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RICO Overview
RICO, or the Racketeer Influenced and Corrupt Organizations Act, is a law that has been used in a range of lawsuits, from class actions targeting payday loan companies, to e-cigarette advertising, to Walmart. Learn about RICO and how RICO lawsuits can protect consumers.
According to the U.S. Department of Justice, the Racketeer Influenced and Corrupt Organizations Act, or RICO for short, was passed by Congress “to eradicate organized crime in the United States.” The law was passed in 1970 and was meant to target mob bosses who had escaped prosecution because they did not commit the crimes that they had allegedly ordered others to do.
As a result, most think of Mafia takedowns or gang activity when they think of RICO and, indeed, RICO has been used to bring vast criminal enterprises to justice. However, the law does not only apply to the mob or gangs.
According to The New York Times, RICO can be used in civil lawsuits to hold businesses accountable for unlawful activities. RICO allows plaintiffs to file legal action against a number of defendants, some of whom might be untouchable otherwise. Additionally, the Times reports that RICO lawsuits bring three times the amount of damages, along with attorneys’ fees, if successful.
How Does RICO Work?
Under RICO, it is illegal for those associated with an “enterprise” that affects interstate commerce to engage in “a pattern of racketeering activity” or the “collection of unlawful debt.” “Unlawful debts” are those that are due to illegal gambling.
There are several other terms within RICO that are further defined by the law.
An “enterprise” is expansive and includes legal entities, such as corporations, unions, and other groups, as well as less formal designations, including individuals, partners, and clubs.
Under federal law, activity that constitutes “racketeering” includes everything from murder and kidnapping to bribery, extortion, or drug dealing and also includes threats to conduct these activities. RICO requires a “pattern of racketeering,” which means a minimum of two racketeering activities.
To make a RICO claim, the litigant must establish the following:
- The existence of an enterprise
- That interstate commerce was affected by the enterprise
- That the enterprise employed or involved the defendant
- The defendant was engaged in racketeering activity
- A link between the defendant’s racketeering activity and the enterprise on at least two occasions
For criminal organizations, RICO allows the government to prosecute the leader, rather than picking off small time criminals who are following orders. Regular individuals can also bring claims under RICO in a civil lawsuit if they can demonstrate an organization engaged in a pattern of criminal activity, including mail and wire fraud, within the same year. In addition, the plaintiff must bring the RICO claim within four years of being injured or damaged by the alleged criminal activity.
Can Businesses Violate RICO?
According to the Department of Justice, RICO lawsuits can be filed against enterprises engaging in racketeering activities.
Under the law “[a]n ‘enterprise’ is defined as including any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.”
Businesses can certainly violate RICO if individuals associated with the organization engaging in racketeering activities.
RICO Lawsuits in the News
Indeed, a number of businesses unrelated to organized crime have faced RICO lawsuits.
E-cigarette company JUUL, along with its largest investor Altria, reportedly face hundreds of RICO lawsuits alleging that they targeted youth in vape advertising campaigns. According to the RICO lawsuits, the companies were attempting to get a whole new generation of kids and teens addicted to nicotine. The JUUL RICO lawsuits allege wire and mail fraud – a violation of RICO.
The notorious alleged sex offender Harvey Weinstein and his company also face allegations of RICO violations. In 2017, a group of plaintiffs alleged in a class action lawsuit that the Hollywood mogul sexually assaulted and harassed hundreds of women over the years. In addition, the RICO lawsuit claims that Weinstein’s employees and business partners engaged in a systematic cover-up of his crimes by threatening and intimidating victims and witnesses.
RICO violations are among the charges alleged in an emissions cheating scandal involving Bosch and Fiat Chrysler. The companies face multidistrict litigation claiming they lied to regulators and the public when they used a device that allowed Chrysler EcoDiesel trucks to fake emissions testing.
Payday lending companies have also been the target of RICO lawsuits. The lawsuits allege that certain payday loan companies used tribal names to skirt state laws that protect consumers from unfair lending practices.
Walmart has also been the target of a RICO lawsuit claiming that it extorted money out of accused shoplifters. According to the lawsuit, Walmart and a number of other retailers offer accused shoplifters a choice: take part in a “restorative justice” program or call the police. The plaintiffs allege that Walmart extorts between $400 and $500 from those who choose the program over law enforcement and preys upon fears of police and legal proceedings.
Filing a RICO Lawsuit
If successful, a RICO lawsuit can bring triple the amount in damages, making it a powerful tool for regular consumers to hold businesses and other organizations accountable for patterns of criminal activity. RICO is a complex law, however, and The New York Times warns that the requirements for filing a RICO lawsuit can be strict.
An experienced RICO attorney can help those who believe they have been victims of racketeering or other violations of the Act. An attorney can help ensure that a lawsuit establishes the factors necessary to make a RICO claim, including criminal activity, a pattern, and that the activity occurred within the correct timeline or statute of limitations.
RICO lawsuits can be a very valuable tool to make businesses accountable for their actions; however, they can be quite expensive, so it is important to ensure the requirements of the claim are established.
