Racketeer Influenced and Corrupt Organizations Act

• 1. Introduction

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  The Racketeer Influenced and Corrupt Organizations Act, known as RICO, convinced one Wall Street chief executive that a bank could not survive an indictment under it. Fred Joseph, president and chief executive of Drexel Burnham Lambert, put it bluntly years later: "a financial institution cannot survive a RICO indictment."

  Congress had not written the law with bankers in mind. It passed in 1970 as Title IX of the Organized Crime Control Act, and its primary intent was to deal with organized crime.

  Within a few decades, prosecutors and private plaintiffs were pointing it at targets who looked nothing like mobsters. What did the law actually require a prosecutor to prove? Why did so many defendants give in before a jury ever heard the case? And how far could a statute built for the Mafia stretch?

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• 2. Blakey's Blueprint

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  G. Robert Blakey, an adviser to the United States Senate Government Operations Committee, drafted the statute. He worked under the close supervision of Senator John L. McClellan, who chaired the Criminal Law and Procedures Subcommittee of the Senate Judiciary Committee. President Richard Nixon signed it into law. Prosecutors in the 1970s used it against the Mafia and others actively engaged in organized crime, and in later years they applied it more broadly.

  Blakey himself denied that Congress ever meant the law to stop at the Mob. He once told Time, "We don't want one set of rules for people whose collars are blue or whose names end in vowels, and another set for those whose collars are white and have Ivy League diplomas."

  Critics were not persuaded. One of them pointed to a figure from the American Bar Association: civil suits against businesses, labor unions and other private parties made up 90 percent of all civil RICO cases.

  In 1972, state legislatures began copying the federal model. As of 2014-33 states, along with Puerto Rico and the United States Virgin Islands, had adopted their own RICO laws. These cover additional state crimes, and they differ from the federal law and from each other in several respects.

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• 3. Anatomy Of A Charge

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  Two acts is the threshold. A person who commits at least two acts of racketeering activity within a 10-year period can be charged with racketeering, provided the acts connect to an enterprise in one of four specified ways. The acts must come from a list of 35 crimes, made up of 27 federal crimes and eight state crimes.

  The list of 35 crimes runs from arson and gambling to securities fraud and terrorism. State offenses include murder, kidnapping, extortion, robbery, bribery, dealing in obscene matter, and dealing in controlled substances or listed chemicals. Federal offenses include counterfeiting, theft, embezzlement, fraud, obstruction of justice, slavery, money laundering and murder-for-hire, along with many others in the federal criminal code. Embezzling union funds, bankruptcy fraud, criminal copyright infringement and helping people enter the country illegally for financial gain are also on it.

  Drug trafficking appears on the list, yet the Continuing Criminal Enterprise Statute, nicknamed the "Kingpin Statute," now commonly handles large, organized drug networks. It targets only traffickers behind long-term and elaborate conspiracies. RICO, by contrast, covers a variety of organized criminal behaviors.

  The word "pattern" carries the weight in every charge. A pattern needs at least two acts, one of them after the law's effective date and the last within ten years of an earlier one, not counting time spent in prison. The US Supreme Court has told federal courts to apply a continuity-plus-relationship test. The illegal acts that form a pattern are called predicate offenses. They count as related if they "have the same or similar purposes, results, participants, victims, or methods of commission," or are tied together by distinguishing traits and are not isolated events. Continuity can mean a closed stretch of conduct, or past conduct that by its nature threatens to repeat.

  Four relationships to an enterprise satisfy the law. A defendant either invested the proceeds of the pattern in the enterprise, acquired or kept an interest in it or control of it through the pattern, conducted or took part in its affairs through the pattern, or conspired to do one of those things. The Supreme Court noted that a commentator had labeled the four relationships prize, instrument, victim and perpetrator.

  Each racketeering count carries up to 20 years in prison and a fine of up to $25,000. A convicted racketeer must also forfeit all ill-gotten gains and any interest in a business acquired through the pattern.

