Document Type

Article

Publication Date

1986

Abstract

Congress enacted the Racketeer Influenced and Corrupt Organizations Act (RICO) in 1970 in order to stem the infiltration and corruption of legitimate businesses by organized crime. During the 1970's, civil litigants virtually ignored the statute, but in the 1980's the utility of RICO's civil provisions has come to be generally recognized. Attorneys representing the victims of securities and commercial fraud now routinely add a claim alleging a RICO violation. Ii It is the attractiveness of the remedy - the successful plaintiff's recovery of treble damages and attorney's fees - that has led to this ever increasing use of RICO.

To establish a claim, a plaintiff must show that the defendant violated section 1962 of the statute and injured the plaintiff in his business or property by reason of such activity. Section 1962 makes it unlawful to invest in an enterprise income derived from a pattern of racketeering activity or through the collection of an unlawful debt; to acquire or maintain an enterprise through a pattern of racketeering activity or the collection of an unlawful debt; and to conduct the affairs of an enterprise through a pattern of racketeering activity or the collection of an unlawful debt. In addition, it is illegal to conspire to do any of the above. lo Section 1961 provides definitions for the Act's operative terms, including "racketeering activity," "enterprise," "pattern of racketeering activity," and "unlawful debt." Section 1963 provides criminal penalties for violations of section 1962. Finally, section 1964 provides civil remedies, including a
private cause of action for any person "injured in his business or property by reason of a violation of section 1962." A key element in proving a RICO violation is the "pattern
of racketeering activity." A "pattern of racketeering activity" requires the commission of at least two acts of racketeering activity (commonly referred to as predicate offenses) within a ten year period? "Racketeering activity" is defined in terms of a number of state and federal offenses. Plaintiffs in securities and commercial fraud cases typically rely on three of the enumerated predicate offenses: any offense involving fraud in the sale of securities punishable under any law of the United States; any act indictable under the federal mail fraud statute; and any act indictable under the federal wire fraud statute.

Establishing the predicate offenses, however, is not in itself sufficient to establish a RICO violation. The illegal conduct must have been committed for one of the illegal purposes specified in section 1962. Plaintiffs in securities and commercial fraud cases commonly use section 1962(c). Interpreting the various elements of the statute, and their relationship to each other, has caused considerable judicial confusion. In addition, the courts have engaged in continuing attempts to limit the scope of the private RICO claim.

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