RICO Act Essay

The statute uses very broad definitions to cover many types of criminal activity. It allows for the government to go after organized families like the Mob, while also covering anyone who uses a business or enterprise to commit any racketeering acts. Since the passing of the RICO act in October of 1970, many states have decided to implement similar statutes to fight organized crime. Some notables states include New York, California, Colorado, and Washington.

Many people over the years have argued that RICO act has now been abused passed its original purpose of eliminating crime organizations. It now has allowed for nonviolent criminals that are faced with long prison terms. Many lawyers have realized since 1970 the major money making

potential in the civil provisions of the RICO act. Victims has been able to sue anyone who was remotely involved in the criminal organization that has money to pay out. Some of these individuals that have been sought after include accountants, insurance companies, bankers, and major corporations like General Motors. Most cases the defendant deny wrongdoing but have still have been forced to settle to avoid losing a bigger judgement.

For a RICO claim to exist there needs to be some specific elements. First, is the individual must be involved in an organization that operates through a pattern of racketeering activities. Common organizations include partnerships, corporations, and other legal entities, but there is also informal groups like street gangs can also be involved in racketeering. The RICO act requires that the criminal organization has committed at least two or more racketeering activities in a ten year time frame. For them to be considered related activities or having a pattern the courts have ruled that they must be related to one another and continuous.

II. SUCCESSFUL RICO OUTCOME

II.1 Bonnano Family (1982)

Agent Kossler had reorganized the way the FBI investigated organized crime. He had specific squads committed to only investigate one crime family at a time across jurisdictional lines. He focused on ongoing investigations and the elements of RICO, which was to prove acts of racketeering and to prove there was in fact an enterprise. He noticed that there were three ongoing investigations into the Bonnano family but that they were not connected. One case was on the “Zips” who were Sicilian underlings of the Bonnano family who did a lot of the dirty work such as contract killings. Another case was pen registers at a known Bonnano hangout. Pen registers differ from wiretaps because they just record numbers dialed, they don’t eavesdrop or record the conversation. The third investigation was about an undercover FBI agent named Joseph Pistone. Kossler wanted to have evidence of killings and other acts of racketeering against the Bonnano family to bring down the entire organization. He got his first break when a sister of a Bonnano captain said her brother left her his jewelry because he knew he was going to go. Shortly after that, some kids found a body at a playground.

Richard Guay was an assistant to the U.S. attorney's office for the eastern district office of New York. He was the one who was doing all the pen register applications. He began working with Jerry Loar, a case agent who worked for Kossler. Loar told Guay that he needed wiretaps and that he had a mole in the mob; agent Pistone, who was going by Donnie Brasco. He had been working as an associate for the Bonnano crew and was a burglar and jewel thief. He was close to being made, which is officially becoming part of the enterprise. He would write up reports for agent Loar about how the family operated, who was in charge, and often wore a body wire to record conversations. He reported to one of the captains soldiers “Lefty Guns”. He reported that Lefty Guns told him he would be inaccessible for up to two weeks and that he was not to try and contact him or his captain. Upon his return he told Pistone, “I just got back. Everything went good. We’ll be alright. We’re on top.” Then Pistone met with the captain Sonny Black, “We took care of those three guys, they’re finished. Anthony Bruno got away from us.” He didn’t specifically say it but Pistone knew what he meant. There had been a peace meeting with the three captains and they had been ambushed. All of this evidence was circumstantial since there were no bodies, weapons, or direct orders. This changed when Sonny Black told Pistone to go find Bruno in Miami and take care of him, “When you find him, you can call me and we’ll send somebody down to take care of him. Otherwise, you can take care of him yourself. Either way you want to do it. If you hit him in the street, just leave him lay.”

