Tag Archives: racketeering

RICO Convictions in Puerto Rico Call First Circuit to Analyze Sufficiency Requirements

Published By Stephen Preziosi

US v. Rodriguez-Torres
939 F.3d 16
First Circuit Court of Appeals
Decided: September 18, 2019

Issue:

What is required to convict under RICO and what evidence is considered sufficient to meet those requirements?

Holding:

The First Circuit held that there was sufficient evidence to show defendants met the requirements under RICO. A RICO conviction requires:

  1. That an “enterprise” existed and that the group had:
    • a common purpose,
    • relationships within the enterprise, and
    • longevity
  2. That the organization affected foreign or interstate commerce;
  3. That the defendants had some role operating and managing the organization;
  4. That there was a pattern of racketeering; and
  5. That the defendants knowingly joined the conspiracy.

Facts:

A gang known as La Rompe ONU was one of the biggest street gangs in Puerto Rico. After the take-down, an astounding 105 defendants were charged with racketeering, drug trafficking, firearms offenses, and murder. It was alleged that La Rompe profited by selling drugs to a large number of public housing projects by using violence and threats to maintain power over its territory. Four convicted defendants appealed to the First Circuit and argued, among other things, that there was insufficient evidence to convict them under RICO.

Analysis:

The Racketeer Influenced and Corrupt Organizations Act (RICO) was enacted in 1970 to prosecute organized crime in the United States. 18 U.S.C. § 1962(c),(d) provides that anyone “employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of an enterprise’s affairs through a pattern of racketeering activity” or to conspire to do so. 

Enterprise Requirements Under RICO: Purpose, Relationships, and Longevity

Under RICO, an “enterprise” is defined as any group of individuals “associated-in-fact,” with the exception of legal entities. An association-in-fact is proved by evidence of an ongoing organization (formal or informal) and by evidence that its associates function as a continuing unit.

To determine whether an enterprise exists under RICO, the U.S. Supreme Court set out a three part test that asks whether the group has (1) a common purpose, (2) relationships among those associated with the enterprise, and (3) longevity sufficient to permit these associates to pursue the enterprise’s purpose. Boyle v. United States, 556 U.S. 938, 946, 129 S.Ct. 2237, 173 L.Ed.2d 1265 (2009).

The First Circuit held La Rompe met the “common purpose” requirement in determining whether the group made up an enterprise under RICO. According to the Court, there was sufficient evidence to show that La Rompe’s purpose was to profit by selling drugs at housing projects under their control by using violence. The group also shared the common purpose of expanding and strengthening its power.

In determining whether the group met the “relationships” requirement under RICO, the Court held there was more than sufficient evidence to show the group made up an enterprise. To start, the group’s naming their organization “La Rompe ONU”—where “ONU” stands for Organization of United Drug Traffickers, in English—showed they viewed themselves as a united group. Additional evidence cited by the Court pointed to the group’s loyalty to one another, pooling resources for the group’s common purpose, and joint criminal activity.

As for the longevity requirement, the Court held evidence showing La Rompe continued as a unit for eight years was more than enough to check off the final enterprise factor under RICO.

RICO Racketeering Affects Interstate or Foreign Commerce

Another element of RICO the government must prove is whether the organization affected interstate or foreign commerce. The codefendants argued the organization never operate outside of Puerto Rico. However, La Rompe’s trafficking of cocaine and heroin affected foreign commerce because, as the government’s expert witness testified, these narcotics are not produced in Puerto Rico and must have been imported. Additionally, the Court pointed to expert testimony that the large quantities of marijuana were likely imported from southwestern US states, thus also affecting interstate commerce.

Running the Enterprise: Level of Participation in RICO Activities

Not only must the government prove defendants participated in RICO activities, but it must also show defendants were involved to some degree with operating or managing the enterprise. The member of the enterprise need not be in a position of “upper management” to operate an enterprise. A group member can hold management status even under the direction of someone further up the chain. The Court found the La Rompe defendants held this status, at least to a sufficient degree, as evidence established they were drug-point owners.

Pattern of Racketeering

At least two predicate acts of racketeering within ten years of each other are required in showing a pattern of racketeering exists. These predicate acts include drug trafficking, bribery, money laundering, murder, robbery, extortion, and more. The government must also prove the acts are somehow related to one another and “amount to or pose a threat of continued criminal activity.” H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 239, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989).

The La Rompe defendants argued that they should not have been prosecuted under RICO because evidence only established predicate acts of drug trafficking and no other acts. However, the Court held the defendants incorrectly interpreted the requirements of “pattern of racketeering” in that the “two or more” predicate acts do not have to be two distinct acts. On the contrary, a defendant may be prosecuted under RICO for multiple counts of mail fraud, for instance, without evidence of any other types of predicate acts. 

