Racketeering

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The term racketeering refers to the operation of a business that causes a problem, with the intent to offer to solve the problem. These problems involve illegal activities, and racketeering is just as illegal as the other party’s illegal business. Racketeering may include services to solve problems related to someone’s involvement in such unlawful activities as prostitution rings, gambling operations, money laundering, and managing the sale or distribution of drugs. To explore this concept, consider the following racketeering definition.

Definition of Racketeering

Noun

  1. The practice of engaging in a “racket,” in which the organization extorts others, or otherwise creates problems, for the purpose of solving those problems for a fee or other benefit.

Origin

1925-1930       Americanism

What Is Racketeering

Racketeering describes a pattern of engaging in illegal business activities, or extorting money from people. This is most commonly associated with organized crime, in which mob families, gang leaders, and others, who own and control the illegal activities. According to the federal Racketeer Influenced and Corruption Organizations Act (RICO), a pattern of racketeering activity requires a minimum of two acts of racketeering activities. A racketeering activity is any act, or threat to act involving:

  1. Robbery
  2. Bribery
  3. Extortion
  4. Arson
  5. Gambling
  6. Kidnapping
  7. Dealing in obscene matter
  8. Dealing in manufacture or distribution of a controlled substance or prohibited chemical
  9. Murder

Example of Racketeering in Gang Activities

In 2012, Kevin Eleby, leader of the Pueblo Bishop Bloods street gang in Los Angeles, California, was convicted of crimes related to controlling the Pueblo del Rio housing projects, and distribution of drugs. The Bloods attempted to prevent a rival street gang from setting up shop in their territory (the housing projects), to protect their drug distribution business in the area.

Members of the Bloods shot more than a dozen rounds from a Thompson submachine gun into an apartment in the housing projects, targeting a rival gang member. While he was not in the apartment, the Bloods did shoot both his mother and younger brother. Eleby was convicted of conspiracy to distribute cocaine, crack cocaine, and heroin, and possession of a firearm in committing a crime of violence. Eleby and other gang members were also charged with conspiracy to violate the RICO Act.

The jury found the defendants guilty of being members of a criminal group engaged in illegal activities in order to control the housing projects. In this example of racketeering, the additional charge of racketeering brings with it an enhanced sentence. Eleby was sentenced to 25 years in federal prison, followed by 10 years of parole.

Racketeer Influenced and Corrupt Organizations Act

In 1970, the Racketeer Influenced and Corrupt Organizations Act (the “RICO Act”) was enacted by Congress. RICO gives prosecutors much-needed tools in the fight against organized crime. The individual states also have similar laws, which vary widely. According to RICO, racketeering is the committing of multiple violations of different types within a 10-year period.  According to Section 1961(10) of Title 18 of the RICO Act, the Attorney General can designate any law enforcement agency, or prosecuting division, to conduct investigations into suspected rackets.

Elements of a RICO Claim

There are certain elements of a RICO claim that must be met in order to successfully convict a person of racketeering. The individual must be involved in an enterprise that operates through a certain pattern of racketeering activity. This pattern must consist of two or more acts of racketeering activity within a 10-year period, and the criminal activities must be related and continuous. This means that the acts must be similar in nature, with such related characteristics as the same perpetrators, same victims or types of victims, and methods of conduct.

Common Rackets

Common rackets deal mainly with activities that are clearly illegal, including prostitution, drug trafficking, and counterfeiting. Racketeering groups recruit others to keep their business profitable, and often, they expand into new areas of racketeering. Common rackets in the modern world include such activities as trafficking in illegal weapons, working through labor unions to steal funds from pension plans, and other white collar crimes.

Criminal Acts Involved in Racketeering

There are many unlawful acts that may garner a charge of racketeering in certain circumstances. Criminal acts involved in racketeering are characterized by the nature of the group committing the crimes, in their pattern of such activities in the pursuit of profit.

Examples of Criminal Acts Involved in Racketeering

It is not uncommon for a technically legal business to be used to cover the acts of a racket, in order to make everything appear lawful to outsiders and law enforcement agencies.

Penalties for Racketeering

The penalties for racketeering depend greatly on the facts and activities surrounding the crime, as aggravating factors increase the serious of the offense. Racketeering is subject to felony charges, and the penalties for racketeering include time in prison, felony probation or extended parole, fines, restitution, and the forfeiture of all profits and property obtained through the illegal activities.

Criminal penalties for racketeering include up to 20 years in prison, or life in prison, if the underlying crime supports that sentence. Fines for racketeering may be double the amount the defendant obtained through his crimes, or $250,000. A successful conviction for racketeering requires the prosecutor to prove, beyond a reasonable doubt, that the defendant was involved in a pattern of criminal activities that meet the definition of racketeering under RICO.

RICO laws allow victims of racketeering to seek damages in civil court. If the victim successfully proves the elements of RICO, the court may award him “treble damages,” which is three times the amount of his actual loss. This is done in order to punish the perpetrator, and to discourage others from engaging in the same crime.

