There are a lot of misconceptions about RICO. The most common one is that the law requires a conspiracy, which I addressed in the last entry. The second biggest misunderstanding, and one that is quite forgivable given how the law is worded, is that the plaintiff must prove multiple injuries. A little review will help explore this. RICO requires a plaintiff, a defendant and that the defendant commit a “pattern of racketeering activity.” So one injury caused by a single act of racketeering will never be enough to sustain a RICO cause of action. But this is not the same thing as saying the plaintiff must have been harmed by an entire pattern of racketeering. One harm will suffice. So suppose you are an honest business owner and are taken in by a serial con artist. You have one injury, the amount of your loss to the con artist. That wouldn’t enable you to bring a RICO suit unless you could show the con artist had a history of other frauds against other victims. If so, then you probably could show a pattern of related crimes and be able to say that you are the latest known victim of the Defendant. There is a pattern of frauds (racketeering activity if the mails or wires or used) but you have only suffered once. Your case can proceed.
Defendants will often make the argument that every RICO violation in a pattern must have harmed the plaintiff. No court has accepted this argument, though it has some facial appeal. But as soon as one reads H.J. v. Northwestern, one of the seminal Supreme Court cases, it is clear this is just not correct. There the Court went into considerable detail in interpreting the phrase “pattern of racketeering activity,” used in the statute but inadequately defined as two or more racketeering acts. Is two enough? And over what period of time must these acts take place? The Court decided two alone is not enough. They must show an inherent danger of reoccurring (“open ended”) or have occurred over a long period (‘closed”). I won’t elaborate on those terms here, but will just point out that the Court provided some illustrations. An organized crime ring is a classic “open ended” operation because it has no legitimate reason for being. Crime is its “regular way of doing business.” So one can infer its criminal acts will carry on as long as possible. The Court also noted that a different section of the Organized Crime Control Act, Title IX of which is RICO, defined pattern as “criminal acts that have the same or similar purposes, results, participants, victims or methods of commission…” From this the Court required a loose grouping of vaguely related crimes to state a RICO claim.
But RICO’s civil cause of action, sec. 1964(c), does not require that the pattern be committed against the plaintiff. So a RICO plaintiff needs to allege the defendant has committed a pattern of racketeering (or will do so) and that the plaintiff has suffered at least one injury by it. This should give legitimate RICO plaintiffs more leeway is stating a claim.