41 Ariz. L. Rev. 1133, *
Copyright (c) 1999 Arizona Board of Regents
Arizona Law Review
Arizona Law Review
Winter, 1999
41 Ariz. L. Rev. 1133
NOTE: From the Mafia to Milking Cows: State RICO Act Expansion
A. Laxmidas Sawkar
SUMMARY:
... When the Racketeer Influenced and Corrupt Organizations Act ("RICO") was drafted as part of the Organized Crime Control Act of 1970, Congress described its purpose as an attack on a "highly sophisticated, diversified, and widespread activity that annually drains billions of dollars from America's economy by unlawful conduct...." RICO was enacted as part of an effort to deal with organized crime, and it included enhanced criminal penalties and civil sanctions for those who acquire or operate an enterprise through a pattern of racketeering activity. ... Some states have modeled their statute after the federal statute, but have also imposed an organized crime limitation on it. The majority of states, however, have lifted this organized crime limitation and followed the expansive nature of the federal statute. ... Although the legislative history of RICO does not discuss pattern in depth, it does establish certain standards for the concept. For instance, beyond the limitation of at least two acts within ten years, the legislative history indicates that a 'pattern of racketeering activity' should also reflect the twin factors of 'relationship' and 'continuity.' ...
TEXT:
[*1133]
I. Introduction
When the Racketeer Influenced and Corrupt Organizations Act ("RICO") was drafted as part of the Organized Crime Control Act of 1970, Congress described its purpose as an attack on a "highly sophisticated, diversified, and widespread activity that annually drains billions of dollars from America's economy by unlawful conduct...." 1 RICO was enacted as part of an effort to deal with organized crime, and it included enhanced criminal penalties 2 and civil sanctions 3 for those who acquire or operate an enterprise through a pattern of racketeering activity. Prior to its enactment, the Department of Justice and its many regional United States Attorneys had no legislation to pursue complex criminal organizations. Instead, federal prosecutors were limited to individual prosecutions with little or no impact on the strength of the criminal enterprise. 4 [*1134]
Since its enactment, RICO has grown into a tool which has gone far beyond its original organized crime limitation. 5 In the nearly thirty years since Congress passed RICO, thirty states have enacted similar legislation to deal with crimes within their jurisdictions. 6 In passing their own statutes, these states have [*1135] gone in two directions. Some states have modeled their statute after the federal statute, but have also imposed an organized crime limitation on it. 7 The majority of states, however, have lifted this organized crime limitation and followed the expansive nature of the federal statute. 8
This Note serves two purposes. First, this Note serves as a guide to state and federal prosecutors on the various state RICO statutes in comparison with the federal statute. Specifically, this Note will address three key RICO concepts: (1) the organized crime element, (2) the enterprise element, and (3) the pattern element. 9 Second, this Note will touch upon recent state RICO litigation, demonstrating how the majority of states are following the federal RICO statute in moving towards a more expansive application of RICO.
Organized crime is an appropriate starting point for any RICO discussion because the federal statute was originally created to address this problem. 10 This Note contends that with few exceptions, the states have expanded on this implied limitation within RICO. The remaining two concepts are substantive elements unique to RICO. "Enterprise" is a term of art which focuses on businesses maintained through the use of racketeering activity. "Pattern" is also a term of art which requires prosecutors to show that the defendant made continuing efforts to engage in illegal activity. This Note will show the overall parity between state interpretation of these elements and the federal statute. [*1136]
Part II provides a brief introduction to RICO and discusses the historical progression of the organized crime element. Part III discusses the enterprise and pattern concepts of the federal statute which are unique to RICO. Parts IV and V discuss how state statutes have addressed the organized crime limitation and the two substantive elements of enterprise and pattern, respectively. Part VI concludes that, with the exception of a small minority of states, state RICO acts will continue to move in the same expansive direction as the federal RICO statute.
II. Origins of Federal RICO
A. RICO and the Attack on Organized Crime
In 1965, President Johnson named Attorney General Nicholas Katzenbach to head a commission to study the administration of justice, including the problem of organized crime. 11 The commission determined that organized crime legislation required defining illicit business in organizational terms and then making participation in such activities a violation of criminal law. 12 Accordingly, any legislation aimed at the enterprise criminal had to achieve at least five goals. First, it had to define what would be criminal. 13 Second, it had to identify, specifically if possible, the activity that would constitute the crime. 14 Third, it had to identify the participants in the criminal activity and their relationship to the organization. 15 Fourth, it had to allow for the admission of evidence that characterized the participants in the criminality. 16 Finally, it had to avoid the constitutional stigma attached to status legislation. 17 In short, it had to be careful to focus not on who the person was, but on what the person did.
As a result of the commission's careful planning, RICO's essential elements have survived constitutional attack. 18 Generally speaking, RICO makes it [*1137] unlawful for a person to acquire, maintain, or operate an enterprise through a pattern of racketeering activity. 19 Section 1962 sets forth the unlawful conduct, 20 and section 1961 defines each element. 21 Section 1961 defines the activity that constitutes the criminality, which is the pattern of racketeering activity. 22 Specifically, section 1961 lists each act that may comprise the criminal activity, referred to as the racketeering acts. 23 Further, section 1961 defines the participants--the person 24 and the enterprise. 25 Sections 1963 26 and 1964 27 provide for criminal sanctions and civil remedies, respectively; sections 1965 through 1968 28 facilitate civil enforcement of the statute.
B. Organized Crime Loses its Place in Federal RICO
Although RICO was originally designed to infiltrate organized crime, it was also crafted broadly enough to deal with all forms of enterprise criminality. 29 The 1968 President's Commission on Law Enforcement and Administration of Justice, whose studies led to RICO, addressed not only organized crime but also [*1138] white-collar crime. 30 The text and legislative history of the statute demonstrate that RICO is properly applied to whitecollar crime. 31
In Sedima, S.P.R.L. v. Imrex Co., 32 a Belgian corporation in a joint business venture with a New York exporter sued the exporter and its officers under the private treble damages provision of the federal act. The United States Supreme Court held that the suit was proper because "there is no requirement that a private action under § 1964(c) can proceed only against a defendant who has already been convicted of a predicate act or of a RICO violation." 33 What was left unsaid was whether the Court would expressly limit RICO actions to factual situations involving conduct traditionally attributed to organized crime.
If the Supreme Court's decision in Sedima 34 left any doubt, the Court's decision in H.J. Inc. v. Northwestern Bell Tel. Co. 35 eliminated it, when it squarely refused to read an organized crime limit into the statute. 36 First, the Court [*1139] recognized that an organized crime limitation would imply that only those acts committed by a group, instead of an individual, would fall within RICO's scope. 37 The Court observed that "RICO's language supplies no grounds to believe that Congress meant to impose such a limit on the Act's scope." 38 Second, "no such restriction is explicitly stated." 39 Third, the Court held that Congress specifically limited other titles of the Organized Crime Control Act to organized crime, which indicates that if Congress wanted such a limitation in Title IX, Congress knew how to create it. 40 The legislative history also illustrates that RICO's principal sponsors expressly rejected the limitation. 41 Thus, based on the wording of the statute and its legislative history, the United States Supreme Court expressly rejected the organized crime limitation.
Accordingly, by removing the organized crime limitation, the Court opened the doors to RICO prosecutions beyond the traditional mafia targets. Instead, RICO could be used to infiltrate, generally, the enterprise criminal.
III. Two Key Concepts in Federal RICO
A. The Enterprise Element
Enterprise, as illustrated in section 1961(4) of the RICO statute, "includes any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity." 42 Congress defined the enterprise with the non-exclusive term, "includes." 43 Thus, the terms that follow it are illustrative but not the only types of RICO enterprises. 44 [*1140] A variety of RICO enterprises not listed in the definition may exist. 45 Indeed, as written, any entity may fall within the scope of the section 1961(4) definition. 46 While the statutory language provides little direct insight into the statutory functions of the enterprise concept, section 1961(4) constitutes the starting point for any effort to employ those functions in RICO.
Definition of the enterprise concept should follow from the function of the concept in the facts of litigation. For example, "corporation," "perpetrator," or "structure enabling the joinder of various corporate employees" could be illustrations of the enterprise concept reflected in RICO. 47 Of these possible definitions, only the first--"corporation"--is expressly provided by section 1961(4). The statute itself, in short, merely illustrates the enterprise by noting examples of entities that will fit within its substantive provisions. 48 The characterizations or functions of the entities are aspects of the concept, however, that are essential to formulating litigation strategy.
