Officials may add RICO charges to securities offenses
The Racketeer Influenced and Corrupt Organization Act covers offenses related to an ongoing pattern of unlawful activity. As described by the Wall Street Journal, federal officials first used RICO to indict individuals purportedly involved in organized crime. The unlawful activities often included drug trafficking.
The U.S. Department of Justice notes that federal prosecutors may file RICO charges against individuals allegedly engaged in mail, securities or wire fraud. Indictments under the RICO Act may result in harsher penalties than charges covering only white collar offenses.
Establishing a pattern of illicit activity
To obtain a RICO conviction, a prosecutor must show the court that a visible pattern of wrongdoing took place. RICO requires showing proof that an individual engaged in a minimum of two offenses within 10 years.
Prosecutors must also show how the pattern connects to an enterprise involved in unlawful activity. Illicit business activities generally include unlicensed gambling and offering predatory loans. Prosecutors may, however, also seek indictments based on securities trades.
Increasing the scope of charges under RICO
RICO charges may result from investigations uncovering repeated misconduct. As noted by the Corporate Finance Institute, if the pattern supports an ongoing business, officials may file RICO charges.
Prosecutors may press for a RICO conviction based on a series of securities trades using insider information. Rather than file a securities fraud charge, prosecutors may instead show how the unlawful trades reflected part of an established enterprise.
Individuals facing federal RICO charges require a strong defense to counter a prosecutor’s evidence. The court generally needs proof of racketeering. A prosecutor’s proof may rest on an individual’s repeated use of fraudulent means to generate income.