Proving racketeering in a civil lawsuit is less challenging than in criminal court, as the burden of proof is lower. In civil court, the plaintiff must prove, by a preponderance of the evidence, that the defendant’s illegal acts caused the plaintiff’s losses. Still, pursuing a civil lawsuit for racketeering can be a drawn-out, expensive quest.

Forfeiture of Assets in RICO

When an organization is investigated for racketeering, law enforcement attempts to trace its assets, including real and personal property, as well as financial assets, to link them to the criminal conduct of each individual involved. The federal government has the authority to freeze the assets of any defendant charged with racketeering, until the matter can be settled at trial.

Basically, both the defendant and his assets are brought to trial. The jury then determines whether the defendant is guilty of the crimes with which is charged, and whether the assets were gained as a direct result of the defendant’s criminal activities. Similar to the forfeiture of assets bought with drug money, assets obtained with racketeering money or activities can be seized by the government.

For example:

Manuel holds the second highest position in his gang, and is responsible for ensuring drug sales in a 4-block radius operate smoothly. While Manuel lives in the same depressed neighborhood with his other gang members, he has fully paid for the home in which his mother lives, as well as a tricked out lowrider.

Manuel is arrested and charged with drug-related offenses, which are enhanced with RICO charges. During their investigation, detectives seize Manuel’s car, as well as title to his home. The jury, after finding Manuel guilty on the criminal charges, also hears evidence about the home and car, before determining they were paid for with Manuel’s illegally-gotten gains. Manuel is sentenced to prison and fined a hefty amount. The government permanently takes possession of his home and car.

Atlanta Educators Found Guilty in Racketeering Case

The No Child Left Behind Act of 2001 put a great deal of pressure on teachers and school administrators across the nation. The Act attempted to hold school officials responsible for providing a quality education measured by new standardized testing in the Criterion-Referenced Competency Tests (CRCT).

In 2009, test results submitted by the Atlanta Public Schools showed an unlikely sharp increase in test scores, prompting an investigation into the testing practices. The Georgia Bureau of Investigation learned that 44 out of 56 schools in the Atlanta area cheated on the 2009 CRCT by correcting students’ answers on the test. In all, 178 teachers and principals were accused of engaging in an organized and systemic effort to cheat in order to meet the required test scores.

A grand jury indicted a total of 35 educators, on charges that included making false statements and theft. Because these educators engaged in an organized system of illegal activity, they were also charged with racketeering.

More than 20 of the accused teachers and principals avoided trial by confessing to the crime and accepting plea agreements. Five elementary school teachers, two testing coordinators, an assistant principal, a principal and three superintendents took their cases to trial. During the six-month long trial, witnesses testified that the educators had stolen exam booklets prior to the test, met with other teachers after the fact, and changed students’ answers.

The Atlanta cheating scandal became the most publicized and far-reaching case involving school officials to date. When the verdict was read on April 1, 2015, 11 defendants were found guilty of the charges, including the charge of racketeering in their effort to boost their students’ test scores in an attempt to keep their jobs.

Each defendant received a different sentence for their part in the scheme. These sentences ranged from several years of probation and a fine, to the 20 years in prison, $25,000 fine, and 2,000 hours of community given to Sharon Davis-Williams, former Regional Director of the school district.

Related Legal Terms and Issues

  • Civil Lawsuit – A lawsuit brought about in court when one person claims to have suffered a loss due to the actions of another person.
  • Criminal Charge – A formal accusation by a prosecuting authority that an individual has committed a crime.
  • Damages – A monetary award in compensation for a financial loss, loss of or damage to personal or real property, or an injury.
  • Defendant – Control or advantage held by one entity over the commercial market in any specific geographical region.
  • Fraud – A false representation of fact, whether by words, conduct, or concealment, intended to deceive another.
  • Jurisdiction – The legal authority to hear legal cases and make judgments; the geographical region of authority to enforce justice.
  • Jury – A group of people sworn to render a verdict in a trial, based on evidence presented.
  • Perpetrator – A person who commits an illegal or criminal act.
  • Plaintiff – A person who brings a legal action against another person or entity, such as in a civil lawsuit, or criminal proceedings.
  • Preponderance of the Evidence – The belief by a jury or judge that evidence presented by one party in a civil lawsuit is more convincing, or believed to be more truthful, than that presented by the opposing party. In other words, it is more likely than not that such evidence is true.
  • Restitution – The restoration of rights or property previously taken away or surrendered; reparation made by giving compensation for loss or injury caused by wrongdoing.
  • Treble Damages – An award of three times the amount of a plaintiff’s actual financial losses, incurred as a result of the defendant’s illegal acts. Treble damages are allowed only in certain types of cases.
  • Trial – A formal presentation of evidence before a judge and jury for the purpose of determining guilt or innocence in a criminal case, or to make a determination in a civil matter.
  • Victim – A person who is injured, killed, or otherwise harmed as a result of a criminal act, accident, or other event.