Courts have held the section 1961(4) enterprise definition to include commercial entities, 49 benevolent organizations, 50 individuals, 51 and entities associated in fact. 52 In addition, courts have found other entities, notably governmental entities and multi-entity combinations, to be enterprises within the scope of section 1961(4). 53 [*1141]
The notion that RICO prosecution is limited to complex organized crime syndicates quickly falters. Section 1961(4) provides on its face that an individual may be a RICO enterprise. 54 In Von Bulow v. Von Bulow, for example, the defendant was charged with a section 1962(c) violation for conducting the affairs of his wife through a pattern of racketeering activity. 55 The court held that "an individual may qualify as an enterprise within the meaning of 18 U.S.C. § 1961(4)." 56 Thus, Mrs. Von Bulow, as an individual, was a RICO enterprise. 57
RICO's expansive nature was further defined when the courts determined that a unit of government could also be a RICO enterprise. In United States v. Thompson, the Sixth Circuit, sitting en banc, reversed a panel holding that Congress did not intend for RICO to apply to government enterprises. 58 The panel conceded that section 1961(4) was clear and broad, but decided to look beyond the language in order to avoid the "anomalous result[]" of applying RICO remedies against the office of the governor of Tennessee. 59 The full circuit rejected the panel's argument, and reaffirmed that Congress purposefully enacted the RICO statute with broad language. 60 The court also found that "Congress chose language that was clear and broad," but did not find reason to go beyond the language for further signs of congressional intent. 61 Accordingly, the limited origins of federal RICO in organized crime have not served to limit its application or interpretation of enterprise.
B. The Pattern Element
Although the legislative history of RICO does not discuss pattern in depth, it does establish certain standards for the concept. For instance, beyond the limitation of at least two acts within ten years, the legislative history indicates that a 'pattern of racketeering activity' should also reflect the twin factors of 'relationship' and 'continuity.' 62 The Senate report accompanying RICO explains that "the target of RICO is thus not sporadic activity. The infiltration of legitimate business normally requires more than one 'racketeering activity' and the threat of continuing activity to be effective. It is this factor of continuity plus [*1142] relationship which combines to produce a pattern." 63 Furthermore, RICO's sponsor pointed out that the term "pattern" itself requires the showing of a relationship 64 and that "proof of two acts of racketeering activity, without more does not establish a pattern." 65
The United States Supreme Court, in Sedima, S.P.R.L. v. Imrex Co., 66 stated that one of the reasons for the numerous applications of civil RICO has been the "failure of Congress and the courts to develop a meaningful concept of 'pattern.'" 67 In a footnote, Justice White stated that "the implication [of section 1961] is that while two acts are necessary, they may not be sufficient since in common parlance two of anything does not generally form a pattern." 68
While the Court did not directly address the issue of pattern in Sedima, it did spend considerable time identifying the federal standards for interpreting the term. 69 First, when interpreting a statute, the courts must look to the language because it is the most reliable evidence of congressional intent. 70 Second, courts must read the language of a statute with its plain meaning, yet view the statute in context. 71 Third, courts may not read the language of RICO differently in criminal [*1143] and civil proceedings. 72 Fourth, courts must read RICO broadly and construe it liberally. 73 Sedima also directed courts to the text of RICO and its legislative history when interpreting the statute. 74
What the Court in Sedima failed to do is create one meaningful interpretation of pattern. Based on the expansive nature and application of federal RICO, the Court realized that courts must apply the facts of the individual cases to the violations alleged, look to the purpose of the Act, and then apply the appropriate interpretation. Accordingly, the concept of pattern in federal RICO evolved as case law developed.
IV. The Development of State RICO
A. Adoption of State RICO
After the federal RICO statute became effective in 1970, states were initially slow to enact similar racketeering laws because the impact and effectiveness of the federal law was still unclear. 75 The first state to enact a RICO statute patterned after the federal statute was Hawaii, whose law became effective in 1972. 76 Hawaii was followed by Pennsylvania in 1973, Florida in 1977, Arizona and Puerto Rico in 1978, and Rhode Island in 1979. 77 The largest and most rapid [*1144] growth of state RICO statutes occurred during the 1980s, when twenty-three states enacted RICO statutes generally patterned after the federal version. 78 The idea behind enacting state RICO acts alongside the federal act was to empower local and state authorities with the tools to address enterprise criminality in their communities. It stands to reason that local authorities are much more knowledgeable than their federal counterparts when it comes to localized crime.
B. The Myth of the Organized Crime Limitation
Largely, this state tool of the 1980s followed its federal counterpart and avoided an organized crime limitation. 79 For example, in State v. Nuckolls, Florida prosecutors brought a RICO claim against a defendant that sold high mileage cars to small wholesalers who fronted the cars for him after they rolled back the odometers. 80 The court reasoned that as long as the information "tracks the statute and alleges the existence of a criminal 'enterprise,'" there is no requirement that the enterprise have connections to organized crime. 81 Similarly, a federal district court in Ohio determined that the Ohio organized crime statute 82 is "not narrowly drawn to proscribe only particular areas of 'organized' criminal activity. Rather, the statute operates to transform any criminal offense of an economic nature, no matter how petty, into one of Ohio's most serious classifications of criminal activity...." 83
With the influx of federal civil RICO suits in the early nineties, states made reasonable and unreasonable adjustments to accommodate more technologically advanced enterprise criminals by making their RICO statutes more expansive. North Dakota added a conspicuous chapter specifically addressing computer fraud and computer crimes under its RICO statute. 84 Other states, like [*1145] Louisiana, amended their statutes in order to accommodate non-organized crime and drug litigation. 85
However, a minority of states isolated themselves from the expansive nature of federal RICO and neighboring statutes. Because state RICO was a local response to localized enterprise criminality, some states justified limiting their RICO acts to specific local problems. For instance, while Illinois took its guidance on the construction of its act from federal case law, 86 it narrowly shaped its act to target the growing problem of narcotics racketeering in high drug-trafficking cities like Chicago. 87 In People v. Calloway, 88 the state charged the defendant with operating a scheme whereby he persuaded people to sell drugs for him and then collected their profits and turned the people in to law enforcement authorities in exchange for cash for providing information. 89
Other states like New York and Pennsylvania, with infamous histories of organized crime going back several decades, 90 limited their Acts to address the problem that Title IX aimed to correct in 1970--organized crime. The target group envisioned by the New York legislature in enacting the Organized Crime Control Act 91 was discussed by one of the statute's authors, Assembly Member Melvin H. Miller, then Chair of the Committee on Codes. In a letter to Evan A. Davis, counsel to the Governor, Mr. Miller wrote that the extraordinary sanctions [*1146] provided by the act "should be reserved for those who not only commit crimes but do so as part of an organized criminal enterprise." 92
People v. Yarmy 93 involved activities more akin to the organized criminal enterprise Miller envisioned. Two defendants operated a scheme in which the first defendant, who was a licensed firearm dealer, would provide firearms to the second defendant. The second defendant, who was not a licensed firearm dealer, would then sell the firearms to his neighborhood customers. 94 The New York Supreme Court recognized that the standard for proving enterprise corruption was higher than the federal statute's counterpart because the scope of New York's act was defined more rigorously. 95
Similarly, the Pennsylvania Supreme Court looked no further than the actual words of its state RICO statute 96 to determine that the "express intent was to prevent infiltration of legitimate business by organized crime." 97 The Court solidified its organized crime limitation in Commonwealth v. Bobitski. 98 In that case, the issue was whether the Pennsylvania Corrupt Organizations Statute could be applied to an individual who committed a series of criminal acts for his own benefit while employed by a legitimate enterprise, and where there were no ties between the individual, the enterprise and organized crime. 99 The defendant in that case, an employee of Thrift Drug, was responsible for soliciting bids and awarding construction contracts. The defendant took advantage of his position in Thrift Drug by soliciting bribes from various contractors, but solely for his own benefit. Thrift Drug neither was involved nor profited from his illegal acts. 100 The prosecutors tried to argue that "although...[the defendant] has no ties to 'organized crime' as [*1147] that term is defined within the corrupt organizations statute, the organized, systematic method by which the defendant committed his crimes brings him within the purview of the statute." 101
In a footnote, the Pennsylvania Supreme Court acknowledged that federal courts have held that there is no requirement "under the Racketeer Influenced Corrupt Organizations Act, 18 U.S.C. § 1961 et. seq., for the prosecution to establish a nexus between the individual and/or the enterprise being charged and 'organized crime.'" 102 Yet, the court did not find this interpretation of the federal statute controlling in the analysis of the Pennsylvania statute. 103 It instead focused on the intent of the General Assembly in determining that the purpose of the statute was to "punish persons engaged in organized crime, not 'organized criminals.'" 104
Nevertheless, states like New York and Pennsylvania are the anomalies of the organized crime limitation myth of state RICO. If, in fact, more states adopt acts similar to the federal RICO, they will more than likely adopt the expansive federal approach rather than the limited approach of the minority states.
An expansive approach to RICO affords local authorities more opportunities to convict criminals. Additionally, it allows states that find federal case law interpretative of their own state RICO statutes to use the vast federal precedent as persuasive interpretative authority.
