In Pro Per
RICO

How Fraud Victims Can use RICO

by: Kevin H
WJFA Support Group
Feb. 2004

Here's how RICO would apply to a victim denied justice.

Remember, RICO is not a one-size-fits-all solution. I definitely recommend that if you've been a victim of a white-collar crime, you should read the
RICO statute thoroughly and then read the court rulings to determine if RICO applies to the white-collar crime committed against you.

Understanding RICOIn 1970, Congress passed the Racketeer Influenced and Corrupt Organizations (RICO) Act, Title 18, United States Code, Sections 1961-1968.

At the time, Congress' goal was to eliminate the ill-affects of organized crime on the nation's economy. To put it bluntly, RICO was intended to destroy the Mafia.

Throughout the 1970's, RICO's intended purpose and its actual use ran parallel to each other. Seldom was RICO used outside of the context of the Mafia, and it is not an overstatement to say that civil claims under RICO were simply not brought.

In the 1980's, however, civil lawyers caught on to section 1964(c) of the RICO Act, which allows civil claims to be brought by any person injured in their business or property by reason of a RICO violation.

Any person who succeeded in establishing a civil RICO claim would automatically receive judgment in the amount of three times their actual damages and would be awarded their costs and attorneys' fees.

The financial windfall available under RICO inspired the creativity of lawyers across the nation, and by the late 1980's, RICO was a (if not the most) commonly asserted claim in federal court. Everyone was trying to depict civil claims, such as common law fraud, product defect, and breach of contract as criminal wrongdoing, which would in turn enable the filing of a civil RICO action.

RICO's broad application was the result of Congress' inclusion of mail and wire fraud as two crimes upon which a RICO claim could be brought.

Given the breadth of activities that had historically been criminally prosecuted under the mail and wire fraud statutes, it was not difficult for creative civil attorneys to depict practically any wrong doing as mail or wire fraud.

During the 1990's, the federal courts, guided by the United States Supreme Court, engaged in a concerted effort to limit the scope of RICO in the civil context. As a result of this effort, civil litigants must jump many hurdles and avoid many pitfalls before they can expect the financial windfall available under RICO, and RICO has become one of the most complicated and unpredictable areas of the law.

Today, RICO is almost never applied to the Mafia. Instead, it is applied to individuals, businesses, political protest groups, and terrorist organizations. In short, a RICO claim can arise in almost any context.

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Civil RICO Statute of Limitations

Racketeering Influenced Crime Organization has statute of limitations for when the victim may file an action. When that clock begins ticking depends upon which US Court of Appeal Circuit the suing party resides in. Check which circuit court has jurisdiction over your area and then read the legal citations below.

"The First, Second, Fourth, Fifth, Seventh, and Ninth Circuit Courts, "Applied an injury discovery accrual rule starting the clock when a plaintiff knew or should have known of his injury."

Rotella, 120 S. Ct. at 1080 (citing cases).

The Sixth, Tenth, and Eleventh Circuits, "Applied the injury and pattern discovery rule, which a civil RICO claim accrues only when the claimant discovers, or should discover, both an injury and a pattern of RICO activity." Id. (citing cases).

The Third Circuit chose yet another approach, adopting a "Last predicate act" rule.

Keystone Ins. Co. v. Houghton, 863 F.2d 1125, 1130 (3d Cir.
1988).

Under the Third Circuit's formulation, the statute of limitations "Began to run as soon as the plaintiff knew or should have known of the injury and the pattern of racketeering activity, but began to run anew upon each predicate act forming part of the same pattern." Rotella, 120 S. Ct. at 1080.

In Klehr v. A.O. Smith Corp., the Supreme Court "Cut the possibilities by one, in rejecting the last predicate act rule" espoused by the Third Circuit. Rotella, 120 S. Ct. at 1080.

The Court reasoned, in part, that "Because a pattern of predicate acts can continue indefinitely, with each separated by as many as 10 years, that rule might have extended the limitations period to many decades, and so beyond any limit that Congress could have contemplated." Id. Following Klehr, two possibilities remained."

Sharing Strategies

Got a strategy that worked for you and you want to share with other victims of fraud? Submit your suggestions to In Pro Per. Put in the subject box the words: Self Help submission.