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Should your business dispute be handled as a civil RICO case?

The Racketeer Influenced and Corrupt Organizations Act, or RICO, is a federal law meant to fight organized crime. It has a criminal component that is often used to prosecute the mafia and drug traffickers. It also has a civil component that allows private citizens to seek damages from enterprises that are involved in “a pattern of racketeering activity,” which means essentially criminal deception or fraud.

For the plaintiff involved in a certain type of business dispute, this can be a powerful tool. For one thing, it puts the defendant in the position of defending accusations of long-running criminal behavior. More significantly, it allows the successful plaintiff to collect triple their actual damages, plus attorney fees.

Tripling your damages is a substantial incentive. It takes more than mere allegations of criminal activity to make a civil RICO case, however. Courts generally don’t allow ordinary business disputes to be brought as federal RICO cases, even when there is an element of criminality. The requirements are strict.

According to the U.S. Supreme Court, there are three elements required to bring a civil RICO case:

  • A criminal purpose
  • Relationships among those associated with the enterprise
  • Sufficient longevity to allow these associates to pursue the enterprise’s purpose

On top of that, the RICO statute was amended in 1995 to limit possible claims. Now, RICO claims cannot be filed for securities fraud, even if the alleged behavior would also constitute mail or wire fraud.

That said, a pattern of mail or wire fraud activity can support a civil RICO claim, as long as the activity is not also securities fraud. The federal mail and wire fraud statutes specifically make it illegal to engage in a “scheme or artifice to defraud,” which can form the basis for the racketeering activity you would need to prove to file under RICO.

Do you suspect your dispute involved fraud?

Did the company mislead you through deceptive mailings, emails or bank transactions? Was this part of a longstanding practice, or did it happen just once? Could the business be considered a criminal enterprise? That is to say, how deep within the company does the criminal activity reach?

If you have lost significant money or advantage and feel you were deceived, it can be tempting to claim that the entire business that deceived you is part of a criminal enterprise. However, a civil RICO case can be an uphill battle. If you don’t have a basis to allege a pattern of intentional, ongoing illegality by a group of people, your case could be dismissed out of hand.

In the right situation, however, a civil RICO case could be a way to hold that company to account for victimizing you.