Racketeering is a form of criminal activity that involves the use of force, fraud, or intimidation to make money. It includes organizing, managing, or running a corrupt enterprise that engages in illegal activities (a “racket”). Law enforcement agencies use this term to describe various criminal activities, including blackmailing, extortion, kidnapping, trafficking, and money laundering.
How Does Racketeering Work?
Racketeering is a pattern of illegal activity committed as part of a larger criminal enterprise, whether a legal business or an illegal organized crime group such as a gang. Racketeering may appear normal, but it involves illegal profit-making activities such as extortion, bribes, and threatened violence.
The Racketeer Influenced and Corrupt Organizations Act (RICO) defines a slew of crimes as racketeering. RICO was enacted in 1970 to combat organized crime’s infiltration of legitimate businesses. Any act or threat related to the following is considered a serious crime:
- Dealing in obscene matter
- Dealing in a controlled substance or listed chemical
However, dozens of additional crimes can also be prosecuted under RICO, including:
- Embezzlement from pension and welfare funds
- Extortionate credit transactions
- Trafficking in firearms
- Tampering with a witness, victim, or an informant
- Possessing, developing, producing, stockpiling, transferring, or acquiring biological weapons.
Examples of Racketeering
A gang acquiring money through murders, money laundering, drug trafficking, and home invasion robberies is an example of racketeering. RICO conspiracy charges may be filed against gang members who commit the crimes.
Another example of racketeering would be a contracting company employee conspiring with the company owner to commit visa and foreign-labor contracting fraud for financial gain. They force agricultural laborers to work for low pay by seizing their passports and isolating them from contact with the outside world.
Another example could be state employees being paid to create fake IDs and register stolen vehicles.
Types of Racketeering
Organized crime might infiltrate and use a legitimate business, such as a store or nightclub, as a front to commit gambling, extortion, money laundering, or loan-sharking. A few examples might include a drug dealer’s use of drug-trafficking proceeds to operate a legitimate business or an organized crime figure intimidating a business owner into selling the business to the criminal, who then uses it for loan-sharking or predatory loans.
With labor racketeering, criminals infiltrate, corrupt, or attempt to control workers’ unions, employee benefit plans, or workforces for personal or financial gain. Crimes committed include employer extortion by threatening work stoppages, picketing, or sabotage. They could also include requesting bribes from the employer in exchange for ignoring the union’s collective-bargaining agreement. Labor racketeering might include defrauding benefit plans as well.
Racketeering can happen online as well. Cyber-racketeering crimes are typically committed by criminal organizations using tech hacking tools to steal money and information from individuals, businesses, and government agencies. Federal racketeering charges have been levied against people who have used phishing emails, fraudulent online auctions, malware, or customer service impersonation at sites such as eBay.
The Racketeer Influenced and Corrupt Organizations (RICO) Act
The Department of Justice (DOJ) provides an expansive view on RICO charges. According to the DOJ, in order to be found guilty of violating the RICO statute, the government must prove beyond a reasonable doubt that:
- An enterprise existed.
- The enterprise affected commerce across state lines.
- The individual was associated with or employed by a criminal enterprise.
- The defendant engaged in racketeering activity.
- The individual participated in racketeering by commissioning at least two acts of racketeering.
Government prosecutors primarily used the Act to target organized crime and criminal organizations when it was enacted. Before the law was in place, prosecutors were forced to try mob-related racketeering crimes individually, even though many individuals may have been involved in committing a crime.
RICO allows law enforcement officials to file cases against an entire racket. The law allows prosecutors to seize the assets of an indicted party, thereby preventing the transfer of funds and property through shell companies.
How Federal vs. State Racketeering Offenses Differ
Prosecutors can charge someone through RICO if they commit at least two acts of racketeering activity, one of which occurred after RICO became law and the last of which occurred within 10 years after the prior act.
Federal crimes lead to prosecution at both the federal and state levels. Investigation of federal crimes involves national agencies such as the Federal Bureau of Investigation (FBI), Drug Enforcement Agency (DEA), Border Patrol, Department of Homeland Security, Internal Revenue Service (IRS), Bureau of Alcohol, Tobacco and Firearms (ATF), and the Secret Service.12 In some cases, international law enforcement may also participate.
State crimes violate the laws of a particular state and are investigated by local, state, or county police. Kidnapping, robbery, and assault are considered state crimes, provided they occur within the boundaries of a particular state.
Sentences for federal crimes are generally longer and harsher than those imposed for state crimes
Is Racketeering a Felony?
Racketeering includes committing, attempting to commit, conspiring to commit, or intentionally assisting, soliciting, coercing, or intimidating another person to commit a specified list of crimes. Gambling, extortion, drug offenses, weapons offenses, murder, assault, prostitution, hazardous waste violations, securities violations, coercion, money laundering, arson, bribery, and forgery are all felonies.
Is Racketeering the Same as Money Laundering?
Money laundering involves cleaning “dirty” money, so it appears that it was earned legitimately when it was not. Money laundering can fall under racketeering if it is part of an organized scheme.
For How Long Can You Go to Jail for Racketeering?
Anyone convicted for RICO crimes receives a prison sentence of 20 years or more if they commit more serious crimes. Fines and penalties may also apply.
Is the RICO Act effective?
The RICO Act is extremely helpful in the fight against racketeering and organized crime. It allows prosecutors to effectively target criminal enterprises and organizations and the leaders of these groups even if they had other individuals commit the actual crimes.