Amicus Curiae Brief — Sedima, S. P. R. L. v. Imrex Co.

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No. 84-648

Jn the Supreme Court

OF THE

Anited States

OCTOBER TERM, 1984

SEDIMA, S.P.R.L.

PETITIONER,

Vv.

IMREX Co., INC.,

GIDON ARMON AND JACOB ARMON,

RESPONDENT,

On Writ of Certiorari to the United States

Court of Appeals for the Second Circuit

BRIEF FOR AMICI CURIAE IN SUPPORT OF PETITIONER

ROBERT K. CORBIN

Attorney General

State of Arizona

1275 West Washington

Phoenix, Arizona 85007

(602) 255-4256

jé

Honorable Norman C. Gorsuch,

Attorney General of the State of Alaska,

Honorable John Van de Kamp,

Attorney General of the State of California,

Honorable Duane Woodard,

Attorney General of the State of Colorado,

Honorable Joseph Lieberman,

Attorney General of the State of Connecticut,

Honorable Jim Smith,

Attorney General of the State of Florida,

Honorable Michael Lilly,

Attorney General of the State of Hawaii,

Honorable Jim Jones,

Attorney General of the State of Idaho,

Honorable Neil Hartigan,

Attornev General of the State of Illinois,

Honor. -ie Linley E. Pearson,

Attorney General of the State of Indiana,

Honorable David L. Armstrong,

Attorney General of the State of Kentucky,

Honorable William J. Guste, Jr.,

Attorney General of the State of Louisiana,

Honorable Frank J. Kelley,

Attorney General of the State of Michigan,

Honorable Edward L. Pittman,

Attorney General of the State of Mississippi,

Honorable William L. Webster,

Attorney General of the State of Missouri,

Honorable Mike Greely,

Attorney General of the State of Montana,

Honorable Brian McKay,

Attorney General of the State of Nevada,

NaROR RTE EE

Honorable Irwin I. Kimmelman,

Attorney General of the State of New Jersey,

Honorable Paul Bardacke,

Attorney Genera! of the State of New Mexico,

Honorable Lacy H. Thornburg,

Attorney General of the State of North Carolina,

Honorable Nicholas J. Spaeth,

Attorney General of the State of North Dakota,

Honorable Anthony Celebrezze,

Attorney General of the State of Ohio,

Honorable Michael Turpen,

Attorney General of the State of Oklahoma,

Honorable David Frohnmayer,

Attorney General of the State of Oregon,

Honorable Dennis J. Roberts II,

Attorney General of the State of Rhode Island,

Honorable T. Travis Medlock,

Attorney Genera! of the State of South Carolina,

Honorable Mark V. Meierhenry,

Attorney General of the State of South Dakota,

Honorable W. J. Michael Cody,

Attorney General of the State of Tennessee,

Honorable David L. Wilkinson,

Attorney General of the State of Utah,

Honorable John J. Easton,

Attorney General of the State of Vermont,

Honorable Kenneth O. Eikenberry,

Attorney General of the State of Washington,

Honorable Charlie Brown,

Attorney General of the State of West Virginia,

Honorable Bronson C. La Follette,

Attorney General of the State of Wisconsin,

Honorable Archie G. McClintock,

Attorney General of the State of Wyoming,

Il.

TABLE OF CONTENTS

TABLE OF CONTENTS. ...............+5.:

TABLE OF AUTHORITIES ................

INTEREST OF AMICI CURIAE ............

See ee eee

SUMMARY OF ARGUMENT ..............

GREE 6 ice ek ceo ccnesivsvoscesess

RICO WAS BROADLY DRAFTED WITH PUB-

LIC AND PRIVATE REMEDIES AS GEN-

ERAL REFORM AND IT IS TO BE LIBER-

ALLY CONSTRUED TO EFFECTUATE ITS

REMEDIAL PURPOSES.................-.

RICO DOES NOT REQUIRE A PRIOR CRIM-

INAL CONVICTION AS A PREREQUISITE

FOR A PRIVATE CIVIL SUIT..............

COE occ ccc cc cccccessccsseseees

APPENDIX A

APPENDIX B

TABLE OF AUTHORITIES

Page(s)

United States Supreme Court Cases:

Addington v. Texas, 441 U.S. 418 (1979).......... 22

Bell v. United States, 103 S. Ct. 2398 (1983) ...... 9

Blue Chip Stamps v. Manor Drug Store, 421 U.S. 723

ss wis y'u's usb WR ek oe ees 23

Blue Shield v. McCready, 457 U.S. 465 (1982)..... 12

Blum v. Stenson, 104 S. Ct. 1541 (1984).......... 15

Boyd v. United States, 116 U.S. 616 (1886)........ 9

Brady v. Daly, 175 U.S. 148 (1899) .............. 10

Caminetti v. United States, 242 U.S. 470 (1917).... 9

Church of the Holy Trinity v. United States, 143 U.S.

er EL oc Se a dareciaw du cawentseeuue cs wer 12

City of Milwaukee v. Illinois, 451 U.S. 304 (198i) ... 10

Coffey v. United States, 116 U.S. 476 (1886)....... 9,10

Consumer Product Safety Comm’n v. GTE Sylvania,

ce gS ee eee 15

Detroit Trust Co. v. The Thomas Barlum, 293 U.S.

