Supreme Court Ruling Gives Prosecutors More Leverage

Some might say that the last thing federal prosecutors need in their large toolbox of potential charges is more leverage in prosecuting federal cases. But following a recent Supreme Court ruling on the scope and applicability of the Racketeer Influenced and Corrupt Organizations Act (RICO) that is exactly what has happened.

Reading only the headline of the result in RJR Nabisco, Inc. v. European Community may not lead one to conclude that it expands federal prosecution. A closer reading, however, shows that part of the court’s holding increases the availability of the RICO Act to federal prosecutors. In some parts of this case the court was almost unanimous while in other parts split, but the large takeaways will shape federal criminal law well into the future.

What Happened in This Case

The European Union and its member states brought this civil lawsuit against the giant food and tobacco company under the allegation that the company was part of a large money laundering scheme. According to the complaint, this company worked with organized crime syndicates to import vast quantities of cigarettes without paying taxes and customs and thereby making those cigarettes available to the European market.

The Union based their civil complaint on the provision in the RICO Act which grants a private right of action for violating its terms. The court balked at this strategy, though, because under U.S. federal law there is strong presumption that domestic laws do not apply to conduct abroad. To avoid this presumption, the law must expressly include extraterritorial provisions or the text of the law must unmistakably show congress expected it to apply to conduct abroad.

The RICO Act and Scope

The RICO Act was passed primarily as a tool to break up and weaken organized criminal activity. The Act itself describes dozens of different federal offenses that can be part of a RICO claim when they are committed if connected to racketeering activity. Most of those offenses and provisions are exclusive to federal and state charges and therefore not applicable to activity undertaken internationally. The court took this to mean that in order to prove a civil RICO violation, the underlying conduct must be domestic.

This was not the approach taken regarding criminal activity. For example, the court noted in its opinion that because the criminal parts of RICO specifically describe that activities abroad fall within RICO, that criminal RICO cases extends to conduct taken abroad. This holding has led many to conclude that federal prosecutors have a new tool when they bring charges against someone for criminal activity that crosses borders into international territory. In fact, many are viewing this holding as bolstering a current high-profile case against an international soccer organization.

Understanding and Defending Your Rights

When you are facing federal charges, having the right attorney who knows and understands the law as it applies to you is key. Royse Law has that knowledge and understanding, but more importantly, we have the experience your case needs and deserves. If you are facing federal charges, contact us today and let our attorneys put their experience to work for you.

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Roger Royse
rroyse@rroyselaw.com

Roger Royse, the founder of the Royse Law Firm, works with companies ranging from newly formed tech startups to publicly traded multinationals in a variety of industries. Roger regularly advises on complex tax structuring, high stakes business negotiations and large international financial transactions. Practicing business and tax law since 1984, Roger’s background includes work with prominent San Francisco Bay area law firms, as well as Milbank, Tweed, Hadley and McCloy in New York City.
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