V. Substantive Elements of the State RICO Statutes
A. Enterprise Definition
While the majority of state RICO statutes "look to federal decisional law for guidance in construing and applying [their State's] statute," 105 most states have expanded on concepts like enterprise. For instance, the federal statute aims to illustrate kinds of enterprises by using a non-exclusive term, "includes." 106 Since [*1148] the states began to adopt their own RICO statutes, eleven states have also used the non-exclusive term "includes." 107 Of those states, many have gone several steps further than their federal counterpart and expanded on the illustrative list following "includes." 108
In a Georgia case, a defendant tried to argue that since the federal RICO act does not explicitly forbid participation in a legitimate corporation, it was insulated from liability under the Georgia RICO Act which saw federal case law as instructive in its interpretation. 109 The court in that case properly ruled that "the fact that [the defendant] was a legitimate corporation does not insulate it from RICO liability." 110 Federal case law contradicted the defendant's treatment of the issue. 111 Also, the Georgia statute specifically included "illicit as well as licit enterprises" as targets of RICO prosecution. 112
Similarly, in Commonwealth v. Brown, 113 the defendant argued that state case law held that a conviction under the Pennsylvania Corrupt Organizations Act 114 required an illegitimate enterprise to have a connection with a legitimate business. 115 However, the court relied on another decision which reflected the legislature's intent to apply the Act to both legitimate and illegitimate enterprises. 116 [*1149]
Although the majority of states choose to use the more exclusive word "means" to limit the concept of enterprise, 117 even these states have expanded their illustrative terms beyond the federal RICO statute. 118 For example, in State v. Schwartz, the court addressed the issue of whether a sole proprietorship standing alone can constitute an enterprise, within the meaning of illegally conducting an enterprise. 119 In that case, the defendant was the sole proprietor of several adult-oriented companies that arranged photograph and videotape sessions with customers and the defendant's employees. 120 On appeal, the defendant argued that since he was the sole proprietor of the operation, no enterprise could have existed. 121 Since the Arizona RICO Act required an association between a person and the enterprise, the defendant argued that if he was being indicted as both the "person" and the "enterprise" he could not be "associated" with himself. 122 The court agreed. Looking to federal case law for guidance, 123 it held that "a sole [*1150] proprietor [needed to associate] with other individuals to create an enterprise for the purposes of [the Arizona RICO Act]." 124 Thus, the court required the prosecution to prove an association with other individuals since an association between the defendant and himself did not satisfy Arizona RICO. 125
Few states have sought to limit the concept of enterprise, outright. 126 However, in 1986 the New York State Legislature aimed to "draft a narrower and more precise statute than RICO." 127 New York's Organized Crime Control statute ("OCCA") requires that there be a "criminal enterprise." 128 The legislature was "aware of and sought to avoid the wide scope and sweep of RICO." 129 Thus, mere corruption of a legitimate enterprise by a pattern of criminal activity is insufficient to justify prosecution under this Act. 130
In People v. Capaldo, union officials were charged with enterprise corruption in violation of New York's OCCA. 131 In that case, the defendant challenged the constitutionality of the New York organized crime statute. 132 The court noted that the New York statute was drafted more narrowly than its federal counterpart. 133 Therefore, since the federal statute had survived constitutional scrutiny it stood to reason that the New York statute would survive. 134 [*1151]
The fact that New York, and to some extent Pennsylvania, are the only states that attempt to restrict the broad approach of federal RICO is evidence of a trend for the majority of states. The majority trend is for states to utilize the broad language of their statutes in order to allow new RICO prosecutions against criminals.
B. Pattern Definition
To establish a pattern of racketeering activity under the federal RICO act, the government must show the predicate acts are related, and either constitute or threaten long-term criminal activity. 135 The state counterparts are generally no different. Most state statutes require at least two incidents that constitute the racketeering activity. 136 Also, most states require continuity among the predicate acts. 137 This can either be a closed period of repeated conduct or past conduct that by its nature projects into the future with a threat of repetition. 138 While most state statutes do not explicitly require continuity as an element of proof, state case law often requires it. 139
For instance, in Burr v. Kulas, a graduate student at a state university brought action against university officials, alleging conspiracy to steal her research and hold it out as their own work. 140 She specifically alleged that her professor's act of accessing her computer without authorization plus using the data to enhance the professor's professional status constituted the two predicate acts necessary for [*1152] a pattern under the North Dakota RICO statute. 141 The Supreme Court of North Dakota, finding federal interpretation of pattern instructive, 142 held that the pattern of racketeering activity is not established by "sporadic activity" but instead by showing a "relationship between the predicates and the threat of continuing activity." 143 Whether "particular proven acts establish a threat of continued racketeering activity is a question of fact and is determined on a case by case basis." 144 Accordingly, the Burr court overturned a summary judgment ruling by the trial court in favor of the defendant and remanded the case for rehearing. 145
Alternatively, in Computer Concepts, Inc. v. Brandt, the defendant argued that the plaintiff's failure to plead a threat of continuing activity was fatal to its civil claim under the Oregon RICO statute. 146 After looking to the legislative intent, the Oregon Supreme Court determined that the overriding purpose of the act was to "compensate those who had been harmed in the past." 147 Thus, the overriding purpose suggests that the statute defining "pattern of racketeering activity" should be "liberally construed" in favor of plaintiffs, and that the legislature's focus was on past harm rather than threats of future harm. 148
The area where state statutes have moved ahead of their federal counterpart is in how they choose to define the pattern of racketeering activity. The federal RICO act uses the non-exclusive language "requires" to define a "pattern of racketeering activity." 149 Accordingly, it sets a minimum standard for what constitutes a pattern. However, it does not guarantee that the minimum will always constitute a pattern.
Most states use "means" to define pattern. 150 This latter verb gives prosecutors and potential plaintiffs more definitive ground on what is required to [*1153] establish a pattern. 151 Because "means" is a word of limitation, it sets a cap on interpretations of pattern in RICO.
For instance, in Chancey v. State, the defendants challenged the Georgia RICO statute's definition of "pattern of racketeering activity." 152 After being indicted and convicted on five counts of murder and arson, the defendants appealed, arguing that section 16-14-3(2) of the Georgia RICO was "vague and overbroad in defining that 'pattern of racketeering activity' means at least two incidents of racketeering activity that have the same or similar intents, results, accomplices, victims, or methods of commission or otherwise are interrelated by distinguishing characteristics and are not isolated incidents...[.]" 153 The Georgia Supreme Court determined that the Georgia RICO statute was "significantly broader than its federal counterpart." 154 However, "in one respect [Georgia RICO] is narrower than the federal statute" in that it limits its meaning of pattern. 155 Thus, the Georgia definition of pattern, unlike the federal RICO statute, "serves to limit the definition of pattern rather than render[] the 'pattern' definition vague and overbroad." 156
Inevitably, a minority of states who initially sought to expand on the power of federal RICO by enacting their own state RICO legislation inadvertently made their statutes narrower than the federal statute.
Georgia RICO, for example, requires plaintiffs to show that any injury resulted from the pattern of racketeering activity. 157 It also requires that the pattern [*1154] of racketeering activity is directed towards something of pecuniary value. 158 Nonetheless, the majority of states enacting their own RICO statutes have sought to limit the definition of pattern in order to create a definitive requirement.
Such a narrow requirement serves to limit second-guessing as to whether the burden of proving a pattern has been met.
VI. Conclusion
The Racketeer Influenced Corrupt Organizations statute was created with two distinct purposes. Its drafters wanted to provide prosecutors with the most effective tool to attack organized crime. They also purposefully drafted the statute broadly in order to accommodate prosecutions of enterprise criminals who might not be part of a syndicate. It only made sense to create a statute which adapted to the ever-changing growth industry of enterprise criminality. When the states followed by creating their own RICO statutes, they sought to follow the general expansive nature of the federal statute. While several states have enacted RICO statutes narrower than their federal counterpart, future state enactments will aim for the expansive nature of the majority of state statutes and the federal statute itself. New crimes and new criminal enterprises develop strongholds on legitimate organizations every day, and it is up to the states to adapt current law or adopt new laws like RICO to prosecute them.
The majority of states have responded by massaging their state RICO statutes in order to follow the expansive nature of the federal RICO act. Enterprise criminality has moved from the big cities to our backyards. Expansive state RICO statutes will serve to infiltrate these backyard enterprises.
FOOTNOTES:
n1 Racketeer
Influenced and Corrupt Organizations Act of 1970, Pub. L. No. 91-452, 84 Stat.
922 (codified as amended at 18
U.S.C. §§ 1961-1968 (1994 & Supp. III 1997)). n2 18
U.S.C. § 1963 (1994). Among RICO's enhanced criminal penalties are a fine of
up to $ 25,000, imprisonment of up to twenty years, or both, and forfeiture of
any interest acquired or maintained in violation of the act. See id. n3 18
U.S.C. § 1964 (1994 & Supp. III 1997). Among RICO's civil penalties are
divestment, imposition of restrictions, orders of dissolution or reorganization,
treble damages, and reasonable attorney's fees. See, e.g., United
States v. Bonanno Organized Crime Family, 683 F. Supp. 1411, 1445 (E.D.N.Y.
1988) The point was repeatedly made [during Congressional hearings on RICO] that conviction and imprisonment of the perpetrators of organized crime were not sufficient to deter or curtail organized criminal activities since the incarcerated individuals were merely replaced with other members of the criminal enterprise while the economic base of the enterprise remain untouched.