  Before any trial, a US Attorney who indicts someone under RICO can seek a restraining order or injunction to seize the defendant's assets temporarily. The prosecutor can also require the defendant to post a performance bond. These tools make sure something is left to seize after a guilty verdict, and they stopped owners of Mafia-related shell corporations from absconding with assets.

  Frozen assets change how cases end. The threat of a RICO indictment can push defendants to plead guilty to lesser charges, partly because a seizure makes it hard to pay a defense attorney. Despite its harsh provisions, the charge is considered easy to prove, since it focuses on patterns of behavior rather than individual criminal acts.

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• 4. Suing Under RICO

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  Section 1964 of Title 18 sets out the civil remedies for violations of section 1962. District courts may issue orders to restrict or dissolve entities involved in violations. The Attorney General may start civil proceedings that allow further court action while a final decision is pending, including injunctions, restraining orders and acceptance of satisfactory performance bonds. Anyone found guilty in a RICO criminal proceeding cannot deny the same allegations in a later civil case.

  Preponderance of the evidence is the standard in civil court, a lighter burden than a criminal trial. That lets the United States get around restrictions that apply in criminal proceedings. Discovery tools, the permitted use of illegally obtained evidence and adverse inferences all broaden what the government can do.

  A private individual "damaged in his business or property" can sue as well. The plaintiff must prove that an enterprise exists, and the defendants cannot be that enterprise. Such a suit can be filed in state or federal court. Both the criminal and civil sides allow treble damages, meaning triple the actual damages. When the US government is the plaintiff in civil court, treble damages may be replaced with a request for equitable remedies and preliminary injunctive relief.

  In 1986, the Christic Institute filed a civil RICO case naming 30 defendants who were also implicated in the Iran-Contra scandal. The suit, titled Avirgan v Hull, alleged that they were part of a conspiracy behind the La Penca bombing. It named several Central Intelligence Agency figures and accused them of illegal political assassinations, along with arms and drug trafficking. The court dismissed it in 1989. Lead attorney Daniel Sheehan alleged that members of the Iran-Contra enterprise were behind the assassination of judge Robert Vance, who was expected to reverse the dismissal. Blakey called it the best-charged RICO case he had seen. In 1990, Bruce Springsteen and Bonnie Raitt held a benefit concert for the litigation, and a 500-page affidavit filed in December 1986 was published as "The Shadow Government."

  In 2001, Major League Baseball team owners voted to eliminate two teams, presumably the Minnesota Twins and Montreal Expos. In 2002, the former minority owners of the Expos filed RICO charges against commissioner Bud Selig and former Expos owner Jeffrey Loria. They claimed the two had conspired to devalue the team for personal benefit ahead of a move. Baseball faced up to $300 million in punitive damages. The case lasted two years and stalled the Expos' move to Washington, as well as contraction, during that time. It went to arbitration, and the arbiters ruled for Major League Baseball, which allowed the move to Washington to proceed.

  In Williams v. Mohawk Industries, Inc., the Eleventh Circuit Court of Appeals ruled that a corporation could be held liable for unlawfully conducting the affairs of an association-in-fact enterprise made up of the corporation and its agents. Mohawk had allegedly hired workers who were in the country illegally. The Supreme Court was asked whether Mohawk and its recruiting agencies together formed an "enterprise" that RICO could reach. It vacated the Eleventh Circuit decision that had permitted RICO liability.

  On the 18th of October 2013, Art Cohen filed a civil RICO class action against Donald Trump. It accused him of misrepresenting Trump University "to make tens of millions of dollars" while delivering "neither Donald Trump nor a university." Judge Gonzalo P. Curiel heard the case in the US District Court for the Southern District of California in San Diego, and argument was scheduled to begin on the 28th of November 2016. On the 18th of November, shortly after Trump won the presidential election, this case and two others settled for a total of $25 million, with no admission of wrongdoing by Trump.

