How Racketeering Works in 3 Easy Steps
Legal terms often have complicated definitions that are difficult for most to fully understand. Many people don't know what makes a felony different from a misdemeanor, or what exactly constitutes a legally binding contract. In this guide we explain, in simple terms, what racketeering is. This video was made with Ezvid Wikimaker.
What is Racketeering?
Racketeering is crime that is organized or planned, and repeated over time. If you're not sure whether or not something counts as racketeering, look for these three elements:
- A Group: It can be a business, a family, or even a street gang
- A Crime: One or more of the 35 crimes listed by RICO
- A Pattern: At least two crimes committed within a span of 10 years
What is RICO?
RICO stands for the Racketeer Influenced and Corrupt Organizations act. It was passed into law in 1970 in response to a problem with organized crime in the United States. Before RICO, it was difficult to arrest mob bosses. If a boss had underlings carrying out their dirty work, but didn't personally do anything illegal, they were unlikely to have to serve any jail time. But with the new statute in place, law enforcement could convict a boss by proving that they own or manage a group that participates in criminal activity.
Which Crimes are Considered Racketeering?
Here are a few of the crimes that are listed under RICO:
- Money laundering
- Witness tampering
- Mail & wire fraud
- Interstate transportation of stolen vehicles
- Waste management fraud
How RICO Affected the Mafia
Racketeering is most often associated with the mafia, but it can be done by any business or association that has a pattern of committing certain crimes. If a group of people commits at least two crimes listed by RICO during a single decade, racketeering has occurred.
Racketeering is a class of crime in which organized groups of people systematically conduct illegal business activities for profit. The traditional example is the "protection racket." In this scheme, a gang or other group offers home and business owners protection against vandals for a fee. People or businesses who refuse to pay can become the gang's vandalism targets. The group creates the very problem for which it is selling a solution.
Racketeering is far more encompassing than this example though. Federal law names 35 crimes that can fall under its definition. The list includes bribery, counterfeiting, extortion, sex trafficking, illegal gambling, arson, and many more.
If you are a fan of mobster movies or TV programs, you have seen this type of crime in action. The organized group is often a family in these shows, but modern street gangs would also fit the definition. Their criminal activities range from prostitution and murder for hire to white-collar crimes like mortgage and insurance fraud.
While the subject seems complex, the basics are not terribly difficult. Let's break it down and see how it works in three easy steps. Racketeering occurs when all of the following are true.
#1. A group exists. Racketeering is usually conducted by organized criminal enterprises. These are defined as "any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact ..." This broad definition gives law enforcement far-reaching power to go after groups that might otherwise escape prosecution.
#2, The enterprise commits one or more of the 35 crimes listed by the law that defines racketeering. Possibilities include money laundering, witness tampering, mail and wire fraud, interstate transportation of stolen vehicles, embezzlement, and more. The statute targets traditional organized crime activities, such as prostitution and waste management fraud. It also broadened the definition so that criminal activities not normally associated with syndicates could be prosecuted.
#3, The enterprise shows a pattern of illegal activity. The law defines a pattern as at least two acts of crimes defined by the racketeering statute which are committed not more than ten years apart.
Historically it was difficult to prosecute criminals for racketeering because the people in charge of the organization were not the ones committing the crimes. Mob bosses had hit men and "soldiers" to carry out their orders, so it was notoriously difficult to link them to illegal activity.
A federal law passed in 1970 changed all of that. The Racketeer Influenced and Corrupt Organizations act, or RICO, was designed to punish the use of an enterprise to commit crimes. It gave law enforcement the tools needed to go after the leaders of syndicates such as gangs and classic mobs. Under this statute, prosecutors no longer have to prove that an individual was directly involved in a crime. They merely have to prove that he or she manages or owns a group that participates in criminal activity to be convicted of racketeering.
RICO made it a crime to profit in any way from a group's illegal actions. So not only would the original act, such as drug trafficking, be against the law, but so would receiving money from that activity. A person who profits from a group's actions could be charged with racketeering under RICO even if that person did not personally commit the crimes.
Racketeering cases are not unusual. In a 2017 example, two former Baltimore police detectives pleaded guilty to the crime in an ongoing investigation. They were part of a group of seven officers who allegedly schemed to repeatedly commit such illegal acts as robbery, extortion, and overtime fraud. In another case, a gang member from central Ohio was prosecuted for conspiracy and murder in aid of racketeering.
White-collar crimes are also covered by RICO. In a 2017 Florida case, a former stock broker was convicted of racketeering for defrauding a widow of more than $1,000,000 in life insurance proceeds. In Indiana, former executives of a nursing home management company were charged with racketeering for embezzling an estimated $16 million from the business.
While the details of the law governing it can be complex, racketeering itself is easy to understand. It contains three elements: an enterprise, one or more crimes, and a pattern of criminal activity over time. When these three components are present, racketeering has occurred and group members or managers can be prosecuted under RICO. Cases do not usually involve stereotypical gangsters. Anyone who uses a business in any way to commit two or more crimes could find themselves in trouble with the law. Each conviction carries a sentence of up to 20 years in prison.