What Is Racketeering?

Definition

Racketeering is a form of criminal activity that involves the use of force, fraud, or intimidation to make money. It includes organizing, managing, or running a corrupt enterprise that engages in illegal activities (a “racket”). Law enforcement agencies use this term to describe various criminal activities, including blackmailing, extortion, kidnapping, trafficking, and money laundering.

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Key Takeaways

  • Racketeering is a crime of obtaining money or property through illegal means.
  • At the federal level, racketeering is most often charged as a felony under RICO, while charges vary by state.
  • Racketeering, or "organized crime," is a type of criminal activity that includes extortion, fraud, trafficking in contraband goods or illegal drugs, and labor racketeering such as union corruption and bribery.
  • Racketeers typically are well-connected through informal associations or formal organizations (e.g., the Mafia) or an international organization with links to a crime syndicate.

How Does Racketeering Work?

Racketeering generally refers to a pattern of committing illegal activity as part of a larger criminal enterprise, whether a legal business or an illegal organized crime group such as a gang. Racketeering can look like regular business activity, but involves profit-generating unlawful activities such as extortion, bribes, and threatened violence.

The Racketeer Influenced and Corrupt Organization (RICO) Act outlines dozens of crimes that count as racketeering. RICO was passed in 1970 to address organized crime’s infiltration of legitimate enterprises. The most serious crimes include any act or threat related to the following:

  • Murder
  • Kidnapping
  • Gambling
  • Arson
  • Robbery
  • Bribery
  • Extortion
  • Dealing in obscene matter
  • Dealing in a controlled substance or listed chemical

However, dozens of additional crimes can also be prosecuted under RICO, including:

  • Embezzlement from pension and welfare funds
  • Extortionate credit transactions
  • Trafficking in firearms
  • Tampering with a witness, victim, or an informant
  • Possessing, developing, producing, stockpiling, transferring, or acquiring biological weapons

The federal government can prosecute any enterprise with "a pattern of racketeering activity or collection of unlawful debt," defined as being committed by an individual or group twice within a 10-year window. RICO charges can be pressed at the state and federal levels. States may model racketeering charges after federal charges.

Examples of Racketeering

An example of racketeering might include a gang acquiring money through murders, money laundering, drug trafficking, and home invasion robberies. RICO conspiracy charges could be levied against gang members committing the crimes.

Another racketeering example might be a contracting company employee conspiring with the company owner to commit visa fraud and foreign-labor contracting fraud for financial gain. Together, they force agricultural laborers to work for low pay by confiscating the workers’ passports and isolating them from interactions with the outside world.

Another example might include state employees receiving money for creating false IDs and registrations for stolen vehicles.

Types of Racketeering

Business Racketeering

Organized crime might infiltrate and use a legitimate business such as a store or nightclub as a front to commit gambling, extortion, money laundering, or loan-sharking. A few examples might include a drug dealer’s use of drug-trafficking proceeds to operate a legitimate business, or an organized-crime figure intimidating a business owner into selling the business to the criminal, who then uses it for loan-sharking or predatory loans.

Labor Racketeering

With labor racketeering, criminals infiltrate, corrupt, or attempt to control workers’ unions, employee benefit plans, or workforces for personal or financial gain. Crimes committed include employer extortion by threatening work stoppages, picketing, or sabotage. They could also include requesting bribes from the employer in exchange for ignoring the union’s collective-bargaining agreement. Labor racketeering might include defrauding benefit plans as well.

Note

The Office of the Inspector General at the Department of Labor is responsible for investigating labor racketeering.

Cyber-Racketeering

Racketeering can happen online as well. Cyber-racketeering crimes typically are committed by criminal organizations using tech hacking tools to steal money and information from individuals, businesses, and government agencies. Federal racketeering charges have been levied against people who have used phishing emails, fraudulent online auctions, malware, or customer service impersonation at sites such as eBay.

Frequently Asked Questions (FAQs)

What are racketeering charges?

Examples of racketeering felonies include: murder, money laundering, scamming, financial and economic crimes, bribery, drug trafficking, kidnapping, human trafficking, bribery, robbery, cyber extortion, illegal gambling, possession of weapons, arson, forgery, and hazardous-waste dumping. Racketeering also includes “attempting to commit, conspiring to commit, or intentionally aiding, soliciting, coercing, or intimidating another person to commit” these kinds of felonies.

What is racketeering activity under RICO?

Congress passed the Racketeer Influenced and Corrupt Organization (RICO) Act in 1970 to provide prosecutors with legal tools to fight organized crime at all levels by attacking organized crime’s economic infrastructure and leadership structure. These statutes focus on prosecuting groups involved in organized crime—racketeers—and reimbursing those who are unwilling victims subject to violence or economic exploitation by those criminal organizations. There are three main ways of violating the RICO Act:

  • Running an ongoing criminal enterprise
  • Participating in a pattern of crimes as part of an ongoing criminal organization
  • Conspiring to commit these crimes
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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Legal Information Institute. "18 U.S. Code § 1961 - Definitions."

  2. U.S. Department of Justice Archives. "109. RICO Charges."

  3. U.S. Sentencing Commission. "Primer on RICO Offenses."

  4. U.S. Department of Labor. "The OIG's Labor Racketeering Program."

  5. Connecticut General Assembly. "Definition of Racketeering."

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