RICO Charges in Federal Court: What You’re Really Facing

RICO is not a charge about organized crime, though it was designed for organized crime. It is a charge about patterns, and patterns are everywhere.

The Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961 through 1968, was enacted in 1970 to address the infiltration of legitimate businesses by organized crime. Its drafters, under the influence of Robert Blakey’s academic work on enterprise liability, constructed a statute whose elements were broad enough to reach the Cosa Nostra. They were also broad enough to reach a great deal of conduct the drafters did not specifically contemplate, which became apparent as federal prosecutors applied the statute in the decades following its enactment.

RICO is available against anyone who participates, directly or indirectly, in the conduct of an enterprise through a pattern of racketeering activity. Each element of that formulation is a term of art with a specific legal definition. Together they describe a framework that reaches far beyond traditional organized crime.

The Enterprise

An enterprise under RICO includes any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact, although not a legal entity. The association-in-fact enterprise is the provision that extends RICO beyond formal legal structures to any group of individuals who associate for a common purpose. Two business partners who associate to defraud customers may constitute a RICO enterprise. A group of employees who participate in a fraud scheme may constitute a RICO enterprise. The enterprise need not have a formal structure, defined roles, or any indicia of conventional organization.

The Supreme Court’s decision in Boyle v. United States in 2009 confirmed that an association-in-fact enterprise requires only that the group have some kind of structure that, however minimal, distinguishes it from a mere conspiracy. That standard is not demanding. An enterprise with a structure sufficient for RICO purposes has been found in cases involving two individuals who met intermittently to coordinate a fraud scheme.

The Pattern of Racketeering Activity

A pattern of racketeering activity requires at least two acts of racketeering activity within ten years of each other. The predicate acts that constitute racketeering activity are enumerated in the statute and include murder, kidnapping, extortion, drug trafficking, fraud, embezzlement, obstruction of justice, and numerous other offenses. Wire fraud, mail fraud, and bank fraud are each predicate acts. A defendant who committed two acts of wire fraud in connection with an enterprise may have committed two predicate acts sufficient to establish a pattern.

The relatedness and continuity requirements for a pattern were established by the Supreme Court in H.J. Inc. v. Northwestern Bell Telephone Co. in 1989. The predicate acts must be related to each other and to the enterprise. They must amount to or pose a threat of continued racketeering activity. Continuity may be established by a closed period of repeated conduct or by the open-ended nature of an ongoing enterprise. Two isolated fraudulent acts connected to the same enterprise may not constitute a pattern if they do not reflect a threat of continued activity.

The Penalties

Criminal RICO conviction carries a maximum sentence of twenty years imprisonment per RICO count, a fine, and forfeiture of all interests in the enterprise and all proceeds of the racketeering activity. The forfeiture provision is particularly significant: RICO forfeiture is mandatory upon conviction, and it reaches assets derived from or traceable to the racketeering activity without the limitations applicable to forfeiture under the money laundering statutes.

Civil RICO is available to private parties who can establish the same elements as criminal RICO and who suffered injury to their business or property by reason of the violation. Civil RICO plaintiffs may recover treble damages and attorney fees. The availability of civil RICO claims in private litigation has produced a large body of case law narrowing the statute’s elements in the civil context, some of which is instructive in criminal cases where the same definitional questions arise.

A RICO indictment is a statement that the government views the charged conduct not as a series of individual crimes but as the product of a criminal enterprise. That framing has consequences beyond the additional twenty-year count: it shapes the government’s narrative at trial, permits the introduction of evidence about the enterprise’s conduct that might be inadmissible in a prosecution for individual offenses, and produces forfeiture exposure that the underlying offense counts alone would not generate.

Defense Strategies in RICO Cases

RICO defenses challenge each element of the charge with particular attention to the enterprise and pattern requirements, which are the elements most susceptible to legal argument. The enterprise challenge attacks the government’s theory of how the alleged participants were associated, whether their coordination rose to the level of an enterprise with the necessary structure, and whether the defendant participated in the conduct of that enterprise rather than merely committing individual predicate acts in the same environment.

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The pattern challenge contests whether the alleged predicate acts were sufficiently related and whether they established the continuity the law requires. Two fraudulent transactions connected by nothing more than the same defendant and the same scheme may not constitute a pattern if they were isolated rather than part of ongoing or threatened criminal activity.

The variance defense, available in multi-defendant RICO cases, argues that the evidence at trial established multiple separate enterprises rather than the single enterprise charged in the indictment. Where different groups of defendants operated independently, without coordinated direction from a common leadership, the variance argument challenges the government’s ability to attribute the conduct of one group to the defendants in another.

RICO cases are tried on evidence of the enterprise’s full conduct, not merely the defendant’s individual acts. The trial record in a complex RICO case is the record of an entire criminal organization’s activity over years. Preparing a defense in that environment requires a command of the full evidentiary record, not merely the facts directly implicating the specific defendant. That preparation begins long before the trial date and it begins with the consultation that maps the full scope of what the defendant faces.