What is Illegally Conducting an Enterprise in Arizona?

Need an Arizona State Illegally Conducting an Enterprise Defense Attorney? Contact David Michael Cantor if you have been charged with Illegally Conducting an Enterprise.

Whether in the Phoenix area, or anywhere in Arizona, per A.R.S. §13-2301, 13-2312, 13-2313, and 13-2314 “Racketeering” and “Illegal Control Of An Enterprise/Illegally Conducting An Enterprise” are some of the most serious “White Collar” crimes in Arizona. These State charges are sometimes erroneously referred to as “RICO” charges. RICO is a Federal, (not State) charge which stands for Racketeer Influenced and Corrupt Organizations Act.

• Theft
• Asserting false claims including, but not limited to, false claims asserted through fraud or arson.
• Intentional or reckless false statements or publications concerning land for sale or lease or sale of subdivided lands or sale and mortgaging of un-subdivided lands.
• Resale of realty with intent to defraud.
• Intentional or reckless fraud in the purchase or sale of securities.
• Intentional or reckless sale of unregistered securities or real property securities.
• A scheme or artifice to defraud.
• Restraint of trade or commerce in violation of A.R.S. §34-252.
• Money laundering.
• Counterfeiting marks as proscribed in A.R.S. §44-1453.

For purposes of “Blue Collar” crimes which involve Racketeering, this list includes the following acts if committed for financial gain:

• Homicide
• Robbery
• Kidnapping
• Forgery
• Bribery
• Gambling
• Usury
• Extortion
• Extortionate Extensions of Credit
• Prohibited Drugs, Marijuana or other prohibited chemical substances
• Trafficking and explosives, weapons or stolen property
• Participating in a criminal syndicate
• Obstructing or hindering criminal investigations or prosecutions
• Obscenity
• Sexual Exploitation of a Minor
• Prostitution
• Terrorism
• Obscene or indecent telephone communications to minors for commercial purposes
• Animal terrorism or ecological terrorism
• Smuggling of human beings

A.R.S. §13-2312(A) defines “the Illegal Control of an Enterprise” as when a person, through Racketeering or its proceeds, acquires or maintains, by investment or otherwise, control of any enterprise. This is a Class Three (3) Felony.

A.R.S. §13-2312(B) defines “Illegally Conducting an Enterprise” as a person who is employed by or associated with any enterprise and conducts such enterprises or affairs through Racketeering or participates directly or indirectly in the conduct of any enterprise that the person knows is being conducted through Racketeering. This is also a Class Three Felony. If a person violates either section A or B of the statute and hires, engages or uses a minor for any conduct preparatory to or in completion of any offense of this section, then they are guilty of a Class Two (2) Felony.

Possible Punishment For Arizona State Racketeering (RICO)/Illegally Controlling Or Illegally Conducting An Enterprise

If the illegal enterprise involves the use of a minor, then this would be a Class Two (2) Felony. For a first offense, punishment can be probation with zero (0) days in jail up to one (1) year in jail; or prison of three (3) years to twelve and one half (12.5) years of incarceration. If the person has one (1) allegeable historic prior conviction, then the “prison only” range is four and one half (4.5) years to twenty three and one quarter (23.25) years in prison. If the person has two (2) allegeable historical prior convictions, then the “prison only” range is ten and one half (10.5) years to thirty five (35) years of incarceration.

If the Racketeering (RICO)/Illegally Controlling or Illegally Conducting an Enterprise does not involve a minor, then this is a Class Three (3) Felony. For a first offense, punishment can be probation with zero (0) days in jail up to one (1) year in jail; or prison of two (2) years to eight and three quarters (8.75) years in prison. If the person has one (1) allegeable historical prior conviction then the “prison only” range is three and one half (3.5) years to sixteen and one quarter (16.25) years of incarceration. If the person has two (2) allegeable historical prior convictions, then the “prison only” range is seven and one half (7.5) years to twenty five (25) years of incarceration.

Beware: In addition to the above stated punishment, the person also faces the punishment for the underlying “predicate” offense. For example, if the person committed the crime of intentionally and recklessly making false statements concerning land for sale, they would face punishment for that charge plus the RICO punishment. However, if the person committed murder, then they would face that punishment (which would be infinitely more severe) plus the RICO punishment. It’s important to not only defend the underlying predicate criminal charge, but also the charge that this was somehow committed as part of the criminal enterprise or for the purpose of Racketeering.

A.R.S. §13-2313 allows a judge, during the pendency of the criminal case, to issue civil Liens and Forfeiture orders pursuant to A.R.S. §13-2314. A.R.S. §13-2314 allows civil remedies for Racketeering which includes treble damages. This means a Defendant is subject to Forfeiture of substitute assets in the amount that is three (3) times the amount involved in the pattern of conduct. During the pendency of the case, the Superior Court can issue a warrant seizing all of your assets and issue restraining orders which prohibit you from conducting your business.

