Emerging Issues Under the Colorado Organized Crime Control Act-colorado's Little Rico
| Publication year | 1989 |
| Pages | 2077 |
1989, November, Pg. 2077. Emerging Issues Under the Colorado Organized Crime Control Act-Colorado's Little RICO
The Colorado Organized Crime Control Act ("COCCA")(fn1) was enacted by the General Assembly in 1981. The Colorado Supreme Court acknowledges that it was "modeled after" the federal RICO statute.(fn2) The dirth of reported cases under COCCA indicates that civil litigators under the Colorado statute, as with federal RICO, have been slow to utilize it.(fn3) Nevertheless, as federal cases construing RICO continue to confirm its intentional breadth,(fn4) the use of the Colorado statute by civil litigators will grow.
The purpose of this article is to highlight some of the emerging issues under COCCA. This article addresses those issues which have arisen or are likely to arise in the early stages of COCCA's development. It first discusses why COCCA will remain a viable statute and then presents an overview of the basic concepts under COCCA. The article often discusses whether COCCA is limited to organized crime, and what is a pattern of racketeering activity. Because COCCA does not have a specific limitations period in its text, the applicable statute of limitations period and the time of accrual of an action are analyzed. Finally, the article highlights nuances of suing corporations for COCCA violations and suing for a conspiracy to violate COCCA.
The majority of cases referred to in this article are federal decisions construing federal RICO on which COCCA was modeled. Some of the cases cited are from states with legislation like COCCA. Few reported cases actually construe COCCA itself.(fn5)
There is a strong lobbying effort to amend federal RICO,(fn6) partially motivated by the belief that federal RICO created a floodgate of new litigation that would overwhelm federal district courts.(fn7) For whatever reason, there is no similar effort underway in Colorado.(fn8) One explanation for the lack of lobbying effort in Colorado is the floodgate argument would not generate action by the Colorado General Assembly.(fn9) COCCA litigation is usually based on state common law theories as well and would be viable litigation with or without a COCCA claim for relief.
A second factor indicating that the scope of COCCA is not likely to be amended includes the limited budgets of prosecutors and agencies which favor the retention of COCCA and the vigorous use of the statute by civil litigants as private attorneys general.(fn10) Colorado's Deputy Attorney General for Enforcement recently noted "if we had the resources to implement the statute, it would be an important tool."(fn11) The fact is state agencies do not have the resources and are looking to civil enforcement of COCCA. The Colorado Securities Commissioner opposed proposed restrictions on the use of federal RICO and supported civil enforcement of the statute.
The number, size and scope of investment frauds detected in just the last few years are well documented and staggering. At the same time, prosecutorial and regulatory resources
G. Robert Blakey is a partner in the firm of Cornwell & Blakey and the William J. and Dorothy O'Neill Professor of Law at the Notre Dame Law School. Blakey drafted the federal RICO statute in 1970 and assisted in the drafting of COCCA in 1981. Greg Walker is also with the firm of Cornwell & Blakey.
The free enterprise system may be disrupted by at least three basic methods: collusion, fraud, or violence.(fn13) Federal and state antitrust laws provide civil and criminal remedies against those who enter into agreements or conspiracies to alter the free enterprise system.(fn14) Federal RICO and COCCA provide civil and criminal remedies against those who participate in fraudulent and violent efforts to tamper with the free enterprise system. Fraud alone, in fact, may have a greater impact than traditional anti-trust-type agreements---its national economic impact each year is estimated to be as high as $200 billion.(fn15) To attack these problems in the marketplace in Colorado, COCCA makes it unlawful for "any person" to:
1) knowingly receive any proceeds derived from a pattern of racketeering activity, and to use or invest those proceeds in the establishment or operation of an enterprise;
2) knowingly acquire or maintain an interest in or control of an enterprise through a pattern of racketeering activity;
3) be employed by or associated with an enterprise and conduct or participate in it through a pattern of racketeering activity; and
4) conspire to violate any of these proscriptions.(fn16)
The definition of "enterprise" under COCCA is broad. It means "any individual, sole proprietorship, partnership, corporation, trust, or other legal entity or any chartered union, association, or group of individuals, associated in fact although not a legal entity, and shall include illicit as well as licit enterprises. . . ."(fn18) In light of this statutory reference to "associated in fact," courts routinely, but not always, give a broad meaning to the term "enterprise."(fn19) Such a broad definition is necessary to ensure that COCCA applies to both traditional and non-traditional illicit conspiracies.(fn20)
The "racketeering activity" incorporated into COCCA includes any violation of one or more listed state and federal crimes, which cover various forms of fraud (e.g., mail, tax, wire and securities fraud, bribery, theft and forgery) and violence (e.g., murder, arson, kidnapping, extortion and robbery).(fn21) The list of crimes is extensive; it enables COCCA to be used in the context of a wide range of transactions involving both legitimate and illegitimate enterprises. Legitimate businesses "enjoy neither an inherent incapacity for criminal activity nor immunity from its consequences."(fn22)
Any person injured by reason of a violation of COCCA may sue for treble the actual damages sustained. A prevailing plaintiff also recovers attorney's fees in trial or appeal and costs of investigation and litigation. The plaintiff may obtain, pre-judgment relief in the form of a temporary restraining order or a preliminary injunction without having to meet the traditional burden of first showing irreparable damage. As such, a plaintiff may be able to monitor the assets of a defendant to ensure they will be available to satisfy a potential treble damage judgment.(fn23)
In the trial on the merits, the plaintiff's burden of proof is that of preponderance of the evidence.(fn24) If judgment is obtained, depending on who is the plaintiff, the court is given broad powers to fashion an equitable remedy. This may include but is not limited to ordering the defendant to sell his or her interest in an enterprise or property, imposing restrictions on future conduct, ordering dissolution or reorganization of an enterprise and ordering the civil forfeiture of any real or personal property for the benefit of the state or the injured person.(fn25)
In the federal courts, defendants repeatedly have urged that federal RICO could only be used against members of organized crime. COCCA's title also might suggest such a limitation is applicable in Colorado. Ultimately, the argument was rejected by federal courts, including the United States Supreme Court in 1985.(fn26) The Supreme Court confirmed its 1985 conclusion in its June 1989 opinion in H. J. Inc. v. Northwestern Bell Telephone Co.(fn27) "[T]he argument for reading an organized crime limitation into [RICO], ... finds no support in the Act's text, and is at odds with the tenor of its legislative history."(fn28) The similarities between federal RICO and COCCA, as well as COCCA's legislative history, also reveal that COCCA is not limited to organized crime. If a person engages in conduct in violation of COCCA, he or she engages in "organized crime" for the purposes of COCCA.(fn29)
Other than in the title and the statement of legislative purpose, "organized crime" is not used in the text of COCCA and, therefore, it is not a defined term. CRS § 18-17-104 makes it "unlawful for any person" to violate COCCA. "Person" is defined in CRS § 18-17-103(4) to mean "any individual or entity holding or capable of holding a legal or beneficial interest in property." This definition is not confined to mobsters or by any other words of limitation. "Any" means "all."(fn30) Words and phrases in a statute should be construed in their "familiar and popular sense," without subtle construction to limit or extend their meaning.(fn31) A clear and unambiguous statute "is not subject to interpretation ...; [it] is held to mean what it clearly says."(fn32)
Moreover, if the legislative history is examined, the intent that COCCA apply beyond "organized crime" is unequivocal. Testimony explaining the scope of the proposed legislation included an article which became part of the House Hearing of March 20, 1981.(fn33) This article states:
Largely ignored at first, RICO is today widely employed by federal prosecutors, not just in organized crime-type...
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