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Civil RICO Claims – Part II

| Nov 1, 2012 | Uncategorized

As we discussed in our first post in this series, business may be able to recover from a variety of torts through the civil RICO statues.   In review, RICO stands for the Racketeer Influenced and Corrupt Organizations Act.

To review, the elements for this claim include: (1) the conduct of an enterprise, (2) through a pattern, (3) of racketeering activity. 

Lets look at the first element: the conduct of an enterprise. 

In order to pursue a civil RICO claim, an “enterprise” must exist as defined by the Act.  Enterprise is defined as: “any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.” 18 U.S.C. § 1961(4).  It may seem straightforward, but it is actually more complicated than this definition suggests.

In order to establish liability, a business bringing the claim must allege and prove the existence of two distinct entities: a liable person and a separate “enterprise” that is not simply the same “person” referred to by a different name.

To clarify, there needs to be two players and the enterprise is itself never a proper RICO defendant.  In other words, the same entity cannot do double duty as both the RICO defendant and the RICO enterprise.” Miranda v. Ponce Federal Bank, 948 F.2d 41, 44-45 (1st Cir. 1991). 

Why are two distinct persons/entities required? 

The purpose is to protect a “legitimate enterprise from those who would use unlawful acts to victimize [the enterprise].”  Cedric Kushner Promotions, Ltd., 533 U.S. 158 at 164  (citing to Turkette, 452 U.S. at 591). 

In the next two parts of this blog series, we will examine the final two elements and how the law defines a pattern of racketeering activity.

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