What Is Racketeering? RICO Law, Penalties & Examples of Crimes

Racketeering is one of the most powerful and misunderstood concepts in American criminal law. Prosecutors use racketeering charges to dismantle organized crime groups, corrupt corporations, and long-running fraud schemes that operate across state lines.

According to the U.S. Department of Justice (DOJ), racketeering laws were created to combat organized criminal enterprises that commit repeated crimes as part of an ongoing operation. The legal backbone of racketeering prosecutions is the Racketeer Influenced and Corrupt Organizations Act (RICO), enacted in 1970 as part of the Organized Crime Control Act.

Before RICO, prosecutors faced a major problem. Mafia leaders and enterprise heads rarely committed crimes themselves. Orders traveled downward, while profits moved upward. RICO changed that structure by allowing courts to connect patterns of illegal activity to the people who control or benefit from them.

What Is Racketeering?

Racketeering refers to a pattern of criminal activity conducted as part of an organized enterprise. The crimes must be related, continuous, and performed to gain financial or operational control.

Under 18 U.S.C. § 1961, racketeering activity includes more than 35 specific federal and state crimes, such as:

• Bribery
• Mail fraud
• Wire fraud
• Extortion
• Money laundering
• Drug trafficking
• Human trafficking
• Securities fraud

A single crime does not qualify as racketeering. The law requires at least two qualifying criminal acts within a 10-year period, committed through an enterprise.

Key Elements of Racketeering

Racketeering charges rely on four legal elements, each of which prosecutors must prove:

1. An enterprise exists
   The enterprise can be a corporation, gang, union, nonprofit, or informal group.
2. The enterprise affects interstate commerce
   Interstate commerce includes phone calls, emails, bank transfers, or shipments crossing state lines.
3. The defendant was associated with the enterprise
   Association includes leadership roles, financial control, or operational involvement.
4. A pattern of racketeering activity occurred
   At least two related crimes showing continuity and intent.

This structure separates racketeering from ordinary criminal charges and gives prosecutors broad reach.

What Is the RICO Act and Why Does It Matter?

The Racketeer Influenced and Corrupt Organizations Act (RICO) allows prosecutors to charge individuals and organizations for crimes committed on behalf of a group, not just as isolated acts.

Why RICO Changed Criminal Law?

Before RICO:

• Prosecutors charged crimes individually
• Leaders avoided responsibility
• Criminal networks survived leadership arrests

After RICO:

• Entire organizations can be dismantled
• Profits and assets can be seized
• Leaders can be convicted without committing every crime personally

RICO applies at both federal and state levels. States such as California, New York, Florida, and Georgia maintain their own RICO statutes, often mirroring federal law.

What Crimes Qualify as Racketeering?

Racketeering crimes fall into specific legal categories, not general wrongdoing. Federal law identifies qualifying acts with precision.

Common Racketeering Crimes Under U.S. Law

There are 35+ predicate offenses, including:

• Mail fraud – fraudulent schemes using USPS
• Wire fraud – scams involving phone calls, emails, or electronic transfers
• Extortion – threats used to obtain money or property
• Bribery – payments to influence officials or business decisions
• Money laundering – concealing illegal proceeds
• Drug trafficking – distribution networks across state lines
• Human trafficking – forced labor or sexual exploitation
• Gambling offenses – illegal betting operations
• Securities fraud – stock manipulation and insider trading

Each crime becomes racketeering only when connected to an enterprise and repeated over time.

Examples of Racketeering Crimes in the United States

Understanding racketeering becomes easier through real-world examples.

Organized Crime Families

Italian-American Mafia families used racketeering to control:

• Construction unions
• Waste management contracts
• Waterfront labor

Crimes included extortion, loan sharking, and bribery. Federal prosecutors dismantled five New York crime families using RICO convictions in the 1980s and 1990s.

Corporate Fraud Rings

Executives at a corporation falsify earnings reports over five consecutive years, use interstate emails, and mislead investors. Each false filing and wire transmission becomes part of a racketeering pattern.

Drug Trafficking Organizations

A drug cartel distributes cocaine across six U.S. states, launders profits through shell companies, and intimidates witnesses. Drug sales, money laundering, and witness tampering qualify as racketeering acts.

Public Corruption Schemes

A city official accepts bribes from contractors over three election cycles, steering contracts in exchange for kickbacks. Bribery plus wire fraud forms a racketeering pattern.

Street Gangs

Federal prosecutors increasingly use RICO against gangs involved in:

• Firearms trafficking
• Carjacking rings
• Drug distribution
• Violent crime coordination

Each crime strengthens the racketeering case.

Penalties for Racketeering in the United States

Racketeering penalties are severe because courts treat these crimes as systemic threats to public order.

Federal Racketeering Penalties

Under 18 U.S.C. § 1963, penalties include:

• Up to 20 years in federal prison per racketeering count
• Life imprisonment, if predicate crimes allow life sentences
• Fines up to $250,000 or twice the illegal profits
• Mandatory forfeiture of assets, including:
  • Cash
  • Real estate
  • Vehicles
  • Business interests

Asset Forfeiture Explained

Courts may seize:

• Bank accounts linked to crimes
• Businesses used to commit offenses
• Property purchased with illegal proceeds

Asset forfeiture disrupts criminal enterprises more effectively than incarceration alone.

Civil RICO vs Criminal RICO: What’s the Difference?

Racketeering laws apply in both criminal and civil courts.

Criminal RICO

• Prosecuted by government authorities
• Requires proof beyond a reasonable doubt
• Results in prison sentences and fines

Civil RICO

• Filed by private individuals or businesses
• Requires proof by a preponderance of evidence
• Allows recovery of triple damages and attorney fees

Businesses often use civil RICO to pursue fraud networks and corrupt competitors.

Who Can Be Charged With Racketeering?

Racketeering charges apply to:

• Business owners
• CEOs and executives
• Public officials
• Gang leaders
• Financial managers
• Employees who knowingly participate

Low-level participants can face charges if evidence shows knowing involvement.

Common Defenses Against Racketeering Charges

Defense strategies depend on facts, but common approaches include:

• Challenging the existence of an enterprise
• Disputing the pattern of activity
• Attacking witness credibility
• Suppressing unlawfully obtained evidence
• Demonstrating lack of intent or knowledge

Racketeering cases rely heavily on documents, recordings, and cooperating witnesses.

How Racketeering Affects Businesses and Communities?

Racketeering causes measurable harm:

• Increased consumer prices
• Reduced competition
• Corruption of public institutions
• Loss of investor confidence

The Federal Bureau of Investigation (FBI) identifies racketeering as a major threat to economic stability.

Final Thoughts

Racketeering laws exist to dismantle criminal systems, not just punish individual crimes. By targeting patterns, enterprises, and financial structures, RICO prevents organizations from rebuilding after arrests.

For prosecutors, racketeering provides leverage. For defendants, penalties carry life-altering consequences. For communities, RICO remains one of the strongest tools protecting economic fairness and public trust.

Understanding what racketeering means empowers citizens, business owners, and professionals to recognize illegal patterns before they spiral into large-scale harm.

FAQs