Racketeering in Texas: Criminal Defense Against RICO Charges

Today, everyone recognizes organized crime known as the “Mafia” or the “Cosa Nostra,” but it wasn’t until the middle of the 20^th Century that these criminal enterprises were confirmed to exist.  A man named Joseph Valachi is credited with being the first organization member to authenticate its existence, and he did so during public testimony before Congress’ Permanent Subcommittee on Investigations of the U.S. Senate Committee on Government Operations in 1963 (the “McClellan Hearings”).

Valachi admitted to being a member of the Genovese Crime Family, and explained not only the history of the Mafia in America, but the managerial hierarchy of the Five Families.  Watch his Congressional testimony here and for more, read Maas, Peter. The Valachi Papers. Harper Collins, 2003.  For even more on Mr. Valachi, check out the 1972 movie “The Valachi Papers,” and read “The Valachi Papers”- Fifty Years In The Shadow Of “The Godfather” written by Matt Davey and published by Cinema Retro on February 2, 2021.

Federal RICO Statute

In the late 1960s, Congressional lawmakers were focused “… the elimination of the infiltration of organized crime and racketeering into legitimate organizations operating in interstate commerce.” S.Rep. No. 617, 91st Cong., 1st Sess. 76 (1969). As a result, over 50 years ago Congress passed the Organized Crime Control Act of 1970 which included the Racketeer Influenced and Corrupt Organizations Statute (18 U.S.C. §§ 1961-1968).

This law has come to be commonly referred to as the federal “RICO Statute.”  Today, the Federal RICO Statute has a much wider application than cases with alleged Mafia activities.  Federal prosecutions can – and will – include allegations that the Federal RICO Statute has been violated in any number of alleged criminal acts involving either interstate commerce or overseas (foreign) commerce.  See, U.S. Department of Justice U.S. Attorneys’ Manual 9-110.010 (May 1999) (“Manual”).

The position of the Office of the Attorney General for the United States is that “… the statute is sufficiently broad to encompass illegal activities related to any enterprise affecting intestate or foreign commerce.”  Manual §9-110.100.

Consider some of the following examples of federal indictments based upon the Federal RICO Statute:

1. State Police Union President and Lobbyist charged with violation of Federal RICO as well as wire fraud, obstruction of justice, and conspiracy to defraud the United States; see, Former President of Massachusetts State Police Union and Union’s Former Lobbyist Indicted on RICO and Tax Charges, September 12, 2019, by the U.S. Attorney’s Office in the District of Massachusetts;
2. Executives and managers of Insys Therapeutics, a pharmaceutical company, including its CEO and National Director of Sales, charged with violation of RICO as well as wire fraud, mail fraud, and conspiracy to violate the Anti-Kickback Law; see, Pharmaceutical Executives Charged in Racketeering Scheme, December 8, 2016, by the U.S. Attorney’s Office in the District of Massachusetts;
3. Pain Clinic Owner charged with RICO violations alongside conspiracy to distribute oxycodone, oxymorphone, and morphine outside the scope of professional practice and not for a legitimate medical purpose; see, Florida and Tennessee Pain Clinic Owner Extradited From Italy to the United States to Face RICO Charges, November 23, 2020, by the U.S. Attorney’s Office in the Eastern District of Tennessee;
4. The world’s largest telecommunications equipment manufacturer, Huawei Technologies Co.,, charged with conspiracy to violate RICO and steal trade secrets; see, Chinese Telecommunications Conglomerate Huawei and Subsidiaries Charged in Racketeering Conspiracy and Conspiracy to Steal Trade Secrets, February 13, 2020, by the U.S. Attorney’s Office in the Eastern District of New York; and
5. Street gang members and their associates charged with RICO along with drug trafficking, firearms charges, bank fraud, and violations of the Mann Act; see, 31 Boston Gang Members and Associates Charged, June 16, 2020, by the U.S. Attorney’s Office in the District of Massachusetts.

Federal RICO Charges in the 21^st Century

Criminal defense lawyers in Texas licensed to practice in federal court understand that Federal RICO is seen by AUSAs as criminalizing any activity that involves or is associated with any enterprise engaging in a pattern of racketeering activity or collection of unlawful debt that crosses state lines in some way.

However, Federal RICO is not to be included in any federal indictment without special approval and consideration.  The Attorney General’s Office requires the following before federal charges are brought based upon the Federal RICO Statute, with a particular consideration that the federal authorities are not using Federal RICO “…to prosecute what are essentially violations of state law … unless there is a compelling reason to do so.”  Manual, §9-110.310.

