- Racketeering is a federal crime that includes up to 20 years in prison.
- If found guilty, a defendant in a racketeering trial can pay up to $25,000.
- Organized crime, white-collar crime, and cybercrime are the most common types of racketeering.
- Bribery, money laundering, and fraud are common racketeering schemes known today.
As a term, racketeering (also spelled rackateering) refers to a federal crime. As such, it mostly classifies as a white-collar crime. Racketeering can involve a number of illegal activities, including trafficking narcotics, money laundering, extortion, and racket, as the most prominent forms of organized crime schemes. In its most common meaning, racketeering is linked to organized crime and is also closely connected to the mafia.
Throughout history, the first documented case of racketeering happened in the 1920s. The Employers’ Association of Chicago took the initiative to coin the term “racketeering” in 1927 after identifying the organized crime influence in the Teamster Union.
- Racketeering Definition and Meaning
- Types of Racketeering
- Racketeering Schemes
- Impact of Racketeering
- Racketeering Laws and Enforcement
- Examples of High-Profile Racketeering Cases
- Prevention and Protection Against Racketeering
Racketeering Definition and Meaning
To define racketeering, one would say it is “dishonest and fraudulent business dealings,” as the Oxford Dictionary states. By definition, racketeering is an organized crime involving an individual or a group of individuals looking to amass gains from fraudulent actions that are also extortive and/or coercive.
The racketeering meaning is deliberately broad to encompass as many illegal activities as known nowadays. Any form of organized crime including, the formation of an enterprise managing and handling illegal activities, is considered racketeering.
The enterprise is crucial in the racketeering scheme; it’s a front to deceive the authorities — without it, the criminals won’t be able to collect the illegally acquired gains.
Types of Racketeering
Racketeering comes in many forms. State-wide, racketeering can include crimes involving robbery, bribery, murder, arson, kidnapping, gambling, extortion, drug crimes, etc. In essence, racketeering can be in the form of organized crime, white-collar crime, and cybercrime.
When speaking of organized crime, one must understand that the actions might not be visible at first and not easily distinguished. Any ongoing criminal enterprise that deliberately causes financial loss and losses to the credibility and status of others with the purpose of amassing wealth is deemed an organized crime.
One of the main reasons organized crime is still evident in this day of age is corruption. Corrupted individuals functioning in prominent and leading positions are the enablers of organized crime activities. Public officials are often involved in major organized crime affairs either due to corruption or intimidation, threats, and other means of coercion.
What’s distinctive about organized crime activities is that they are never random or unplanned, but on the contrary. They take time, thorough planning, and rationalizing, including different assets (human, monetary, and real estate). Organized crime activities are often coupled with violence.
The term “white-collar crime” was first introduced in 1949 by Edwin Sutherland, an American sociologist and criminologist. The author defined the term as a crime perpetrated by an individual of respect and high social status.
In general, white-collar crime does not involve violence and is mainly portrayed through deceptive actions. White-collar crime is mainly linked to efforts to avoid losing money or properties or to gain a business edge among competitors.
Embezzlement, money laundering, securities fraud, and corporate fraud are among the most commonly known examples of white-collar crime.
Any criminal activity that uses a computer, a network, or a networked device is deemed cybercrime. Most of the time, cybercrimes are enacted to gain financial benefits from the entities under attack, but there are instances where cybercrimes don’t involve financial gains.
There are cybercrime cases where the attackers acted with the sole purpose to damage or incapacitate the other party, be it an individual or an organization.
The complexity of racketeering is what makes it difficult to fully eradicate it or even keep such criminal activities under control. The intricateness of racketeering lies in its many schemes, involving money laundering, fraud, embezzlement, etc.
Extortion is classified as an illegal, organized criminal activity involving an individual or a group intending to get money from an organization or a person using threats or force. In other words, anyone who uses force, violence, or intimidation to gain monetary benefits from an entity or a person is an extortionist.
Bribery is a common criminal occurrence in politics. Any action that involves offering money, soliciting using money, as well as receiving money in exchange for public or legal service is considered bribery.
Organized criminal groups and money laundering often go hand in hand. Money laundering is defined as a process used to conceal the money trail for illegally obtained money. Criminals involved in drug trafficking, embezzlement, gambling, corruption, etc., are almost always involved in money laundering.
The purpose of money laundering is to present illegally-obtained money as legitimately sourced.
Just like bribery, fraud is another common racketeering scheme. It involves deliberately gaining assets, monetary or real estate, and stripping the victim of their legal rights. Fraud violates criminal laws and civil laws.
Taking advantage of company credit cards for personal benefits is referred to as embezzlement, and so is stealing money. It’s the act of withholding money or assets with the intention to use them for purposes other than the original ones.
In other words, an embezzler would not sell someone’s house as agreed upon but rather rent it instead and keep the rent money for themselves.
Counterfeiting is a serious federal crime. Counterfeiters are doing forgery by mimicking brands and products. Sometimes, counterfeit goods are very difficult to spot. It includes manufacturing and distributing forgery goods falsely represented under someone else’s name.
Impact of Racketeering
One of the devastating consequences of racketeering is the demise of trust in authorities like governments, the police, the legal system, etc. Victims of racketeering are not confident they can step forward and report a case of racketeering simply because they don’t know how high up the hierarchy racketeering goes.
The impact of racketeering on the economy can be detrimental to a country’s economy, especially in countries that are still developing. Racketeering can easily shed millions off the economy, rendering investors and business owners unable to seize operations.
