12 1 SEC. 4. ADDITIONAL PREDICATE OFFENSES. 2 Section 1961(1) of title 18, United States Code, is 3 amended (1) in subparagraph (A), by inserting "prostitution involving minors," after "extortion,"; (2) in subparagraph (B), by— (A) striking "Section 201" and inserting "Section 32 (relating to destruction of aircraft or aircraft facilities), section 81 (relating to arson), section 201"; (B) inserting before ", section 1084" the following: ", section 1029 (relating to fraud and related activity in connection with access devices),"'; (C) inserting before", section 1953" the following: ", section 1952A (relating to murder-forhire)"; (D) inserting before ", section 2320" the following: ", section 2318 (relating to counterfeit materials)"; and (E) inserting before ", (C)" the following: ", and chapter 51 (relating to homicide), chapter 73 (relating to obstruction of justice), and chapter 110 (relating to sexual exploitation of children)"; (3) by striking "or" before "(E)"; (4) by striking the semicolon at the end thereof and inserting a comma; and 1 2 3 13 (5) by adding at the end thereof the following: "(F) section 134 of the Truth in Lending Act, or (G) section 5861 of title 26 (relating to firearms control);". 4 SEC. 5. FEDERAL JURISDICTION. 5 Section 1965 of title 18, United States Code, is 6 amended 7 8 9 10 11 12 13 14 15 16 17 18 (1) in subsection (b) by striking "residing in any other district"; (2) in subsection (b) by striking "in any judicial district of the United States by the marshal thereof." and inserting "anywhere the party may be found."; (3) in subsection (c) by striking "in any other judicial district" and inserting "anywhere the witness is found"; (4) in subsection (c) by striking "in another district"; and (5) in subsection (d) by striking "in any judicial district in which" and inserting "where". 19 SEC. 6. STATE JURISDICTION. 20 Chapter 96 of title 18, United States Code, shall not be 21 construed to confer jurisdiction to hear a criminal or civil 22 proceeding or action under its provisions on a judicial or 23 other forum of a State or local unit of government. 14 1 SEC. 7. EFFECTIVE DATE. 2 (a) GENERAL RULE.-The amendments made by this 3 Act shall apply to any civil action commenced after the date 4 of enactment. 5 (b) EXCEPTION.-In any pending action under section 6 1964(c) of title 18, United States Code, in which a person 7 would be eligible to recover only under paragraph (2)(A) of 8 section 1964(c) as amended by this Act because the person 9 does not meet the requirements of either paragraph 10 (2)(B)(i)(T), paragraph (2)(B)(ii), or paragraphs (2)(B)(iii) (I) 11 and (I) of section 1964(c), if this Act had been enacted 12 before the commencement of that action, the recovery of that 13 person shall be limited to the recovery provided under such 14 paragraph (2)(A), unless in the pending action— (1) there has been a jury verdict or district court judgment, establishing the defendant's liability, or settlement has occurred; (2) the plaintiff is a charitable corporation; or (3) the court determines that, in light of all the circumstances, such limitation of recovery would be clearly unjust. Mr. CONYERS. RICO makes it criminal to use income derived from a pattern of racketeering activity to control or acquire an interest in an enterprise. It also provides that the term "pattern of racketeering activity" requires at least two acts of racketeering activity within 10 years. Predicate offenses include large numbers of crimes ranging from murder, extortion, drug dealing and gambling to cigarette bootlegging. In one important Supreme Court decision, the Sedima case, the Supreme Court rejected any requirement of a prior conviction as a prerequisite to a civil RICO suit. It also rejected a special racketeering injury requirement. In a footnote, however, the Court invited lower courts to narrow the definition of "pattern of racketeering activity." Section 1964 of title 18 authorizes civil actions by any person injured in his business or property by a RICO violation. Civil plaintiffs who bring successful suits can recover treble damages and attorney fees. During the last Congress, the subcommittee held a number of hearings on RICO and heard the testimony of over 50 witnesses which included civil RICO plaintiffs, their attorneys, civil RICO defendants and their attorneys, prosecutors, criminal defense lawyers, States attorney general, members of the judiciary, public interest groups, and the American Bar Association. Recently the business community had expressed the concern for what it perceived to be a rising number of civil RICO suits. Because there is no requirement of a criminal conviction before such civil suit is filed, legitimate businesses were complaining that RICO suits are