| Insurance Dictionary: Racketeer Influenced and Corrupt Organizations Act of 1970 (RICO) |
Legislation that provides support for legal actions against individuals or organizations involved in systematic illegal activities. This act has been applied against insurance
organizations when they were accused of bad-faith failure to pay claims or when there was a question of insolvency.
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| Law Encyclopedia: Racketeer Influenced and Corrupt Organizations Act |
A set of federal laws (18 U.S.C.A. § 1961 et seq. [1970]) specifically designed to punish criminal activity by business enterprises.
Congress passed the Racketeer Influenced and Corrupt Organizations Act (RICO) as part of the Organized Crime Control Act of 1970. Organized crime in the United States had been increasing since the Twenty-first Amendment's prohibition of alcohol was repealed in 1933. Crime groups and families that had been bootlegging moved on to other moneymaking crimes by controlling legitimate businesses and using some of them as fronts for criminal activity. Over the years Congress had enacted several statutes authorizing increased punishment for typical organized crimes such as gambling, loan sharking, transportation of stolen goods, and extortion. However, it had not passed legislation specifically punishing the very act of committing organized crime.
Organized crime continued to proliferate in the 1960s. Congress responded by passing legislation specifically dealing with organized crime. After investigating and debating organized crime legislation for approximately twenty years, beginning with Senate committee hearings conducted in 1951 by Tennessee Senator Estes Kefauver, Congress finally passed RICO.
The specific goal of RICO is to punish the use of an enterprise to engage in certain criminal activity. A person who uses an enterprise to engage in a pattern of racketeering activity may be convicted under the RICO criminal statute (18 U.S.C.A. § 1963). An enterprise is defined as "any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity." A pattern is defined as "at least two acts of racketeering activity, one of which occurred after the effective date of [RICO's passage] and the last of which occurred within ten years … after commission of a prior act of racketeering activity." Racketeering activity includes a number of discrete criminal offenses, such as gambling, bribery, extortion, bankruptcy fraud, mail fraud, securities fraud, prostitution, narcotics trafficking, loan sharking, and murder.
RICO outlaws every manner in which an enterprise can be used for long-term racketeering activity. Under the law no person may invest racketeering proceeds to acquire any interest in an enterprise; no person may acquire or maintain an interest in an enterprise through a pattern of racketeering activity; and no person associated with or employed by an enterprise may conduct that enterprise's affairs through a pattern of racketeering activity.
The punishment for violating the criminal provisions of RICO is exceptionally harsh. If convicted, a defendant is fined and sentenced to not more than twenty years in prison for each RICO violation. Furthermore, the defendant must forfeit any interest, claim against, or property or contractual right over the criminal enterprise, as well as any property that constitutes the racketeering activity or was derived from the racketeering activity. Finally, RICO contains civil provisions that allow a party injured by a RICO defendant to recover from the defendant in civil court. A successful civil RICO plaintiff may collect treble damages, or three times the amount lost to the defendant, as well as attorney's fees and other costs associated with the litigation. The intent of the many and various sanctions is to cripple and ultimately eradicate organized crime enterprises.
RICO employs broad definitions to sweep a wide variety of enterprise criminal activity into its purview. One of the original goals of RICO was to eliminate organized crime families, such as the loose collection of crime families that comprised the Mafia. However, because Congress could not legislate against specific persons or families, it was forced to use broad language to define racketeering and organized crime. The far-reaching language of the statute has subjected a wide range of criminal defendants to RICO's penalties. The typical RICO defendant is far from the stereotypical violent mobster. A RICO defendant can be anyone who uses a business in any way to commit two or more of the many racketeering offenses.
RICO has proved to be a powerful tool in the federal government's fight against organized crime. Many states also have enacted RICO-style statutes designed to apprehend organized crime that somehow escapes the provisions of RICO. Prosecutors have used RICO against a variety of criminals and obtained lengthy sentences for them. According to many critics, RICO has been expanded beyond its original purpose of eradicating traditional organized crime groups to convict petty, nonviolent criminals and sentence them to unduly long prison terms. Supporters of RICO counter that the act was intended to reach all organized crime, not just traditional organized crime groups. Advocates of RICO argue further that the act is not unduly harsh because the use of a business enterprise to conduct criminal activity is more dangerous and more difficult to eradicate than individual, freelance criminal activity and that therefore the defendants who commit acts that bring them under RICO's provisions deserve the punishment they receive.
