enterprise (singular) not enterprises. A strict textualist would conclude Congress envisioned just one enterprise per indictment or civil case. Yet numerous civil and criminal cases reference “multiple enterprises.” These references do not amount to a judicial holding in which a court carefully analyzes the statute and reaches a conclusion, but rather simply note in passing that a case involved more than one enterprise. And there is no counter-authority noting that multiple enterprises were disallowed.

So plaintiffs should feel free to allege a pattern of racketeering through more than one enterprise if such an approach would help get to a successful case. Here is an example: suppose the RICO plaintiff does business with a person that commits fraud in a transaction in which interstate wires are used. The plaintiff later finds out that the defendant has done this to others, indicating a pattern. But the defendant, like most racketeers, is shifty and uses different companies for different transactions. The RICO plaintiff should then allege a series of wire fraud violations committed through the various corporate enterprises. After all, if racketeers use business entities to shield themselves from liability, the law should allow plaintiffs to follow them wherever they hide.

It is also likely that federal prosecutors use broad-based association-in-fact enterprises to address this problem, i.e., the associations are large enough to include all of the people who associate at various times to carry out crime. This should be equally available to civil plaintiffs when defendants make use of business entities in much the same way.