Id.
n4 See United
States General Accounting Office, Effectiveness of the Government's Attack on La
Cosa Nostra 14 (1988). ("Prior to the passage of RICO, attacking an organized
criminal group was an awkward affair. RICO facilitated the prosecution of a
criminal group involved in superficially unrelated criminal ventures and
enterprises connected only at the usually well-insulated upper levels of the
organization's bureaucracy."). n5 See Kentucky
Laborers Dist. Council Health and Welfare Trust Fund v. Hill
& Knowlton, Inc., 24 F. Supp. 2d 755, 770 (W.D. Ky. 1998) (acknowledging
that plaintiffs stated a proper claim under civil RICO § 1964(c) where the
defendant tobacco companies conspired to shift the cost of health care for
victims of its products to the plaintiffs); National
Org. for Women, Inc. v. Scheidler, 510 U.S. 249, 262 (1994) (allowing
women's' rights organization and abortion clinics to file a RICO action alleging
that the defendants were members of nationwide conspiracy to shut down abortion
clinics through a pattern of racketeering activity). n6 See Bureau of
Justice Statistics, U.S. Dep't of Justice, Local Prosecution of Organized Crime:
The Use of State RICO Statutes 3 (1993). See generally, Arizona Racketeering
Act, Ariz. Rev. Stat. §§ 13-2301 to -2318 (1998); California Control of Profits
of Organized Crime Act, Cal. Penal Code §§ 186-186.8 (West 1998); Colorado
Organized Crime Control Act, Colo. Rev. Stat. Ann. §§ 18-17-101 to -109 (West
1999); Corrupt Organizations and Racketeering Act (CORA), Conn. Gen. Stat. Ann.
§§ 53-393 to -403 (West 1994 & Supp. 1999); Delaware Racketeer Influenced
and Corrupt Organizations Act, Del. Code Ann. tit. 11, §§ 1501-1511 (1995 &
Supp. 1998); Florida RICO (Racketeer Influenced and Corrupt Organization Act),
Fla. Stat. Ann. §§ 895.01-.09 (West 1994 & Supp. 1999); Civil Remedies for
Criminal Practices Act, Fla. Stat. Ann. §§ 772.101-.190 (West 1997 & Supp.
1999); Georgia RICO (Racketeer Influenced and Corrupt Organizations) Act, Ga.
Code Ann. §§ 16-14-1 to -15 (Harrison 1998 & Supp. 1999); Organized Crime
Act, Haw. Rev. Stat. §§ 842-1 to -12 (1993 & Supp. 1998); Racketeering Act,
Idaho Code §§ 18-7801 to -7805 (1997 & Supp. 1999); Narcotics Profit
Forfeiture Act, 725 Ill. Comp. Stat. Ann. § 175/1-9 (West 1992 & Supp.
1999); Racketeer Influenced and Corrupt Organizations Act, Ind. Code Ann. §§
35-45-6-1 to -2 (Michie 1998); Louisiana Racketeering Act, La. Rev. Stat. Ann.
§§ 15:1351-1356 (West 1992 & Supp. 1999); Criminal Enterprises Act, Mich.
Stat. Ann. §§ 28.356F-.356X (Law. Co-op. 1999); Minn. Stat. Ann. §§ 609.901-.912
(West Supp. 1999); Racketeer Influenced and Corrupt Organization Act, Miss. Code
Ann. §§ 97-43-1 to 11 (1994); Racketeering Act, Nev. Rev. Stat. Ann. §§
207.350-.520 (Michie 1997 & Supp. 1997); New Jersey RICO (Racketeer
Influenced and Corrupt Organizations) Act, N.J. Stat. Ann. §§ 2C:41-1 to -6.2
(West 1995); Racketeering Act, N.M. Stat. Ann. §§ 30-42-1 to -6 (Michie 1997
& Supp. 1999); Organized Crime Control Act, N.Y. Penal Law §§ 460.00-.80
(McKinney 1989 & Supp. 1999); North Carolina Racketeer Influenced and
Corrupt Organizations Act, N.C. Gen. Stat. §§ 75D-1 to -14 (1990 & Supp.
1998); Racketeer Influenced and Corrupt Organizations Act, N.D. Cent. Code §§
12.1-06.1-01 to .1-08 (1997); Ohio Corrupt Activities Act, Ohio Rev. Code Ann.
§§ 2923.31-.36 (Anderson 1996 & Supp. 1998); Oklahoma Corrupt Organizations
Prevention Act, Okla. Stat. Ann. tit. 22, §§ 1401-1419 (West Supp. 2000); Oregon
Racketeer Influenced and Corrupt Organization Act, Or. Rev. Stat. §§
166.715-.735 (1997); Corrupt Organizations Act, 18 Pa. Cons. Stat. Ann. § 911
(West 1998); Rhode Island Racketeer Influenced and Corrupt Organization (RICO)
Statute, R.I. Gen. Laws §§ 7-15-1 to -11 (1992 & Supp. 1998); Racketeer
Influenced and Corrupt Organization Act of 1989, Tenn. Code Ann. §§ 39-12-201 to
-210 (1997); Pattern of Unlawful Activity Act, Utah Code Ann. §§ 76-10-1601 to
-1609 (1995 & Supp. 1996); Criminal Profiteering Act, Wash. Rev. Code Ann.
§§ 9A.82.001-.904 (West 1988 & Supp. 1999); Wisconsin Organized Crime
Control Act, Wis. Stat. Ann. §§ 946.80-.88 (West 1996 & Supp. 1998).
n7 Those states
which have imposed an organized crime limitation on their RICO statutes are:
California, New York, Pennsylvania, and Illinois. In these states, only
traditional organized criminals like the mafia are prosecuted. See Cal. Penal
Code § 186.1; N.Y. Penal Law § 460.00; 18 Pa. Cons. Stat. Ann. § 911; 725 Ill.
Comp. Stat. Ann. 175/2. Illinois has further limited its statute to activities
involving drugs and drug trafficking. See generally Illinois Narcotics Profit
Forfeiture Act, 725 Ill. Comp. Stat. § 175/1-9 (West 1992 & Supp. 1999).
n8 Those states
which have followed the expansive nature of federal statute with respect to an
organized crime limitation are: Arizona, Colorado, Connecticut, Delaware,
Florida, Georgia, Hawaii, Idaho, Indiana, Louisiana, Michigan, Minnesota,
Mississippi, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Ohio,
Oklahoma, Oregon, Rhode Island, Tennessee, Utah, Washington, and Wisconsin. See
Ariz. Rev. Stat §§ 13-2301 to -2318; Colo. Rev. Stat. Ann. §§ 18-17-101 to -109;
Conn. Gen. Stat. Ann. §§ 53-393 to -403; Del. Code Ann. tit. 11, §§ 1501-1511;
Fla. Stat. Ann. §§ 895.01-.09; Ga. Code Ann. §§ 16-14-1 to -15; Haw. Rev. Stat.
§§ 842-1 to -12; Idaho Code §§ 18-7801 to -7805; Ind. Code Ann. §§ 35-45-6-1 to
-2; La. Rev. Stat. Ann. §§ 15:1351-1356; Mich. Stat. Ann. §§ 28.356F-.356X;
Minn. Stat. Ann. §§ 609.901-.912; Miss. Code Ann. §§ 97-43-1 to -11; Nev. Rev.
Stat. Ann. §§ 207.350-.520; N.J. Stat. Ann. §§ 2C:41-1 to -6.2; N.M. Stat. Ann.
§§ 30-42-1 to -6; N.C. Gen. Stat. §§ 75D-1 to -14 (1990 & Supp. 1998); N.D.
Cent. Code §§ 12.1-06.1-01 to .1-08; Ohio Rev. Code Ann. §§ 2923.31-.36; Okla.
Stat. Ann. tit. 22, §§ 1401-1419; Or. Rev. Stat. §§ 166.715-.735; R.I. Gen. Laws
§§ 7-15-1 to -11; Tenn. Code Ann. §§ 39-12-201 to -210; Utah Code Ann. §§
76-10-1601 to -1609; Wash. Rev. Code Ann. §§ 9A.82.001-.904; Wis. Stat. Ann. §§
946.80-.88. n9 It is not the
purpose of this Note to give an in-depth analysis of every portion of the
federal RICO statute. However, many other key concepts are worthy of discussion:
provisions for joinder of parties, forfeiture provisions, treble damages, notice
requirements, venue, applicability of rules of evidence, and the civil
investigative demand. n10 See S. Rep.
No. 82-141, at 1 (1951). n11 President's
Comm'n on Law Enforcement and Admin. of Justice, The Challenge of Crime in a
Free Society (1967). n12 See Henry S.