being used to turn minor disputes into Federal causes of action, and to provide plaintiffs with powerful tools that put out of balance the power that is essential to the adversarial process. Despite recent concern for the supposedly rising number of civil RICO cases alleging instances of business frauds, the fact remains that RICO is an essential tool in the fight against crime and fraud that permeates almost every aspect of the world around us. The business community has been pressuring Congress to make changes in RICO. Recent events, however such as the revelation of the extent of insider trading in our financial capitals, demonstrate the need for a strengthening in some view rather than a weakening of any of the RICO provisions. Any weakening of the RICO statutes or the creation of a special exemption for certain industries, the securities industry or anybody else, would leave the average individual even more unprotected from the larger scale frauds that work to the consumer's financial detriment. Any reduction in the treble damage provisions would probably work a similar detriment to the consumer or plaintiff. The policies underlying RICO depend upon private enforcement for successful vindication and enhanced damages are an essential incentive to private enforcement of the RICO law. Today we begin a discussion that will give a backdrop to the subcommittee for any consideration in changes or revision of the civil RICO provisions. This has been a very important matter, one of the most important that the subcommittee has dealt with. And it has gained quite a bit of attention in the course of the hearings. The House and the Senate, have all acted in one way or the other on this matter, but it is still before this subcommittee, and the subcommittee intends to retain its jurisdiction in this matter. Prof. G. Robert Blakey, the O'Neill Professor of Law at the University of Notre Dame Law School, a person not only instrumental in drafting the original RICO provisions, but in his role as chief counsel of the Senate Subcommittee on Criminal Laws and Procedures, may well have been the moving force in originating the drafting of these articles. Professor Blakey has written and lectured extensively on this subject, and because of his seminal influence in this legislation and his continued concern in following this matter, we are very pleased to have him begin this hearing, and I must start off by saying that we apologize for not having you into the 99th session of Congress' hearings, Professor Blakey. Professor Blakey has a prepared statement which will be, of course, made part of this record without any objection. And we would invite you, Professor Blakey, to make any remarks over and above your prepared statement. Thank you very much for joining us this morning. STATEMENT OF PROF. G. ROBERT BLAKEY, NOTRE DAME Mr. BLAKEY. Thank you, Mr. Chairman. My name is G. Robert Blakey. I am a professor of law at the Notre Dame Law School. There is a sense in which I am returning home when I am appearing before this committee. In addition to working for the Senate a number of years ago, as I am sure you will recall, I also worked for the House Select Committee on Assassinations, so I am sort of schizophrenic up here. I have been a Hill person on both sides so that I have a great fondness for the Senate and House Judiciary Committees, and that probably makes me schizophrenic. Since 1970, when I was a staff person involved in drafting RICO, and I will make it very clear: I worked for Senator John McClelland and Senator Hruska. Sometimes it is said that I am the author of this statute, and that is just simply not true. As you well know, the people up here work for other people, and we do not do it ourselves. Since 1970, approximately 27 States have enacted RICO statutes, and I have been involved in helping draft at least 17 of those statutes. As you noted, I have written widely on RICO, and I have taught Federal, State and local prosecutors RICO. I have been in seminars with plaintiffs and defendants. I have myself represented both plaintiffs and defendants in RICO cases, both legitimate businesses as plaintiffs and legitimate businesses as defendants. I have been involved in government private suits. What I am saying in short, Mr. Chairman, is since 1970, I have had day-to-day contact with this statute both as a litigant and as a scholar. And what I would like to share with you this morning is my judgment on more or less where we are. I appreciate your incorporation of my statement in the record. I have also two other documents that I would ask be incorporated in the record. One of them is a statistical study of the current RICO cases, and the other is a letter dated March 24, 1987, from the Administrative Office of |