RICO And Racketeering

What Prompted The Government To Enact RICO?

RICO was originally enacted to combat the infiltration of legitimate businesses by organized criminals. By providing a broad federal structure for imposing criminal and civil liability on a wide range of conduct, RICO has succeeded in reaching illegal activity that is beyond the scope of other statutes. Though primarily designed as a weapon against organized crime, RICO's application has not been limited to the "archetypical, intimidating mobster." RICO's provision for treble damages in civil cases has made its use more attractive and creative.

How Has The RICO Statute Been Used?

The statute has been used against legitimate businesses that have committed "offenses" that can be wedged into RICO's racketeering definition, ranging from union tactics to the theft of trade secrets. In regard to data thieves, RICO, with its capacity to provide for treble damages and attorney fees, provides a significant advantage over traditional remedies such as the UTSA or the federal Computer Fraud and Abuse Act (CFAA).

What Sort Of Liability Does RICO Impose On A Defendant?

RICO imposes criminal and civil liability upon those who engage in "racketeering activity," or, as the Supreme Court put it, "prohibited activities." Racketeering activity is defined as "any act or threat involving" specific state-law crimes, any "act" indictable under various enumerated federal statutes, and certain federal offenses. Prohibited activities that apply to the theft of trade secrets are mail fraud, wire fraud, and interstate transportation and receipt of stolen property with a value of $5,000 or more.

What Must A Plaintiff Prove In Order To Recover In A Civil RICO Action?

To recover in a civil RICO action, a plaintiff must prove: (1) that there is a violation of the RICO statute, 18 U.S.C. § 1962; (2) that there is an injury to the plaintiff's business or property; and (3) that the RICO violation was the proximate cause of the injury. A RICO plaintiff must also prove the conduct of an enterprise through a pattern of racketeering activity. While defendants usually contest every element of a RICO claim, the battle usually focuses on proper pleading of the last two prongs: the "pattern" of "racketeering activity."

How Are Prohibited Activities Defined In The RICO Statute?

Each prohibited activity is defined in the RICO statute as including, as a necessary element, proof of either "a pattern of racketeering activity" or the "collection of an unlawful debt."

What Is A "Pattern Of Racketeering Activity?"

A "pattern of racketeering activity" is an occurrence of at least two acts of racketeering activity, known as predicate acts and enumerated in the statute, within a period of 10 years. Demonstrating a "pattern of racketeering activity" also requires showing "that the racketeering acts are related and that they amount to or pose a threat of continued criminal activity." "[A]llegations cannot constitute a RICO 'pattern' unless they satisfy both the 'relatedness' and 'continuity' tests." However, both tests depend heavily on the specific facts of each case.

In addition to satisfying the relatedness requirement, a RICO plaintiff must also satisfy the continuity requirement. Continuity signifies either a closed period of repeated conduct, i.e., "a series of related predicates extending over a substantial period of time," or "past conduct that by its nature projects into the future with a threat of repetition."