Most observers have agreed that the civil provisions of RICO have been abused. Beginning in the late 1970s, civil attorneys began to realize the enormous moneymaking potential of RICO's civil provisions allowing payment of treble damages, fees, and costs to successful RICO plaintiffs. It became common for supposed victims to bring civil actions against anyone who was remotely and indirectly associated with a criminal enterprise and financially solvent enough to pay a RICO judgment. Some of the targets of civil RICO claims have included accountants, bankers, insurance companies, securities firms, and major corporations such as General Motors and MCI Communications. In many cases defendants in civil RICO cases have denied any wrongdoing but have been forced to settle because they were afraid of losing and being forced to pay a huge judgment.
In 1993 the Supreme Court limited the scope of civil RICO claims with its decision in the case of Reves v. Ernst & Young, 507 U.S. 170, 113 S. Ct. 1163, 122 L. Ed. 2d 525. In Reves, an accounting firm performed three audits of a farmers' cooperative to determine its financial health after its general manager and accountant were convicted of tax fraud. When the cooperative went bankrupt, note holders on the cooperative filed suit against forty individuals and entities associated with the cooperative. One of the claims was a civil RICO claim against the accounting firm. The note holders claimed that the accountants participated in a scheme to inflate the value of the cooperative above its actual value, that this scheme constituted fraud, and that the accountants had participated in the operation or management of the cooperative's affairs. The Supreme Court disagreed, holding that the accounting firm's level of participation in the cooperative did not rise to the level of operation or management of the cooperative's affairs and that therefore it was beyond the reach of RICO liability.
See: gaming; loan shark; money laundering.
| WordNet: Racketeer Influenced and Corrupt Organizations Act |
The noun has one meaning:
Meaning #1:
law intended to eradicate organized crime by establishing strong sanctions and forfeiture provisions
Synonyms: anti-racketeering law, RICO Act, RICO
| Wikipedia: Racketeer Influenced and Corrupt Organizations Act |
The Racketeer Influenced and Corrupt Organizations Act (commonly referred to as RICO Act or RICO) is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization. RICO was enacted by section 901(a) of the Organized Crime Control Act of 1970 (Pub.L. 91-452, 84 Stat. 922, enacted October 15, 1970). RICO is codified as Chapter 96 of Title 18 of the United States Code, 18 U.S.C. § 1961–1968. While its intended use was to prosecute the Mafia as well as others who were actively engaged in organized crime, its application has been more widespread.
It has been speculated that the name and acronym were selected in a sly reference to the movie Little Caesar, which featured a notorious gangster named Rico. The original drafter of the bill, G. Robert Blakey, refused to confirm or deny this.[1] G. Robert Blakey remains the country's foremost expert[peacock term] on RICO;[2] his former student Michael Goldsmith has also gained a reputation as one of the nation's leading RICO experts.[3]
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Under RICO, a person who is a member of an enterprise that has committed any two of 35 crimes—27 federal crimes and 8 state crimes—within a 10-year period can be charged with racketeering. Those found guilty of racketeering can be fined up to $250,000 and/or sentenced to 20 years in prison per racketeering count. In addition, the racketeer must forfeit all ill-gotten gains and interest in any business gained through a pattern of "racketeering activity." RICO also permits a private individual harmed by the actions of such an enterprise to file a civil suit; if successful, the individual can collect treble damages.
When the U.S. Attorney decides to indict someone under RICO, he or she has the option of seeking a pre-trial restraining order or injunction to temporarily seize a defendant's assets and prevent the transfer of potentially forfeitable property, as well as require the defendant to put up a performance bond. This provision was placed in the law because the owners of Mafia-related shell corporations often absconded with the assets. An injunction and/or performance bond ensures that there is something to seize in the event of a guilty verdict.
