RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS

RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1372

II. ELEMENTS OF THE OFFENSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1374

A. RICO Definition of “Person” . . . . . . . . . . . . . . . . . . . . . . . . 1375

B. Two or More Predicate Acts of “Racketeering Activity” . . . . . 1375

C. Pattern. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1378

D. Enterprise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1382

1. Types of Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1383

2. Proving the Enterprise . . . . . . . . . . . . . . . . . . . . . . . . . . 1386

3. Person-Enterprise Rule . . . . . . . . . . . . . . . . . . . . . . . . . . 1386

E. Effect on Interstate Commerce. . . . . . . . . . . . . . . . . . . . . . . . 1388

F. Prohibited Acts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1388

1. Investment of Racketeering Proceeds . . . . . . . . . . . . . . . 1389

2. Acquisition of Enterprise Interest . . . . . . . . . . . . . . . . . . 1390

3. Conducting an Enterprise Through Racketeering Acts . . . 1390

4. Conspiracy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1392

III. DEFENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1392

A. Invalidity of One or More Predicate Acts . . . . . . . . . . . . . . . . 1393

B. Limitation of Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1394

C. Withdrawal from the Conspiracy . . . . . . . . . . . . . . . . . . . . . . 1395

D. “Horizontal Preemption” or “Primary Jurisdiction” . . . . . . . 1396

E. “Reverse Vertical Preemption” . . . . . . . . . . . . . . . . . . . . . . . 1399

F. Constitutional Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . 1400

IV. CRIMINAL PENALTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1404

A. Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1404

B. Sentencing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1405

C. Forfeiture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1407

1. “Seize and Freeze” Orders . . . . . . . . . . . . . . . . . . . . . . . 1407

2. Rights of Innocent Third Parties . . . . . . . . . . . . . . . . . . . 1410

3. Attorney’s Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1410

V. CIVIL RICO ACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1412

A. Civil Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1412

B. Civil Cause of Action for Private Parties . . . . . . . . . . . . . . . . 1413

1. Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1414

2. The Person/Enterprise Distinction . . . . . . . . . . . . . . . . . . 1418

3. Statute of Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . 1419

VI. NON-TRADITIONAL USES OF THE RICO STATUTE . . . . . . . . . . . . . . . . . 1421

A. Protests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1421

B. Labor Unions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1422

C. Tobacco Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1423

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D. College Admissions Fraud. . . . . . . . . . . . . . . . . . . . . . . . . . . 1425

E. Health Care Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1426

F. Police Misconduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1427

G. Cannabis Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1428

H. Defending Against Judgments from Foreign Courts . . . . . . . . 1429

I. INTRODUCTION

Congress designed the Racketeer Influenced and Corrupt Organizations Act

(“RICO”)

1

to facilitate the eradication of organized crime in the United States.

2

Enacted as Title IX of the Organized Crime Control Act of 1970,

3

RICO con-

structed new legal tools for prosecutors to use in the evidence-gathering process,

enhanced sanctions, and created new remedies to combat the unlawful activities of

criminal syndicates.

4

RICO brings the “highly diversified acts of a single organized

crime enterprise under [one] umbrella”

5

in an attempt to “curb the infiltration of

legitimate business organizations by racketeers.”

6

Although the purpose of RICO

is to combat organized crime, Congress chose to enact a broad statute reaching

more than just the proverbial “mob.”

7

Consistent with congressional intent,

8

courts

have liberally construed

9

RICO so as to include even legitimate businesses

10

and

1. 18 U.S.C. §§ 1961–68.

2. Organized Crime Control Act of 1970, Pub. L. No. 91-452, 84 Stat. 922, 923 (1970) (“It is the purpose of

[RICO] to seek the eradication of organized crime in the United States by strengthening the legal tools in the

evidence-gathering process, by establishing new penal prohibitions, and by providing enhanced sanctions and

new remedies to deal with the unlawful activities of those engaged in organized crime.”).

3. Id. (codified as amended in scattered sections of 18 U.S.C. §§ 1961–68).

4. Id. at 923.

5. United States v. Irizarry, 341 F.3d 273, 292 n.7 (3d Cir. 2003) (quoting United States v. Eufrasio, 935 F.2d

553, 566 (3d Cir. 1991)).

6. Sinclair v. Hawke, 314 F.3d 934, 943 (8th Cir. 2003) (quoting Atlas Pile Driving Co. v. DiCon Fin. Co.,

886 F.2d 986, 990 (8th Cir. 1989)).

7. See H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 248 (1989) (“Congress . . . chose to enact a more general

statue, one which, although it had organized crime as its focus, was not limited in application to organized

crime.”).

8. See Organized Crime Control Act, § 904(a), 84 Stat. at 947 (mandating RICO Act “be liberally construed to

effectuate its remedial purposes”).

9. See H.J. Inc., 492 U.S. at 248–49 (reiterating RICO was broadly written to encompass a wide range of

criminal activity); Nat’l Org. for Women, Inc. v. Scheidler (NOW I), 510 U.S. 249, 257 (1994) (finding RICO

statute can be broadly applied to the detrimental activities of almost any group of individuals, even those without

profit-seeking motives.). The breadth of RICO, however, is the subject of much criticism. See generally Neil

Feldman, Spiraling Out of Control: Ramifications of Reading RICO Broadly, 65 DEF. COUNS. J. 116 (1998)

(outlining problems with overly broad RICO application); Douglas E. Abrams, Crime Legislation and the Public

Interest: Lessons from Civil RICO, 50 SMU L. REV. 33, 56–57 (1996) (criticizing civil RICO’s breadth).

10. Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 499 (1985) (stating legitimate enterprises are neither

inherently incapable of criminal activity nor immune from its consequences). RICO is also applicable to criminal

enterprises that have not yet infiltrated, or are not associated with, legitimate business. See United States v.

Patrick, 248 F.3d 11, 19 (1st Cir. 2001) (upholding RICO conviction of gang members involved in drug

trafficking enterprise that had not “infiltrated legitimate businesses”).

1372 AMERICAN CRIMINAL LAW REVIEW [Vol. 58:1371

organizations without a profit-motive.

11

However, the “liberal construction” clause

is not without limits—it is “not an invitation to apply RICO to new purposes that

Congress never intended.”

12

Prosecutors bring charges under the RICO statute in a wide variety of criminal

contexts.

13

Since the statute has broad applicability, the requisite mens rea is

merely that of the “predicate acts,” or underlying offenses.

14

Further, it imposes

severe sanctions that supplement those a defendant faces for each underlying

offense.

15

RICO also provides a private right of action for any person “injured in his busi-

ness or property” by a RICO violation.

16

Under 18 U.S.C. § 1964, the Attorney

General

17

or a private plaintiff

18

may bring a civil action in either state or federal

court,

19

and if a final judgment is entered against the defendant in any criminal pro-

ceeding also brought under RICO, the defendant is estopped from denying the

predicate acts in subsequent civil proceedings.

20

RICO provides equitable relief

through divestiture of the defendant’s interest in the enterprise, restrictions on the

defendant’s future activities or investments, and dissolution or reorganization of

11. See NOW I, 510 U.S. at 258 (holding abortion clinics could maintain RICO action against anti-abortion

groups even if the anti-abortion groups had no economic motive).

12. See Reves v. Ernst & Young, 507 U.S. 170, 183 (1993) (holding that RICO defendants must have

participated in the “operation or management” of the enterprise); Baisch v. Gallina, 346 F.3d 366, 376 (2d Cir.

2003) (citing Reves, 507 U.S. at 170); see also Republic of Iraq v. ABB AG, 768 F.3d 145, 162–63 (2d Cir. 2014)

(holding civil RICO claims do not preclude the common law defense of in pari delicto); Attorney Gen. of Canada

v. R.J. Reynolds Tobacco Holdings, Inc., 268 F.3d 103, 129 (2d Cir. 2001) (concluding language of RICO and

legislative history do not indicate RICO affords a civil remedy to a foreign nation for tax evasion by a U.S.

company); Chappell v. Robbins, 73 F.3d 918, 921–23 (9th Cir. 1996) (declining to presume RICO abrogates

common law legislative immunity protection absent clear legislative intent or statutory language).

13. See generally G. Robert Blakey & John Robert Blakey, Civil and Criminal RICO: An Overview of the

Statute and Its Operations, 64 DEF. COUNS. J. 36, 43 (1997) (discussing the breadth of RICO prosecutions). Since

the passage of RICO, thirty States have adopted similar legislation to address organized crime within their

jurisdiction. See A. Laxmidas Sawkar, From the Mafia to Milking Cows: State RICO Act Expansion, 41 ARIZ. L.

REV. 1133, 1135 (1999) (noting the expansive growth of state RICO statutes and the ever-increasing expansive

use of those statutes).

14. See infra Part II.B (defining “predicate acts”); Gil Ramirez Grp., L.L.C. v. Houston Indep. Sch. Dist., 786

F.3d 400, 412 (5th Cir. 2015) (“RICO requires demonstrating an underlying criminal act, which entails a mens

rea requirement. . . .”); United States v. Rosenthal, 334 F. App’x 841, 843 (9th Cir. 2009) (holding intent to

commit predicate act satisfies mens rea requirement); Bruner Corp. v. R.A. Bruner Co., 133 F.3d 491, 495 (7th

Cir. 1998) (noting mens rea requirement is satisfied if defendant knew predicate offense was illegal); United

States v. Baker, 63 F.3d 1478, 1493 (9th Cir. 1995) (“The mens rea element necessary for a substantive RICO

conviction is the same as is required for the predicate crime. . . .” (alteration in original) (citing United States v.

Scotto, 641 F.2d 47, 55–56 (2d Cir. 1980))).

15. 18 U.S.C. § 1963.

16. Id. § 1964.

17. Id. § 1964(b).

18. Id. § 1964(c).

19. See Tafflin v. Levitt, 493 U.S. 455, 458 (1990) (holding state and federal courts have concurrent

jurisdiction over claims arising under § 1964(c)). RICO also reaches foreign conduct if the acts establishing a

pattern of racketeering violated a predicate statute that is itself extraterritorial. RJR Nabisco, Inc. v. European

Cmty., 136 S. Ct. 2090, 2103 (2016) (concluding RICO applies to some foreign racketeering activity).

20. 18 U.S.C. § 1964(d).

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