This was good and bad. It was good because an FBI agent had just been given a contract to kill a wise guy. It was bad because Pistone had to avoid finding Bruno while pretending to look for him and once Bruno found out about the hit he may go after Pistone. This was when Loar and Kossler decided they needed a wiretap. Loar and Guay worked relentlessly compiling pen registers, transcripts from Pistone’s recordings, and surveillance reports and wrote up a thirty six page affidavit. Before they took the affidavit to a judge they learned that the body found by the kids on the playground was that of Alphonse Idelicato, the Bonnano captain whose sister said he knew he was going to go. Loar and Guay took the affidavit to Judge Jack Weinstein who read it over and signed the authorization order. That same day the first wires were put into place for all of the families and at the Bonnano hangout. These wiretaps led to more and more wiretaps just as Blakely had said they would. The ball was rolling. Wiretapped conversations between Sonny Black and his soldiers included drug dealing, loan-sharking, and illegal gambling. These were all separate acts of racketeering which immensely strengthened the RICO case.

The case went to trial in 1982 and all defendants were found guilty. Lefty Guns received twenty years in prison and Sonny Black was never tried because he disappeared before the trial he disappeared. His body was found a year and a half later. This case proved Blakely’s theory and became the poster child for RICO cases. It also made Kossler look like a genius for his restructing of the FBI into organized crime. Prosecutors everywhere began using wiretaps and RICO and within ten years after the Bonnano case most of the Mafia was in hiding or in jail. RICO had defeated the Mafia.

III. RICO FAILURES

III.1 Montreal Expos V. Major League Baseball (2002)

Fourteen Canadian companies and individuals who were limited partners in the once known major league baseball team the Montreal Expos. The lawsuit brings charges against four people with violating the Racketeer Influenced and Corrupt Organization act. Most commonly known names listed are the commissioner Bud Selig and Bob DuPuy baseball’s Chief operating officer. Bob DuPuy argues that they plead for help from the limited partners to help offset the teams operating losses and received no help on the matter. The fourteen plaintiffs claim that Jeffrey Loria the team's majority owner had purposely shrunk their ownership from 76% to 6%. The group claims that Bud Selig and Loria committed mail and wire transfer frauds that fall under the RICO act. They were seeking 200 to 250 million dollars in damages, which under RICO could be tripled in amount if Major League Baseball had been found guilty. However, the judge was not satisfied with the limited partners evidence and decided to send the case to arbitration to recover for damages. In arbitration the plaintiffs lost and major league baseball did not have to pay the limited partners of the Montreal Expos for any damages or wrongdoings under the RICO act.

III.2 Hell’s Angels

The government had success with using RICO against the mafia but failed miserably when it attempted to use RICO against the Hell’s Angels in 1979 and 1981. The motorcycle gang was located in Oakland, California. The eleven bikers were accused of selling illegal drugs and guns through the enterprise known as Hell’s Angels. The bikers were acquitted because, the jury did not believe the bikers looked like an organized gang enterprise with long hair and tattoos. “The bikers were too loosely organized. Members teamed up to do deals, but police discovered that the popular image of close-knit gangs is largely false, cultivated to intimidate their competition, not to provide a structure for day-to-day operations.” (Sillars) The jury was confused on whether they were finding the members of Hell’s Angels guilty or Hell’s Angels the enterprise. The jury came back with the decision that they were hopelessly in a deadlock.