Internal AUSA Approval Before Indictment

To pursue a Federal RICO charge, the government attorney (AUSA) must get internal approval that at least one of the following criteria are met (Manual, §9-110.310):

1. RICO is necessary to ensure that the indictment adequately reflects the nature and extent of the criminal conduct involved in a way that prosecution only on the underlying charges would not;
2. A RICO prosecution would provide the basis for an appropriate sentence under all the circumstances of the case in a way that prosecution only on the underlying charges would not;
3. A RICO charge could combine related offenses which would otherwise have to be prosecuted separately in different jurisdictions;
4. RICO is necessary for a successful prosecution of the government’s case against the defendant or a codefendant;
5. Use of RICO would provide a reasonable expectation of forfeiture which is proportionate to the underlying criminal conduct;
6. The case consists of violations of State law, but local law enforcement officials are unlikely or unable to successfully prosecute the case, in which the federal government has a significant interest;
7. The case consists of violations of State law, but involves prosecution of significant or government individuals, which may pose special problems for the local prosecutor.

Only after internal office approval is the federal prosecutor allowed to file the indictment that includes a Federal RICO Charge.  In that charge, the elements of the statute itself must be met with sufficient proof as to their existence.

AUSA Elements of Proof Under the Federal RICO Statute

Racketeering activity is defined in 18 U.S. Code § 1961(1).  Almost three dozen different crimes are listed in this definition, among them:   murder, kidnapping, extortion, human trafficking, mail fraud, wire fraud, bank fraud, counterfeiting, and embezzlement.  Things become a “pattern of racketeering activity” if two or more of these acts are proven to have occurred within a ten (10) year period.

Congress has created a huge list of federal crimes that can be tied together with a Federal RICO charge.  Consider the current, complete statutory definition of racketeering activity under federal law which allows Federal RICO allegations to be included in the indictment:

(A) any act or threat involving murder, kidnapping, gambling, arson, robbery, bribery, extortion, dealing in obscene matter, or dealing in a controlled substance or listed chemical (as defined in section 102 of the Controlled Substances Act), which is chargeable under State law and punishable by imprisonment for more than one year; (B) any act which is indictable under any of the following provisions of title 18, United States Code: Section 201 (relating to bribery), section 224 (relating to sports bribery), sections 471, 472, and 473 (relating to counterfeiting), section 659 (relating to theft from interstate shipment) if the act indictable under section 659 is felonious, section 664 (relating to embezzlement from pension and welfare funds), sections 891–894 (relating to extortionate credit transactions), section 1028 (relating to fraud and related activity in connection with identification documents), section 1029 (relating to fraud and related activity in connection with access devices), section 1084 (relating to the transmission of gambling information), section 1341 (relating to mail fraud), section 1343 (relating to wire fraud), section 1344 (relating to financial institution fraud), section 1351 (relating to fraud in foreign labor contracting), section 1425 (relating to the procurement of citizenship or nationalization unlawfully), section 1426 (relating to the reproduction of naturalization or citizenship papers), section 1427 (relating to the sale of naturalization or citizenship papers), sections 1461–1465 (relating to obscene matter), section 1503 (relating to obstruction of justice), section 1510 (relating to obstruction of criminal investigations), section 1511 (relating to the obstruction of State or local law enforcement), section 1512 (relating to tampering with a witness, victim, or an informant), section 1513 (relating to retaliating against a witness, victim, or an informant), section 1542 (relating to false statement in application and use of passport), section 1543 (relating to forgery or false use of passport), section 1544 (relating to misuse of passport), section 1546 (relating to fraud and misuse of visas, permits, and other documents), sections 1581–1592 (relating to peonage, slavery, and trafficking in persons).,[1] sections 1831 and 1832 (relating to economic espionage and theft of trade secrets), section 1951 (relating to interference with commerce, robbery, or extortion), section 1952 (relating to racketeering), section 1953 (relating to interstate transportation of wagering paraphernalia), section 1954 (relating to unlawful welfare fund payments), section 1955 (relating to the prohibition of illegal gambling businesses), section 1956 (relating to the laundering of monetary instruments), section 1957 (relating to engaging in monetary transactions in property derived from specified unlawful activity), section 1958 (relating to use of interstate commerce facilities in the commission of murder-for-hire), section 1960 (relating to illegal money transmitters), sections 2251, 2251A, 2252, and 2260 (relating to sexual exploitation of children), sections 2312 and 2313 (relating to interstate transportation of stolen motor vehicles), sections 2314 and 2315 (relating to interstate transportation of stolen property), section 2318 (relating to trafficking in counterfeit labels for phonorecords, computer programs or computer program documentation or packaging and copies of motion pictures or other audiovisual works), section 2319 (relating to criminal infringement of a copyright), section 2319A (relating to unauthorized fixation of and trafficking in sound recordings and music videos of live musical performances), section 2320 (relating to trafficking in goods or services bearing counterfeit marks), section 2321 (relating to trafficking in certain motor vehicles or motor vehicle parts), sections 2341–2346 (relating to trafficking in contraband cigarettes), sections 2421–24 (relating to white slave traffic), sections 175–178 (relating to biological weapons), sections 229–229F (relating to chemical weapons), section 831 (relating to nuclear materials), (C) any act which is indictable under title 29, United States Code, section 186 (dealing with restrictions on payments and loans to labor organizations) or section 501(c) (relating to embezzlement from union funds), (D) any offense involving fraud connected with a case under title 11 (except a case under section 157 of this title), fraud in the sale of securities, or the felonious manufacture, importation, receiving, concealment, buying, selling, or otherwise dealing in a controlled substance or listed chemical (as defined in section 102 of the Controlled Substances Act), punishable under any law of the United States, (E) any act which is indictable under the Currency and Foreign Transactions Reporting Act, (F) any act which is indictable under the Immigration and Nationality Act, section 274 (relating to bringing in and harboring certain aliens), section 277 (relating to aiding or assisting certain aliens to enter the United States), or section 278 (relating to importation of alien for immoral purpose) if the act indictable under such section of such Act was committed for the purpose of financial gain, or (G) any act that is indictable under any provision listed in section 2332b(g)(5)(B).