In many cases, the threat of a RICO indictment can force defendants to plead guilty to lesser charges, in part because the seizure of assets would make it difficult to pay a defense attorney. Despite its harsh provisions, a RICO-related charge is considered easy to prove in court, as it focuses on patterns of behavior as opposed to criminal acts.[4]
There is also a provision for private parties to sue. A "person damaged in his business or property" can sue one or more "racketeers." The plaintiff must prove the existence of a "criminal enterprise." The defendant(s) are not the enterprise; in other words, the defendant(s) and the enterprise are not one and the same. There must be one of four specified relationships between the defendant(s) and the enterprise. A civil RICO action, like many lawsuits based on federal law, can be filed in state or federal court. [5]
Both the federal and civil components allow for the recovery of treble damages (damages in triple the amount of actual/compensatory damages).
Although its primary intent was to deal with organized crime, Blakey said that Congress never intended it to merely apply to the Mob. He once told Time, "We don't want one set of rules for people whose collars are blue or whose names end in vowels, and another set for those whose collars are white and have Ivy League diplomas."[4]
The time before RICO was signed into law (October 15, 1970), was referred to as "The Golden Age" by those involved in organized crime. The term "The Golden Age" can be found on any of the multitude of "Mob Speak" glossaries on the internet.
Under the law, racketeering activity means:
Pattern of racketeering activity requires at least two acts of racketeering activity, one of which occurred after the effective date of this chapter and the last of which occurred within ten years (excluding any period of imprisonment) after the commission of a prior act of racketeering activity. The U.S. Supreme Court has instructed federal courts to follow the continuity-plus-relationship test in order to determine whether the facts of a specific case give rise to an established pattern. Predicate acts are related if they "have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events." (H.J. Inc. v. Northwestern Bell Telephone Co.) Continuity is both a closed and open ended concept, referring to either a closed period of conduct, or to past conduct that by its nature projects into the future with a threat of repetition.
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Although some of the RICO predicate acts are extortion and blackmail, one of the most successful applications of the RICO laws has been the ability to indict or sanction individuals for their behavior and actions committed against witnesses and victims in alleged retaliation or retribution for cooperating with federal law enforcement or intelligence agencies.
Violations of the RICO laws can be alleged in cases where civil lawsuits or criminal charges are brought against individuals or corporations in retaliation for said individuals or corporations working with law enforcement, or against individuals or corporations who have sued or filed criminal charges against a defendant.
Anti-SLAPP (strategic lawsuit against public participation) laws can be applied in an attempt to curb alleged abuses of the legal system by individuals or corporations who utilize the courts as a weapon to retaliate against whistle blowers, victims, or to silence another's speech. RICO could be alleged if it can be shown that lawyers and/or their clients conspired and collaborated to concoct fictitious legal complaints solely in retribution and retaliation for themselves having been brought before the courts.
In 1979, the United States federal government went after Sonny Barger and several members and associates of the Oakland chapter of the Hells Angels using RICO. In United States v. Barger, the prosecution team attempted to demonstrate a pattern of behavior to convict Barger and other members of the club of RICO offenses related to guns and illegal drugs. The jury acquitted Barger on the RICO charges with a hung jury on the predicate acts: "There was no proof it was part of club policy, and as much as they tried, the government could not come up with any incriminating minutes from any of our meetings mentioning drugs and guns".[6][7].
On November 21, 1980, Genovese crime family boss Frank "Funzi" Tieri was the first Mafia boss to be convicted under the RICO Act.[citation needed]
In June 1984, the Key West Police Department in Monroe County, Florida was declared a criminal enterprise under the Federal RICO statutes after a lengthy United States Department of Justice investigation. Several high-ranking officers of the department, including Deputy Police Chief Raymond Cassamayor, were arrested on federal charges of running a protection racket for illegal cocaine smugglers. [8] At trial, a witness testified he routinely delivered bags of cocaine to the Deputy Chief's office at City Hall. [9]
On March 29, 1989, financier Michael Milken was indicted on 98 counts of racketeering and fraud relating to an investigation into insider trading and other offenses. Milken was accused of using a wide-ranging network of contacts to manipulate stock and bond prices. It was one of the first occasions that a RICO indictment was brought against an individual with no ties to organized crime. Milken pled guilty to six lesser offenses rather than face spending the rest of his life in prison.
