The Racketeer Influenced and Corrupt Organizations Act, commonly known as RICO, provides the government with authority to prosecute for acts performed as part of an ongoing criminal organization and permits a civil cause of action by victims to recover stolen assets. That criminal organization can be devoted to activities such as:
Penalties are hefty — criminal convictions can bring $25,000 penalties and 20 years in prison for each count. That’s in addition to forfeiture, where the government can seize all of the proceeds of the RICO criminal enterprise. Those forfeitures can occur pre-trial, too. Civil lawsuits can further strip RICO defendants of the rest of their assets.
In a stunning loss for bankruptcy trustee Irving Picard in the suits to recover assets from the Bernard Madoff Ponzi scheme, a federal district court disallowed RICO charges against what had been dubbed the Medici Enterprise: Austrian banker Sonja Kohn and 55 other defendants. The judge threw out the RICO charges asserting that, based on the evidence, Picard failed to prove that the Medici Enterprise defendants knew that Madoff was stealing the money he claimed to be investing. Picard had sued the Medici Enterprise for $19.6 billion, which the trustee had hoped to return to innocent victims of the Madoff fraud. To date, Picard has recovered over $9.3 billion.
Although hard to defend, experienced attorneys can challenge criminal and civil RICO charges. Bernie Madoff is currently serving a 150-year sentence in the Butner Federal Correctional Complex with an improbable release date of 2139. However, Madoff did not stand trial for his crime of bilking $17.3 billion from investors worldwide. Instead he pleaded guilty to 11 counts of fraud after turning himself in on December 11, 2008, just as the financial markets were collapsing and unraveling his Ponzi scheme.
Posted in Civil Litigation