Duane Morris Class Action Review - 2023 - Report - Page 293
CHAPTER 18
RICO Class Actions
I.
Executive Summary
The Racketeer Influenced and Corrupt Organizations Act, commonly referred to as the
RICO, is a federal law that provides for extended criminal penalties and a civil cause of
action for acts performed as part of an ongoing criminal enterprise. The Congress
enacted the RICO in 1970 in an attempt to combat organized crime in the United States.
The law has since been used to prosecute a variety of offenses, including securities
fraud, money laundering, and even environmental crimes. The RICO provides for both
criminal and civil penalties. The criminal penalties include up to 20 years in prison and
fines of up to $250,000. The civil penalties allow for treble damages, which means that
a person who has been harmed by a violation of the RICO can recover three times the
actual damages sustained.
The RICO allows the government to prosecute individuals associated with criminal
activity, such as the leaders of crime organizations. For criminal RICO charges, a
defendant must have taken part in racketeering activity related to some sort of business.
This can include anything from murder or arson, to kidnapping and drug dealing. Mail
and wire fraud are also crimes that fall under the criminal RICO statute. Crimes of this
nature are called “predicate offenses,” and to charge someone under the criminal RICO
law, an individual must have committed two predicate crimes with the same business
within a span of 10 years.
In the context of a civil RICO claim, a plaintiff must prove three elements:
Criminal Activity – the plaintiff must show the defendant committed a RICO crime.
1. Pattern of Criminal Activity – the plaintiff must show that the defendant committed
a pattern of at least two crimes. Patterns can include everything from the same
victim to the same methods used to commit the crimes, or that the crimes
happened within the same year.
2. The statute of limitations – in civil RICO cases, the statute of limitations is four
years, which starts to run the moment the victim discovers the damages.
For the elements of a civil RICO claim, the plaintiff must prove the existence of an
“enterprise.” The defendants are not the enterprise; in other words, the defendants and
the enterprise are not one and the same. Instead, there must be one of four specified
relationships between the defendants and the enterprise, including: (i) either the
defendants invested the proceeds of the pattern of racketeering activity into the
enterprise (18 U.S.C. § 1962(a)); (ii) the defendants acquired or maintained an interest
in, or control of, the enterprise through the pattern of racketeering activity (subsection
(b)); (iii) the defendants conducted or participated in the affairs of the enterprise
“through” the pattern of racketeering activity (subsection (c)); or (iv) the defendants
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Duane Morris Class Action Review – 2023
