Racketeering Act turns on corporations
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The federal judge in the case refused to dismiss the RICO charge before the trial, but the charge was ultimately dropped by the filing attorneys because they did not think it would hold up under judicial scrutiny during the trial.Skip to next paragraph
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The attorney for the insurance company, Charles Tuffley, says including a RICO count in a business dispute case generally ``makes the case more expensive to litigate. [And] ``most of those claims are brought to give the insured additional leverage to obtain a settlement.'' As a result of such cases, RICO has taken on a life of its own. Some legal experts suggest that it has already eclipsed state fraud laws.
``It really is revolutionizing commercial litigation,'' says Susan O'Connor of the American Law Institute in Philadelphia.
``RICO is likely to be a prominent feature of the commerical dispute landscape in a wide range of cases from corporate takeovers to loan defaults,'' says Stephen Glasser, president of Legal Times, a weekly law review.
In the meantime, several members of Congress are examining how to amend RICO to prevent what some consider abuses by private lawyers. The problem is that no one can agree on what constitutes ``racketeering.''
Business groups would like to see the racketeering statute apply only to illicit criminal enterprises, such as Mafia syndicates.
Others maintain that the RICO statute should stay as is, applying to both legal and illegal organizations. Some lawyers contend that the current RICO statute, if left alone, will help restore true ethics to the US business community and help reduce fraud in America.
Still others contend that the ultimate costs of maintaining civil RICO in its current form will be a growing case load in federal court and increasingly expensive commercial lawsuits. How RICO emphasis has changed
Congress passed RICO as part of the Organized Crime Control Act of 1970. In it, federal prosecutors are granted broad powers to charge alleged organized criminals with committing a series of crimes or what amounts to a ``pattern of racketeering.'' Rather than stop there, Congress also wanted to encourage the private sector's participation in the fight against organized crime. A civil section was included in the anti-racketeering law. It was aimed at encouraging businessmen and their lawyers to, in
effect, become private-sector prosecutors.
Fifteen years ago, the congressional spotlight was on the archetypal godfather version of racketeering. Members of Congress were concerned that Mafia bosses using strong-arm tactics and stolen riches could make offers that honest but frightened businessmen couldn't refuse.
Today, only 9 percent of RICO civil suits relate to typical mobster activity such as embezzlement, extortion, political corruption, and bribery. And 81 percent of all RICO suits filed involve either alleged securities fraud, business disputes, or antitrust allegations, according to an American Bar Association study.