IV. GOVERNMENT ABUSE

IV.1 Phillip Morris

One of the first major scrutinies against the RICO statute came in the case of U.S. v. Phillip Morris (2000), where the U.S. government found the tobacco industry guilty of RICO charges. The Department of Justice sued several tobacco companies for “fraudulent and unlawful conduct and reimbursement of tobacco-related medical expenses. The claim for reimbursement was initially dismissed by the circuit court, however the claim for the RICO violation was allowed. The charges were as follows: “...sued on the ground that the tobacco companies had engaged in a decades-long conspiracy to (1) mislead the public about the risks of smoking, (2) mislead the public about the danger of secondhand smoke; (3) misrepresent the addictiveness of nicotine, (4) manipulate the nicotine delivery of cigarettes, (5) deceptively market cigarettes characterized as “light” or “low tar,” while knowing that those cigarettes were at least as hazardous as full flavored cigarettes, (6) target the youth market; and (7) not produce safer cigarettes.” The tobacco industry as a whole, from manufacturers to trade associations to research organizations, was considered an enterprise. It was claimed that this enterprise conspired to further the sale of tobacco products over the past forty years and ordered the disgorgement of any profits received that were linked to a RICO violation. The tobacco industry denied these charges saying that the DOJ did not present enough evidence to show that threat of future violations. Also, the industry cited that it had already reached a settlement in 1998 with various states the provided monetary relief and controls to prevent future violations. The defendants also claimed the disgorgement of profits is not a permissible form of relief under the RICO’s civil provisions. In what would effectively allow the government to bully and intimidate manufacturers and trade associations at large, the presiding Judge Kessler denied the motion of the defense to dismiss the charges. Judge Kessler ruled that the government had adequately alleged the necessary elements of the RICO violations and the threat of future RICO violations, and found that the previous settlement in 1998 did not preclude the government actions’. It was ruled that the court could not assume the industry would comply with the previous settlement or that the settlement had adequate mechanisms in place for enforcement. Concerning the threat of future RICO violations, the Judge relied on the fact of whether or not there will be opportunities to violate the law in the future. As this is a tobacco industry, that just happens to be daily operations. This ruling also contradict the previous settlements prohibition of the types of RICO violations that were allegedly committed. With this ruling, companies could now be under constant RICO surveillance due to issuing information to the media about the risks of their products, even if they are in legitimate businesses. The disgorgement of profits in a civil RICO case are intended to prevent future violations, and could actually lead to unlimited damages being sought. This ruling could now hinder future research in fields that have potential risks, as companies do not want to risk finding themselves facing a RICO violation. Other industries may also avoid entering settlement agreements, as they would not prevent the government from seeking relief under RICO charges. Judge Keller stated that the government does not need to precisely define the enterprise, as the enterprise could be controlling a “secret criminal network”. Also, it was found that the government does not need to establish the elements of the RICO violation based on separate evidence. This ruling now allows the government to look into an industry’s activities and infer that it is an enterprise conspiring to commit a RICO violation.

This case has essentially awarded the Department of Justice unlimited power concerning the RICO statute. With the potential of disgorgement of profits for any RICO violation, the industry could be looking at nearly relief payments that could essentially end the industry. At such a high risk, any industry now almost has a disincentive to not research the health risks of their product and to not engage in public debates. Simply mailing advocacy for your product could be considered a RICO violation, which could be construed to think that businesses are now having their First Amendment right diminished. Any product advertising for a then considered safe product could be seen as a violation, keeping companies wary about advertising or even further researching a product.

CONCLUSION
The Racketeer Influenced and Corrupt Organization Act went into effect on October 15, 1970, by the Congress of the United States.

The government has since used the RICO act for its intended purposes over the years. The original intent was to bring down members of criminal organizations such as the mafia. It allowed the prosecution to connect incidents to the bosses or leaders behind the original crimes. Throughout our research we went back to how the RICO act came to be and the definitions of some key terminology of the act. The government has been successful in many famous cases over the years by benefiting from the RICO act. The RICO act has also led to some failures and confusion both in civil cases and in prosecution cases. The Hell’s Angels is a great example of the jury not understanding the terminology of an organized crime enterprise. The jury was unable to determine whether or not the prosecution was finding the bikers guilty or the Hell’s Angels enterprise guilty leading to a hung jury. Since, the original act has passed its original purpose the government and civil cases have abused the RICO act beyond it’s intended purposes. What was once a tool in law to aid in the dismantling of criminal organizations has now become an intimidating force which could prevent growth in an industry for fear of the massive fines. Through our research on the subject of Racketeer Influenced and Corrupt Organization Act we have found the good, the bad, and the grey area. RICO has served its purpose, but like with any good intentioned act it can be mistreated over

time.