Ruth, The Challenge of Crime in a Free Society: Perspectives on the Report of
the President's Commission on Law Enforcement and the Administration of Justice
12 (1971). n13 See 18
U.S.C. § 1962 (1994) (defining the prohibited activities under RICO).
n14 See 18
U.S.C. § 1961(1) (1994 & Supp. III 1997) (defining the types of activity
that are considered "racketeering activity"). n15 See 18
U.S.C. § 1961(3)-(5) (1994) (defining "person," "enterprise" and "pattern of
racketeering activity"). n16 See 18
U.S.C. § 1961(5) (1994) (defining "pattern of racketeering activity" which
is part of the required proof in a RICO prosecution). n17 See, e.g., United
States v. Kragness, 830 F.2d 842 (8th Cir. 1987) (holding that conviction on
both RICO conspiracy charge and various drug conspiracies did not violate the
Fifth Amendment's double jeopardy clause). n18 RICO
initially produced two constitutional concerns: (1) it was too broad in scope,
and (2) it was vague in its language. See United
States v. Aleman, 609 F.2d 298, 305 (7th Cir. 1979) ("Being broad in scope
is not synonymous with being vague."). Cf. Parnes
v. Heinhold Commodities, 548 F. Supp. 20, 22-24 (N.D. Ill. 1982) (applying
the broadly drafted RICO definitions in a way that would not "turn the English
language on its head"). See also United
States v. Sutton, 642 F.2d 1001, 1008 (6th Cir. 1980) (no ambiguity in use
of the word "enterprise"); United
States v. Thompson, 669 F.2d 1143, 1145 (6th Cir. 1982) (definition of
"enterprise" clear and broad); United
States v. Parness, 503 F.2d 430, 442 (2d Cir. 1974) (section 1962(b) not
unconstitutionally vague). n19 18
U.S.C. §§ 1962(a)-(d) (1994). n20 Id.
n21 18
U.S.C. § 1961 (1994 & Supp. III 1997). n22 18
U.S.C. § 1961(5) (1994). ("'Pattern of racketeering activity' requires at
least two acts of racketeering activity, one of which occurred after the
effective date of this chapter and the last of which occurred within ten years
[excluding any period of imprisonment] after the commission of a prior act or
racketeering activity...."). n23 18
U.S.C. § 1961(1) (Supp. III 1997). n24 18
U.S.C. § 1961(3) (1994) ("'Person' includes any individual or entity capable
of holding a legal or beneficial interest in property."). n25 18
U.S.C. § 1961(4) (1994) ("'Enterprise' includes any individual, partnership,
corporation, association, or other legal entity, and any union or group of
individuals associated in fact although not a legal entity...."). n26 See 18
U.S.C. § 1963 (1994). n27 See 18
U.S.C. § 1964 (1994). n28 See 18
U.S.C. §§ 1965-1968 (1994). n29 RICO's
purpose is "the imposition of enhanced criminal penalties and new civil
sanctions to provide new legal remedies for all types of organized criminal
behavior, that is, enterprise criminality--from simple political
corruption to sophisticated white-collar crime schemes to
traditional Mafia-type endeavors." G. Robert Blakey & Brian Gettings,
Racketeer Influenced and Corrupt Organizations (RICO): Basic Concepts--Criminal
and Civil Remedies, 53 Temp. L.Q. 1009, 1013-14 (1980), cited in United
States v. Cauble, 706 F.2d 1322, 1330 (5th Cir. 1983). n30 See
President's Comm. on Law Enforcement and Admin. of Justice, Task Force Report:
Crime and Its Impact--An Assessment (1967). The Commission determined that
"where corporate misconduct is involved, the offenders--and particularly the
offenders against whom evidence of guilt can be obtained--act as part of a
corporate hierarchy and, ordinarily, follow a pattern of corporate behavior."
Id. at 108. n31 See G. Robert
Blakey, The RICO Civil Fraud Action in Context: Reflections on Bennett v. Berg,
58
Notre Dame L. Rev. 237, 249-56 (1982). In the article, this author stated:
A review of the legislative history of [the Organized Crime Control Act] in general, and Title IX RICO in particular, establishes the following points beyond serious question:
(1) Congress fully intended, after specific debate, to have RICO apply beyond any limiting concept like "organized crime" or "racketeering";
(2) Congress deliberately redrafted RICO outside of the antitrust statutes, so that it would not be limited by antitrust concepts like "competitive," "commercial," or "direct or indirect" injury;
(3) Both immediate victims of racketeering activity and competing organizations were contemplated as civil plaintiffs for injunction, damage, and other relief;
(4) Over specific objections raising issues of federal-state relations and crowded court dockets, Congress deliberately extended RICO to the general field of commercial and other fraud; and
(5) Congress was well aware that it was creating important new federal criminal and civil remedies in a field traditionally occupied by common law fraud.
Id. The article's review of RICO's legislative history was cited with approval in Russello v. United States, 464 U.S. 16, 28 (1983).
n32 473
U.S. 479 (1985). n33 See id.
at 479. n34 Id.
n35 492
U.S. 229 (1989). n36 See id.
at 244. ("The argument for reading an organized crime limitation into RICO's
pattern concept...finds no support in the Act's text, and is at odds with the
tenor of its legislative history."). n37 See id.
n38 Id.
n39 Id. The Court
recognized that the title of the act, its stated purpose, and its legislative
history might lend themselves to a narrow view of the act, but it recognized
that the text was not so limited. See id. The general rule is that a restrictive
title or preamble may not be used to restrict a clear text. See, e.g., United
States v. Briggs, 50 U.S. 351, 355 (1850); Roush
v. State, 413 So. 2d 15, 18-19 (Fla. 1982); Dorsey
v. State, 402 So. 2d 1178, 1180-81 (Fla. 1981) (citing Yazzo
& Miss. Valley R.R. Co. v. Thomas, 132 U.S. 174, 188 (1889)). See also
Caminetti
v. United States, 242 U.S. 470, 490 (1917) (holding that "the name given to
an act by way of designation or description, or the report which accompanies it,
cannot change the plain import of its words"). n40 See H.J.
Inc., 492 U.S. at 244. n41 See, e.g., S.
Rep. No. 91-617, at 82 (1969) ("[Title IX] is...a protection of the public
against parties engaging in certain types of businesses after they have shown
that they are likely to run the organization in a manner detrimental to the
public interest."). n42 18
U.S.C. § 1961(4) (1994). n43 See, e.g., American
Sur. Co. v. Marotta, 287 U.S. 513, 517 (1933); United
States v. Aimone, 715 F.2d 822, 828 (3d Cir. 1983); Bunker
Ramo Corp. v. United Bus. Forms, Inc., 713 F.2d 1272, 1285 (7th Cir. 1983);
United
States v. Thevis, 665 F.2d 616, 625 (5th Cir. 1982); United
States v. Huber, 603 F.2d 387, 394 (2d Cir. 1979); Rhoades
v. Powell, 644 F. Supp. 645, 673 (E.D. Cal. 1986). n44 By
comparison, Congress defined "racketeering activity" using a word of limitation.
18
U.S.C. § 1961(1) (1994 & Supp. III 1997). Racketeering activity "means"
any one of the specified offenses listed in § 1961(1). No crimes or offenses
other than the ones listed can be acts of racketeering within the meaning of the
statute. The definition of racketeering activity restricts that concept.
Enterprise is not so constrained. See Helvering
v. Morgan's, Inc., 293 U.S. 121, 125 n.1 (1934) ("The natural distinction
would be that where 'means' is employed, the term and its definition are to be
interchangeable equivalents, and that the verb 'includes' imports a general
class, some of whose particular instances are those specified in the
definition."). n45 See, e.g., Cullen
v. Margiotta, 811 F.2d 698, 730 (2d Cir. 1987); United
States v. McDade, 827 F. Supp. 1153, 1181 (E.D. Pa. 1993). n46 See United
States v. Turkette, 452 U.S. 576, 580 (1981) (finding "no restriction upon
the associations embraced by the definition"). In theory, no restriction should
apply to any formulation of enterprise according to the section 1961(4)
definition. Compare United
States v. Sutton, 642 F.2d 1001, 1003-04 (6th Cir. 1980), rev'g 605
F.2d 260 (6th Cir. 1979), with United
States v. Turkette, 632 F.2d 896, 899 (1st Cir. 1980), rev'd, 452
U.S. 576 (1981). n47 See, e.g., Word
of Faith World Outreach Center Church, Inc. v. Sawyer, 90 F.3d 118, 123 (5th
Cir. 1996). n48 See 18
U.S.C. § 1961(4) (1994). n49 See United
States v. Weisman, 624 F.2d 1118, 1120 (2d Cir. 1980) ("corporation"); United
States v. Parness, 503 F.2d 430, 440-42 (2d Cir. 1974) ("foreign
corporation"); United
States v. Jannotti, 501 F. Supp. 1182, 1185-86 (E.D. Pa. 1980), rev'd on
other grounds, 673
F.2d 578 (3d Cir. 1982) ("partnership"). n50 See, e.g., United
States v. Provenzano, 688 F.2d 194, 199-200 (3d Cir. 1982) ("labor union");
United
States v. Rubin, 559 F.2d 975, 978 (5th Cir. 1977), vacated and remanded, 439
U.S. 810 (1978), reinstated in relevant part, 591
F.2d 278 (5th Cir. 1979) ("benefit fund"); United
States v. Bledsoe, 674 F.2d 647, 659-61 (8th Cir. 1982) ("cooperative").
n51 See Von
Bulow v. Von Bulow, 634 F. Supp. 1284, 1304-05 (S.D.N.Y. 1986). n52 See United
States v. Turkette, 632 F.2d 896 (1st Cir. 1980), rev'd, 452
U.S. 576 (1981). n53 See United
States v. Thompson, 685 F.2d 993, 994 (6th Cir. 1982). n54 See 18
U.S.C. § 1961(4) (1994). ("'Enterprise' includes any individual,
partnership, corporation, association, or other legal entity, and any union or
group of individuals associated in fact although not a legal entity."(emphasis
added)). n55 Von
Bulow v. Von Bulow, 634 F. Supp. 1284, 1305 (S.D.N.Y. 1986). n56 Id.
n57 See id. For
the purposes of this case, the court recognized that Mrs. Von Bulow had been
victimized by her husband's activities. As an enterprise under RICO, then, the
individual played the enterprise role of "victim" in this case. The court
pointed out that even the American Bar Association conceded that the individual
as the "victim" of RICO activity will satisfy the enterprise requirement. Id.
n58 See United
States v. Thompson, 685 F.2d 993, 994 (6th Cir. 1982), en banc, rev'g 669
F.2d 1143 (6th Cir. 1982). n59 Thompson,
669 F.2d at 1145. n60 See Thompson,
685 F.2d at 998. n61 Id. Congress
would have known how to characterize private as opposed to public enterprises
had it seen fit. See id.
at 996. n62 See 116 Cong.
