Word: rico
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...underline the law's value, civil RICO proponents point to cases like that of Barney and Donna Millsaps. Six years ago, a door-to-door salesman talked them into adding a room to their home in Norfolk, Va., assuring them loan payments would amount to no more than $50 a month. Instead, they wound up with a second mortgage and monthly payments of $148 for 15 years, a burden that strained their modest income until, less than a year later, they had lost their house. But the Millsapses along with eight other families that were hustled in the same scheme...
Despite its now well-established popularity with federal prosecutors, however, RICO has its problematic side too. The statute's civil portion allows companies and individuals to bring RICO lawsuits, and because it defines racketeering so broadly, all kinds of legitimate businesses and businessmen are using the law to bash each other around in court. IBM, for example, used the law to sue Hitachi for theft of confidential technology, and reportedly pocketed a settlement of $300 million. New York Yankees Owner George Steinbrenner aimed RICO against investment partners whom he charged with selling him their interests in a joint venture without...
...civil RICO cases are actually brought to trial. Says Boston Attorney David Gibbs: "Most lawyers use it as leverage to intimidate the other party into settling out of court. It's a three-barreled shotgun." RICO allows a successful plaintiff to claim triple damages, plus attorneys' fees. And it can mean unsavory publicity. What corporate executive wants to find himself accused of "racketeering"? Explains one lawyer: "They don't like this mix- up over whether they are wearing a white shirt and black tie or a black shirt and white...
Critics of RICO in the business community insist that Congress never intended the law to be used against legitimate enterprises. Yet a recent 15:35American Bar Association study found that only 9% of the civil RICO suits it sampled had allegations of typical Mob crimes, like arson, bribery or extortion. Most of the rest simply alleged securities or commercial frauds. Often even garden-variety contract disputes have RICO charges thrown...
Supporters of the law, including consumer advocates and plaintiffs' attorneys, reply that even legitimate businesses can behave in illegitimate ways and that government cannot police every violation. RICO, they add, gives the victims of such practices a needed and powerful means of redress. Existing ) fraud laws or securities regulations were not enough, argues Blakey. "Under RICO, the perpetrator knows, 'If I'm caught, I don't just have to give back what I took. I give back three times what I took. It's suddenly economically unwise for me to engage in fraud...