Prosecuting Criminal Enterprises
Federal prosecutors have available two sets of statutes to dismantle criminal enterprises that function like businesses.9 min read
Prosecuting Criminal Enterprises: Federal Offense And Offenders
November 1993, NCJ-142524
By K Carlson P Finn, ABT Associates Inc.
Federal prosecutors have available two sets of statutes to dismantle criminal enterprises that function like businesses. The continuing criminal enterprise (CCE) statute (21 U.S.C. 848) targets only drug traffickers who are responsible for long-term and elaborate conspiracies. The antiracketeering statute (18 U.S.C. 1951-1968), which includes the Racketeer Influenced and Corrupt Organizations Act (RICO), targets offenders working at the top levels of various kinds of criminal organizations.
The number of prosecutions based on these statutes is relatively small compared to those for major categories of Federal offenses such as drug trafficking. Among persons whose cases were terminated in U.S. district court in 1990, 996 were prosecuted using the racketeering statutes and 128 were prosecuted using CCE, while 17,135 were prosecuted for drug trafficking using other statutes.
Conviction under most criminal enterprise statutes requires proof of both a predicate offense and--what is generally more difficult--a pattern or set of circumstances that connect the predicate offenses.
The importance of the criminal enterprise statutes comes from their potential to break up associations of highly placed drug traffickers or to incapacitate criminals who direct complex illegal activities. By using these statutes, a U.S. attorney can obtain convictions that carry longer sentences on average than convictions for the predicate offenses alone. Additionally, based on overlapping jurisdiction with the States, Federal prosecutors may agree to use the statutes to prosecute crimes such as murder and robbery that would otherwise be State offenses only.
The main findings from an analysis of matters concluded by U.S. attorneys and cases terminated in U.S. district courts, from mid-1987 to mid-1990, include the following:
*In 1990, 2% of Federal offenders were convicted of racketeering or CCE charges.
*CCE offenders constituted less than 1% of Federal drug offenders, representing a uniquely defined set of the most serious drug traffickers. Characteristics of these offenders, such as sentence length and criminal history, can be most clearly observed in comparing CCE with "other" drug cases.
*Most racketeering convictions were based either on RICO (27%) or interstate travel in aid of racketeering (28%).
*The predicate offenses on which racketeering convictions were based were primarily gambling offenses (21%), drug offenses (23%), and threats and extortion (22%).
*Defendants in both racketeering and CCE cases were less likely than other Federal defendants to plead guilty but were about as likely as others to be convicted.
*Whether disposed by plea or trial, CCE cases took considerably longer to resolve than other drug trafficking cases. Racketeering cases took somewhat longer to dispose than cases that involved the corresponding underlying offenses, and approximately 50% longer than the average for all offenses. (Underlying offenses include all Federal offenses which could have qualified as predicate offenses in a RICO prosecution, except for drug trafficking, which is tabulated separately for comparison with CCE cases.)
*Offenders convicted of racketeering were more likely to be incarcerated than were those convicted only of underlying offenses.
*Prison sentences for both racketeering and CCE offenders were substantially longer than those imposed on offenders convicted of the underlying racketeering- related or drug trafficking offenses, respectively. Ten percent of CCE offenders were sentenced to life terms, and another 29% were sentenced to definite terms of more than 20 years.
*Fines were imposed on a quarter of CCE offenders. The average fine exceeded $100,000, more than 7 times the average fine imposed on other drug traffickers.
Federal racketeering statutes, first enacted in 1934 and periodically amended, target a number of specific offenses, such as conspiracy to obstruct, or obstruction of, interstate commerce by robbery or extortion; travel in interstate or foreign commerce, or use of the mails, with the intent to facilitate any unlawful activity; and any offer, acceptance, or solicitation of bribes to influence an employee benefit plan. Penalties include fines and imprisonment and vary by offense.
Racketeer Influenced and Corrupt Organizations Act (RICO)
The Organized Crime Control Act of 1970 amended existing Federal racketeering statutes to include the Racketeer Influenced and Corrupt Organizations Act (RICO).
RICO specifically prohibits four activities: (a) investing the proceeds of a pattern of racketeering activity (as defined below) in an enterprise that engages in interstate or foreign commerce; (b) acquiring or maintaining an interest in such an enterprise by means of a pattern of racketeering activity; (c) using a pattern of racketeering activity in conducting the affairs of such an enterprise; or (d) conspiracy to do (a), (b), or (c).
