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RICO was originally enacted in 1970 as a way to combat organized crime. 18 U.S.C. §§ 1961– 1968.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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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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