Civil RICO as a (Better?) Alternative to Conspiracy Claims


The rationale for some Plaintiff’s attorneys alleging civil RICO claims begins and ends with treble damages and unilateral attorney’s fees recovery. Many would be hard pressed to give another reason.

Some might also add that, in theory, civil RICO also allows a plaintiff to sue for damages for “predicate acts” which might not have civil law equivalents—some are pure crimes. The list of about 35 qualifying predicate acts is in 18 U.S.C. 1961(1). But in practice, it seems about 9 out of 10 civil RICO cases allege predicate acts of allege wire fraud or mail fraud, which can be plead as common law fraud. And many (but not all) of the other predicate acts have direct civil law equivalents. So turning crimes into civil claims isn’t typically considered a major advantage of civil RICO law. It often comes down to treble damages and attorney’s fees.  

Yet these advantages come at a price. Civil RICO claims are often more burdensome to prosecute than ordinary tort claims. The elements and sub-elements are numerous, complicated, and legally unsettled—with Circuit Court splits on many issues. District Courts impose additional procedural hurdles like RICO Case Statements. And RICO claims are frequently viewed by the defense bar as practically inviting FRCP Rule 12(b)(6) and Rule 56 motions. Also, to the extent most civil RICO claims are based on mail fraud or wire fraud, FRCP Rule 9 is invoked, adding teeth to any Rule 12(b)(6) motions.

These disadvantages raise the question, aren’t there any other advantages to Plaintiffs bringing civil RICO claims? Isn’t there anything else to offset the significant disadvantages?

In short, yes. We cover one here: Civil RICO is an alternative to conspiracy allegations.

The RICO Act’s History – Closing a Loophole

One of the plaintiffs’ advantages built into the RICO Act is its easier route to alleging and proving accomplice liability. Maybe the best way to understand this is to look at the history of the RICO statute and why Congress passed it in 1970. (Although this detour delves into the RICO Act’s criminal law origins, its applicability to civil law is clear.)

The RICO statute’s legislative history shows that federal prosecutors were becoming frustrated with perceived loopholes in the U.S. criminal code as they tried to prosecute members of sophisticated mob organizations. (See, e.g., Primer on RICO, U.S. Sentencing Commission.) Prosecutors found that lower-level members of these organizations were kept in the dark about the “big picture”—i.e. the way that their roles contributed to the larger criminal scheme of the “enterprise.” This was likely by design. Organized criminals were gaming the penal system.

While prosecutors could successfully prosecute lower-level soldiers (“soldatos”) with minor crimes, it was difficult to tie them to the more serious criminal scheme of the organization. Existing conspiracy law required that the defendant knew about and intended to provide substantial support to the commission of the criminal scheme. Since the soldatos were kept ignorant of the big picture, it was difficult to prosecute them for the more serious crimes to which their minor crimes contributed. Without the threat of long prison sentences threatening the soldatos, it was difficult for prosecutors to induce the soldatos to testify against their bosses.

The RICO Act was passed in 1970 in part to fix this perceived loophole. Now, under section 1962(c), it was enough that the defendant was part of a criminal enterprise and committing minor crimes (the “predicate acts.”) for the enterprise. They could now be convicted of the “big picture” crimes without their knowing exactly what those crimes were. It was essentially a back door into a looser type of accomplice liability—one that didn’t have the same mens rea requirements as conspiracy law.  On top of that, the RICO statute has its own conspiracy provision (Section 1962(d)), which allows culpability for the broader criminal scheme through conspiring to commit a relatively minor predicate act.

Applicability to Civil RICO Cases

In theory, this same relaxed standard for accomplice liability is available in civil RICO. (We say “in theory” because there seems to be at least some confusion and disagreement in the Circuits Court and District Courts about almost every element of civil RICO claims.) There is simply no guarantee that any given court won’t read a requirement into the statute that is not actually in the statute. But strictly applying the elements of Section 1962(c) liability, there’s arguably no requirement that a RICO defendant intended to accomplish (or even was aware of) the overall RICO scheme. It may be enough that the defendant was part of “an enterprise” and committed a pattern of predicate acts.

In some civil cases, there can be a clear advantage is tying a group of defendants together as part of a larger RICO enterprise, particularly in overcoming a causation problem. It might be difficult, for example, to prove that any single fraudulent email was the proximate cause of the plaintiff’s reliance and/or damages. But what about the collective effect of many emails by many different defendants? In the aggregate, many communications, taken together, can overcome causation problems where any single communication by a single defendant could not. By tying all of the defendants together into a single Enterprise, you make them all potentially liable for the overall scheme, even if their individual roles were minor and even if they didn’t know precisely what the scheme was.   

A word of caution: This article is of course written from a plaintiff’s perspective. There are many, perhaps superior, defense strategies to counter the theories discussed here, but they are a subject for another article. 

Brodie Smith and Anthony Lanza, litigation and trial attorneys, have developed focused practice areas both prosecuting and defending civil RICO lawsuits in federal courts. They have also been retained by other attorneys to consult on RICO claims in both pending and contemplated lawsuits. They can be contacted at (949) 221-0490. 

The information in this blog post does not constitute legal advice, nor create and attorney-client relationship. Laws constantly change, and this information may become outdated; moreover, the information here is only a general overview and may omit some aspects of the law. It is provided for discussion purposes only; not to be relied upon by the reader in making any real-world decisions. 

©2020 Lanza & Smith PLC. All rights reserved.

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