The statute defines racketeering activity as any of 27 types of violations of the U.S. Code and 8 types of State felonies. The 27 Federal offenses include specific types of gambling, prostitution, drug offenses, obscenity, theft, fraud, extortion, counterfeiting, bribery, obstruction of justice, cigarette boot-legging, and labor law violations. State predicate crimes include murder, kidnaping, gambling, arson, robbery, bribery, extortion, and drug offenses.
The statute defines enterprise to include any individual, partnership, corporation, association, or other legal entity, or any group of individuals who, though not a legal entity, are associated in fact.
The RICO statute permits fines of up to $25,000, imprisonment for up to 20 years, or both, and requires the forfeiture of ill-gotten gains and any interest in the enterprise. The statute authorizes restraining orders and injunctions prior to conviction to prevent the transfer of potentially forfeitable property.
The civil provisions of RICO permit U.S. attorneys and private citizens to sue for treble damages and the cost of the suit (including reasonable attorney fees) if it can be shown that the plaintiff was injured in his or her business or property and that those injuries resulted from a pattern of racketeering activity. Many objections raised against the RICO statute have focused on its use in civil cases, as varied as divorce proceedings, religious disputes, and contractual disputes between business people.
The use of the civil penalties provided by RICO is not included in this report because private parties, not U.S. attorneys, have initiated most of the civil cases. In the 12 months ending June 30, 1991, a total of 966 civil RICO cases had commenced in U.S. district courts. The United States was the plaintiff in 12 of these suits.
Continuing Criminal Enterprise statute (CCE)
Although similar in purpose, the CCE statute and RICO differ considerably. The CCE statute targets only illegal drug activity. The statute makes it a crime to commit or conspire to commit a continuing series of felony violations of the 1970 Drug Abuse Prevention and Control Act when such acts are undertaken in concert with five or more other persons. Appeals courts have ruled that a continuing "series" means at least three related violations. For conviction under this statute, the offender must have been an organizer, manager, or supervisor of the continuing operation and have obtained substantial income or resources from the drug violations.
The sentence for a first CCE conviction is a mandatory minimum 20 years' imprisonment (with a maximum of life imprisonment), a fine of not more than $2 million, and forfeiture of profits and any interest in the enterprise. Anyone engaging in a continuing criminal enterprise who intentionally kills a person or causes an intentional killing (which actually occurs) may be sentenced to death. Probation, parole, and suspension of the sentence are prohibited.
In calendar year 1990, U.S. attorneys investigated 2,704 suspects in matters potentially involving violations of the racketeering statutes and another 440 in matters where a charge of CCE was considered. Although only 3% of the suspects in criminal matters terminated in that year were investigated for these offenses, these matters involved some of the most serious offenders and led to some of the most severe sentences among all the cases terminated.
The U.S. attorneys declined to prosecute about half of the suspects in racketeering matters. This declination rate was roughly comparable to that for suspects investigated for the underlying offenses mentioned in the racketeering statute. In CCE matters 85% of suspects became defendants in Federal prosecutions (although not necessarily on CCE charges), a prosecution rate comparable to that for other drug suspects.
Declination did not necessarily mean that no action was taken against a suspect. About a fifth of the racketeering suspects and nearly a third of CCE suspects whose matters were declined by U.S. attorneys were referred to other authorities for prosecution.
Among those racketeering matters that prosecutors declined to prosecute, 45% were declined because of problems with the legal case, such as weak evidence, jurisdictional problems, or the expiration of the statute of limitations. Among declined CCE matters, 31% were declined for these case-related reasons.
Another 16% of suspects in declined racketeering matters were declined because the actions did not constitute a crime, either for a reason such as lack of intent or from the conduct not appearing to violate a Federal law. The remaining 20% of the racketeering declinations and 36% of the CCE declinations occurred because of a lack of resources to prosecute, minimum Federal interest, a policy directive in prosecutorial guidelines, a request from another agency, or personal circumstances such as the defendant's poor health.
The nature of criminal enterprise offenses
In 1990, 3,248 defendants in cases terminated in U.S. district courts were charged with either racketeering or one or more of the offenses underlying the racketeering statute. Thirty-one percent of these defendants--996--were specifically charged with a racketeering violation. By contrast, fewer than 1% of the over 17,000 drug trafficking defendants in 1990 were charged under the CCE statute.
Over a 3-year period ending June 30, 1990, racketeering convictions were based principally on charges of interstate travel in aid of racketeering (28%) or RICO (27%). The predicate offenses on which racketeering convictions were based were primarily gambling offenses (21%), drug offenses (23%), and threats and extortion (22%).
