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What is RICO?

The Racketeer Influenced and Corrupt Organizations Act attacks the financial core of organized crime.
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  • Written By: Mary McMahon
  • Edited By: Bronwyn Harris
  • Last Modified Date: 23 October 2014
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The Racketeer Influenced and Corrupt Organizations Act (RICO) was a groundbreaking piece of legislation passed in the United States in 1970 with the goal of financially crippling the Mafia. In addition to being used against members of the Mafia, RICO can also be used in a variety of other circumstances. Under RICO, the scope of potential prosecution against people who participate in organized crime was expanded, along with the penalties upon conviction.

In order for an offender to fall under the RICO rules and be charged with racketeering, he or she must violate two of 35 statutes within 10 years, and the violations must be linked in some way. For example, both rape and murder are included in the RICO rules, but someone who commits a rape and a murder would not necessarily be charged under RICO unless the crimes could be linked to organized crime in some way. Because RICO charges rely on proving a pattern of behavior, rather than specific crimes, they are generally easier to prove in court.

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Historically, people brought into court with accusations of participation in organized crime would move to cover up the evidence. Under RICO, the assets of suspects can be frozen, preventing them from hiding their profits until the case can be resolved. If the RICO charge is proved, it can result in up to 20 years imprisonment on each count of racketeering, along with a forfeiture of all racketeering-related assets, including those tied into legitimate businesses. Furthermore, financial damages may also be imposed.

RICO strikes at the financial core of organized crime, by ensuring that legitimate businesses cannot be used as a cover. It also allows civil claims, which means that people who feel that they have been harmed as a result of racketeering can also bring charges, resulting in even more penalties. In order to pursue civil charges under RICO, claimants must be able to fulfill a specific set of criteria.

Because the financial repercussions of a RICO charge can be quite significant, many criminals decide to try to strike a deal. In return for being allowed to keep some of their assets, they may give up other members of a criminal organization, or offer to assist with an investigation. This gives prosecutors a powerful tool to use against organized crime, which can be extremely useful in ongoing investigations where it is difficult to pin down the major players in an organized crime ring.

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parmnparsley
Post 6

@Cougars- Precedent has been set a number of times that state RICO violations do not need be economically driven. RICO is used for both criminal and civil prosecutions of individuals and enterprises.

I can give you a few examples of cases classified as RICO crimes that did not involve economic related crimes. The case of Scheidler V the National Organization for Women (a pro-life organization) used RICO to bring civil charges against the organization for blocking women from seeking abortions at abortion clinics. The organization had committed systematic racketeering acts by physically preventing and intimidating women who were within their rights.

Another instance RICO is used for non-economic crimes is in the prosecution of Catholic Dioceses for sex abuse charges. Racketeering laws were used to prosecute the higher ups in the Catholic church for the crimes committed by those underneath them.

cougars
Post 5

What is the definition of racketeering, and is there a monetary threshold that would need to be met for prosecutors to charge someone with a RICO crime?

Comparables
Post 4

@Babalaas- To be honest, some of these executives may be charge with acts covered under the RICO legislation, but they will not likely be charged with a RICO offense unless they had committed one of these acts within the last ten years. RICO covers securities fraud, bankruptcy fraud, money laundering, embezzlement, bribery, and theft, all realistic charges some of these powerful people could face if the Justice department decides to file.

I do think that there will be some fraudsters that took advantage of the lax regulatory climate who could be threatened with RICO charges. Surely some of the people who committed fraud have done so and been convicted in the past. By definition, their crimes would fall under the label of racketeering, but RICO would likely be used to push a plea bargain to guarantee a conviction. Most will take a lesser guilty plea rather than have their assets frozen under RICO and be unable to defend themselves. Only time will tell, but I am sure some of the engineers of the financial crisis will be brought to justice.

highlighter
Post 3

@Baballas- While I agree that what the Wall Street banks did was wrong, I think it was more a failure on the regulators and governments part. I do not think there should have been such a conflict of interest between the former Goldman execs working in the government and the people they are supposed to protect.

I think that the RICO act would be too hash a law to charge any of these offenders under. This could result in life sentences for people doing what a lack of oversight allowed them to do. There is more of a lack of ethics in banking than a deliberate organization trying to manipulate the system.

Babalaas
Post 2

Does the RICO act only apply to the Mafia and other crime families, or can it apply to organized crime in the context of Wall Street criminal organizations? I began to read a summary of the financial crisis report released by congress, and it highlighted the criminal behavior and patterns of certain Wall Street banks like Washington Mutual, Goldman Sachs, and many others.

The report is too extensive to summarize in a discussion forum, but I find it amazing that not a single one of these crooks has been charged with a crime, or been forced to repay profits gained in their fraud schemes. I would like to know if anything these super huge banks, and the insurance companies that insured their fraud, did qualifies as corruption or racketeering under the RICO act.

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