What is Racketeering?

Racketeering refers to an organized criminal activity that involves the operation of illegal businesses. It generally involves a repeated act (a pattern) done by means of extortion or coercion from which businesses or individuals benefit by earning illegal money. In other words, it is a means through which businesses or individuals earn illegal money either repeatedly or regularly.

How Does Racketeering Work?

The racketeer offers a service that is deceitful to resolve a problem which does not exist. The term racketeer is derived from the word racket, which is a word meaning criminal activity that extorts money from individuals or business by way of cheating.

How Racketeering Works (Examples)

Generally, racketeering exists in many forms. Below are examples of racketeering: 

Example one 

Let's assume that there has been a cyber-extortion that is regular on a computer of the user. A hacker, therefore, takes advantage through illegal means to place malware to the users computer. As a result, it blocks any access to the computer, including the data stored on the computer. The hacker then demands payment so that the users access on the computer can be restored. This means that money is being demanded from a computer user to restore access that was intentionally denied by the hacker using malware. In this case, the user might not be in a position to know what happened, but for him or her to have access to the computer and data again, he or she has to pay for access to be restored. This is an illegal way of earning money and can, therefore, referred to as racketeering. 

Example two 

There is also another form of racketeering known as a protection racket. An example of this is as follows: A criminal entity may threaten to harm a business or a private property of an individual in case the business or this individual does not agree to make payment for its protection. This is an illegal way of earning money which makes racketeering. 

Other examples of racketeering may include:

• A criminal entity may intentionally decide to illegally detain an individual and then demands a ransom from the relative(s) of the victim before setting the person free.
• Doctors may be bribed by a drug manufacturing company to overprescribe a certain medicine so that they can defraud insurance companies to help boost their earnings.

Generally, it is important to note that when it comes to racketeering, there is usually an intentional creation of a specific problem by the criminal entity (racketeer). The criminal entity does this so that he or she can get an opportunity to fix the problem he or she has created in exchange for money. This is an illegal way of earning money as it involves cheating.

Containing Racketeering (1970 RICO Act)

Initially, there were few legal avenues for prosecuting criminal organizations hence, being forced to only try an individual on mob-related racketeering. To be able to contain illegal extortion of money through collusions by criminal entities, in October 1970, the U.S. government decided to introduce an act known as the Racketeer Influenced and Corrupt Organization (RICO). The RICO Act of 1970 (law) was legislated as Title IX Organization Crime Act of 1970 and signed by President Richard Nixon making it a law. With the creation of RICO law, government officials were now able to take down the entire racket since the law stipulates options through which an indicated organizations assets can be seized. In addition, the RICO law permits the leaders of the racketeering organizations to be prosecuted for having ordered others to engage in racketeering activities. Generally, enforcement agencies are permitted under this law to charge criminal entities involved in different racketeering acts. The purpose of the law is to eliminate the racketeering and organized groups and turns them into legitimate organizations, that operate in interstate commerce. However, there is an expansive view when it comes to RICO charges. For instance, for one to be found guilty of violating the RICO law, the government must without reasonable doubt be able to prove that:

• The enterprise does exist or existed.
• The defendant was somehow or fully involved with the enterprise
• The enterprise caused interference to the interstate commerce
• The defendant did carry out racketeering related activity.
• The defendant did actually participate in the enterprises racketeering activity at least more than once, as stated in the indictment.

Federal versus State Offenses

According to the RICO law, a person can be charged upon committing at least two racketeering activities within a period of ten years. However, a total of 35 criminal acts qualify it to be termed as racketeering. Twenty-seven of the crimes are usually categorized as federal crimes while the other eight are categorized as state crimes. Note that federal crimes result in prosecution at both the state and federal levels. They include:

• Crimes related to immigration
• Drug and trafficking crimes
• Crime related to weapons
• White-collar crimes
• Crime related to computer fraud

Federal Crimes Investigating Agencies

There are various national agencies that are involved in investigating federal crimes. They include the following:

• Federal Bureau of Investigation (FBI)
• Bureau of Alcohol
• Drug Enforcement Agency (DEA)
• Internal Revenue Services (IRS)
• Border Patrol
• Tobacco and Firearms (ATF)
• Department of Homeland Security
• The Secret Service

In general, state crimes are crimes that violate the law of a particular state. Such crimes are investigated by the state, county or local police. This means that crimes such as robbery, assault, and kidnapping committed within a boundary of a given state, are state crimes and, therefore, the investigation is carried out by investigators from within the state.

Related Topics

•  Criminal Law (Intro)
• What is Criminal Law?
• What are the elements of a crime?
• Classifications of crimes Misdemeanor vs Felony Criminal Charges?
• What is the process of bringing criminal charges?
• Cease and Desist Order
• What is the process for executing an arrest?
• What are the exceptions to reading Miranda Rights?
• What is the process for initiating criminal charges?
• Prima Facie
• What is the Arraignment and Initial Appearance
• Investigation - Subpoena
• Common Defenses to Criminal Conduct
• Ex. Castle Doctrine
• Types of Punishment for Criminal Activity
• Theories Behind Criminal Punishment
• Federal Sentencing Guidelines
• What are the 4th Amendment protections against Search and Seizure?
• What are the 5th Amendment criminal law protections?
• What are the 6th Amendment criminal law protections?
• What are the 8th Amendment criminal law protections?
• Crimes Against the Property of Others
• Activity Constituting Fraud
• Good Faith as a Defense to Fraud
• Common Types of Business Fraud
• False Statement as a Criminal Charge
• Conspiracy as a Criminal Charge
• Obstruction of Justice as a Criminal Charge
• Aiding and Abetting or Conspiracy to a Crime

• What is a White Collar Crime?
• Lone-back Method of Money Laundering
• Defalcation
• Kiting
• Lapping Scheme

• Whistleblower
• Crimes or Conduct Endangering Workers
• Bribery or Illegal Kickback as a Crime
• Racketeer Influenced and Corrupt Organization Act
• Racketeering
• The False Claims Act
• Sarbanes Oxley Act
• What is Cyber Crime
• Phishing