Rec. 18,940 (1970) (citation omitted). n63 Id.
n64 Id.
n65 Id.
n66 473
U.S. 479 (1985). n67 Id.
at 500. n68 Id.
at 497 n.14. The footnote reads: As many commentators have pointed out, the definition of a "pattern of racketeering activity" differs from the other provisions in § 1961 in that it states that a pattern "requires at least two acts of racketeering activity," § 1961(5), not that it means two such acts. The implication is that while two acts are necessary, they may not be sufficient. Indeed, in common parlance two of anything do not generally form a pattern. The legislative history supports the view that two isolated acts of racketeering activity do not constitute a pattern.
Id. at 497 n.14.
n69 See id. The
Supreme Court addressed the issue of prior criminal conviction and racketeering
injury requirements. The Court held that in a civil RICO action there is no
prior conviction requirement nor any requirement that the plaintiff establish a
"racketeering injury" beyond that resulting from "the predicate acts
themselves." Id.
at 485. The parties presented no pattern issue to the Court. n70 Id.
at 495 n.13 ("Congress[']...[intent is] best determined by the statutory
language it chooses...[;] congressional silence...cannot override the words of
the statute."); Russello
v. United States, 464 U.S. 16, 20 (1983) ("In determining the scope of a
statute, we look first to its language." (citing United
States v. Turkette, 452 U.S. 576, 580 (1981))); United
States v. Turkette, 452 U.S. 576, 593 (1981) ("The language of the
statute...is the most reliable evidence of...[ congressional] intent....").
n71 See Sedima,
473 U.S. at 495 n.13 ("Given the plain words of the statute, we cannot agree
with the court below that Congress could have had no inkling of [§ 1964(c)'s]
implications."); Russello,
464 U.S. at 21 ("We start with the assumption that the legislative purpose
is expressed by the ordinary meaning of the words used." (citing Richards
v. United States, 369 U.S. 1 (1962)); Turkette,
452 U.S. at 580 ("If the statutory language is unambiguous, in the absence
of 'a clearly expressed legislative intent' to the contrary, that language must
ordinarily be regarded as conclusive." (quoting Consumer
Prod. Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980)).
n72 See Sedima,
473 U.S. at 489 ("Section 1962 renders certain conduct 'unlawful'; § 1963
and § 1964 impose consequences, criminal and civil, for 'violations' of § 1962.
We should not lightly infer that Congress intended the term to have wholly
different meanings in neighboring sections."). n73 See Sedima,
473 U.S. at 497-98 RICO is to be read broadly. This is the lesson not only of Congress' self-consciously expansive language and overall approach..., but also for its express admonition that 'RICO is to be liberally construed to effectuate its remedial purpose.' The statute's remedial purposes are nowhere more evident than in the provision of a private action for those injured by racketeering activity.
Id (quoting Pub. L. 91-452, § 904(a), 84 Stat. 947 (1970)).
n74 See Sedima,
473 U.S. at 486 ("It is worth briefly reviewing the legislative
history...."). See also Turkette,
452 U.S. at 586 ("The language of the statute and its legislative history
indicate that Congress was well aware that it was entering into a new
domain...."); id.
at 590 ("In view of the purposes and goals of the Act, as well as the
language of the statute, we are unpersuaded that Congress nevertheless confined
the reach of the law to only narrow aspects of organized crime...."). The
legislative history of RICO specifically states that the target is not sporadic
activity. See S. Rep. No. 91-617, at 158 (1969). n75 This was due
in part to federal prosecutors' initial reluctance to charge defendants with
RICO violations because of uncertainty as to the potential benefits and
advantages of RICO. See Ira H. Raphaelson & Michelle D. Bernard, RICO and
the "Operation or Management" Test: The Potential Chilling Effect on Criminal
Prosecutions, 28
U. Rich L. Rev. 669, 672 (1994). n76 Haw. Rev.
Stat. §§ 842-1 to -12 (1993 & Supp. 1998). n77 See generally
supra note 7 and accompanying text. The scope of this Note focuses on
differences between the federal RICO statute and the 30 state RICO statutes.
Therefore, it is beyond the scope of this Note to discuss the RICO statutes in
the Virgin Islands and Puerto Rico. See Act Against Organized Crime, P.R. Laws
Ann. tit. 25, §§ 971-971s (1980 & Supp. 1981); Criminally Influenced and
Corrupt Organizations Act, V.I. Code Ann. tit.14, §§ 600-614 (Supp. 1995).
n78 These states
are: New Mexico (1980), Georgia (1980), Indiana (1980), New Jersey (1981), Utah
(1981), Colorado (1981), Idaho (1981), Oregon (1981), Wisconsin (1982), Illinois
(1982), Connecticut (1982), North Dakota (1983), Nevada (1983), Louisiana
(1983), Mississippi (1984), Washington (1985), Ohio (1986), Tennessee (1986),
New York (1986), Delaware (1986), North Carolina (1986), Oklahoma (1988), and
Minnesota (1989). See sources cited supra note 6. n79 Only
Pennsylvania and New York have explicit organized crime limitations in their
RICO statutes. See generally supra note 7 and accompanying text. n80 State
v. Nuckolls, 677 So. 2d 12, 13 (Fla. Dist. Ct. App. 1996). n81 Id.
at 14 (citing State
v. Whiddon, 384 So. 2d 1269 (Fla. 1980)). n82 Ohio Rev.
Code Ann. §§ 2923.31-.36 (Anderson 1996 & Supp. 1998). n83 Amusement
Devices Ass'n v. Ohio, 443 F. Supp. 1040, 1049 (S.D. Ohio 1977). It is worth
noting that the issue in this case was the constitutionality of the Ohio statute
as challenged by two plaintiffs who alleged that the statute failed to specify
with reasonable clarity which kind of conduct it prohibits. The two were
challenging the statute's prohibition on furnishing legal services to a criminal
syndicate with the purpose of establishing or maintaining a criminal syndicate
or facilitating any of its activities. See id. n84 See N.D.
Cent. Code §§ 12.1-06.1-01 to .1-08 (1997) which reads in part: "(1) A person
commits computer fraud by gaining or attempting to gain access to, altering,
damaging, modifying, copying, disclosing, taking possession of, or destroying
any computer, or computer system...." Ironically, North Dakota prosecutors have
not prosecuted anyone under this statute as of the date of this Note. n85 See La. Rev.
Stat. Ann. §§ 15:1351-1356 historical and statutory notes (West 1992 & Supp.
1999) ("The 1992 amendment, in subsec. A, changed the defined term from 'Drug
racketeering activity' to 'Racketeering activity.'" (emphasis added)).
n86 See 725 Ill.
Comp. Stat. § 175/8 (West 1992 & Supp. 1999) ("It is the intent of the
General Assembly that this Act be liberally construed so as to effect the
purposes of this Act and be construed in accordance with similar provisions
contained in Title IX of the Organized Crime Control Act of 1970, as amended [at
18
U.S.C. §§ 1961-1968]."). n87 See 725 Ill.
Comp. Stat. § 175/2 (West 1992 & Supp. 1999) ("Narcotics racketeering is a
far-reaching and extremely profitable criminal enterprise.... It is therefore
necessary to supplement existing sanctions by mandating forfeiture of money and
other assets generated by narcotics racketeering activities."). n88 540
N.E. 2d 1153 (Ill. App. Ct. 1989). n89 See id.
at 1154-55. The scheme took the following pattern. The defendant would ask a
friend to sell drugs to a third person, usually described by the defendant as
his cousin from out of town. Each testified that the defendant told them that he
did not want his cousin to know he was a dealer. The defendant supplied the
drugs and returned after the sale to collect the money, between $ 100 and $ 300
per transaction. In the meantime, the defendant would make arrangements with
local narcotics investigators to act as an informant concerning illegal drug
sales. The individual purporting to be the defendant's cousin was, in fact, an
undercover law officer. For each drug transaction arranged by the defendant, he
would receive a fee from the government of $ 35 to $ 50, depending upon the type
of drug involved. The scheme was not discovered until the defendant had fled to
Texas. See id. n90 For an
excellent and in-depth look at organized crime and its history in New York, see
Estes Kefauver, Crime in America (1968). n91 N.Y. Penal
Law §§ 460.00-.80 (McKinney 1989 & Supp. 1999). n92 Letter from
Melvin H. Miller, Chair, New York Committee on Codes, to Evan A. Davis, counsel
to the Governor, (July 16, 1986) quoted in People
v. Yarmy, 171 Misc. 2d 13, 16 (N.Y. 1996). The text as quoted by the court
reads: The members of the Codes Committee felt that the extraordinary sanctions allowed under the Act should be reserved for those who not only commit crimes but do so as part of an organized criminal enterprise...[.] For that reason, it was not the sponsors' intent to redefine or sanction anew conduct already punishable under current law...[.] Rather, the bill now requires association with an ascertainably distinct criminal enterprise in addition to corruption of a legitimate enterprise by criminal activity.
