Civil RICO Actions—Worth the Trouble?

The federal RICO law—Racketeer and Influenced Corrupt Organizations Act—was passed in 1970 for the main purpose of combating the mafia and organized crime. True to Congress’s word, most people associate RICO with high-profile criminal prosecutions. 

Another side of the federal RICO Act is the section providing for civil remedies. This allows successful plaintiffs to recover after losing income, business opportunities, or something else due to another entity’s alleged RICO actions. 

Activities covered under the federal RICO statute include threats involving “murder, kidnapping, gambling, arson, robbery, bribery, extortion, dealing in obscene matter, or dealing in a controlled substance or listed chemical (as defined in section 102 of the Controlled Substances Act), which is chargeable under State law and punishable by imprisonment for more than one year.”

Most civil actions filed under RICO, however, do not involve allegations or murder, kidnapping, or arson. Activities like mail, fraud, wire fraud, and extortion are often alleged in the civil RICO context. Typically, successful RICO claims must show a pattern of predicate acts, or wrongdoing. Note: RICO claims involving securities fraud are not permitted.

Civil RICO claims are attractive for a number of reasons. One reason many parties try to parlay a rather routine business dispute into a RICO claim is to get the matter in federal district court. Otherwise, companies usually have to settle for state court. 

Another value-add for civil RICO claims is the potential for treble damages. Treble damages are equal to three times the amount of actual damages to be paid to a plaintiff. A successful RICO claim may also provide for recovery of attorney’s fees. 

These two factors often motivate litigants to pursue RICO claims. In many business disputes, though, a RICO claim is simply inappropriate. Courts typically look upon civil RICO claims unfavorably, leading to dismissals of otherwise valid claims.

Conclusion

Unnecessarily forcing a civil RICO claim is as futile as fitting a square peg into a round hole. It is difficult to convince a judge to proceed with such a claim when the matter at hand is a garden variety business dispute. Canales PLLC has experience handling civil RICO claims. Let’s discuss your needs soon.

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