America's RICO (Racketeer Influenced and Corrupt Organisations) Act has allowed lawmakers to bust open many criminal and corporate criminal enterprises that were otherwise too hard to convict. Australia desperately needs similar laws — and the banking royal commission should recommend them
Tough penalties
The RICO Act has been in action since 1970.
Under RICO, a person who has committed "at least two acts of racketeering activity" drawn from a list of 35 crimes—27 federal crimes and 8 state crimes—within a 10-year period can be charged with racketeering if such acts are related in one of four specified ways to an "enterprise".
Those found guilty of racketeering can be fined up to $25,000 and sentenced to 20 years in prison per racketeering count. In addition, the racketeer must forfeit all ill-gotten gains and interest in any business gained through a pattern of "racketeering activity."
Asset seizure
When the U.S. Attorney decides to indict someone under RICO, they have the option of seeking a pre-trial restraining order or injunction to temporarily seize a defendant's assets and prevent the transfer of potentially forfeitable property, as well as require the defendant to put up a performance bond. This provision was placed in the law because the owners of Mafia-related shell corporations often absconded with the assets. An injunction and/or performance bond ensures that there is something to seize in the event of a guilty verdict.
In many cases, the threat of a RICO indictment can force defendants to plead guilty to lesser charges, in part because the seizure of assets would make it difficult to pay a defence attorney. Despite its harsh provisions, a RICO-related charge is considered easy to prove in court since it focuses on patterns of behaviour as opposed to criminal acts.
Enables civil lawsuits
RICO also permits a private individual "damaged in his business or property" by a "racketeer" to file a civil suit. The plaintiff must prove the existence of an "enterprise". The defendant(s) are not the enterprise; in other words, the defendant(s) and the enterprise are not one and the same. There must be one of four specified relationships between the defendant(s) and the enterprise: either the defendant(s) invested the proceeds of the pattern of racketeering activity into the enterprise (18 U.S.C. § 1962(a)); or the defendant(s) acquired or maintained an interest in, or control of, the enterprise through the pattern of racketeering activity (subsection (b)); or the defendant(s) conducted or participated in the affairs of the enterprise "through" the pattern of racketeering activity (subsection (c)); or the defendant(s) conspired to do one of the above (subsection (d)). In essence, the enterprise is either the 'prize,' 'instrument,' 'victim,' or 'perpetrator' of the racketeers. Civil RICO action can be filed in state or federal court.
Both the criminal and civil components allow the recovery of treble damages (damages in triple the amount of actual/compensatory damages).
From the Mafia to the boardroom
Although its primary intent was to deal with organized crime, Blakey said that Congress never intended it to merely apply to the Mob. He once told Time, "We don't want one set of rules for people whose collars are blue or whose names end in vowels, and another set for those whose collars are white and have Ivy League diplomas."
Initially, prosecutors were sceptical of using RICO, mainly because it was unproven. The RICO Act was first used by the US Attorney's Office in the Southern District of New York on September 18, 1979, in the United States v. Scotto. Scotto, who was convicted on charges of racketeering, accepting unlawful labour payments, and income tax evasion, headed the International Longshoreman's Association. During the 1980s and 1990s, federal prosecutors used the law to bring charges against several Mafia figures. The second major success was the Mafia Commission Trial, which resulted in several top leaders of New York City's Five Families getting what amounted to life sentences. By the turn of the century, RICO cases resulted in virtually all of the top leaders of the New York Mafia being sent to prison.
RICO offences
- Any violation of state statues against gambling, murder, kidnapping, extorsion, arson, robbery, bribery, dealing in obscene matter, or dealing in a controlled substance or listed chemical (as defined in the Controlled Substances Act)
- Any act of bribery, counterfeiting, theft, embezzlement, fraud, dealing in obscene matter, obstruction of justice, slavery, gambling, money laundering, commission of murder for hire, and many other offences covered under the Federal Criminal Code. (Title 18)
- Embezzlement of Union Funds
- Bankruptcy, fraud, or securities fraud.
- Drug trafficking, long-term and elaborate drug networks can also be prosecuted using the Continuing Criminal Enterprise Statute.
- Criminal copyright infringement.
- Money Laundering and related offences
- Bringing in, aiding or assisting aliens in illegally entering the country (if the act was for financial gain (Thankfully John Howard stopped the boats!)
- Acts of terrorism
Pattern of racketeering activity requires at least two acts of racketing activity, one of which occurred after the effective date of this chapter and the last which occurred within 10 years (excluding any term of imprisonment) after the commission of the prior act of racketeering activity.
The US Supreme Court (similar to Australia’s High Court) has instructed federal courts to allow the continuity-plus-relationship test in order to determine whether the facts of a specific case give rise to an established pattern. Predictable acts are related if they “have the same or similar purposes, results, patterns, victims or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events”
I can think of many past and ongoing cases of racketeering in Australia, but I will not mention them as I do not wish to be sued for libel.
Australia desperately needs similar laws. I trust the Haynes Royal Commission will recommended them.