A “racket” is any organized criminal scheme like the ones favored by the Mafia in the early 20th century: prostitution, gambling, the “numbers racket” (illegal lotteries), “rum running” during Prohibition and the “protection racket,” in which the mob offers businesses paid “protection” from criminal gangs, notably themselves.
Racketeering, as defined by RICO, is when an individual operates or manages an enterprise through a pattern (or series) of racketeering activities. The alleged racketeer does not have to commit any of the crimes himself, says Grell, or even know about the crimes, which include everything from kidnapping to wire fraud to biological weapons.
“As long as the individual is operating and managing the enterprise that’s engaged in the acts of racketeering, that person can be held liable,” says Grell.
Proving Racketeering Isn’t Easy
Contrary to popular belief, RICO cases aren’t easier to prosecute than regular criminal cases. Although the language of RICO is broad, the Supreme Court and federal appeals courts have narrowed its application. As a consequence, the U.S. Department of Justice very rarely pursues racketeering charges.
“Most of the time, people who commit crimes are out there committing the crimes,” says Grell. “They’re dealing drugs, they’re murdering people. Why would the Feds use RICO when they can just charge them with the underlying crime? The DOJ only uses RICO when there’s really no other alternative, like with John Gotti.”
To make a racketeering charge stick, you first need to prove that a pattern of related criminal activity took place, whether it was murder, extortion, drug dealing or some other racket. Again, you don’t have to prove that Gotti himself pulled the trigger or ordered the hit, but that someone in the enterprise did. Second, and most importantly, you need to prove that Gotti or any other alleged racketeer operated or managed the enterprise.
Grell points out that under RICO law, the enterprise or organization itself isn’t on trial for racketeering, but rather the individuals in charge, defined as those who “exercise discretionary authority” on behalf of the enterprise. If an individual associated with an enterprise simply follows orders, and exercises no discretion in carrying out their duties, most courts agree that such low-level associates cannot be held liable under RICO.
To better explain how RICO works, let’s look at some famous racketeering cases from recent history, both criminal and civil.