IS THAT AN ABUSE OF THE RICO STATUTE?

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This is the most common question I am asked by people who want to know what type of law I practice. RICO’s title reminds cinemaphiles of Edward G. Robinson’s performance in “Little Caesar” in which he depicted a Chicago mobster. The words “racketeer influenced and corrupt organizations” conjure organized street gangs. Congress enacted the law as Title IX of the Organized Crime Control Act of 1970. But what is “organized crime?” Blacks Law Dictionary defines it as “widespread criminal activities that are coordinated and controlled through a central syndicate.” Substitute the term “pattern of racketeering activity” for “widespread crimininal activities” and “enterprise” for “syndicate” and you have the major concepts of section 1962, the heart of the RICO statute. The law does not require that the crimes be of a violent nature, be committed by the mafia, or involve the prototypical mob activities of murder, loan sharking or extortion. Congress defined “racketeering activity” so broadly that it includes offenses such as hiring illegal immigrants, ocean dumping and certain banking violations. The very first RICO case decided by the Supreme Court in 1981 decided that the “enterprise” could be a legitimate business as well as an informal street gang.

A few years later the Supreme Court acknowledged “private civil actions under the statute [RICO] are being brought almost solely against… respected and legitimate enterprises….” But it refused to narrowly construe the law so as to apply only to prototypical “mobsters.” It said only Congress had the power to do so since it had written the law broadly. Then civil RICO suits exploded. Very few have been brought against mobsters, and Congress has not revised the law (in fact it expanded it). So maybe everyone should just relax. Is it an “abuse” of the law to bring a civil action predicated on a pattern of frauds? I don’t think so provided there really is a long-term pattern, multiple victims, and money damages caused by the RICO violations.

And how can a pattern of frauds be carried out by a single person? Modern business involves the internet, marketing professionals, consultants, executives, and other subordinates who must be involved in sophisticated schemes to defraud. These people are located in different offices and are linked through computer networks while working for a single enterprise. It resembles the definition of “organized crime” I mentioned above except the perpetrators wear “white” rather than blue collars.

Using RICO against two children operating a lemonade stand would be an abuse. They are not racketeers even if they are not actually using fresh lemons, and their business is not typically thought of as an “enterprise” affecting interstate commerce. But I’ve never brought a RICO case against a small business or someone who lacked the means to defend the suit.

It can’t be disputed Congress wanted the law to be used against racketeers engaged in nearly any commercial activity. the list of federal and state crimes under the definition of “racketeering activity” runs for two pages. the easiest and most persuasive retort to the criticism that a particular case is an “abuse” of the RICO law is simply to scan the statute. It’s depth is striking, and the words “mobster” or “mafia” are nowhere to be found.