“Knowingly Joined” Requirement

The final RICO requirement disputed by the defendants is that they did not “knowingly join” the RICO conspiracy. This element only requires that a defendant “agreed with one or more coconspirators to participate in the conspiracy.” See United States v. Ramírez-Rivera, 800 F.3d 1, 18 n.11 (1st Cir. 2015). The Court held that the defendants’ participation as drug-point owners was enough to show they knowingly entered into the conspiracy since making money through drug dealing was the main purpose of La Rompe’s conspiracy.

Civil RICO Racketeering Claims

Published By Stephen Preziosi

LLM Bar Exam, LLC v. Barbri, Inc.
No. 17-3463-cv
Second Circuit Court of Appeals
Decided: April 25, 2019

The Alleged Conspiracy: Bribery, Monopolization, Kickbacks and Racketeering

In 2016, LBE, a bar exam prep company, filed a lawsuit against Barbri and several law schools claiming conspiracy to restrain trade, monopolization, and attempted monopolization in violation of the Sherman Act, 15 U.S.C. §§ 1 and 2, and racketeering in violation of the Racketeer Influenced and Corrupt Organizations (“RICO”) Act, 18 U.S.C. § 1962(c). Unpersuaded, the District Court dismissed each of LBE’s claims of racketeering.

LLM Bar Exam, LLC (“LBE”) is a company that offers courses for foreign attorneys who wish to obtain Master of Law, or “LL.M.” degrees from U.S. law schools. Barbri, Inc. provides bar prep courses to U.S. law school graduates as well as LL.M. graduates and is a direct competitor of LBE.

LBE filed a racketeering lawsuit against Barbri, alleging they were forced out of business due to a conspiracy between and among Barbri and several law schools, including Harvard, NYU, and Columbia. LBE alleged that Barbri maintained a monopoly over the market by donating money to schools, bribing their administrators, and hiring faculty in exchange for promotion of Barbri’s products.

LBE appealed to the Second Circuit, challenging the dismissal of its Sherman Act and RICO claims. As to the RICO claim, LBE asserted that there were sufficient facts to show that defendants-appellees engaged in “a pattern of racketeering activity” within the meaning of RICO for the “common purpose” of using “dishonest means to wrest customers from LBE in the LLM Market.”

Ultimately, the Second Circuit upheld the District Court’s decision to dismiss LBE’s complaint because they failed to state a plausible claim of relief. The Court provided no further analysis.

Civil RICO Racketeering Claims: Strict Requirements Limit Success

On the criminal side of RICO, a convicted defendant can receive a lengthy prison sentence. However, criminal liability is not the only potential consequence of a RICO violation. Alleged victims of racketeering may bring a civil suit as a mechanism for receiving compensation for injury.

A successful RICO claim must demonstrate:

  • tangible financial loss;
  • a pattern of criminal activity (although a conviction is not necessary);
  • the claim is brought within the four-year statute of limitations.

RICO claims are often dismissed by courts because plaintiffs fail to show the defendant actually committed racketeering activities. Thus, the standard for a successful civil RICO suit is rarely met. Predicate acts that are required in RICO claims include extortion, kickbacks, money laundering, bribery, wire and mail fraud and more.

RICO Racketeering Claims under 18 U.S.C. § 1962(c)

Among other claims, LBE alleged Barbri engaged in affecting interstate or foreign commerce by violating section § 1962(c) of the RICO Act. 18 U.S.C. § 1962(c) makes it illegal for a person who is employed by or associated with an enterprise engaged in or affecting interstate or foreign commerce to conduct or participate in the conduct of the enterprise’s affairs through a pattern of racketeering or collection of unlawful debts.

For a successful showing of a RICO violation under §1962(c), the plaintiff must demonstrate the defendant conducted or participated in conduct, that the conduct was of an enterprise, and that there was a pattern of racketeering activity.

A showing of a “pattern” of racketeering activity requires proof that the acts are related to and that the acts posed a threat of continued criminal activity. “Related” acts will generally have the same goal, participants, or victims, or methods of commission. The activity is “continuing” where the conduct occurred during the course of a confined period of time or past conduct that threatens future repetition.

Under RICO, an “enterprise” is defined as any group of individuals associated in fact. An association-in-fact is proved by evidence of an ongoing organization (formal or informal) and by evidence that the associates function as a continuing unit. A civil RICO complaint must show that each defendant participated in the operation of the enterprise.

