Document Type

Working Paper

Publication Date

11-28-2012

SSRN Discipline

Economics Research Network; Legal Scholarship Network; Corporate, Securities & Finance Law eJournals; Criminal Law & Procedure eJournals; Law School Research Papers - Legal Studies; Litigation, Procedure & Dispute Resolution eJournals; Corporate Governance Network; LSN Subject Matter eJournals; Financial Economics Network; CGN Subject Matter eJournals; Political Science Network; Management Research Network

Abstract

The Racketeer Influenced Corrupt Practice Act RICO passed in 1970 is a sprawling and complex statute designed to penetrate organizations and impose liability on those who orchestrate criminal acts but insulate themselves with layers of underlings and bureaucracy RICO is a crime and also provides a civil cause of action for those whose business or property has been damaged by RICO conduct For a variety of reasons criminal RICO has fallen into disfavor Civil RICO which is an optimal tool to pursue fraud has not yet reached its potential This article explores this phenomenon and provides a roadmap for civil RICO's appropriate use in fraud casesThis article makes four points First that RICOs "enterprise" requirement fits the typical white collar case well RICO focuses on those who use an enterprise to commit crimes White collar offenders almost always use an enterprise as defined by RICO to do their deeds they operate through collective endeavors and use the resources of an existing organizationSecond because of globalization and the Internet white collar crime is on a grander scale wreaks greater havoc on economic stability is easier to commit and easier to conceal than ever before Effective tools are needed to combat the threats posed by white collar crime Used properly RICO can be a highly effective toolThird RICO especially civil RICO historically has not been used effectively or appropriately to pursue against fraud Often it is over utilized which has caused courts and the business community to resent RICO At the same time RICO has not been used as much as it could be against sophisticated wideranging frauds RICO should be deployed more often by the private bar and by the government to target sweeping white collar schemes One reason for RICOs inappropriate use both its overuse and underuse is its complexity RICOs approach to white collar wrongdoing is novel and effective but its terms are abstract and the courts have made a confusing mess of RICO as they have strived to sort out its elements Lastly this article discusses the most confusing aspect of RICO its enterprise element Case law on RICO enterprises is jumbled inconsistent and often wrong This article sorts through this tangled web analyzing existing case law and suggesting which makes sense and which does not This article concludes with concrete suggestions for proper analysis of RICO enterprise issues These suggestions build on established principles of corporate law and provide a roadmap for straightforward application of RICO even in the most complex situations Such clarity will help RICO serve as a robust tool against white collar crime

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