RICOCharges

Key Definitions Under 18 U.S.C. § 1961

To understand RICO charges, you must understand the statute's key definitions, which are set forth in 18 U.S.C. § 1961.

Enterprise

"Enterprise" 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.

Two Types of Enterprises:

1. Legal Entities: Corporations, partnerships, limited liability companies, labor unions, government agencies, and other formally organized entities
2. Associations-in-Fact: Groups of individuals associated together for a common purpose, even without formal legal structure. This can include street gangs, organized crime families, or informal criminal networks.

Requirements for an Association-in-Fact Enterprise:

Courts have held that an association-in-fact enterprise must have:

• An ongoing organization with a structure
• Members functioning as a continuing unit
• An existence separate and distinct from the pattern of racketeering activity

Broad Interpretation: Congress intended RICO's enterprise element to be broadly construed. The enterprise need not have a hierarchical structure, formal charter, or explicit rules. Even loosely organized groups can constitute an enterprise if they have an ongoing structure and common purpose.

Interstate Commerce Requirement: The enterprise must be engaged in or its activities must affect interstate or foreign commerce. This requirement is satisfied in virtually all cases, as courts have interpreted it very broadly.

Pattern of Racketeering Activity

"Pattern of racketeering activity" requires at least two acts of racketeering activity, one of which occurred after October 15, 1970 (the effective date of RICO), and the last of which occurred within ten years (excluding any period of imprisonment) after the commission of a prior act of racketeering activity.

Two Requirements:

1. At Least Two Predicate Acts: A minimum of two acts of racketeering activity within a ten-year period
2. Pattern: The acts must be related and demonstrate continuity

Relatedness: Predicate acts are related if they have the same or similar purposes, results, participants, victims, or methods of commission, or are otherwise interrelated by distinguishing characteristics and are not isolated events.

Continuity: There are two types of continuity:

• Closed-Ended Continuity: A series of related predicates extending over a substantial period of time (courts have found periods as short as several months may suffice if the conduct demonstrates a pattern)
• Open-Ended Continuity: Conduct that poses a threat of continued racketeering activity into the future, either because it is part of an ongoing entity's regular way of doing business or because the nature of the predicates implies ongoing criminal conduct

Important Note: While two predicate acts are the statutory minimum, two acts alone may not always be sufficient to establish a "pattern." Courts examine the totality of circumstances to determine whether the acts form a pattern of racketeering rather than isolated criminal conduct.

Racketeering Activity (Predicate Offenses)

"Racketeering activity" means any of the acts or offenses listed in 18 U.S.C. § 1961(1). The statute divides racketeering activity into several categories:

State Offenses (18 U.S.C. § 1961(1)(A)):

Any act or threat involving the following crimes that is chargeable under state law and punishable by imprisonment for more than one year:

• Murder
• Kidnapping
• Gambling
• Arson
• Robbery
• Bribery
• Extortion
• Dealing in obscene matter
• Dealing in a controlled substance or listed chemical

Federal Offenses Under Title 18 (18 U.S.C. § 1961(1)(B)):

Any act indictable under numerous federal statutes, including but not limited to:

• Bribery (18 U.S.C. § 201)
• Sports bribery (18 U.S.C. § 224)
• Counterfeiting (18 U.S.C. §§ 471, 472, 473)
• Theft from interstate shipment, if felonious (18 U.S.C. § 659)
• Embezzlement from pension and welfare funds (18 U.S.C. § 664)
• Extortionate credit transactions (18 U.S.C. §§ 891-894)
• Fraud and related activity in connection with identification documents (18 U.S.C. § 1028)
• Fraud in connection with access devices (18 U.S.C. § 1029)
• Mail fraud (18 U.S.C. § 1341)
• Wire fraud (18 U.S.C. § 1343)
• Financial institution fraud (18 U.S.C. § 1344)
• Citizenship and naturalization fraud (18 U.S.C. §§ 1425-1427)
• Passport and visa fraud (18 U.S.C. §§ 1541-1544)
• Obstruction of justice (18 U.S.C. §§ 1503, 1510, 1511, 1512, 1513)
• Obstruction of criminal investigations (18 U.S.C. § 1510)
• Obstruction of state or local law enforcement (18 U.S.C. § 1511)
• Tampering with a witness, victim, or informant (18 U.S.C. § 1512)
• Retaliating against a witness, victim, or informant (18 U.S.C. § 1513)
• Theft of interstate or foreign shipments (18 U.S.C. § 659)
• Embezzlement from employee benefit plans (18 U.S.C. § 664)
• Sexual exploitation of children (18 U.S.C. §§ 2251, 2251A, 2252, 2260)
• Interstate transportation for illegal sexual activity and related crimes (18 U.S.C. §§ 2421-2424)
• Trafficking in contraband cigarettes (18 U.S.C. § 2341)
• White slave traffic (18 U.S.C. §§ 2421-2424)

