US & World Economies Economic Terms What Is Racketeering? By Hannah Hottenstein Updated on October 5, 2022 Reviewed by Robert C. Kelly Reviewed by Robert C. Kelly Robert Kelly is managing director of XTS Energy LLC, and has more than three decades of experience as a business executive. He is a professor of economics and has raised more than $4.5 billion in investment capital. learn about our financial review board Fact checked by Kyra Baker In This Article View All In This Article How Does Racketeering Work? Examples of Racketeering Types of Racketeering Frequently Asked Questions (FAQs) Photo: Maskot / Getty Images 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. 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: MurderKidnappingGamblingArsonRobberyBriberyExtortionDealing in obscene matterDealing in a controlled substance or listed chemical However, dozens of additional crimes can also be prosecuted under RICO, including: Embezzlement from pension and welfare fundsExtortionate credit transactionsTrafficking in firearmsTampering with a witness, victim, or an informantPossessing, 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 enterpriseParticipating in a pattern of crimes as part of an ongoing criminal organizationConspiring to commit these crimes Was this page helpful? Thanks for your feedback! Tell us why! Other Submit 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. Legal Information Institute. "18 U.S. Code § 1961 - Definitions." U.S. Department of Justice Archives. "109. RICO Charges." U.S. Sentencing Commission. "Primer on RICO Offenses." U.S. Department of Labor. "The OIG's Labor Racketeering Program." Connecticut General Assembly. "Definition of Racketeering."