Monday, June 23, 2008

White Collar - Proving Civil RICO

The Racketeer Influenced and Corrupt Organizations ("RICO") statute provides a powerful tool for civil litigants. The act is not merely a governmental weapon to use against racketeers and other criminals.

In the civil context the statute allows for the recovery of triple damages and attorneys' fees by the successful plaintiff. A RICO suit must prove the following by a preponderance of the evidence: 1) conduct violating a RICO predicate offense (mail and wire fraud are most common in the civil RICO context), 2) the existence of an enterprise, and 3) a pattern of racketeering activity.

The predicate for a RICO suit must involve predicate activity that would violate specified statutes. These can be either federal or state statutes. In suits evolving from business relationships, the most popular predicate acts involve wire fraud, mail fraud, and to a lesser degree transportation of stolen goods in interstate commerce.

The enterprise must exist separately from the criminal activity itself. In other words the enterprise cannot be created simply to commit the crime. Thus, an enterprise is more than a mere criminal conspiracy. A RICO complaint should sufficiently allege the characteristics of the association that make it an enterprise. Lastly, the enterprise itself may be either a legitimate or illegitimate entity.

The "pattern of racketeering activity" requires two acts of racketeering activity within a 10 year period. Moreover, the acts must bear some relationship to each other and indicate a threat of continuing unlawful activity. The continuity requirement may be either closed or open ended. It may be a pattern of activity with a likelihood of future repetition or a standard method of conducting an activity.

While RICO is a complex statute, it offers great rewards to plaintiffs who are represented by counsel with significant RICO experience.

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