  One of the most successful uses of RICO has been to punish people who retaliate against witnesses and victims for cooperating with federal law enforcement or intelligence agencies. Charges can also be brought against people or corporations who have sued or filed criminal charges against a defendant. Anti-SLAPP laws, short for strategic lawsuit against public participation, aim to curb those who use the courts as a weapon against whistle blowers or victims. RICO could be alleged if lawyers and their clients conspired to concoct fictitious complaints solely for retribution.

  In 2015, the Drummond Company sued attorneys Terrence P. Collingsworth and William R. Scherer, the advocacy group International Rights Advocates, and Dutch businessman Albert van Bilderbeek, an owner of Llanos Oil. The suit accused them of violating RICO by alleging that Drummond had worked alongside Autodefensas Unidas de Colombia to murder labor union leaders near its Colombian coal mines. Drummond denies that allegation.

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• 5. First Courtroom Tests

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  On the 1st of December 1977, a federal grand jury in the Eastern District of Louisiana indicted thirteen defendants on conspiracy and racketeering charges in a case involving Robert J. L'Hoste & Company, Inc. The defendants asked the court to dismiss the indictment as overbroad and vague. On the 27th of February 1978, the grand jury returned a superseding indictment with the same offenses, this time naming eleven defendants. The first RICO trial began on the 13th of March 1978. The jury convicted four appellants and another corporation on both the conspiracy and racketeering counts.

  Local 1292 of the Laborers International Union of North America was the next target. On the 2nd of October 1978, the US Attorney's office for the Eastern District of Arkansas indicted its officers. Special Assistant United States Attorney Samuel A. Perroni prosecuted the first trial of labor union officials, which began on the 5th of June 1979. In United States v. Allison, his prosecution used RICO to win convictions for conspiracy, murder for hire, perjury and embezzlement of union property.

  In May 1979, prosecutor Mark L. Webb of the Northern District of California tried United States v. Sam Bailey Gang. The defendants were a gang of postal burglars and a Nevada fence who, the government argued, worked together in the manner of organized crime. No Mafia crime family was involved, and the prosecution succeeded.

  Sonny Barger and other members and associates of the Oakland chapter of the Hells Angels faced RICO charges in 1979 in United States vs. Barger. Prosecutors tried to show a pattern of behavior tied to guns and illegal drugs. The jury acquitted Barger on the RICO charges and hung on the predicate acts. One account of the case, told from the club's side, says: "There was no proof it was part of club policy, and as much as they tried, the government could not come up with any incriminating minutes from any of our meetings mentioning drugs and guns."

  On the 18th of September 1979, the US Attorney's Office in the Southern District of New York used RICO in United States v. Scotto. The defendant, Scotto, headed the International Longshoremen's Association. He was convicted of racketeering, accepting unlawful labor payments and income tax evasion.

  During 1977 and 1978, a group from Texas, Tennessee and Florida imported over 106 tons of marijuana, and RICO helped indict its members as the Cowboy Mafia. The shrimp boats Agnes Pauline, Monkey, Jubilee and Bayou Blues made six trips from Colombia to Texas. Federal agents seized the Agnes Pauline in 1978 as it unloaded its cargo in Port Arthur, Texas. In 1979, twenty-six members of the smuggling ring were convicted. Charles "Muscles" Foster, a ranch foreman and head of the operation, pleaded innocent by reason of insanity and was acquitted in 1980.

  In August 1981, a grand jury indicted Rex Cauble, whom the government believed to be the smugglers' financial backer. Foster was the foreman of Cauble's ranches, and the drugs were transported to those ranches throughout Texas. Cauble was a multi-millionaire, a former chairman of the Texas Aeronautics Commission, an honorary Texas Ranger and the owner of a famous cutting horse named Cutter Bill. In January 1982, he was convicted on ten counts: two violations of RICO, conspiracy to violate RICO, three violations of the Interstate Commerce Travel Act, and four counts of misapplication of bank funds. He received ten concurrent five-year terms, was released in September 1987, and died in 2003.

