RICO is a federal statute providing extended penalties for acts performed as part of an ongoing criminal organization. Although the primary reason for enacting the statute was to deal with organized crime, Congress never intended RICO to apply only in criminal cases.
In certain circumstances, RICO can be an effective tool in civil cases for circumventing a corporation and suing the bad actor individuals running the corporation. RICO also provides a powerful litigation hammer because if successful at trial, a plaintiff in a civil case will receive three times his or her actual damages plus attorneys’ fees, litigation expenses, and costs.
To assert a civil RICO claim, a plaintiff’s business or property must have been damaged by reason of the defendant engaging in a “pattern of racketeering activity.” A plaintiff also must prove the existence of an “enterprise” that is separate and apart from the defendant; the defendant and the enterprise cannot be the same entity.
A pattern of racketeering activity consists of at least two acts drawn from a list of 35 crimes—known as “predicate acts”—committed within a 10-year period, provided such acts are related in one of four specified ways to an enterprise. The most common predicate acts in civil RICO cases are mail fraud, wire fraud, and bank fraud. A defendant need not be criminally convicted of a predicate act before a plaintiff may bring a civil RICO claim.
An enterprise may be a single entity—such as a corporation, partnership, estate, trust, or other organization—or a relatively loose-knit group of people or legal entities operating as an enterprise, known as an “association-in-fact.” A RICO enterprise must be engaged in, or affect, interstate commerce.
The four specified relationships between a defendant and an enterprise giving rise to a civil RICO claim are where (a) a defendant invests the proceeds of a pattern of racketeering activity in an enterprise (i.e., money laundering), (b) a defendant acquires or maintains an interest in, or control over, an enterprise through a pattern of racketeering activity, (c) a defendant manipulates an enterprise for purposes of engaging in, and benefiting from, a pattern of racketeering activity, or (d) two or more defendants conspire with each other to engage in (a), (b), or (c).
The most common civil RICO claim is (c)—where a defendant manipulates an enterprise for purposes of engaging in a pattern of racketeering activitythat damages the business or property of another. The classic fact pattern in a civil RICO case is where the officers of a corporation engage in a pattern of mail fraud or wire fraud through the corporation that harms a plaintiff’s business or property. In this scenario, the corporate officers (the RICO defendants) conduct the business of the corporation (the RICO enterprise) through a pattern of mail fraud or wire fraud (the predicate acts) in such a way as to harm the plaintiff’s business or property.
Edis Trucking, Inc. v. Pilot Corporation; No. 1:13-cv-03294 (N.D. Ill.) (mail fraud and wire fraud) (represented trucking company in a class action against Pilot Flying J to secure underpaid fuel rebates) ($40+ million settlement).
In re Honey Transshipping Litigation; No. 1:13-cv-02905 (N.D. Ill.) (represented independent honey producers against importers that illegally imported transshipped honey from China and other illicit-source countries into the United States, thereby defrauding the federal government out of millions of dollars of antidumping duties, and defrauding United States honey producers out of millions of dollars of honey sales) (multimillion dollar settlement).
Curtis v. Martin; No. 1:12-cv-00151-MAC (E.D. Tex.) (mail fraud and wire fraud) (represented purchaser of gold coins against coin and bullion dealer) (purchase price recovered).
Rogers v. Penland; No. 1:04-cv-00611-RC (E.D. Tex.) (bank fraud) (represented directors of a closed bank against former customer who defrauded the bank via a check kiting scheme).