The social impact of racketeering goes beyond what meets the eye. Even though the tangible repercussions can lead to significant monetary loss, a victim of racketeering stands more to lose than money. For instance, victims of fraud are likely to experience decreased reputation, interruption in business correlations, and so on.
Corrupt politicians are a common sight these days. It’s no wonder that racketeering and corruption have determined the faith of hundreds of thousands of people worldwide. Racketeering governments refuse to leave the throne of reign and hold their own nations hostage.
Impact on Businesses
No matter how big or small a business is, racketeering can do massive damage to the brand’s reputation and the net worth. Loss of business opportunities and investments and losing recurrent customers and suppliers are only some of the horrendous effects racketeering invokes in businesses.
Racketeering Laws and Enforcement
As time passes, state and federal authorities are becoming more and more relentless in fighting organized crime. The RICO (Racketeer Influenced and Corrupt Organizations) Act is one of the most wholesome federal statutes.
Since its introduction into the legal system in 1970, the RICO has been used by federal law enforcement to charge persons and groups. Everyone who has committed crimes on a nationwide level, even if more than 10 years of the initial crime have passed, can be charged with RICO.
In the U.S., the first RICO trial took place in May of 1979, in San Francisco, in the trial case United States vs. Sam Bailey Gang. The trial was led by prosecutor Marl L. Webb.
RICO Charges Meaning
The Act outlines penalties, offenses, and punishments for individuals or groups involved in racketeering. The maximum cash fine outlined in RICO is $25000, whereas imprisonment can last for up to 20 years.
Other Federal and State Laws
In federal cases of racketeering, as opposed to state cases, the penalties are more severe and unforgiving. In general, the severity of the penalty depends on how elaborate the racketeering scheme is.
State laws, like those in Nevada, categorize racketeering as a Category B felony, translating to a maximum time in prison of 20 years. Fine-wise, the defendant can pay as much as $5,000.
Law Enforcement Agencies Involved in Fighting Racketeering
Luckily, every major authority figure in the authority hierarchy is boarding the fierce opposition to racketeering. Some of the more prominent law-enforcement agencies tackling racketeering include the following:
- The US Federal Bureau of Investigation (FBI)
- The UK National Crime Agency (NCA)
- The Spanish National Police (Policía Nacional)
- The Bundeskriminalamt (BKA — Federal Criminal Police Office of Germany)
- The Dutch National Police (Politie)
- And the Swiss police.
Examples of High-Profile Racketeering Cases
The public is no stranger to televised racketeering cases, especially back in the 60s and 70s when racketeering was in full swing. Some examples of racketeering include the famed mafia cases that caused fear and loathing in every corner of the U.S.
There probably isn’t a more famous racketeering trial than the RICO Act conviction back in 1982. The famed case involved John Gotti, the Gambino crime family boss, who was convicted of murder, conspiracy to commit racketeering, and 9 more charges.
It was reported that the prosecutors spent a whole month and more preparing the documents for the case, and they had a lot of work on their hands. Gotti was finally found guilty on all charges.
In the world of soccer, nothing shook the ground quite like the news of racketeering, money laundering conspiracies, and wire fraud in FIFA, the Fédération Internationale de Football Association.
The indictment contained 47 counts revolving around a two-decade-long scheme to amass wealth under the FIF brand. Some of the defendants in the trial included five high-ranking FIFA officials and other officials governing other aspects of soccer. The prosecutors disclosed that the defendants paid more than $150 million in bribes.
One of the biggest cybercrimes is that of the Iceman, aka Max Ray Butler. He committed cybercrime by stealing the credit card information of over 2 million people! After being apprehended and put on trial, the Iceman was sentenced to 13 years in prison, which he still serves.
In addition, he was obligated to pay restitution of $27.5 million to his victims.
Prevention and Protection Against Racketeering
Even though not all businesses can afford top-notch cybersecurity systems or security systems in general, there are still several aspects of prevention to take into consideration. For instance, you can get to know your employees better before you let them into your business.
There are several steps individuals and businesses can take to protect themselves, such as:
- Separate the duties and enforce reviews
- Learn more about your employees
- Make use of internal controls
- Learn how to detect fraud
- Avoid using company credit cards
- Schedule random bookkeeper audits
- Review the company’s bank statements
The Role of Law Enforcement and Government in Preventing Racketeering
It goes without saying that the law enforcement system should be the wall that prevents racketeering from affecting the population. Granted, that might be easier said than done, but there are so many departments and agencies people can rely on.
For instance, the Department of Labor’s duty is to fight racketeering and organized crime. Still, with so much work in the field, the Department created the Office of Inspector General’s Labor Racketeering Program. The primary goal of the Office is to pursue criminal investigations involving racketeering, extortion, embezzlement, and forgery.
Locally, the NYPD branched out to Departments committed to combating organized crime, like NYPD’s Organized Crime Control Bureau.
Thanks to federal acts like RICO and the joint efforts of federal and local crime fighting agencies, we no longer witness massive mafia scandals involving bribes, money laundering, or extortion. Well, at least not so much, anyway.
Still, racketeering has become the cancer of the economy, the social well-being of the nation, and the political (under)development of parties. Do we really want to live in a world where corrupted authorities lead the way? Do we want to wake up in a world that looks past racketeering, fraud, embezzlement, and extortion?
No matter if you’re a business owner or a regular Joe or Jane, it’s up to all of us to speak when we see wrongdoing.