Drug Offenses (18 U.S.C. § 1961(1)(D)):

Any offense involving the manufacture, importation, sale, or distribution of controlled substances punishable under federal law

Other Federal Statutes:

The statute also includes numerous other federal offenses, including:

• Money laundering (18 U.S.C. §§ 1956-1957) (added by 1986 amendment)
• Bankruptcy fraud (18 U.S.C. §§ 152-153)
• Securities fraud (15 U.S.C. §§ 78j, 78ff)
• Felonious dealing in firearms (18 U.S.C. § 922)
• Theft or embezzlement from employee benefit plans (18 U.S.C. §§ 664, 1027)
• Immigration violations (8 U.S.C. § 1324)
• Terrorism-related offenses (numerous provisions under 18 U.S.C. § 2332b(g)(5)(B))

Expansive List: The list of predicate offenses is extensive and continues to expand as Congress adds new federal crimes. Courts have noted that the breadth of predicate offenses reflects Congress's intent to provide prosecutors with flexible tools to combat diverse forms of organized criminal activity.

Unlawful Debt

"Unlawful debt" means a debt that is unenforceable under state or federal law in whole or in part as to principal or interest because the debt was incurred or contracted in connection with illegal gambling or illegal lending (loan sharking).

Criminal Penalties: 18 U.S.C. § 1963

Prison Sentence

A violation of any provision of 18 U.S.C. § 1962 is punishable by:

• Standard Maximum: Imprisonment for not more than 20 years
• Enhanced Maximum: Life imprisonment if the RICO violation is based on a racketeering activity for which the maximum penalty includes life imprisonment

Examples Where Life Imprisonment Applies:

• If the predicate acts include murder
• If the predicate acts include certain drug trafficking offenses that carry potential life sentences
• If the predicate acts include certain terrorism-related offenses

Fines

Defendants convicted under RICO shall be fined under Title 18, which currently provides:

• For individuals: Up to $250,000 per count, or twice the gross gain or loss from the offense, whichever is greater
• For organizations: Up to $500,000 per count, or twice the gross gain or loss from the offense, whichever is greater

Criminal Forfeiture (Mandatory)

Perhaps the most devastating aspect of a RICO conviction is mandatory criminal forfeiture. Upon conviction, the court must order forfeiture to the United States, irrespective of any provision of state law, of the following property:

1. Any Interest in the Enterprise (18 U.S.C. § 1963(a)(1)):

Any interest the defendant has acquired or maintained in violation of Section 1962, including:

• Ownership interests in businesses
• Real property used by the enterprise
• Contractual rights connected to the enterprise

2. Any Property Affording Source of Influence Over Enterprise (18 U.S.C. § 1963(a)(2)):

Any interest in, security of, claim against, or property or contractual right affording a source of influence over any enterprise that the person has established, operated, controlled, conducted, or participated in the conduct of, in violation of Section 1962, including:

• Stocks, bonds, and other securities
• Business interests and partnership shares
• Contractual rights
• Positions of authority or control

3. Any Proceeds from Racketeering Activity (18 U.S.C. § 1963(a)(3)):

Any property constituting, or derived from, any proceeds that the person obtained, directly or indirectly, from racketeering activity or unlawful debt collection in violation of Section 1962, including:

• Money and bank accounts
• Real property purchased with criminal proceeds
• Vehicles, boats, and aircraft purchased with criminal proceeds
• Investments made with criminal proceeds
• Any other property traceable to criminal proceeds

Property Subject to Forfeiture (18 U.S.C. § 1963(b)):

"Property" includes real property and tangible and intangible personal property, including rights, privileges, interests, claims, and securities. This broad definition encompasses virtually any asset.