Criminal Forfeiture and Seizing the Defendant’s Assets Before Trial

One of the biggest temptations for AUSAs to indict someone on Federal RICO charges is because of their ability to take that indictment and go to a federal judge seeking a pre-trial order for forfeiture or seizure of assets from the defendant while the federal case is pending.  18 U.S. Code § 1963.  Property subject to criminal forfeiture under Federal RICO includes both (1) real property, including things growing on, affixed to, and found in land; and (2) tangible and intangible personal property, including rights, privileges, interests, claims, and securities.

The ability of the AUSA to grab the defendant’s property before any charges have been proven, much less any conviction or sentencing, can be devastating to the accused’s ability to mount an aggressive and thorough defense of the RICO charges.

For more on forfeiture, read our earlier discussions in:

• Federal Forfeiture Reform: 81% Property Seized by DOJ From People Never Charged with a Crime; and
• Lessons of The Gas Pipe Bust: Traffic Stop Leads to Major Synthetic Marijuana Bust and Big Federal Forfeiture Grab.

Texas Racketeering Charges

The State of Texas also has its own racketeering statute, which can be found in Texas Penal Code §71.02 (“Texas RICO Statute”). The Texas RICO Statute is used by state prosecutors to enhance penalties when other crimes are being charged.  It is independent of any Federal RICO claim.

For details, read our discussion in Organized Criminal Activity Charges Under Texas Penal Code §71.02.

Criminal Defense of RICO Charges

Key in any racketeering case is a detailed understanding of the underlying factual allegations and their corresponding evidentiary support as collected by the government.  Is there sufficient support for the RICO allegation?  What about for the corresponding criminal charges (as shown in the long list above) – is there sufficient evidence for an indictment based upon mail fraud, kidnapping, etc.?

Additionally, a savvy criminal defense attorney with an accused in federal court will look to the federal indictment and consider whether or not the pursuit of Federal RICO charges can withstand judicial scrutiny from a jurisdictional basis.  Just because an AUSA has obtained internal approval to pursue a Federal RICO Charge when the underlying case consists solely of violations of Texas state law does not mean that a federal judge will agree on their jurisdictional stand. Is this an overreach into state jurisdiction in order to seize assets?

Another defense to racketeering charges will be to challenge the facts purporting to show there was any pattern of criminal activity, or if there was, that the accused was a knowing and repetitive participant.  There must be more than one event to establish a pattern.  Is this shown in the evidence?   Moreover, there must be evidence of the accused’s actual knowledge of what was happening.  If so, is there also enough admissible evidence of participation?

Defense of RICO Charges in Federal or State Court

Someone who is convicted under Federal RICO charges not only faces the loss of property through its forfeiture provisions, but imprisonment ranging from 20 years in a federal prison for each statutory violation to life imprisonment if the underlying crime comes with the possibility of a life sentence.

Texas RICO charges are enhancements of underlying criminal charges.  Conviction of racketeering under the Texas Penal Code means those criminal charges receive much harsher punishment.  See our earlier discussion for details.

It is vital that anyone who suspects that they are being investigated for racketeering or a violation of the Federal RICO statute or the Texas racketeering law immediately begin an aggressive defense against these potentially life-changing charges.  Of particular import in federal cases is the possibility of a pre-trial order allowing forfeiture of assets while the federal prosecution proceeds in these matter—this possibility alone demands swift action in order to protect the individual’s rights.

Also read:

• ARRESTING TEXAS DOCTORS FOR HEALTH CARE FRAUD: WHAT YOU NEED TO KNOW
• WHITE COLLAR CRIME: INDICTMENTS OF TEXAS PROFESSIONALS
• WHAT ARE RACKETEERING CHARGES? ORGANIZED CRIME, GANGS AND CARTELS, AND OVERCHARGING RICO.

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For more information, check out our web resources and read Michael Lowe’s Case Results as well as his in-depth article, “PRE-ARREST CRIMINAL INVESTIGATIONS.”