To decide whether a pattern of racketeering activity exists, courts have historically considered the following factors:

  • the number of victims
  • the nature and quantity of predicate acts
  • how long the activity took place
  • whether there were distinct injuries
  • the quantity of distinct transactions involving the conduct

LBE’s Unsuccessful RICO Claims

Although the Second Circuit does not make clear why, specifically, LBE failed to establish a showing that Barbri engaged in a pattern of racketeering activity, the District Court’s decision outlines reasons for dismissal.

As an initial matter, the District Court addressed the vagueness of the complaint alleging wire and mail fraud communications, noting the complaint failed to specify the fraudulent content of the communications, who made the statements, and when the statements were made. “RICO claims premised on mail fraud must be particularly scrutinized . . . ,” the Court held. Like many other civil RICO claims, LBE’s complaint failed to meet the strict requirements of demonstrating a pattern of racketeering.

The District Court further found that LBE failed to show that the defendants formed an enterprise-in-fact because the complaint did not indicate they acted as one unit. Moreover, the complaint omitted any evidence that each individual participated in the operation it alleged.

Chances of winning a RICO civil suit are slim. As this case demonstrates, courts scrutinize civil RICO claims with careful eyes and the requirements for showing sufficient evidence for a RICO violation exists are extensive.

RICO Racketeering Conspiracy: How Specific Must a Jury’s Verdict be? No Need To Name Racketeering Acts Says The First Circuit.

Published By Stephen Preziosi

United States v. Leoner-Aguirre
No. 18-1333
First Circuit Court of Appeals
Decided: September 20, 2019

ISSUE

Withdrawing From a Racketeering Conspiracy: Incarceration Doesn’t Count

  • Whether the incarceration of a defendant constitutes a withdrawal from a RICO conspiracy.

HOLDING

  • The Court held that the jury is not required to state in its verdict which specific racketeering acts the defendant committed. The Court relied on Salinas v. United States, 522 U.S. 52 (1997), which overruled United States v. Ramirez-Rivera 800 F.3d 1, 18 (1st Cir. 2015). Thus, while there was a long list of alleged acts that Mr. Aguirre was accused of such as murder, attempted murder, robbery etc. It was not necessary for the jury to specify which acts they found the defendant to have committed. 
  • The Court held that imprisonment has no bearing on whether a defendant has withdrawn from a racketeering conspiracy nor does ceasing to participate in a conspiracy mean a defendant has withdrawn. To withdraw from a RICO conspiracy, a conspirator must act affirmatively. Typical demonstrations of withdrawal include a “full confession or communication of abandonment to one’s co-conspirators.”

What is Required in a Jury’s Verdict to Convict a Defendant of RICO or Racketeering Conspiracy?

FACTS

Rafael Leoner-Aguirre was a member of the El Salvador based gang “MS-13,” which also operates in the United States. In 2017, a grand jury indicted Aguirre for a conspiracy under the RICO Act (Racketeer Influenced and Corrupt Organizations). Allegations against Aguirre under the RICO conspiracy included attempted murder, robbery, and drug trafficking. A jury found Aguirre guilty of RICO conspiracy and he was sentenced to 228 months in prison with three years of supervised release.

Before his trial, Aguirre urged the district court to instruct the jury to specify which acts it found Aguirre had committed in order to convict him of RICO conspiracy. The district court denied his motion, and Aguirre appealed to the First Circuit.

ANALYSIS

No Findings of Specific Acts of RICO Conspiracy from the Jury are Necessary in a Jury’s Verdict

Aguirre’s argument that the jury must specify which racketeering acts Aguirre committed to convict him of RICO conspiracy relies on the First Circuit’s ruling in United States v. Ramirez-Rivera 800 F.3d 1, 18 (1st Cir. 2015). However, the Court found that the Supreme Court’s decision in Salinas v. United States, 522 U.S. 52 (1997) contradicts the case on which the Ramirez-Rivera decision relies. Aguirre’s argument, therefore, fails since the Supreme Court’s decision overrules the underlying case in Ramirez-Rivera.

Incarceration Does Not Constitute Withdrawal from a RICO Conspiracy

As to the withdrawal issue, the First Circuit held that a defendant convicted of RICO conspiracy does not withdraw from a conspiracy just because he has entered prison. On the contrary, the Court found there was sufficient evidence to determine that Aguirre continued to actively participate in the conspiracy while incarcerated. As the Court pointed out, “ . . . mere cessation of activity in furtherance of the conspiracy does not constitute withdrawal.” Instead, the defendant must demonstrate he has affirmatively withdrawn from the RICO conspiracy. Although the Court provided no specific rule, it held that affirmative withdrawal from a conspiracy typically “requires either a full confession to authorities or a communication by the accused to his co-conspirators that he has abandoned the enterprise and its goals . . .”