RICO – One of the Most Powerful Anti-Fraud Tools in Our Arsenal

RICO is the acronym for the Racketeer Influenced and Corrupt Organizations Act and is one of the most powerful civil remedies available to victims of fraud, criminal conduct and conspiracies.

Unfortunately, it is also one of the most misused. In the hands of the right lawyers, however, the law can be used to recover triple damages, litigation costs and legal fees. When wielded skillfully and correctly, it levels the playing field and allows ordinary businesses to take on big banks and corporate offenders.

Congress passed RICO in 1970. It is primarily a criminal statute that allows federal prosecutors to better target biker gangs, organized crime and drug cartels. At the last minute, however, Congress added a private right of action, a section that allows ordinary litigants to sue for damages.

Civil (not criminal) RICO has Powerful Remedies for a Lender’s Extortion or Fraud

The civil RICO section says, “any person injured in his business or property by reason of a violation of section 1962 ... may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney’s fee ...”

In layman’s terms, if the wrongdoer has engaged in a pattern of criminal conduct such a fraud or extortion, civil RICO provides powerful remedies.

Courts have ruled that RICO civil lawsuits can be filed anywhere in the United States. Although a federal law, RICO claims can be filed in either state or federal courts. Many states have developed their own state RICO laws that often contain even more powerful provisions and remedies.

Unfortunately, the law is often misused by litigants who are lured by the promise of mandatory triple damages. RICO is a very complex statute with precise pleading requirements. In the right hands, it is a powerful weapon.

When Banks Force an Action Using Extortion or Wire Fraud

Civil RICO allows litigants – victims – to sue for what are essentially criminal violations. If a bank uses extortion, for example, to force you to provide more collateral or turn over assets for which it is not entitled, there may be a RICO violation.

There are dozens of criminal violations that are included in RICO. Most don’t apply to private civil lawsuits. The ones we are most concerned with include wire fraud, mail fraud and extortion. It is difficult to conduct any form of commerce today without the use of “wires” (telephone, fax and email) or “mail” (U.S. Postal Service or private couriers such as FedEx). If a person uses email or telephone to engage in fraud, chances are they are committing wire fraud.

As noted above, extortion can also be used a “predicate act” for RICO.

Civil RICO Let’s You Turn the Tables on Banks & Other Lenders

Criminal violations typically require proof beyond a reasonable doubt. Try to get a prosecutor to go after a bank or business for criminal fraud, however. Those cases are quite rare.

Civil RICO claims however turns the tables and allows you to sue these same businesses or banks for what is essentially criminal behavior. Better yet, the required burden of proof is much lower. This means that a victim can go after a big bank or corporation for criminal behavior even if the wrongdoer was never convicted of a crime.

A civil plaintiff need only prove the criminal conduct by a mere preponderance of the evidence. Prosecutors, however, must use the higher “proof beyond a reasonable doubt” standard when pursuing criminal charges.

Suddenly the advantage shifts to the victims.

Bankruptcy not an Option for RICO Defendants

Another advantage of civil RICO claims is their non dischargability in bankruptcy. We understand the frustration that comes when after years of battle, a defendant suddenly files for bankruptcy protection instead of paying what they owe. Bankruptcy won’t help a RICO defendant, however.

The above summary is a dramatic oversimplification, of course. The lawyers bringing the RICO case must know the many intricacies of the law. Because RICO claims are subject to so much abuse, many courts have little patience for lawyers that don’t fully understand how to prosecute these claims. Miss any element and the case faces an instant dismissal.

We Sue Banks & Other Lenders for RICO Violations

We are on the very few law firms that pursue RICO claims against big banks and businesses. Most lender liability lawyers work for large firms and represent banks. We are different; we are one of the elite law firms that sue banks.

Because we are a national boutique, our rates are extremely competitive. More importantly, we don’t have to “learn the law” on your dime meaning we often charge less hours than other firms.

If you have suffered more than a million dollars in damages, call us. Cases can be handled on an hourly or hybrid / alternative basis. Call us now to learn your options.