What Is the Racketeer Influenced and Corrupt Organizations Act?

The Racketeer Influenced and Corrupt Organizations Act (RICO) was a act passed into federal law by the US Congress in 1970 to curtail the practices of organized crime in the country. It was used solely for this purpose until the 1980s when a legal loophole was discovered in the legislation. This allowed the RICO Act to be claimed as a defense in a wide variety of civil court cases, including mail fraud, product defects, and breach of contract lawsuits.

When attorneys began using the act to file civil claims for grievances covering everything from bank foreclosures to child-custody battles, Congress undertook attempts to reform the legislation. In 1995, one element of these reform efforts was successful in limiting the scope of the Racketeer Influenced and Corrupt Organizations Act. This was the passage of the Private Securities Litigation Reform Act, which removed from RICO the provision for liability in securities fraud cases. The reform attempt failed to otherwise close the large usage of the act for civil claims in US courts, however, and, as of 2011, it is still widely cited in court cases. One of the primary reasons for this is that RICO awards a successful plaintiff with three times the dollar judgment amount that they would otherwise receive if their court case is won.

One of the main reasons that the Racketeer Influenced and Corrupt Organizations Act has loopholes is in how it is interpreted due to the fact that it was written broadly. It is designed to encompass the inchoate, or solicitation nature of organized crime, where behavior such as extortion is usually preceded by activities that are only marginally illegal. This includes provisions where the structure of organized crime itself can come under prosecution when authorities in the network can be prosecuted for ordering others to carry out criminal acts.

The definition in the act of continuing criminal enterprise, which was meant to solely target the activities of organized crime, can also be used to legally define such topics as ongoing medical malpractice instances in a hospital setting by surgeons who have performed failed surgeries. The Racketeer Influenced and Corrupt Organizations Act was also meant to primarily protect businesses who were targeted by organized crime under section 1951, that governs interference with commercial activity. This, along with the RICO Act defining a “person” as “any individual or entity holding a legal or beneficial interest in property” opened it up to wide scale abuse in lawsuits.

The RICO Act was specifically written to cover a very broad definition of racketeering, or organized illegal activity, precisely because the Mafia in the US has been engaged in so many different types of crimes. The act covers detailed cause of action provisions for types of interstate, institutional, and government fraud, such as banking fraud, mail fraud, and the trafficking of untaxed and unregulated goods. Where these provisions addressed the misuse or theft of property, the violation of personal rights, and coercion of individuals and businesses, they were open to interpretation by lawyers in civil cases that had nothing to do with Mafia activity. As of 2011, the RICO Act has been invoked in lawsuits ranging from prosecution of the Hell's Angels motorcycle club and Catholic sex abuse cases to supposed crimes in Major League Baseball and against Pro-Life anti-abortion activists' practice of picketing in front of abortion clinics.