On September 7, 1988, Milken's employer, Drexel Burnham Lambert, was also threatened with a RICO indictment under the legal doctrine that corporations are responsible for their employees' crimes. Drexel avoided RICO charges by pleading no contest to lesser felonies. While many sources say that Drexel pleaded guilty, in truth the firm only admitted it was "not in a position to dispute the allegations." If Drexel had been indicted, it would have had to post a performance bond of up to $1 billion to avoid having its assets frozen. This would have taken precedence over all of the firm's other obligations—including the loans that provided 96 percent of its capital. If the bond ever had to be paid, its shareholders would have been practically wiped out. Since banks will not extend credit to a firm indicted under RICO, an indictment would have likely put Drexel out of business.[10]
In 2002, the former minority owners of the Montreal Expos baseball team filed charges under the RICO Act against Major League Baseball commissioner Bud Selig and former Expos owner Jeffrey Loria, claiming that Selig and Loria deliberately conspired to devalue the team for personal benefit in preparation for a move.[11] If found liable, Major League Baseball could have been found liable for up to $300 million in punitive damages. The case lasted for two years, successfully stalling the Expos' move to Washington or contraction during that time. It was eventually sent to arbitration where the arbiters ruled in favor of Major League Baseball,[12] permitting the move to Washington to take place.
RICO laws were unsuccessfully cited in NOW v. Scheidler, a suit in which certain parties, including the National Organization for Women, sought damages and an injunction against pro-life activists who physically block access to abortion clinics.
On April 26, 2006, the Supreme Court heard Mohawk Industries, Inc. v. Williams, which concerned what sort of corporations fell under the scope of RICO. Mohawk Industries had allegedly hired illegal aliens, in violation of RICO. The court was asked to decide whether or not Mohawk Industries, along with recruiting agencies, constitutes an 'enterprise' that can be prosecuted under RICO, but in June of that year dismissed the case and remanded it to Court of Appeals.[13]
On August 20, 2006 in Tampa, Florida most of the state leadership members of the street gang, the Latin Kings, were arrested in connection with RICO conspiracy charges to engage in racketeering and currently await trial. The operation, called "Down Crown," targeted statewide leadership of the Latin Kings. The raid occurred at the Caribbean American Club. Along with Hillsborough County Sheriff’s Office, Tampa Police Department, the State Attorney’s Office, the FBI, Immigration and Customs Enforcement, and the Federal Bureau of Alcohol, Tobacco and Firearms were involved in the operation. Included in the arrest were Luis Hernandez, Celina Hernandez, Michael Rocca, Jessica Ramirez, Reinaldo Arroyo, Samual Alvarado, Omari Tolbert, Edwin DeLeon, and many others, totaling 39.
Also, in Tampa, on October 16, 2006, four members of the Gambino crime family (Capo Ronald Trucchio, Terry Scaglione, Steven Catallono and associate Kevin McMahon) were tried under RICO statutes, found guilty and sentenced to life in prison.
In 2005, the U.S. Department of Justice's Operation Family Secrets indicted 15 Outfit members and associates under RICO predicates. As of 2009 Joseph Lombardo and James Marcello have been sentenced to life imprisonment.
Anthony Pellicano (born March 22, 1944, in Chicago, Illinois) is a former high-profile Los Angeles private investigator who recently served a sentence of three and a half years in federal prison for illegal possession of explosives, firearms and homemade grenades, and who was arrested on February 4, 2006, on unlawful wiretapping and racketeering charges.
A federal grand jury in the Middle District of Pennsylvania handed down a 48-count indictment against former Luzerne County Court of Common Pleas Judges Michael Conahan and Mark Ciavarella. [14] The judges were charged with RICO after allegedly commiting acts of Wire fraud, Mail Fraud, Tax Evasion, Money Laundering, and Honest Services Fraud. The judges were accused of taking kickbacks for housing juveniles, that the judges convicted for mostly petty crimes, at a private detention center. The incident was dubbed by many local and national newspapers as the "Kids for cash scandal".[15]
The US RICO legislation has other equivalents in the rest of the world. In spite of Interpol having a standardized definition of RICO-like crimes, the interpretation and national implementation in legislation (and enforcement) widely varies. Most nations do cooperate with the US on RICO enforcement only where their own related laws are specifically broken, but this is in line with the Interpol protocols for such matters.
By nation, alphabetically
Without other nations enforcing similar legislation to RICO many cross border RICO cases would not be possible. In the overall body of RICO cases that went to trial, at least 50% have had some non-US enforcement component to them. It must be noted that the offshoring of money away from the US finance system as part racketeering (and especially money laundering) is typically a major contributing factor to this.
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