People v. Yarmy, 171 Misc. 2d 13, 16 (N.Y. 1996).
n93 Yarmy,
171 Misc. 2d at 13. n94 See id.
n95 See id.
at 16. ("The purpose of [the Act] is to arm state prosecutors with the
ability to prosecute organized crime activities on a similar--but more
limited--basis than the federal RICO." (citing N.Y. Penal Law § 460.00 (McKinney
1989 & Supp. 1999))). The intent of the legislature was to define the scope
of the enterprise corruption statute more rigorously than
comparable federal statutes. See N.Y. Penal Law § 460.00 (McKinney 1989 &
Supp. 1999); People
v. Cantarella, 160 Misc. 2d 8, 15-16 (N.Y. 1991); People
v. Moscatiello, 149 Misc. 2d 752, 754-55 (N.Y. 1990). n96 18 Pa. Cons.
Stat. Ann. § 911 (West 1998). n97 Commonwealth
v. Bobitski, 632 A.2d 1294 (Pa. 1993). n98 Id.at
1296. n99 See id.
at 1295. n100 See id.
n101 Id.
at 1296. "'Organized crime' means any person or combination of persons
engaging in or having the purpose of engaging in conduct which violates any
provision of subsection (b) and also includes 'organized crime' as defined in
5702 (relating to definitions)." 18 Pa. Cons. Stat. Ann. § 911(h)(8) (West
1998). n102 Bobitski,
632 A.2d at 1296 n.2. n103 See id. ("We
do not find the interpretation of a federal statute to be controlling in our
analysis of the Pennsylvania Corrupt Organizations Statute."). n104 Id.
at 1297. n105 Baines
v. Superior Court, 688 P.2d 1037, 1040 (Ariz. Ct. App. 1984). See People
v. Chaussee II, 847 P.2d 156, 159 (Colo. Ct. App. 1992) ("Absent a prior
interpretation by Colorado state courts, federal case law construing the [RICO
ACT] is instructive because COCCA was modeled after the federal act."); Stroik
v. State, 671 A.2d 1335, 1340 (Del. 1996) ("Delaware RICO statute is
essentially an adaptation of its federal counterpart"); State
v. Nishi, 521 So. 2d 252, 253-54 (Fla. Dist. Ct. App. 1988) (examining
federal court decisions for guidance in interpreting and applying the Florida
act). See generally supra note 7 and accompanying text. n106 18
U.S.C. § 1961(4) (1994) ("Enterprise includes any individual, partnership,
corporation, association, or other legal entity, and any union or group of
individuals associated in fact although not a legal entity." (emphasis added)).
See also supra notes 41-42 and accompanying text. n107 See
generally supra note 7 and accompanying text. Those states incorporating
"includes" in the definition of enterprise are: Delaware, Hawaii, Illinois,
Michigan, Nevada, New Jersey, Ohio, Oklahoma, Oregon, Rhode Island, and
Washington. See Del. Code Ann. tit. 11, § 1502(3) (1995 & Supp. 1998); Haw.
Rev. Stat. § 842-1 (1993 & Supp. 1998); 725 Ill. Comp. Stat. Ann. § 175/3(d)
(West 1992 & Supp. 1999); Mich. Stat. Ann. § 28.356f (Law Co-op. 1999); Nev.
Rev. Stat. Ann. § 207.380 (Michie 1997 & Supp. 1997); N.J. Stat. Ann. §
2C:41-1(c) (West 1995); Ohio Rev. Code Ann. § 2923.31(c) (Anderson 1996 &
Supp. 1998); Okla. Stat. Ann., tit. 22 § 1402(2) (West Supp. 2000); Or. Rev.
Stat. § 166.715(2) (1997); R.I. Gen. Laws § 7-15-1(a) (1992 & Supp. 1998);
Wash. Rev. Code Ann. § 9A.82.010(8) (West 1988 & Supp. 1999). n108 See, e.g.,
N.J. Stat. Ann. §§ 2C:41-1 to -6.2 (West 1995) (expanding the federal definition
of enterprise to include "sole proprietorships," "business trusts," "licit and
illicit entities" and "governmental agencies"); Okla. Stat. Ann. tit. 22, §§
1401-1419 (West Supp. 2000) (establishing that enterprises also include "those
involved in any lawful or unlawful project or undertaking"). n109 See Reaugh
v. Inner Harbour Hosp., Ltd., 447 S.E.2d 617, 621 (Ga. Ct. App. 1994).
n110 Id.
at 622. n111 See United
States v. Turkette, 452 U.S. 576, 593 (1981) (interpreting the federal act
to subject both licit and illicit enterprises to RICO prosecution). n112 Ga. Code
Ann. §§ 16-14-1 to -15 (Harrison 1998 & Supp. 1999). n113 701
A.2d 252 (Pa. Super. Ct. 1997). n114 18 Pa. Cons.
Stat. Ann. § 911 (West 1998). n115 See Brown,
701 A.2d at 255 (citing Commonwealth
v. Besch, 674 A.2d 655, 661 (Pa. 1996) (holding that a conviction cannot
stand absent evidence connecting the illegal enterprise to a legitimate
business)). n116 See id.
(citing Commonwealth
v. Schaffer, 696 A.2d 179 (Pa. Super. Ct. 1997)). This court noted that within two weeks after the Besch decision the legislature expressed its disagreement with the supreme court's decision and amended the statute to evidence its intent to apply the Act to both legitimate and illegitimate businesses. The court in Shaffer considered these intervening circumstances in an effort to determine the intent of the legislature, and ruled that Besch cannot be relied upon to afford relief because it arrives at a result contrary to what the legislature intended.
Id.
n117 Currently,
eighteen states use the exclusive term "means" to limit their definition of
enterprise. Those states are: Arizona, Colorado, Connecticut, Florida, Georgia,
Idaho, Indiana, Louisiana, Minnesota, Mississippi, New Mexico, New York, North
Carolina, North Dakota, Pennsylvania, Tennessee, Utah, and Wisconsin. See Ariz.
Rev. Stat. § 132301(D)(2) (1998); Colo. Rev. Stat. Ann. § 18-17-103(2) (West
1999); Conn. Gen. Stat. Ann. § 53-394(C) (West 1994 & Supp. 1999), Fla.
Stat. Ann. § 895.02(3) (West 1994 & Supp. 1999); Ga. Code Ann. § 16-14-3(6)
(Harrison 1998 & Supp. 1999); Idaho Code § 18-7803(b) (1997 & Supp.
1999); Ind. Code Ann. § 35-45-6-1 (Michie 1998); La. Rev. Stat. Ann. §
15:1352(B) (West 1992 & Supp. 1999); Minn. Stat. Ann. § 609.902(3) (West
Supp. 1999); Miss. Code Ann. § 97-43-3(c) (1994); N.M. Stat. Ann. § 30-42-3(c)
(Michie 1997 & Supp. 1999); N.Y. Penal Law § 460.10(2) (McKinney 1989 &
Supp. 1999); N.C. Gen. Stat. § 75D-3(a) (1990 & Supp. 1998); N.D. Cent. Code
§ 12.1-06.1-01(2)(b) (1997);18 Pa. Cons. Stat. Ann. § 911(h)(3) (West 1998);
Tenn. Code Ann. § 39-12-203(3) (1997); Utah Code Ann. § 76-10-1602(1) (1995
& Supp. 1996); Wis. Stat. Ann. § 946.82(2) (West 1996 & Supp. 1998).
n118 See, e.g.,
Ariz. Rev. Stat. §§ 13-2301 to -2318 (1998) (defining enterprise to include
"sole proprietorship"); Minn. Stat. Ann. §§ 609.901-.912 (West Supp. 1999)
(defining enterprise to include "trust," "group of persons," and "illicit and
licit enterprises"). See generally supra note 7 and accompanying text.
n119 935
P.2d 891, 895 (Ariz. Ct. App. 1996). n120 See id.
at 893. n121 See id.
at 895. n122 See Ariz.