  The RICO conviction cost Cauble his 31 percent interest in Cauble Enterprises. That holding included two Cutter Bill Western World stores, three Texas banks, six ranches, a welding supply company and oil and gas holdings. The company's worth was estimated at $80 million, yet the government sold its interest back to the other partners, Cauble's wife and son, for an estimated $12 million. Three books followed: The Cowboy Mafia (2003) by Roy Graham, Cauble's personal jet pilot; Catching the Katy (2017) by Barker Milford; and A Conspiracy Revealed by DEA agent Daniel Wedeman Sr.

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• 6. Taking On The Mafia

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  In 1985, United States Attorney Rudy Giuliani indicted 11 organized crime figures in United States v. Anthony Salerno, also known as the Mafia Commission Trial. Using RICO, he charged the heads of New York's so-called "Five Families" with extortion, labor racketeering and murder for hire. Time quoted his stated intention: "Our approach is to wipe out the five families." The magazine called the "Case of Cases" possibly "the most significant assault on the infrastructure of organized crime since the high command of the Chicago Mafia was swept away in 1943."

  Three Assistant United States Attorneys helped try the case. Michael Chertoff went on to become the second United States Secretary of Homeland Security and a co-author of the Patriot Act. John Savarese later became a partner at Wachtell Lipton Rosen & Katz. Gil Childers rose to deputy chief of the criminal division for the Southern District of New York, and later became a managing director in the legal department at Goldman Sachs.

  Sentencing came on the 13th of January 1987, when three of the family heads received 100 years in prison. The Genovese and Colombo leaders, Tony Salerno and Carmine Persico, drew additional sentences of 70 and 39 years in separate trials, to run consecutively. Separately, Gambino boss Paul Castellano and his underboss, Thomas Bilotti, were murdered on the streets of Midtown Manhattan on the 16th of December 1985.

  The Lucchese crime family, another of the Five Families, fell more slowly. Prosecutors Gregory O'Connell and Charles Rose used RICO charges to break it up over an 18-month period.

  On the 2nd of April 1992, John Gotti and Frank Locascio were convicted under RICO and later sentenced to life in prison. In Tampa, on the 16th of October 2006, a group of Gambino members and an associate, including capo Ronald Trucchio, were tried under RICO. They were found guilty and sentenced to life in prison.

  In 2005, the Department of Justice's Operation Family Secrets indicted 14 members and associates of the Chicago Outfit, also called the Chicago Mafia, under RICO predicates. Five defendants were convicted of RICO violations and other crimes. Six pleaded guilty, two died before trial, and one was too sick to be tried. Members of the Latin Kings have also been convicted of RICO offenses.

  Joseph Massino's trial began on the 24th of May 2004 before Judge Nicholas Garaufis, with Greg D. Andres and Robert Henoch heading the prosecution. Massino, the Bonanno crime family boss, faced 11 RICO counts covering seven murders, arson, extortion, loansharking, illegal gambling and money laundering. Prosecutors might seek the death penalty for the murder of Bonanno caporegime Gerlando Sciascia, so that case was severed to be tried separately.

  After deliberating for five days, the jury found Massino guilty on all 11 counts on the 30th of July 2004. That same day it approved a $10 million forfeiture of the proceeds of his reign as Bonanno boss. Sentencing was initially set for the 12th of October, and he was expected to receive life without parole.

  As court adjourned, Massino asked to meet Judge Garaufis and made his first offer to cooperate, hoping to spare his life. One of John Ashcroft's final acts as Attorney General was to order federal prosecutors to seek the death penalty for him. Massino stood to be the first mob boss to face execution since Lepke Buchalter was executed in 1944. Instead he became the first sitting boss of a New York crime family to turn state's evidence. Only one other boss in Mafia history had done so: Philadelphia's Ralph Natale, who flipped in 1999 while facing drug charges.