Relation Back Doctrine: All right, title, and interest in forfeitable property vests in the United States upon commission of the act giving rise to forfeiture. This means that even if the defendant transfers the property to a third party after committing the RICO violation, the government may still be able to seize it, unless the third party can prove they were a bona fide purchaser for value without knowledge of the forfeitability.

Substitute Assets: If the property subject to forfeiture is unavailable due to its transfer, sale, destruction, or commingling with other property, the court may order forfeiture of substitute assets up to the value of the unavailable property.

Pre-Trial Restraining Orders and Seizures

Upon application of the government, courts may enter restraining orders, preliminary injunctions, or other protective orders to preserve property subject to forfeiture, including:

• Restraining orders prohibiting transfer of assets
• Requirements to post performance bonds
• Temporary seizure of property
• Appointment of receivers or trustees to manage business assets

Before Indictment: The court may issue restraining orders even before an indictment is filed if the government demonstrates probable cause that the property would be subject to forfeiture upon conviction.

After Indictment: Upon filing of an indictment alleging a RICO violation, the government may seek immediate restraint of assets to prevent dissipation or transfer.

Impact of Mandatory Forfeiture

RICO forfeiture is not discretionary. Once a defendant is convicted, the court must order forfeiture. This distinguishes RICO from many other criminal statutes where forfeiture is permissive. The mandatory nature of RICO forfeiture means that defendants face not only lengthy prison sentences but also the complete loss of businesses, property, and assets connected to the racketeering enterprise.

Civil RICO: 18 U.S.C. § 1964

While this article focuses primarily on criminal RICO charges, it is important to note that RICO also provides for civil remedies.

Civil Remedies Available

Injunctive Relief (18 U.S.C. § 1964(a)):

Federal courts have jurisdiction to prevent and restrain RICO violations by issuing orders including:

• Ordering divestiture of interests in enterprises
• Imposing restrictions on future activities
• Prohibiting engagement in the same type of business as the enterprise
• Ordering dissolution or reorganization of enterprises

Private Civil Actions (18 U.S.C. § 1964(c)):

Any person injured in their business or property by reason of a RICO violation may sue in federal court and shall recover:

• Treble damages (three times actual damages)
• Costs of the suit
• Reasonable attorney's fees

Statute of Limitations: Civil RICO claims are generally subject to a four-year statute of limitations.

Defenses to RICO Charges

Defending against RICO charges requires a sophisticated understanding of federal criminal law, complex legal theories, and meticulous case preparation. Given the severity of potential penalties, including decades in prison and forfeiture of all assets, mounting an aggressive defense is essential. At the Law Offices of Matthew Cohan, our former prosecutor brings insider knowledge of how federal prosecutors build RICO cases, allowing us to identify weaknesses and develop effective defense strategies.

Common and effective defenses to RICO charges include:

Challenging the Enterprise Element

No Enterprise Existed: The defense may argue that no qualifying enterprise existed as defined by RICO. This involves demonstrating that:

• The alleged group lacked sufficient structure, continuity, or organization
• The alleged enterprise had no common purpose
• The group was merely a loose association of individuals engaged in separate criminal acts
• There was no ongoing organizational structure or hierarchy

Enterprise and Defendant Are Not Distinct: In Section 1962(c) cases, the Supreme Court has held that the defendant and the enterprise must be separate entities. If the defendant is the sole member of the alleged enterprise, this may defeat liability under Section 1962(c).

Challenging the Pattern of Racketeering Activity

Insufficient Predicate Acts: The defense may challenge whether the prosecution proved beyond a reasonable doubt that the defendant committed at least two predicate acts of racketeering.

Acts Not Related: The defense may argue that the alleged predicate acts are not sufficiently related to constitute a pattern. If the acts involved different victims, different methods, different purposes, and different participants, they may be isolated criminal acts rather than a pattern.