Rev. Stat. § 13-2312(B) (1998) ("A person commits illegally conducting an
enterprise if such person is employed by or associated with any enterprise and
conducts such enterprise's affairs through racketeering or participates directly
or indirectly in the conduct of any enterprise that the person knows is being
conducted through racketeering." (emphasis added)). n123 See Davis
v. Mutual Life Ins. Co., 6 F.3d 367, 378 (6th Cir. 1993) (stating that RICO
contains no requirement defendant be removed from corporation); United
States v. Perholtz, 842 F.2d 343 (D.C. Cir. 1988) (concluding that
individuals within a corporation may associate in fact); McCullough
v. Suter, 757 F.2d 142, 143 (7th Cir. 1985) (stating that sole
proprietorship and employees constitute association-in-fact); United
States v. Thevis, 665 F.2d 616, 625-26 (5th Cir. 1982) (any group of
individuals may constitute an association-in-fact). n124 Schwartz,
935 P.2d at 896. n125 See id.
n126 It is worth
noting that both Pennsylvania and New York sought to draft statutes narrower
than the federal counterpart. In doing so, both kept implied limitations such as
only prosecuting organized criminal syndicates. See generally supra notes 86-99
and accompanying text. n127 N.Y. Penal
Law § 460.00-.80 (McKinney 1989 & Supp. 1999). n128 See §
460.10(3). "'Criminal Enterprise' means a group of persons sharing a common
purpose of engaging in criminal conduct, associated in an ascertainable
structure distinct from a pattern of criminal activity, and with a continuity of
existence, structure, and criminal purpose beyond the scope of individual
criminal incidents." Id. The most fundamental difference between this definition
and its federal counterpart is the New York state requirement of each
defendant's association with a criminal enterprise. Federal law permits
prosecution of individuals who engage in a pattern of criminal activity without
further proof that the criminal activity was accomplished for the purpose of
participating in or advancing the affairs of a criminal enterprise with a
separate, distinct and ascertainable structure and continuity of existence and
purpose beyond the scope of the pattern itself. n129 See People
v. Capaldo, 572 N.Y.S.2d 989, 990 (Sup. Ct. 1991). n130 See id.
at 991. n131 See id.
at 989. n132 See id.
n133 See id.
at 990. n134 See id.
at 990. The Court stated: RICO has survived all constitutional attacks based on vagueness and over-broadness. The drafters of OCCA, who had the benefit of the federal experience, drafted a narrower and more precise statute. None of the defendants has either cited a case or advanced a compelling argument in support of a constitutional challenge to OCCA. Therefore, the motions to dismiss Count One of the indictment on constitutional grounds is denied.
Id. at 992. See generally supra note 18 and accompanying text.
n135 See H.J.
Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 237 (1989). See also Menasco,
Inc. v. Wasserman, 886 F.2d 681, 683 (4th Cir. 1989); Medallion
Television Enters., Inc. v. SelecTV of Cal., Inc., 833 F.2d 1360, 1362 (9th Cir.
1987). n136 See, e.g.,
Fla. Stat. Ann. § 895.02(4) (West 1994 & Supp. 1995). "Pattern of racketeering activity" means engaging in at least two incidents of racketeering conduct that have the same or similar intents, results, accomplices, victims, or methods of commission or that otherwise are interrelated by distinguishing characteristics and are not isolated incidents, provided at least one of such incidents occurred after the effective date of this act and that the last of such incidents occurred within five years after a prior incident of racketeering conduct.
Id.
n137 See, e.g.,
H.J.
Inc., 492 U.S. at 239. n138 See id.
at 241. n139 See Bowden
v. State, 402 So. 2d 1173, 1174 (Fla. 1981) ("We construe the 'pattern'
element to require, in addition to similarity and interrelatedness of
racketeering activities, proof that a continuity of particular criminal activity
exists."); State
v. Ball, 661 A.2d 251, 262 (N.J. 1995) ("some degree of continuity, or
threat of continuity, is required"); Burr
v. Kulas, 564 N.W.2d 631, 636 (N.D. 1997) (finding that the term "pattern"
requires showing a relationship between predicates and the threat of continuing
activity). But see People
v. Chausee II, 880 P.2d 749, 758 (Colo. 1994) (not necessary to prove that
criminal acts meet standards of continuity or of relatedness to one another); Computer
Concepts, Inc. v. Brandt, 801 P.2d 800, 808 (Or. 1990) (continuity is not a
necessary element of state RICO's requirements for 'pattern of racketeering
activity'). n140 See Burr,
564 N.W.2d at 633-34. n141 See id.
at 636. n142 See id.
("Federal law, like North Dakota's amended RICO statute, defines a 'pattern of
racketeering' which 'requires at least two acts of racketeering activity, one of
which occurred after [October 15, 1970,] and the other which occurred within ten
years...after the commission of a prior act of racketeering activity[.]"
(alterations in original)). See also H.J.
Inc., 492 U.S. at 240. n143 Burr,
564 N.W.2d at 636. n144 Id. (citing
H.J.
Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 242 (1989)). n145 Id. at 637.
n146 See Computer
Concepts, Inc. v. Brandt, 801 P.2d 800, 807 (Or. 1990). n147 Id.
at 808. n148 Id.
n149 18
U.S.C. § 1961(5) (1994) ("'Pattern of racketeering activity' requires at
least two acts of racketeering activity, one of which occurred after the
effective date of this chapter and the last of which occurred within ten
years...after the commission of a prior act of racketeering activity." (emphasis
added)). n150 See, e.g.,
Idaho Code § 18-7803(d) (1997 & Supp. 1999) ("'Pattern of racketeering
activity' means engaging in at least (2) incidents of racketeering conduct that
have the same or similar intents, results, accomplices, victims or methods of
commission, or otherwise are interrelated by distinguishing characteristics and
are not isolated incidents." (emphasis added)). See generally supra notes
100-119 and accompanying text. Other states using "means" to define pattern are:
Arizona, Colorado, Connecticut, Florida, Georgia, Idaho, Indiana, Louisiana,
Minnesota, Mississippi, New Mexico, New York, North Carolina, North Dakota,
Pennsylvania, Tennessee, Utah, and Wisconsin. See Ariz. Rev. Stat. §
13-2314.04(5)(3) (1998); Colo. Rev. Stat. Ann. § 18-17-103(3) (West 1999); Conn.
Gen. Stat Ann. § 53394(e) (West 1994 & Supp. 1999); Fla. Stat. Ann. § 895.02
(West 1994 & Supp. 1999); Ga. Code Ann. § 16-14-3(8) (Harrison 1998 &
Supp. 1999); Idaho Code § 18-7803(d) (1997 & Supp. 1999); Ind. Code Ann. §
35-45-61 (Michie 1998); La. Rev. Stat. Ann. § 15:1352(c) (West 1992 & Supp.
1999); Minn. Stat. Ann. § 609.902(6) (West Supp. 1999); Miss. Code Ann. §
97-43-3(d) (1994); N.M. Stat. Ann. § 30-42-3(D) (Michie 1997 & Supp. 1999);
N.Y. Penal Law § 460.10(4) (McKinney 1989 & Supp. 1999); N.C. Gen. Stat. §
75D-3(b) (1990 & Supp. 1998); N.D. Cent. Code § 12.106.1(2)(e) (1997); 18
Pa. Cons. Stat. Ann. § 911(h)(4) (West 1998); Tenn. Code Ann. § 39-12-203(6)
(1997); Utah Code Ann. § 76-10-1602(2) (1995 & Supp. 1996); Wis. Stat. Ann.
§ 946.82(3) (West 1996 & Supp. 1998). n151 See Sedima,
S.P.R.L. v. Imrex Co., 473 U.S. 479, 499, 500 (1985) (positing that one of
the reasons for the numerous applications of civil RICO has been the "failure of
Congress and the courts to develop a meaningful concept of 'pattern'").
n152 349
S.E.2d 717, 729 (Ga. 1986). n153 Id.
at 729, 730. n154 Id.
at 722. n155 Id.
at 723. n156 Id.
at 729. Both state and federal RICO has seen many constitutional challenges.
For treatment of the constitutionality of federal RICO, see supra note 18 and
accompanying text. n157 See Ga. Code
Ann. §16-14-4 (Harrison 1998 & Supp. 1999). Compare id., with Colo. Rev.
Stat. Ann. § 18-17-104 (West 1999) (Under state statute patterned after federal
statute, plaintiff need not show injury which results specifically from an
overreaching pattern of racketeering; enough to allege injury from separate
predicate acts). See also Brown
v. Freedman, 474 S.E.2d 73, 77 (Ga. Ct. App. 1996); Cobb
v. Kennon Realty Svcs., 382 S.E.2d 697, 699 (Ga. Ct. App. 1989); Raines
v. State, 467 S.E.2d 217, 218-19 (Ga. Ct. App. 1996); State
v. Shearson Lehman Bros., 372 S.E.2d 276, 278 (Ga. Ct. App. 1988).
n158 See Ga. Code
Ann. § 16-14-2(a) (Harrison 1998 & Supp. 1999). ("RICO's remedial provisions
are intended to address 'the increasing extent to which criminal activities and
funds acquired as a result of criminal activity are being directed to and
against the legitimate economy of the state.'"). See also Sevcech
v. Ingles Markets, Inc., 474 S.E.2d 4, 6-7 (Ga. Ct. App. 1996).