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Federal Racketeering and the RICO Act: Examples, Penalties & Defenses

Racketeering (ARS 13-2314 04) covers a wide range of activity with different people, groups and organizations. It is a very serious federal criminal offense that is punishable by fines and/or imprisonment. Originally, racketeering was criminal activity that law enforcement limited to organized crime. A “racket” is an organized business or a group of people that conducts business illegally for monetary gain.

Drug trafficking, money laundering, embezzlement of funds are all forms of racketeering. However, due to infiltration of organized crime into the legitimate corporate world in exchange for money, the lines have blurred over the decades, casting a wider view of racketeering and white collar crime in general.

What Is Racketeering?

The classic Merriam-Webster Dictionary definition of racketeering, or a racketeer, is someone who illegally gets money from someone, normally via intimidation. A broader definition of the term is the illegal methods of getting money or offering false services in exchange for money. Extortion, blackmail, bribery, kidnapping for monetary ransom…all of these falls under the racketeering umbrella.

RICO Act (Racketeer Influenced & Corrupt Organization)

The Organized Crime Control Act of 1970 as a whole became law on October 15, 1970. The original purpose of the creation of the RICO statute was to stop the infiltration of organized criminal activity into legitimate businesses. An example of this is the timeless film, The Godfather. The Corleone family was a major crime family in New York City. However, they used an olive oil company as a family business to cover their illegal business practices.

The first documented RICO conviction was a La Cosa Nostra boss in New York City named Frank Tieri. Mr. Tieri was convicted on November 21, 1980 of racketeering charges that included threats to a restaurant owner, loansharking (extortion), and fraudulent activity at the Westchester Premier Theater with proven affiliation to the Genovese crime family. Since this time, however, the RICO act has expanded to include any group that is conducting illegal activity under the racketeering umbrella. This can include corrupt police officers and politicians, street gangs, even businesses and corporations.

Multiple Violations of the RICO Act

A violation of the RICO statute is when someone has committed what is called a “pattern of racketeering” within 10 years. A pattern of racketeering is defined as more than 2 racketeering crimes.

In fact, one of the most notorious RICO cases of this time is the Enron/Arthur Andersen, LLP scandal. Enron executives, along with its auditing company, Arthur Andersen, LLP, falsified financial statements, coerced employees to contribute to fake stock via their 401(k) plans, and was not matching employee contributions. Employee losses combined, the company stole over $2.1 billion in pension plans. This case was very high-profile because it was what is called a “White Collar” crime.

Some Forms of Activity that Fall Under Racketeering and the RICO Statute

There are many forms of racketeering that fall under the RICO statute, including bank fraud, wire fraud, kidnapping, bribery, extortion, contract murder-for-hire (aka, a Hitman), loansharking, drug trafficking, arson, arson for-hire (for intimidation, insurance fraud, etc.) and embezzlement.

The Penalties of Racketeering and Rico Statute Violation

When convicted of racketeering and RICO statute violation, penalties can be very serious. A violation can end up being a sentence of 20 years. The defendant is forced to forfeit of all of his or her property, businesses and money he or she gained from the crime. Please note that these penalties are only for the violations; there is still the underlying crime, where if it is murder, kidnapping, or drug trafficking, a conviction can lead to a life sentence.

The structure of sentencing ranges from 1 being the least serious, and 43 being the most serious. Level 1 can be up to a year of incarceration of jail or prison. Level 43 can be a life sentence.


Defenses Against Racketeering and Rico Violations

It is imperative to retain an experienced attorney that not only knows the law, but who knows how to defend their client (the two are very different). With charges like these one’s attorney must leave no stone unturned. Here are some possible RICO crime defenses when faced with such serious charges:

*Non-Existence of a Criminal Enterprise – Who is to say that such an entity exists? If there is no substantial proof that the said enterprise exists, there is no way to pursue a case on something that is not there.

*Lack of Connection to a Criminal Enterprise – Okay, so there is such an enterprise that does exist. However, what does that said enterprise have to do with the Defendant him or herself? The Prosecution is left with the Burden of Proof to show the Defendant is affiliated with the enterprise. If there is lack or no proof of an affiliation, there cannot be a racketeering and RICO violation case.

*Lack of Conspiracy – No misconduct between said enterprise and the Defendant can be proven. Simple as that.

*Violation of Miranda Rights – Thanks to the landmark 1966 case of Miranda vs. The State of Arizona, every person facing RICO violation should know this information. With some minor paraphrasing variations, the script for Miranda Rights goes something like this:

You have the right to remain silent. Anything you say can and will be used against you in a Court of Law. You have the right to an attorney. If you cannot afford an attorney, one will be appointed to you by the Court. Are you aware of these rights?”

The Defendant normally replies affirmatively. These rights let the defendant know what he or she is entitled to, as well as the basic legal rights. This must be done prior to being taken into custody. It is mandatory for Miranda Rights to be read to every single person being arrested. If either arresting officers fail to read the Defendant his or her Miranda Rights, or it can be proven that any part of the script was violated (denied an attorney by the Court or coercion to speak) can possibly get a case thrown out.

*Denial of Right to Counsel – It is every person’s legal right to retain an expert of the Law if he or she has been arrested. To not allow a person to have access to legal expertise could result in the Defendant not knowing anything about the charges, ultimately becoming a violation of Miranda Rights.

The above conditions of defense are for the RICO violations ONLY. They do not include the underlying crime.

White collar reporting and prosecution on the federal level has been on the decline. With data as recent as November, 2018, there have been 402 reported white collar crime cases. This is compared to roughly 428 in the previous month, reflecting a 6.5% decrease in the prosecution of white collar crime.

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