No Continuity: The defense may argue that the alleged predicate acts do not demonstrate continuity. If the acts:

• Occurred over a very brief time period
• Were isolated incidents rather than ongoing conduct
• Do not pose a threat of continued criminal activity
• Were not part of the regular way of conducting business

Then they may not constitute a pattern sufficient to support RICO liability.

Challenging Defendant's Role in the Enterprise

No Participation in Enterprise Affairs: In Section 1962(c) cases, the defendant must have conducted or participated in the conduct of the enterprise's affairs. The defense may show that:

• The defendant was not employed by or associated with the enterprise
• The defendant played no role in directing or managing the enterprise
• The defendant's conduct was unrelated to the enterprise's affairs
• The defendant was merely a victim or customer of the enterprise

"Operation or Management" Test: While defendants need not be high-level managers to be liable, they must have participated in the operation or management of the enterprise itself. Low-level employees who do not direct enterprise affairs may escape liability.

Challenging the Interstate Commerce Element

While the interstate commerce requirement is broadly interpreted and easy for prosecutors to satisfy, in rare cases the defense may successfully argue that:

• The enterprise was purely local in nature
• The enterprise's activities had no effect on interstate or foreign commerce
• The government failed to prove the interstate commerce nexus

Lack of Knowledge or Intent

No Knowledge of Enterprise: The defendant may argue they had no knowledge of the enterprise's existence or criminal nature. For conspiracy charges under Section 1962(d), the defendant must have knowledge of the essential nature and scope of the enterprise.

No Intent to Further Enterprise Goals: The defendant may show they did not intend to further the enterprise's criminal objectives or participate in its affairs through racketeering activity.

Legitimate Business Activity: The defendant may demonstrate that their conduct was legitimate business activity unconnected to any criminal enterprise.

Challenging Predicate Offenses

Insufficient Evidence of Predicate Acts: Each predicate act must be proven beyond a reasonable doubt. The defense may challenge the evidence supporting each alleged predicate act, arguing:

• The conduct did not occur
• The conduct occurred but does not constitute the charged offense
• The evidence is insufficient to prove guilt beyond a reasonable doubt
• The government's witnesses are not credible

Statute of Limitations on Predicates: While RICO itself has a five-year statute of limitations, some predicate acts may fall outside their own applicable limitations periods.

Constitutional Challenges

Fourth Amendment Violations: Evidence obtained through illegal searches and seizures must be suppressed. The defense may challenge:

• The validity of search warrants
• Warrantless searches and seizures
• Electronic surveillance and wiretaps
• GPS tracking and other location monitoring

Fifth Amendment Violations: The defense may challenge:

• Coerced confessions or statements
• Denial of right to remain silent
• Improper use of immunized testimony
• Double jeopardy issues if defendant was previously convicted or acquitted of predicate acts

Sixth Amendment Violations: The defense may challenge:

• Denial of right to counsel
• Ineffective assistance of counsel
• Violation of right to confront witnesses

Selective Prosecution: In rare cases, the defense may argue that the defendant was selectively prosecuted based on impermissible considerations such as race, religion, or exercise of constitutional rights.

Withdrawal from Conspiracy

For conspiracy charges under Section 1962(d), a defendant may establish an affirmative defense by proving they withdrew from the conspiracy before any overt acts were committed in furtherance of the conspiracy. However, because RICO conspiracy does not require an overt act, withdrawal defenses can be challenging.

Challenging Forfeiture

Even if convicted of RICO violations, defendants may challenge forfeiture by:

• Arguing that specific property was not connected to the enterprise or racketeering activity
• Demonstrating that property was acquired with legitimate funds, not criminal proceeds
• Showing that the extent of forfeiture would constitute excessive fines under the Eighth Amendment
• Proving that third parties have superior legitimate interests in the property

Why Representation by a Former Prosecutor Matters

RICO cases are among the most complex and serious federal prosecutions. They typically involve:

• Multiple defendants and alleged co-conspirators
• Voluminous documentary evidence
• Extensive electronic surveillance, including wiretaps
• Financial records tracing funds through multiple transactions
• Testimony from cooperating witnesses and informants
• Complex legal theories about enterprise structure and racketeering patterns
• Years of investigation before charges are filed