Seventh Circuit Revives Whistleblower Claim Brought Under RICO

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A new federal court ruling creates an avenue for employees to rely on the Sarbanes-Oxley Act (SOX) to pursue retaliation claims under the Racketeer Influenced and Corrupt Organizations Act (RICO).

RICO was originally enacted in 1970 as a way to combat organized crime. 18 U.S.C. §§ 1961– 1968. Today, RICO sets forth dozens of federal statutes that serve as “predicate acts” to support a RICO violation. Before SOX, retaliation against an employee was not considered a predicate act under RICO, and courts routinely denied RICO standing to employees terminated for refusing to cooperate in alleged racketeering activity. In 2002, Congress enacted SOX and made it a felony to retaliate against whistleblowers who provide information about corporate fraud to law enforcement officers. Although Congress also amended RICO to include retaliation under SOX as a predicate act, courts until recently have refused to recognize retaliatory discharge under SOX as a racketeering activity. In DeGuelle v. Camilli, No. 10-2172, 2011 U.S. App. LEXIS 24868 (7th Cir. Dec. 15, 2011), a federal court of appeals for the first time concluded that alleged retaliation under SOX could provide a predicate act for racketeering activity under RICO.

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