What Is Racketeering And How Does Racketeering Work?

What Is Racketeering With Examples And How Does Racketeering Work? Set of illegal activities aimed at commercial profit that may be disguised as legitimate business deals.  Common examples include fraud, extortion, bribery, and actual or threatened violence. 

Why is it called racketeering? The term racketeering broadly refers to criminal acts, typically those involving extortion, that involve a “racket”. 

Federal crimes of racketeering include bribery, gambling offenses, money laundering, obstructing justice or a criminal investigation, and murder for hire. The U.S. government introduced the Racketeer Influenced and Corrupt Organizations Act in October 1970 to contain racketeering.

Organized groups may operate illegal businesses, known as rackets. An organized group may also divert funds from a legal business to use for illegal activities. Rackets primarily functioned in obviously illegal industries, such as prostitution, human trafficking, drug trafficking, illegal weapons trade, or counterfeiting.

Forms of Racketeering:

• Protection rackets: A criminal entity threatens to cause harm to a business or individual unless they are paid a protection fee.
• Drug trafficking: illegal drugs are produced, smuggled, and sold to the public.
• Kidnapping: This is considered racketeering when an individual is illegally detained and their captors agree to set the kidnapped individual free once a ransom is paid.
• Cyber extortion: This occurs when a hacker pushes malware onto someone’s computer, blocking all computer and data access. The hacker then demands money to restore access to the user.
• Illegal gambling activities: such as underground casinos, sports books, or card rooms where the “house” takes a profit.
• Fencing racket: Individuals act as intermediaries to buy stolen goods from thieves at low rates. They resell them for a profit to unsuspecting buyers.

Is the RICO Act effective?

The RICO Act is extremely helpful in the fight against racketeering and organized crime. It allows prosecutors to effectively target criminal enterprises and organizations as well as the leaders of these groups even if they had other individuals commit the actual crimes.

How Does Racketeering Work?

Racketeering is the act of acquiring a business through illegal activity, operating a business with illegally-derived income, or using a business to commit illegal acts. The Racketeer Influenced and Corrupt Organization (RICO) Act outlines dozens of crimes that count as racketeering. Racketeering can look like regular business activity, but involves profit-generating unlawful activities such as extortion, bribes, and threatened violence.

The most serious crimes include any act or threat related to the following:

• Arson
• Robbery. 
• Dealing in obscene matter. 
• Dealing in a controlled substance or listed chemical. 
• Bribery. 
• Murder
• Kidnapping.
• Gambling.
• Extortion. 

The federal government can prosecute any enterprise with “a pattern of racketeering activity or collection of unlawful debt,” defined as being committed by an individual or group twice within a 10-year window. Crimes that can also be prosecuted under RICO Act:

• Trafficking in firearms.
• Possessing, developing, producing, stockpiling, transferring, or acquiring biological weapons. 
• Tampering with a witness, victim, or an informant.
• Embezzlement from pension and welfare funds.
• Extortionate credit transactions.

What are the types of organized crime?

Labor Racketeering

With labor racketeering, criminals infiltrate, corrupt, or attempt to control workers’ unions, employee benefit plans, or workforces for personal or financial gain. Crimes committed include employer extortion by threatening work stoppages, picketing, or sabotage. They could also include requesting bribes from the employer in exchange for ignoring the union’s collective-bargaining agreement.

Cyber-Racketeering

Racketeering can happen online as well. Cyber-racketeering crimes typically are committed by criminal organizations using tech hacking tools to steal money and information from individuals, businesses, and government agencies. Federal racketeering charges have been levied against people who have used phishing emails, fraudulent online auctions.

Business Racketeering

Organized crime might infiltrate and use a legitimate business such as a store or nightclub as a front to commit gambling, extortion, money laundering, or loan-sharking. A few examples might include a drug dealer’s use of drug-trafficking proceeds to operate a legitimate business, or an organized-crime figure intimidating a business owner into selling the business who then uses it for criminal purposes.

Differences between Federal vs. State Racketeering Offenses

State crimes violate the laws of a particular state and are investigated by local, state, or county police. Kidnapping, robbery, and assault are considered state crimes, provided they occur within the boundaries of a particular state. Sentences for federal crimes are generally longer and harsher than those imposed for state crimes.

Federal crimes lead to prosecution at both the federal and the state levels. Investigation of federal crimes involves national agencies such as the Federal Bureau of Investigation (FBI), Drug Enforcement Agency (DEA), Border Patrol, Department of Homeland Security, Internal Revenue Service (IRS), Bureau of Alcohol, Tobacco and Firearms (ATF), and the Secret Service.

Examples of Racketeering

Racketeering Example 1: 

A racketeering example might be a contracting company employee conspiring with the company owner to commit visa fraud and foreign-labor contracting fraud for financial gain. Together, they force agricultural laborers to work for low pay by confiscating the workers’ passports and isolating them from interactions with the outside world.

Racketeering Example 2:

Two former Baltimore police officers pleaded guilty to federal racketeering charges in July 2017. Along with several other members of Baltimore’s Gun Trace Task Force, they were accused of scheming to steal money, property, and narcotics by way of detaining individuals, entering residences, conducting traffic stops, and swearing out false search warrant affidavits.

Example 3: 

Another example of racketeering might include a gang acquiring money through murders, money laundering, drug trafficking, and home invasion robberies. RICO conspiracy charges could be levied against gang members committing the crimes.

Racketeering Example 4: 

Officials and corporate executives from FIFA were indicted in 2015 for racketeering conspiracy and corruption charges that involved bribes and kickbacks paid to secure profitable media and marketing rights to international soccer tournaments.