Without the element of racketeering activity, a RICO claim would be difficult to prove, but because one must also prove racketeering activity in addition to pattern, enterprise, operation and management, etc., a RICO claim is among the most difficult violations to establish. It has been said that the need to prove racketeering activity essentially requires a plaintiff or prosecutor to prove a crime within a CRIME. A plaintiff or prosecutor has no chance of proving the “greater” CRIME, i.e., the RICO violation, unless they can first establish a “lesser” crime, i.e., an act of racketeering (sometimes called a predicate act).
A RICO claim cannot exist in the absence of criminal activity. The simplest way to put this concept is: no crime – no RICO violation. This rule applies even in the context of civil RICO claims. Every RICO claim must be based upon a violation of one of the crimes listed in 18 U.S.C. § 1961(1). The RICO Act refers to such criminal activity as racketeering activity. RICO claims cannot be based upon breach of contract, broken promises, negligence, defective product design, failed business transactions, or any number of other factual scenarios that may give rise to other claims under the common law. Edwards v. Prime, Inc., 602 F.3d 1276, 1293-1294 (11th Cir. 2010) (defendant did not commit acts of racketeering where plaintiff failed to allege that any defendant knew the aliens who were hired had been illegally brought into the United States).
Section 1961(1) of the RICO Act lists all of the crimes upon which a RICO violation must be predicated. Spool, 520 F.3d 178 at 183. A RICO claim can be predicated on not only numerous federal criminal violations, but also on violations of certain state criminal laws. With regard to the state crimes, the RICO Act states that a violation can be predicated upon “any act or threat involving murder, kidnapping, gambling, arson, robbery, bribery, extortion, dealing in obscene matter, or dealing in a controlled substance . . . which is chargeable under State law and punishable by imprisonment for more than one year.” Thus, to prove a RICO claim, a plaintiff or prosecutor must first allege and prove an entire murder case, kidnapping case, arson case, robbery case, etc. Only if the evidence supports these “lesser” charges, can the plaintiff or prosecutor proceed with the remaining elements of the “greater” RICO claim, e.g., pattern, enterprise, operation and management.
A RICO claim can also be predicated upon the violation of many, many federal criminal statutes. The federal crimes relate to a number of areas, including: counterfeiting, extortion, gambling, illegal immigration, obscenity, obstruction of justice, prostitution, murder for hire, interstate transportation of stolen property, and criminal infringement of intellectual property rights. These are but a few of the areas of federal criminal law out of which a RICO claim can arise.
Regardless of whether a RICO claim is predicated upon state or federal criminal violations (or a combination of both), the defendant need not be criminally convicted before a civil plaintiff can sue for treble damages under RICO. Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 493 (1985). The statute requires only that the criminal activities are “chargeable” or “indictable” under state or federal law, not that the defendant has already been charged or indicted. 18 U.S.C. § 1961(1). There is one exception to this rule: since Congress amended the RICO Act in 1995, civil RICO claims cannot be predicated on securities fraud violations unless the defendant has been criminally convicted of a securities fraud violation. 18 U.S.C. § 1964(c). See, e.g., Swartz v. KPMG LLP, 476 F.3d 756, 761 (9th Cir. 2007) (the plaintiff’s civil RICO claims were barred where the defendant had not be convicted of securities fraud and where the sale of stock was the lynchpin of defendants’ allegedly fraudulent scheme); Bixler v. Mineral Energy and Technology Corp., 596 F.3d 751, 760 (10th Cir. 2010) (same). What follows is a discussion of some of the more useful and common acts of racketeering.