In 1970, Congress passed the Racketeer Influenced and Corrupt Organizations Act (US Code-Title 18), or RICO, to provide a powerful tool in the fight against organized crime. The RICO Act enables persons financially injured by a pattern of criminal activity to bring a RICO claim in state and federal court, and to obtain damages three times the amount of their actual harm, plus attorneys fees and costs (www.ricoact.com). Since the mid-1980?s, the RICO Act has been applied in circumstances that many believe to be beyond the scope of the act. The RICO Act has been used successfully against a number of members of the Mafia. It has also been applied in cases against legitimate business people, including accountants, attorneys, and spouses in divorce cases, and protest organizations.
RICO prohibits using money generated by a pattern of racketeering to gain or maintain control over an enterprise, to invest in an enterprise, or to participate in the conduct or affairs of an enterprise (Whitman & Gergacz, 430). Section 1962 of the RICO Act defines a racketeering activity as any act or threat involving murder, kidnapping, gambling, arson, embezzlement, robbery, bribery, extortion, dealing in obscene matter, or dealing in a controlled substance, which is chargeable under State law and punishable by imprisonment for more than one year (www.4law.cornell.edu/uscode/18/1962.text.num). A pattern of racketeering activity may be defined as the commitment of two or more of these violations of the RICO act within a period of ten years. An enterprise can include any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated with the violation of this act.
Whoever violates any provision of the RICO Act, according to section 1963, will be fined or imprisoned for a term of no more than 20 years (or life if the activity is based on a racketeering activity for which the maximum penalty is life imprisonment), or both. These individuals are also required to forfeit to the United States any interest that has been acquired or maintained in violation of this section. They also must forfeit any interest in; security of; claim against; or property or contractual right of any kind affording a source of influence over; any enterprise which the person has established, operated controlled, conducted, or participated in conduct that is in violation of the Act. Any property constituting, or derived from any proceeds the person obtained, directly or indirectly, from racketeering activity or unlawful debt collection is also subject to forfeiture.
Property subject to criminal forfeiture includes real property, including things growing on, affixed to, and found on land; and tangible and intangible personal property, including rights, privileges, interests, claims, and securities (www.4law.cornell.edu/uscode/18/1963.text.num). The attorney general becomes responsible for all aspects of the forfeited property including, but not limited to, disposition, maintenance, and compromise claims with regard to the property. The proceeds from disposed forfeited property must be used to pay all proper expenses for the forfeiture and the sale, including expenses of seizure, custody and maintenance of the property pending its disposition, as well as any advertising and court costs. Any remaining proceeds will be deposited in the Treasury by the Attorney General. By taking the property from the racketeer, he or she is deprived of the ability to control that property.
One case that dealt with the forfeiture of property was Russello v. U.S. (1983). Russello had been convicting of violating the RICO Act due to his involvement in an arson ring. He received compensation from an insurance company for a fire that he caused to a building he owned. He was therefore required to forfeit all monies received from the fire, since he was proven to be in violation of the RICO Act. Russello tried to argue that the law only applies to the enterprise itself. The Supreme Court overruled his argument and declared that since the insurance proceeds came about from an illegal action, arson, he was not entitled to them, (Whitman & Gergacz, 432).
As stated in section 1964, the district courts of the United States have the jurisdiction to restrain violators by issuing appropriate orders to divest any interest, direct or indirect, in any enterprise involved in the violation. They may impose reasonable restrictions on the future activities of any person, such as prohibiting any person from engaging in the same type of endeavor in which the enterprise was engaged (www.4law.cornell.edu/uscode/18/1964.text.num). Dissolution or reorganization of the enterprise, while making due provisions for the rights of innocent persons, is also within the power of the courts.
Any civil action instituted by the court, according to section 1965, may be instituted in the district court of the United States for any district in which such person resides, is found, or transacts his affairs. If it is required that other parties be present at the proceedings, if they reside in a different district than where the proceedings are held, they may be summoned and can be served in any judicial district of the United States by the marshal of that district. There is one stipulation, if the subpoena is to be served to a person that resides over 100 miles from the court in which the trial is held, approval with good cause must be given by the residing judge before service is able to take place.
Whenever there is a civil action that the Attorney General believes is of general public importance, section 1966 of RICO makes it mandatory for the Attorney General to file a certificate with the clerk of the court hearing the case. A copy of that certificate must immediately be given to the chief judge. Once this step has been done, the chief judge will assign a judge within that district to hear and determine the case, (www.4law.cornell.edu/uscode/19/1966.text.num).
