Understanding Racketeering

The term racketeering broadly refers to criminal acts, typically those involving extortion, that involve a "racket". A racket, being some sort of scheme organized to extract illegal profits. It is usually used in reference to patterns of illegal activity specified in the Racketeer Influenced and Corrupt Organizations Act (RICO). This is a U.S. federal law that makes it illegal to acquire or control a business through certain crimes or income from those crimes. It is also illegal to participate, even indirectly, in certain crimes committed by a business or to conspire to do any of the above under the act.

Organized groups may operate illegal businesses, known as rackets. An organized group may also divert funds from a legal business to use for illegal activities. Rackets primarily functioned in obviously illegal industries, such as prostitution, human trafficking, drug trafficking, illegal weapons trade, or counterfeiting.

Racketeering can take many forms including:-Cyber extortion: This occurs when a hacker pushes malware onto someone's computer, blocking all computer and data access. The hacker then demands money to restore access to the user. Protection rackets: A criminal entity threatens to cause harm to a business or individual unless they are paid a protection fee. Kidnapping: This is considered racketeering when an individual is illegally detained and their captors agree to set the kidnapped individual free once a ransom is paid. Fencing racket: Individuals act as intermediaries to buy stolen goods from thieves at low rates. They resell them for a profit to unsuspecting buyers. Drug trafficking: illegal drugs are produced, smuggled, and sold to the public. Illegal gambling activities: such as underground casinos, sports books, or card rooms where the "house" takes a profit.

Labor unions have also been a frequent target of racketeering allegations. Organized crime groups generally use one or more labor unions to extort money from a company or contractor(s). In other cases, groups use unions to control workers. The Italian-American mafia criminal society, La Cosa Nostra, was famous for its control over labor unions. La Cosa Nostra gained such a strong foothold that both company management and the labor union had to rely on the gangsters for protection.

To contain illegal collusion and profiteering through racketeering, the U.S. government introduced the Racketeer Influenced and Corrupt Organizations (RICO) Act in October 1970.

The law permits enforcement agencies to charge individuals or groups involved in various acts of racketeering. Individuals guilty of committing RICO crimes may be prosecuted and, if found guilty, can face a 20-year prison sentence or more for serious crimes. Fines and other penalties may also apply.

Corporations may also engage in racketeering. For instance, a drug manufacturer may bribe doctors to overprescribe a medicine, thus committing fraud in order to boost their profits. Predatory lending may also be deemed a form of racketeering. This happens when a lender tricks a borrower into taking a loan that deliberately ignores or actively hinders their ability to repay it.

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