RICO, passed in 1970 as part of the Organized Crime Control Act of that year, is nearing its twentieth birthday. necessarily going to be a happy one. In fact, 'tis the season for critics of RICO to be, if not jolly, at least highly active. This subcommittee is now beginning hearings on RICO reform, the popular and business press has been filled with debates and criticisms involving fairly arcane points of civil and criminal law, and the pressure has been building for changes in the statute. But as the pressure for change has built up, and the debate has moved away from judges and law professors into newspaper columns and the political arena, increasingly dubious claims have been heard on both sides. I thought it might be useful to give a kind of consumer's guide to some of the arguments you're likely to hear during the coming hearings. Perhaps if the members of the committee are forearmed with accurate information, they will be better prepared to question skeptically and incisively the various spokespeople for special interests who are likely to appear. I want to start with some common myths that seem to permeate the debate. Myth number one is one that the critics of RICO tend to foster. It is frequently argued that RICO was originally designed to make it a crime to be a member of organized crime, and that it is therefore inappropriate to use it against so-called "white collar" criminals. Not true. The original bills that grew into RICO, and the first version of RICO presented to Congress, were both narrower in focus and critically different from an attempt to criminalize membership in a criminal organization. The point of the provisions, according to Senators Hruska and McClellan, their original sponsors, was to cope with the specific threat of organized crime's infiltration into legitimate business. The main thrust of the law was to punish the investment of criminal profits in a legitimate "enterprise" or the acquisition of an interest in such an enterprise by extortion or fraud. 1 This purpose is manifest in what were at one point the only two substantive crimes created by RICO, and what remain in the statute as 18 US C. §§1962 (a) and (b). These provisions punish (a) acquiring an interest in an enterprise with the profits of a pattern of racketeering 1 In order to keep this statement readable, I have tried to keep footnotes and other citations to a minimum. Documentation for many of the assertions in this statement can be found in Lynch, RICO: The Crime of Being a Criminal, 87 Colum. L. Rev. 661 and 87 Colum. L. Rev. 920 (1987). ol (b) acquiring such an interest by means of such a pattern. Now, these provisions are not terribly well-known, because they are so little used. Nearly all civil and criminal RICO cases are brought under a different section of the law, §1962 (c), which was not added until later. But it's important to understand those sections, because they are the keys to understanding three powerful and controversial aspects of the statute. First: the enterprise. An enterprise is whatever organized crime can infiltrate. But Congress knew that that could be almost anything. Functionally, it could be a business, a labor union, a government bureau. Formally, it could be a corporation, a partnership, an unincorporated association, a subdivision of some larger entity, even a sole proprietorship. And so, in order to cover the range of legitimate activities that organized crime could seek to invade, the definition of enterprise had to be extremely broad encompassing. .. so broad as to be virtually allThe word was deliberately chosen to be as broad and vague as possible, to cover every possible subject of organized crime penetration, and the definition given to it was equally open-ended. 2 2 18 U.S.C. §1961(4): "'[E]nterprise' includes any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact, although not a legal entity. Note that even this extraordinarily general description is not technically a definition the use of the word "includes" suggests this is an illustrative list of types of enterprise, not a closed-end definition. Second the pattern of racketeering The central criminal activity in sections (a) and (b) is the penetration of the enterprise, not the pattern of racketeering. In this context, it makes sense that we don't the definition of pattern should be broad. Suppose & mobster is muscling into a trash collection business by extortion and violence want to have to wait for a long series of acts to invoke RICO. Two is - plenty, and maybe even one should suffice.3 And we aren't very concerned about whether the acts display sufficient "continuity and relationship" to form a "pattern" either: acts directed at acquiring an interest in a particular enterprise would by definition display those characteristics. The same is true for subsection (a): the act of investing the proceeds provides a critical unifying element to whatever crimes form the pattern. The main point is the investing of proceeds from a series of crimes, and if what constitutes a series is a touch vague, or the list of crimes subject to the rule is extremely long, we still don't have to worry about the law escaping a fairly specific context. It is Third: the mandatory forfeiture of the interest in the enterprise. Once again, in the context of sections (a) and (b), this is a completely logical, and intrinsically proportional, punishment. logical, because the whole point of the statute is to drive the mobster out of the legitimate business. So like an antitrust remedy remember, applying an antitrust model to the anticompetitive practices of the mob in legitimate enterprises was the original theory of RICO 3 and As the acquisition of an interest in an enterprise by even a single act of loansharking is enough to trigger RICO another little used part of the law. See 18 U.S.C. §1962(b). divestiture is the logical response. You can't take the enter .. And the of the crook, but you can take the crook out of the enterprise. punishment is intrinsically proportional to the wrong done: the size of the mobster's interest in the enterprise is either the percentage of the business he owns due to investment of criminal proceeds in which case the value of his interest is directly proportionate to the criminal profits used to acquire it or it is the interest he obtained by acts of fraud or extortion, in which case it is the direct fruit of such crimes. This package of laws may or may not have done any good in the fight against organized crime. At the time, some critics were skeptical. If the government can prove that the mobster committed the pattern of crimes that produced the profits, why (except in unusual cases for example, when the statute of limitations precluded prosecution) would you take on the additional burden of tracing the proceeds? And if the mobster has obtained a business interest by force or fraud, proof of the RICO violation by definition includes proof of other crines. Certainly, But as things developed, these provisions have not been much used. whether or not the criminalization of infiltration would have been. particularly valuable, the provisions aimed at such infiltration at least formed a tight, coherent, specific response to a species of criminal activity the infiltration of legitimate enterprises that was of concern to the Congress and with which the criminal law did not at the time deal. |