What is Racketeering?
Generally speaking, any illegal activity including a “racket,” or organized criminal group, is considered racketeering.
What is Racketeering – Meaning and Types
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A racket is a criminal enterprise set up for the sole purpose of making money illegally. The term is often used to the kind of illicit behavior covered under the Racketeer Influenced and Corrupt Organizations Act (RICO).
To buy or manage a company in the United States with the proceeds of certain unlawful activities or with funds obtained through such activities is a violation of federal law.
Under the legislation, it is also prohibited to plot to conduct any of the aforementioned offenses or to take any action that facilitates the commission of any such offenses by a company.
Bribery, fraud, gambling offenses, money laundering, financial and economic crimes, impeding justice or a criminal investigation, and murder for hire are all crimes included under RICO.
Crimes such as murder, kidnapping, gambling, arson, robbery, extortion, dealing in obscene content, and drug offenses that fit the “generic description of the state offense cited at the time RICO was adopted” might be considered racketeering on the state level.
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Acquiring a company dishonestly, running a company off of money gained dishonestly, or utilizing a company to execute criminal crimes are all examples of racketeering.
In an effort to curb racketeering, the United States passed the Racketeer Influenced and Corrupt Organizations Act in October 1970.
Both the state and federal governments have the authority to bring charges of racketeering.
Federal racketeering crimes include things like bribery, gambling violations, money laundering, obstructing justice or a criminal investigation, and murder for hire.
Crimes such as murder, abduction, gambling, arson, robbery, bribery, extortion, trading in obscene things, and drug trafficking all fall under the umbrella of racketeering at the state level.
Understanding Racketeering
The term “racket” is often used to describe the illicit activities of organized gangs. It is possible for a gang to illegally reroute cash from a legitimate firm. Prostitution, human trafficking, drug trafficking, the illicit arms trade, and counterfeiting were some of the most common types of business conducted by rackets.
Racketeering Comes in Numerous Shapes and Sizes
- When a hacker installs malware on a victim’s computer and locks them out of their data and systems, they have committed cyber extortion. When a user’s account is hacked, the hacker will often ask for payment before regaining access.
- In protection rackets, criminal organizations demand payment of a protection charge in exchange for the promise that they would not damage the targeted company or person.
- To kidnap someone with the intention of holding them for ransom is an act of racketeering.
- As part of a fencing scheme, people serve as middlemen, purchasing stolen items from other criminals at a discount. They then make a profit by selling them on to customers who are unaware of the scam.
- Production, distribution, and retail sale of illicit substances constitute drug trafficking.
- Underground casinos, sportsbooks, and card clubs where the “house” gets a cut are all examples of illegal gambling activity.
Unions representing workers’ interests have also been accused of racketeering on several occasions.
In order to extort money from a business or contractor, organized criminal gangs often employ one or more labor unions (s). When organizations need to exert influence over their workforce, they often turn to unions.
One of La Cosa Nostra’s most infamous accomplishments was its ability to subvert unions among the Italian American working class.
Because La Cosa Nostra had established such a firm presence, both the enterprise and the union were dependent on their protection.
In October 1970, the United States government passed the Racketeer Influenced and Corrupt Organizations (RICO) Act in an effort to curb illicit collaboration and profiting via racketeering.
To put it simply, the legislation allows law enforcement to file charges against persons and organizations engaged in racketeering activities.
Anyone found guilty of RICO violations may be prosecuted and, in the worst cases, given jail terms of 20 years or more. There might be monetary fines and other punishments imposed.
Notes on the Clause
Racketeering may also be practiced by corporations. To increase their bottom line, a pharmaceutical company could, for instance, pay physicians into illegally prescribing excessive amounts of a certain prescription.
The practice of predatory lending has been compared to racketeering in certain circles. This occurs when a lender uses deceptive practices to convince a borrower to take out a loan, knowing full well that doing so would have a negative impact on the borrower’s capacity to repay the debt.
Even if you have low credit, a formal personal loan is always preferable to what a loan shark can offer.
Example: State Farm was suspected of unlawfully supporting Judge Lloyd Karmeier’s 2004 election campaign by funneling money via advocacy organizations that didn’t reveal sources. State Farm clients have been suing the company for more than a decade over claims that they were provided aftermarket, low-quality auto parts instead of OEM components.
In addition to the damages that might have been treble under the federal RICO Act, the plaintiffs sought $1 billion in damages and $1.8 billion in interest.
Up to $8.5 billion was claimed in damages. State Farm settled the racketeering action for $250 million in September 2018, just before opening remarks were supposed to begin.