Federal Racketeering Statute (RICO)

A U.S. law providing for extended penalties for criminal acts that are performed as part of an ongoing criminal organization. The Racketeer Influenced and Corrupt Organizations Act (RICO) was enacted as Title IX of the Organized Crime Control Act of 1970.

In 1970, the U.S. Congress exercised its broad power under the commerce clause and enacted RICO as part of the Organized Crime Control Act, a law that included the Illegal Gambling Business Act. Like the Illegal Gambling Business Act, RICO was intended to eradicate organized crime by attacking the sources of its revenue, such as syndicated gambling or bookmaking. The law imposes both criminal punishment (imprisonment ranging from 20 years to life, depending on the racketeering activity involved) and civil liability (including treble damages, costs, and attorneys' fees) for those who engage in certain prohibited acts.

A number of prohibited activities are specified under RICO. Most important, however, under RICO it is unlawful for any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity or through the collection of an unlawful debt to use or invest any part of that income, or the proceeds from it, to acquire any interest in or to establish or operate any enterprise engaged in interstate or foreign commerce.

The RICO Act established a threefold prohibition aimed at stopping the infiltration of racketeers into legitimate organizations. The statute makes it unlawful to invest funds derived from a pattern of racketeering activity or collected from an unlawful debt. It also forbids acquiring or maintaining an interest in an enterprise that affects commerce through a pattern of racketeering activity or through the collection of an [Page 259]unlawful debt. Third, it forbids participation in the affairs of such an enterprise through those means. Whether the action is criminal or civil, a RICO violation requires proof of the existence of an enterprise and a pattern of racketeering activity or the collection of an unlawful debt and proof that the enterprise is engaged in or affects interstate commerce.

In essence, RICO was an aggressive initiative that supplemented old methods for fighting crime and provided new weapons of unprecedented scope for an assault on organized crime and its economic roots. In large part, RICO was the U.S. Congress's response to the financial infiltration of organized crime into legitimate business operations that affect interstate commerce. Congress wanted to remove the profit motive from organized crime and separate the racketeers from their revenue sources.

Interestingly, the RICO statue does not specifically mention organized crime. Instead, Congress chose to target racketeering activity. The provisions of RICO, it has been argued, demand a liberal interpretation to effectuate this broad congressional intent. Several courts have interpreted RICO as legislation that ensures marketplace integrity.

In its interpretation of the act, the U.S. Supreme Court rejected the argument that a pattern of racketeering activity requires proof of multiple illegal schemes. The Court noted that a pattern of racketeering activity requires two-pronged proof of a relationship between the offenses and the threat of continuing activity. A relationship is established when the conduct amounts to a pattern that embraces offenses having the same or similar purposes, results, participants, victims, or methods of commission or are interrelated by distinguishing characteristics and are not merely isolated events.

...