Pursuant to A.R.S. §13-2314.02 the State can file a Racketeering Lien. This must include a description of the property and the amount of which the State claims in their action. Once this has been filed, a Defendant may request a hearing seeking to release or extinguish the lien, or a person who claims to possess a valid lien or interest in the property (who is not a Defendant) can also request a hearing. After the hearing is requested, the court must enter an Order to Show Cause setting a hearing date. The hearing date shall be at least five (5) days but not more than ten (10) days from the date the hearing was requested.

If the person filing the hearing request possesses a valid lien and probable cause does not exist to support the Racketeering Lien and the property is not otherwise subject to attachment or encumbrance by the Government, then the court shall enter an order releasing the property. If the Government does not establish probable cause to support the Racketeering Lien or Forfeiture action and the lawsuit is not well grounded in fact, the court shall award the Defendant (or person requesting the hearing) costs and reasonable attorney’s fees.

An exception to the Racketeering Lien and Forfeiture exist in the case of any real or personal property that was acquired legally prior to the filing of the Racketeering Lien. In addition, in the case of community property, any interest acquired legally prior to filing of the Racketeering Lien by a spouse whose own personal conduct does not provide a basis for the filing of the Racketeering Lien is exempt from Forfeiture also. It is important to hire a lawyer who understands the complexities of Forfeiture.

Possible Defenses For Arizona State Racketeering (RICO)/Illegally Controlling Or Illegally Conducting An Enterprise

The main defense to Illegally Controlling or Illegally Conducting an Enterprise/Racketeering (RICO) is “Lack of Knowledge”. This occurs when a person is merely an employee of a business, or a non-involved partner who is basically “duped” into managing a business whose proceeds are the result of an illegal activity. This is very similar to the defenses used in Money Laundering, however, it may also involve a person selling land or investment contracts which they do not realize are actually unregistered securities. In addition, a person may well believe all of the materials that have been placed in an advertising brochure without realizing that there are misstatements and fraud involved.

Many times, one devious business partner will ask another partner to “sign off” on various loan documents, tax returns, sales contracts, advertising materials and other paperwork without telling the Defendant that the information contained therein is false and misleading. This raises the “Lack of Intent” defense. It is critical that interviews of all parties involved are conducted in order to ascertain the Defendant’s good character, and their partner’s bad character. These defenses are quite complex (as are all “White Collar” cases) and involve many hours of records research by attorneys and expert witnesses. It is often beneficial to use a “Forensic Accountant” to go through the documents in order to defend against the State’s allegations. Many times it is also recommended that a private investigator be utilized to thoroughly research the backgrounds of any partners that were involved with the defendant.

We also see many cases where the Defendant was not a partner of the enterprise. They were merely an employee. This can be as simple as the billing and collection manager of a spa who processed credit card payments, all the while unaware that prostitution was occurring in the massage rooms. Similarly, a salesman may be seeking out “investors” for his boss who is promoting concerts or attempting to sell real estate investment trust (R.E.I.T’s) without realizing they are engaged in the sale of unlicensed securities. Lastly, it is not unusual for the Attorney General’s Office or the County Attorney’s Office to seek to indict every Corporate Board Member of a business in which one of the partners is being unscrupulous without the knowledge of the rest of the Board. Again, hiring the right Arizona State Racketeering (RICO)/Illegally Conducting an Enterprise defense attorney is critical.

The “Common Defenses” which may apply in any criminal case are numerous and diverse. One of most common defenses we encounter is a “Miranda rights Violation”. In Arizona, the standard of whether any inculpatory statement (i.e., a statement which tends to admit guilt) is admissible into evidence is based upon a “Voluntariness” standard. If we can demonstrate that the police coerced you (i.e., intimidated or tricked you) into making a confession or inculpatory statement, or that they did not properly read you your Miranda Rights, then we can suppress those statements and any evidence gathered as a direct result of those statements. In addition, “Denial of right to Counsel” is another common defense which is often raised. This occurs when a suspect is in custody and requests to speak to their Attorney, but is denied and questioning continues. Other State Illegally Conducting an Enterprise or Illegally Conducting an Enterprise defenses may include challenging the validity of any search warrant, or whether there were any “forensic flaws” during the investigation of your case. Depending on what you have been charged with, this could include exposing flawed procedures regarding blood, breath, and urine testing; fingerprints analysis; DNA testing; ballistics; gunshot residue testing; computer analysis/”cloning hard drive” procedures; forensic financial accounting reviews; etc. Lastly, one of the most common defenses is exposing sloppy or misleading police reports which include everything from misstatements, false statements, flawed photo line-ups and inaccurate crime scene reconstruction.

It is important to hire an AV® rated law firm (the highest possible rating by Martindale Hubbell®). Also David Michael Cantor is a Certified Criminal Law Specialist, per the Arizona Board of Legal Specialization. In addition, the Firm and all of its lawyers are listed in the Bar Register of Preeminent Lawyers®. At DM Cantor, the majority of our Attorneys are ex-Prosecutors, and all of our Arizona Illegally Conducting an Enterprise Defense Attorneys know the system well.