CRS-11

for 'Criminal Activity"" 124 U.Pa.L.Rev. 192(1975).

"The Precarious Constitutionality of RICO Civil Remedies" 2 N.I11.U.L. Rev. 413(1982).

"RICO Post-Indictment Restraining Orders: The Process Due Defendants" 60 N.Y.U. L.Rev. 1162 (1985).

"The RICO Nexus Requirement: A Flexible Linkage" 83 Mich.L.Rev. 571(1984).

"What Have They Done to Civil RICO: The Supreme Court Takes the Racketeering Requirement Out of Racketeering" 35 Am.U.L. Rev. 821(1986).

APPENDIX 5.-FACTS AND MYTHS CONCERNING RICO, SUBMITTED BY PROF. G. ROBERT BLAKEY

White-collar crime is 'the most serious and
all-pervasive crime problem in America today
1 Although this statement was made
in 1980, there is no reason to think that the
problem has diminished in the meantime.

Braswell v. United States, 108 S.Ct. 2284, 2294 n.9 (1988) (Rehnquist, C.J.)

1.1

Myth: The Courts Are Being Inundated With New

Litigation Under Civil RICO

1.2

Fact: Civil RICO Litigation Is Neither Wholly New

Nor of Floodgate Proportions.

5

2.2

Fact: RICO was Designed, Not Only To Deal With

Organized Crime, But Also Other Forms of

Enterprise Criminality

6

3.1

Myth: RICO Was Designed To Deal Only With The

Infiltration Of Legitimate Business

8

3.2

Fact: RICO Was Designed, Not Only To Deal With The

Infiltration of Legitimate Business, But Also

Other Forms of Enterprise Criminality

8

4.1

Myth: RICO Applies To Every Business Transaction

That Uses the Mails or Phones

9

4.2

Fact: RICO Applies Only to Pattern of Unlawful

Behavior, Not Single Transactions

9

5.1

5.2

6.1

6.2

7.1

7.2

8.1

Myth: RICO Applies to Mere Contract Disputes

Fact: RICO Requires a Showing of Bad Faith, That

is, A Good Faith Dispute Is Not Within RICO

Myth: The General Remedies Against Litigation

Abuse Are Inadequate .

Fact: The General Remedies Against Litigation

Abuse Are Adequate.

Myth: State Common Law Jurisprudence Alone Is

Adequate to Deal With Fraud

Fact: State Common Law Jurisprudence Alone Is Not

Adequate to Deal with Sophisticated Forms of Fraud

Myth: Since Law Enforcement Agencies Can be

Depended Upon to Prosecute the Real Malefactors

Private Enforcement Mechanisms Are Not Needed

Fact: Law Enforcement Can Not Do the Whole Job

Myth: Multiple Damage Suits Are Not Needed

Fact: Multiple Damage Suits Are The Heart of the

Necessary Private Enforcement Mechanism

10.1 Myth: The Racketeer Label Leads Legitimate

8.2

9.1

9.2

Business People to Settle Garden Variety Fraud

Claims For Extortionate Amounts

21

10.2 Fact: The Racketeer Label Inhibits, Not

Facilitates, Settlement; Fraud Is Not a Garden

Variety Problem

21

11.1 Myth:

Private Civil RICO Might not Lend Itself to
Sensible A Construction, Since It was an Ill-
Designed After-thought to a Criminal Statute
11.2 Fact: Private Civil RICO was Part of the Design
of The Statute from the Beginning

26

26

28

1

I.

Introduction.

On February 23, 1989, Senator Dennis DeConcini and Congressman Rick Boucher introduced S. 438/H.R. 1046, "The RICO Reform Act of 1989."1 In large measure, the proposed legislation would set aside the right of victims of patterns of criminal conduct under RICO, Title IX of the Organized Crime Control Act of 1970, to obtain adequate civil redress. Drafted at the

request of representatives of the securities and commodities industries and the accounting profession, the proposed legislation, in most litigation under the 1970 Act, would:

(1)

reduce the measure of damages from treble to
actual damages,

(2)

eliminate the provision for counsel fees for a
prevailing party,

(3)

exclude the securities and commodities industries
from the scope of the 1970 Act, and

(4)

to pending

apply its provisions retroactively
litigation.

1 See, e.g., 135 Cong. Rec. S 1652-57 (daily ed. Feb. 23, 1989) (introduction of S. 438). Paradoxically, Senator DeConcini is chairman of the Special Committee on Investigations of the Select Committee on Indian Affairs, which is looking into allegations of wide-spread fraud against American Indians. See

S. Rep. No. 100-510, 100th Cong., 2d Sess (1988).

The

investigation grew out of a series of stories that appeared in the Arizona Republic. See editions of Oct. 4-11, 1987. The paper outlines, among other things, that "oil companies have looted billions of dollars worth of oil and gas from Indian and federal lands, sometimes aided by negligent or corrupt government officials." Id., Oct. 4, 1987, p. 3, col. 1. The oil companies will be one of the chief beneficiaries of the DeConcini legislation; the Indians will be one of the chief losers. See also N.Y. Times, May 10, 1989, p. 7, col. 3 (Chris Tucker, expert testifying before DeConcini Committee, on oil theft by oil companies: "Its very easy to steal from Indians. There are no checks and balances."); id. May 5, 1989, p. 16, col. 6 (Indians cheated out of millions of dollars of oil and oil royalties).

2 Appendix A includes a chart that compares the "RICO Reform Act of 1989" to present law.

Until the recent investigation and indictment of Michael R. Milken, former head of Drexel Burnham Lambert Inc.'s junk bond operations, on 98 counts of RICO and criminal securities fraud for cheating his clients, the public controversy over RICO