Racketeering

What is racketeering?

Racketeering refers to criminal schemes organized to extract illegal profits or to use a business as a vehicle for ongoing criminal activity. In U.S. law, the term is most often associated with the Racketeer Influenced and Corrupt Organizations Act (RICO), a federal statute that targets patterns of illegal conduct by individuals or enterprises. RICO makes it unlawful to acquire, maintain, or operate an enterprise through specified criminal acts, to participate in an enterprise’s criminal conduct, or to conspire to do so.

Common forms of racketeering

Racketeering can take many forms, including:
* Cyber extortion — using malware or other cyberattacks to coerce payment.
* Protection rackets — threatening harm to obtain payments for “protection.”
* Kidnapping for ransom.
* Fencing — buying stolen goods cheaply and reselling them for profit.
* Drug trafficking and illegal drug distribution.
* Illegal gambling operations.
* Labor-union infiltration and extortion — using union influence to extract payments or control workers.
* Using legitimate businesses to launder or divert funds for criminal activity.

The RICO Act: overview and key elements

RICO (passed in 1970) was designed to allow prosecutors to target organized criminal enterprises rather than pursuing individual crimes in isolation. Key elements prosecutors must establish under the federal RICO statute include:
1. Existence of an enterprise.
2. The enterprise affected interstate or foreign commerce.
3. The defendant was associated with or employed by the enterprise.
4. The defendant engaged in “racketeering activity” (one of the predicate crimes listed in the statute).
5. The defendant committed at least two acts of racketeering activity within a 10-year period (with timing rules that one act must have occurred after RICO took effect).

RICO provides criminal penalties (including long prison terms) and civil remedies, such as seizure of assets, forfeiture to prevent transfer through shell companies, and potential treble damages in civil suits.

Federal vs. state prosecution

• Federal RICO cases involve federal predicate offenses (e.g., bribery, money laundering, murder-for-hire, major fraud, certain gambling offenses) and are prosecuted by federal authorities (FBI, DEA, ATF, IRS, Secret Service, DHS, etc.). Federal sentences are often longer and penalties more severe.
• State-level racketeering prosecutions are based on violations of a particular state’s laws (e.g., murder, robbery, arson, kidnapping) and are handled by local or state prosecutors and police.
  Both federal and state authorities can pursue racketeering-related conduct when appropriate; in some cases both jurisdictions may have concurrent interest.

Penalties

• Criminal RICO convictions can carry up to 20 years in prison for many offenses; more serious crimes may result in longer terms.
• Fines, asset forfeiture, and other penalties are common.
• Civil RICO claims can seek treble damages and injunctive relief.

Notable types of defendants and special considerations

• Corporations and corporate executives can be liable under RICO when businesses are used to further criminal schemes (for example, bribery or deceptive marketing that generates illicit profits).
• Predatory lending or schemes that intentionally prevent repayment may meet racketeering definitions when tied to an organized scheme.
• Labor unions have historically been targeted by racketeering prosecutions when infiltrated or controlled by organized-crime groups to extort employers or manipulate industries.

Representative examples

• Large gang conspiracies coordinated via contraband cell phones to plan murders, kidnappings, arms trafficking, and drug distribution.
• Federal cases against opioid manufacturers alleging deceptive marketing and distribution practices that contributed to widespread addiction.
• Indictments of FIFA officials for racketeering conspiracy involving bribes and kickbacks to secure media and marketing rights.
• Convictions of gang leaders and members for RICO charges tied to murders, drug trafficking, robbery, and witness intimidation.
• Convictions and federal cases against public officials or police officers who used office to steal, extort, or facilitate criminal schemes.
• Corporate settlements where companies resolved racketeering-related lawsuits to avoid trials and potential treble damages.

FAQs

Is racketeering a felony?
* Racketeering generally involves felony-level conduct. Many predicate acts under RICO (murder, drug trafficking, extortion, major fraud, money laundering, etc.) are felonies.

Is racketeering the same as money laundering?
* No. Money laundering is the process of concealing the illicit origin of funds. It can be one predicate act within a broader racketeering scheme but is distinct from the broader concept of racketeering.

How long can you go to jail for racketeering?
* Federal RICO convictions typically carry up to 20 years per count for many offenses; penalties can be higher for particularly serious predicate crimes. Convictions also carry fines and forfeiture.

Is the RICO Act effective?
* RICO is widely regarded as a powerful tool for prosecuting organized crime and enterprise-level corruption because it allows authorities to target the structure and leadership of criminal organizations and to secure asset forfeiture and civil remedies.

Key takeaways

• Racketeering describes organized schemes to obtain illegal profits or to use a business for criminal activity.
• The RICO Act enables prosecution of enterprises and individuals for patterns of specified criminal acts, with both criminal and civil consequences.
• Racketeering prosecutions can arise at the federal or state level, involve a wide range of crimes, and carry significant prison terms, fines, and asset forfeiture.