Among those racketeering offenses for which a monetary loss could be determined, the average value was $1.9 million. Racketeering charges were significantly more likely to be brought in the Eastern U.S. than in the West. Over a quarter (27%) of defendants in racketeering cases terminated in 1990 were prosecuted in five judicial districts (Northern Illinois, Southern Florida, Southern and Eastern New York, and South Carolina).
Disposition of cases
Defendants in CCE and racketeering cases were much less likely to plead guilty than were defendants charged with other drug trafficking or underlying offenses. In 1990 among racketeering defendants, 64% pleaded guilty; among CCE defendants, 57%; while 77% of defendants in cases involving the underlying offenses related to racketeering and 69% of non-CCE drug trafficking defendants pleaded guilty.
Despite the greater likelihood of CCE cases going to trial, these defendants were more likely to be convicted than other drug trafficking defendants (90% versus 84%).
Conviction rates for racketeering defendants were slightly lower than for those charged with underlying offenses (81% versus 86%).
Criminal enterprise cases generally took longer to dispose than other cases. On average, cases of CCE defendants who went to trial took nearly twice as long from filing to disposition as cases of defendants in other drug trafficking trials. Even guilty pleas in CCE cases took 5 months longer to dispose than pleas in other drug prosecutions.
Disposition times for racketeering defendants, however, were similar to or slightly longer than those for defendants charged with underlying offenses. For defendants who did not plead guilty, both groups of cases took approximately twice as long to resolve as dispositions for offenders convicted of crimes unrelated to enterprise offenses. Guilty pleas in racketeering cases also took nearly twice as long as pleas for "all other offenses" and 22% longer than for offenses underlying the racketeering statute.
Incarceration sentences were imposed on most drug traffickers regardless of whether the CCE statute was invoked: 98% of CCE and 91% of other drug traffickers were sentenced to prison in 1990. Racketeering convictions were more likely to result in prison sentences than were convictions for underlying offense types (73% versus 61%).
In addition to sentences to prison or probation, fines were imposed on over a third of convicted racketeering and CCE offenders. The average fine imposed on CCE offenders exceeded $100,000, more than 7 times the average fine imposed on other drug traffickers.
Where prison sentences were imposed, they tended to be much longer for criminal enterprise offenders than for those convicted of comparison offenses. Of all CCE prison sentences 10% were for life imprisonment, and another 29% were for definite terms exceeding 20 years. By comparison, 4% of "other" drug trafficking offenders were sentenced to terms of more than 20 years.
Twenty-two percent of racketeering prison sentences were for 6 years or more, compared to 10% of prison sentences for underlying offenses. Among racketeers sentenced to prison, 10% received terms of 11 years or more; among those sentenced to prison for underlying offenses, 4% had terms of 11 years or more.
Characteristics of convicted offenders
Offenders convicted of CCE are nearly all male (97%), mostly white (76%), less likely to be of Hispanic origin than other drug offenders (19% versus 26%) and substantially older than other drug offenders (a median age of 39 versus 31 years).
Racketeering offenders resembled those convicted of underlying offenses, but were slightly more likely to be male, white, and older than their counterparts.
The criminal records of enterprise offenders were similar to those of their counter-parts, although CCE offenders were more than twice as likely as other drug offenders to have served at least one term of felony imprisonment, and were somewhat more likely to be on probation, parole, or pretrial release at the time of arrest for the CCE violation.
Brief history of criminal enterprise statutes
Continuing Criminal Enterprise Statute (21 U.S.C. 848)
1986: Fines for first offenders increased from maximum of $100,000 to $2 million for individuals
1988: Mandatory minimum prison terms for first violations increased from 10 to 20 years
Federal Racketeering Statutes (18 U.S.C. 1951ff.)
1934: Interference with commerce by threats or violence (Section 1951)
1961: Interstate and foreign travel in aid of racketeering (Sec. 1952)
1961: Interstate transportation of gambling paraphernalia (Sec. 1953)
1962: Offenses related to employee benefit plans (Sec. 1954)
1970: Illegal gambling businesses (Sec. 1955)
1970: RICO (Secs. 1961-68; amended to clarify or broaden scope of prohibited activities, or adjust penalties in 1978, 1984, 1986, 1988, 1989, 1990)
1984: Use of interstate commerce facilities (including mails) in commission of murder-for-hire (Sec. 1958)
1984: Violent crimes in aid of racketeering activities (Sec. 1959)
1986: Money laundering (Sec. 1956)
1986: Monetary transactions in property derived from specific unlawful activity (Sec. 1957)