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• 7. Officials And Extremists

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  Gil Dozier, Louisiana's Commissioner of Agriculture and Forestry, was charged in 1980 under both Hobbs and RICO laws. The federal court case in the Middle District of Louisiana, based in Baton Rouge, accused him of compelling companies doing business with his department to make campaign contributions on his behalf. On the 23rd of September 1980, a jury convicted him of five counts of extortion and racketeering. The judge sentenced him to 10 years, later raised to 18 when other offenses were determined. A $25,000 fine was suspended pending appeal, and Dozier stayed free on bail. The Fifth Circuit in New Orleans upheld the conviction, and he served nearly four years until a presidential commutation freed him in 1986.

  Around June 1984, a lengthy Department of Justice investigation led to the Key West Police Department in Monroe County, Florida, being declared a criminal enterprise under RICO. Several high-ranking officers, including Deputy Police Chief Raymond Cassamayor, were arrested on federal charges of running a protection racket for illegal cocaine smugglers. At trial, a witness testified that he routinely delivered bags of cocaine to the Deputy Chief's office at City Hall.

  In 1999, the Rampart scandal broke in the Los Angeles Police Department and exposed widespread criminal activity inside its anti-gang unit, called CRASH. Seventy officers were initially implicated in planting evidence, dealing drugs, bank robbery, and unlawful killings and beatings. In 2000, Federal District judge William Rea ruled that RICO could be used to name the entire department as a criminal enterprise for people suing it over police brutality and misconduct. More than 140 civil RICO lawsuits followed. In July 2001, US District Judge Gary A. Feess held that the plaintiffs lacked standing, because they alleged personal injuries rather than economic or property damage.

  In 2012, eleven defendants were indicted on RICO charges in El Paso, Texas, for allegedly helping AccessHealthSource, a local health care provider, win and keep lucrative contracts with local and state government entities. The indictment alleged bribery of and kickbacks to elected officials, extortion under color of authority, and deprivation of citizens' right to the honest services of their elected local officials.

  A federal grand jury in the Middle District of Pennsylvania handed down a 48-count indictment against former Luzerne County Court of Common Pleas judges Michael Conahan and Mark Ciavarella. They were charged with mail and wire fraud, tax evasion, money laundering and honest services fraud. The judges allegedly took kickbacks for sending juveniles, whom they convicted mostly of petty crimes, to a private detention center. Local and national newspapers dubbed it the "kids for cash scandal." On the 18th of February 2011, a federal jury found Ciavarella guilty of racketeering for accepting illegal payments from Robert Mericle, the developer of PA Child Care, and Attorney Robert Powell, a co-owner of the facility. Ciavarella still faced 38 other counts.

  The assassination of Jewish radio host Alan Berg on the 18th of June 1984 drew the FBI toward a far-right terrorist group called The Order. The group, active from September 1983 to December 1984, wanted to bring down a federal government it saw as illegitimate, through bombings and assassinations. To fund its plans, it turned to armored car robbery and a counterfeiting and laundering operation. The arrest of member Tom Martinez for using counterfeit bills to buy liquor gave investigators a lead. Martinez informed on the group, and the FBI used RICO to bring 10 members to trial and win convictions for racketeering and conspiracy.

  The Order had distributed millions of dollars to the wider far-right movement. Operation Clean Sweep used RICO to bring 14 leading members of that movement to trial at Fort Smith on charges of seditious conspiracy. Prosecutors alleged that their receipt of The Order's funds linked them to an attempt to overthrow the federal government.

  After the simultaneous bombings of the US Embassies in Tanzania and Kenya in 1998, the Department of Justice sued Osama bin Laden in absentia under RICO. Adam Curtis, a BBC filmmaker, argued controversially in his 2004 documentary The Power of Nightmares that prosecutors had to prove bin Laden headed a criminal organization responsible for the bombings. According to the film, they found a former associate, Jamal al-Fadl, and paid him to testify that bin Laden led a massive terrorist organization called "al-Qaeda." That satisfied the RICO requirements, the film argued, even though no formal terrorist organization by that name actually existed.

