When does wire fraud become a RICO charge?

When Does Wire Fraud Become a RICO Charge?

Wire fraud is a very common predicate offense used to bring Racketeer Influenced and Corrupt Organizations Act (RICO) charges. RICO allows both criminal and civil charges for engaging in a pattern of racketeering activity. Wire fraud occurs when someone uses electronic communications or transmissions to intentionally defraud or obtain money or property.

Overview of Wire Fraud and RICO

The federal wire fraud statute (18 U.S.C. § 1343) makes it a crime to use interstate wire communications to intentionally defraud someone or obtain their money or property. Common examples include email scams, fraudulent wire transfers, and telemarketing schemes. Wire fraud has a maximum sentence of 20 years in prison.
RICO (18 U.S.C. § 1962) allows federal prosecutors to go after criminal organizations that engage in racketeering activities. Racketeering activities are designated predicate offenses like wire fraud, mail fraud, extortion, money laundering, and other serious crimes. To bring a RICO charge, prosecutors must prove a pattern of racketeering activity.
So wire fraud can become a RICO charge when it occurs at least twice within 10 years. The pattern demonstrates an ongoing criminal operation rather than an isolated incident. RICO charges can lead to up to 20 years in prison per racketeering count.

Using Wire Fraud as a RICO Predicate Offense

The extensive use of RICO in civil court cases is almost solely due to the inclusion of mail and wire fraud as predicate acts 1.

These communication-based crimes are so broad that they encompass many types of fraud schemes targeted at businesses, organizations, and individuals.
Prosecutors favor wire fraud as a RICO predicate offense because the scheme itself constitutes the crime, not just the use of wires. As long as the wires are used to further the scheme in some way, the communication does not need to contain false information or promises 5.

This makes wire fraud easier to prove than false statement crimes.

Proving a Pattern of Racketeering Activity

To bring a RICO charge involving wire fraud, prosecutors must prove:

• The defendant used wire communications as part of a scheme to defraud or obtain money/property
• The scheme occurred at least twice within 10 years (pattern requirement)
• The multiple schemes were related and demonstrated an ongoing criminal operation
• The criminal activities affected interstate or foreign commerce

The last element regarding interstate/foreign commerce is easily met for wire fraud since electronic communications often cross state or national borders.
The pattern requirement used to be interpreted loosely so that prosecutors could bundle together various unrelated fraud schemes to show a pattern. But recent court decisions require proofs of relatedness and continuity when demonstrating a pattern of racketeering activity 3.

Using RICO to Target White Collar Crimes

Although RICO was intended for prosecuting organized crime operations, prosecutors have faced criticism for applying it more broadly to white collar and public corruption crimes. The extensive scope of mail/wire fraud and other predicate offenses allows prosecutors to use RICO creatively 3.
For example, the federal fraud statutes do not directly address public corruption. So prosecutors rely on mail/wire fraud to bring RICO charges against corrupt public officials and government employees. Civil RICO claims also frequently target business disputes and frauds against financial institutions.

Defending Against Civil and Criminal RICO Charges

Facing RICO charges can be intimidating given the severe criminal penalties and threat of losing civil lawsuits. Possible defenses include:

• The schemes were isolated incidents rather than an ongoing pattern
• The schemes were not sufficiently related to demonstrate a criminal enterprise
• The defendant did not actually agree to participate in the criminal activities
• The defendant withdrew from the conspiracy before any crimes were committed

For civil lawsuits, additional defenses argue the plaintiff lacks standing to bring a RICO claim or failed to allege concrete financial losses.
An experienced white collar criminal defense attorney can carefully analyze the alleged pattern of racketeering activity and look for deficiencies in how the government is applying RICO. This can lead to getting charges dismissed or leveraging better plea deals.
On the civil side, RICO defenses rely on precedents limiting the scope of mail/wire fraud and pleading requirements that heighten the plaintiff’s burden of proof. The U.S. Supreme Court recently made it more difficult to allege wire fraud in civil RICO cases, so defenses have more teeth 2.

Avoiding RICO Charges and Lawsuits

The best defense is avoiding RICO scrutiny altogether. Businesses should be proactive about detecting and preventing internal fraud schemes before they become widespread patterns. It also helps to avoid even the appearance of impropriety in business practices and transactions.
For individuals, never participate in schemes to defraud others no matter how tempting the money might be. Seek legal counsel at the first sign of trouble rather than waiting for RICO charges down the road. Ultimately, following your moral compass helps sidestep legal complications.

Conclusion

Wire fraud becomes a RICO charge when prosecutors can prove a pattern of two or more related schemes over 10 years. The combination of wire fraud’s broad scope and RICO’s severe penalties makes this an aggressive tool for targeting white collar crimes and corruption. But evolving court interpretations of RICO provide opportunities for defendants to fight back. The key is having an experienced attorney who knows how to exploit deficiencies in the alleged pattern of racketeering activity.