Section 1967 states, ?In any proceeding ancillary to or in any civil action instituted by the United States under this chapter may be open or closed to the public at the discretion of the court after consideration of the rights of affected persons?, (www.4law.cornell.edu/uscode/18/1967.text.num). This basically means that the court must first determine what effects may come to all involved from opening evidence to the view of the public. If the court does infringe on the rights of the defendant, they risk their decision being overturned by a higher court.
Section 1968 of code 18 deals with civil investigative demand procedures. It begins by stating ?whenever the Attorney General has reason to believe that any person or enterprise may be in possession, custody, or control of any documentary materials relevant to a racketeering investigation, he or she may, prior to the institution of a civil or criminal proceeding thereon, issue in writing and cause to be served upon such person, a civil investigative demand requiring such person to produce such material for investigation,? (www.4law.cornell.edu/uscode/18/1968.text.num). Each demand must first state the nature of the conduct that brings about the investigation, including a description of the crime that has been broken. Next it must describe the material that is under investigation in a clear enough manner to permit that the material will be properly identified. There must be a set time in which the material must be produced and there must be information that identifies the person to whom the material should be given. No demand for such material shall contain any requirement, which would be deemed unreasonable for admittance into a grand jury investigation.
Service of a demand or petition for evidence can be made upon a person by either: delivering a copy to any partner, agent, or appointment by law to receive noticed for the person being served. A copy may also be served at the place of business of the principal. It is also acceptable to send notice via certified mail addressed to the principal at their place of business. A verified return by the individual serving any such demand or petition setting forth the manner of such service shall be prima facie proof of such service, (www.4law.cornell.edu.uscode/18/1968/text.num). In the case of service by registered mail, the return post office receipt will be used as evidence of service.
The next step for the Attorney General is to assign a racketeering investigator to serve as the custodian, as well as other investigators in case a need for their assistance should arise, for the documents requested. The person that has been served must make all documents available to the custodian. The custodian is then responsible for the documents until the end of the case. He must make sure that both sides have access to the documents, as well making sure the documents are properly filed at the end of trial.
Although the initial objective of RICO was to aid in the fight against organized crime taking control of legitimate businesses, it is now primarily used in civil lawsuits. The broadness of the law allows it to be applied to many different cases involving businesses? actions and the right to hold those businesses accountable. Businesses need to educate their employees to be aware that they are always under the scope of RICO.
Not all businesses or people brought to trial under RICO are found guilty. Shannon P. Duffy writes, ?A federal judge has dismissed a class-action civil RICO suit against Aetna U.S. Healthcare, brought by a group of consumers who say it lured them in with false promises of high-quality care while secretly pressuring doctors to cut costs and provide only minimum care,? (The Legal Intelligencer, October 1, 1999, www.lawnewsnetwork.com/stories/A6/99-1999Sep30.num). The determination of what defined adequate care was too vague a term for the court to decide. The mistake that the plaintiff made was that they never gave evidence of any real injury that was obtained from this lack of service. The court felt that to find in favor of Maio, it would be necessary to assume that every doctor in the network were basing their medical recommendations on economic interest, rather than the welfare of their patients. Since Maio could not provide any proof where this was the case, the court ruled in favor of the defendant, Aetna.
Sometimes, civil and criminal RICO are used together, as in the precedent setting case of Now v. Scheidler. For ten years, NOW (National Organization of Women), had been complaining to federal law enforcement about ?an organized campaign of terror being waged against clinics and doctors providing family planning services, (Eleanor Smeal, www.feminist.org/news/pr/pro42098.num). There had been many abortion clinics attacked, as well as a few doctors and nurses killed by anti-abortion extremists. It took 12 years for the case to finally be settled and the decision to act has led to the arrests of many of the extremists. It is hoped that showing the stiff arm of the law this time will help deter activists from future acts of violence aimed at healthcare professionals.
Since its inception, the Racketeering Influenced and Corrupt Organizations Act has undergone a change. The original purpose of the law was to stop corrupt persons from using a legitimate business as a cover-up for illegal actions, such as gambling or drug trafficking. Over time, it has become more of a tool in civil RICO claims than in criminal cases. The purpose remains the similar though, to keep people from illegally prospering on the misfortune of others. With the advent of civil RICO, private parties have a way of taking action against a business that has wronged them. RICO will likely continue to grow in its uses to achieve justice.
1.Douglas Whitman & Charles Gergacz (1994). The Legal and Social Environment of Business, p. 432-438, New York: McGraw Hill, Inc.