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• 8. Fortunes And Fame

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  On the 29th of March 1989, American financier Michael Milken was indicted on 98 counts of racketeering and fraud, tied to an investigation of insider trading and other offenses. Prosecutors accused him of using a wide-ranging network of contacts to manipulate stock and bond prices. It was one of the first RICO indictments of an individual with no ties to organized crime. Rather than risk spending the rest of his life in prison, Milken pleaded guilty to six lesser felonies of securities fraud and tax evasion. He served 22 months and was banned for life from the securities industry.

  Milken's employer, Drexel Burnham Lambert, had been threatened with RICO charges on the 7th of September 1988, under the doctrine that corporations are responsible for their employees' crimes. The firm avoided an indictment by entering an Alford plea to the lesser felonies of stock parking and stock manipulation. Its carefully worded plea said Drexel was "not in a position to dispute the allegations." An indictment would have required a performance bond of up to $1 billion to avoid an asset freeze. That bond would have taken precedence over every other obligation, including the loans that supplied 96 percent of the firm's capital base. Banks do not extend credit to a firm indicted under RICO, and by at least one estimate the firm would have been destroyed within a month.

  In 2005, a federal jury ordered Connecticut Senator Len Fasano to pay $500,000 under RICO for illegally helping a client hide assets in a bankruptcy case.

  Scott W. Rothstein was the managing shareholder, chairman and chief executive of the Rothstein Rosenfeldt Adler law firm. He was accused of funding his philanthropy, political contributions, law firm salaries and extravagant lifestyle with a 1.2 billion dollar Ponzi scheme. On the 1st of December 2009, he turned himself in to federal authorities and was arrested on RICO-related charges. He first pleaded not guilty, but he cooperated with the government and changed his plea to guilty on five federal crimes on the 27th of January 2010. US Magistrate Judge Robin Rosenbaum denied him bond, ruling that his ability to forge documents made him a flight risk. On the 9th of June 2010, a federal court in Fort Lauderdale sentenced him to 50 years in prison.

  In 2015, fourteen defendants affiliated with FIFA were indicted under RICO on 47 counts. The indictment described "racketeering, wire fraud and money laundering conspiracies, among other offenses, in connection with the defendants' participation in a 24-year scheme to enrich themselves through the corruption of international soccer." The defendants included many current and former high-ranking officers of FIFA and its affiliate CONCACAF. They allegedly used the enterprise as a front to collect millions of dollars in bribes, which may have influenced the winning bids of Russia and Qatar to host the World Cup in 2018 and 2022.

  In May 2022, the rapper Young Thug was arrested in a RICO indictment against him and his label, YSL Records. Fulton County District Attorney Fani Willis filed it, with 56 counts against 28 affiliates, and Thug himself faced 8 charges. The indictment alleged that YSL was not only a record label but a street gang engaged in violent activity in Georgia.

  The case, originally presided over by Judge Ural D. Glanville, became mired in controversy. Thug's lawyer, Brian Steel, alleged that Glanville had joined a secret ex-parte meeting with the prosecution. Steel was held in contempt and taken into custody for refusing to disclose his source. He was sentenced to 10 weekends in jail, but an appeal overturned that sentence. Glanville was recused soon afterward, and Judge Paige Reese Whitaker took over. The case is notable for the longest jury selection in Georgia's history, at 10 months, and for being the longest trial in the state's history.

  In August 2023, Fulton County District Attorney Fani Willis charged Donald Trump and 18 co-defendants, including Rudy Giuliani, under the Georgia state RICO act. Georgia's law lists 40 state crimes or acts that together can be classified as racketeering schemes. It is broader than the federal law, because attempting, soliciting, coercing or intimidating another person to commit any of the offenses can also count as organized crime. The case was dropped after Trump was elected president in 2024, because a sitting president cannot stand trial and his case was hard to separate from those of his co-defendants.

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