Sc rk ced anes been Nee Seen aee ewes 4

Farmers’ & Mechanics’ Nat’l Bank v. Dearing, 91

Re ii id anke Cesare eKeeac aus oeee 10

Fedorenko v. United States, 449 U.S. 490 (1981)... 4

Fisher v. United States, 425 U.S. 391 (1976)....... 10

Garcia v. United States, 105 S. Ct. 479 (1984)..... 9,15

Herman & MacLean v. Huddleston, 103 S. Ct. 683

SN tk cunwieds Seameee ite eiwen when ouess 22

Tanelli v. United States, 420 U.S. 770 (1975) ...... 7,18

In re Winship, 397 U.S. 358 (1970) .............. 22

iii

INS v. Phinpathya, 104 S. Ct. 584, 593 (1984).....

Leh v. General Petroleum Corp., 382 U.S. 54 (1965)

Louisville Evansville & St. Louis R.R. v. Clarke, 152

EE RE nS a5, Ae Does hee

Mills Music, Inc. v. Snyder, 105 S. Ct 638 (1985). .

Minnesota Mining & Mfg. Co. v. New Jersey Wood

Finishing Co., 381 U.S. 311 (1965).............

Moore Ice Cream Co., Inc. v. Rose, 289 U.S. 373

a re il es Re ee

Northern Securities Co. v. United States, 193 U.S.

Ne en et ba ls

Ohio v. Kovacs, 105 S. Ct. 705 (1985) ............

Park ’N Fly, Inc. v. Dollar Park and Fly, Inc., 105

ee te te

Perrin v. United States, 444 U.S. 37 (1979)........

Perrine v. Chesapeake and Delaware Canal Co., 50

ae Oy UPD 6 60 os bbe e cee saceccees

Ramsey v. UMW, 401 U.S. 302 (1971)............

Reiter v. Sonotone Corp., 442 U.S. 330 (1979) .....

Richards v. United States, 369 U.S. 1, 9 (1962)....

Rubin v. United States, 449 U.S. 424 (1981).......

Russello v. United States, 104 S. Ct. 296

ERR Uy eal rs ely iene sy re eg h ee e ee 6, 7, 8, 11,

Standard Sanitary Mfg. Co. v. United States, 226

on et ee nt i tn

Stantosky v. Kramer, 455 U.S. 745 (1982).........

TVA uv. Hill, 437 U.S. 153 (1978) ................

United States v. Acme Process Co., 385 U.S. 138

United States v. Apfelbaum, 445 U.S. 115 (1980)...

United States v. Culbert, 435 U.S. 371 (1978)...... 8

United States v. Fabrizio, 385 U.S. 263 (1966)..... 8,9

United States v. One Assortment of 89 Firearms, 104

RTT Cree Te Te Te Te 9, 10

United States v. Rodgers, 104 S. Ct. 1942 (1984)... 4

United States v. Turkette, 452 U.S. 576

Rs oo ce eee seee akon pete nie kes 6, 10, 17

United Steelworkers of America v. Weber, 443 U.S.

oe cee chu epee ebee ne #> 12

Woodby v. INS, 385 U.S. 276 (1966) ............. 22

Other Federal Cases:

Alcorn County, Miss. v. U.S. Interstate Supplies, Inc.

cigs Bt Ji Ts 3 \ Bee 10, 12

Alexander Grant & Co. v. Tiffany Industries, 742 F.2d

No oon Gack Eeicee edie d kaso so. 6

Aliberti v. E. F. Hutton & Co., Inc., 591 F. Supp. 632

i ce eee bee ee eaene oe 6

Bunker Ramo Corp. v. United Business Forms, Inc.,

ji RB > Bp Tr Fs | eee i9

Burns v. United States, 200 F.2d 106 (4th Cir.

ees el eae bene a eee eRe 21

Divco Construction & Realty Corp. v. Merrill Lynch

Pierce Fenner & Smith, Inc., 575 F. Supp. 712 (S.D.

Pe Lc cp ot babar oucavawasenevesbtxe ess 4

Halberstam v. Welch, 705 F.2d 472 (D.C. Cir. 1983) 21

Haroco, Inc. v. American National Bank & Trust of

Chicago, 747 F.2d 384 (7th Cir. 1984) .......... 14, 20

In re Action Industries Tender Offer, 572 F. Supp.

— f 2§ | & FPPPrrrrrrrecre ere eee 9

Monsanto Chemical Co. v. Perfect Fit Products Mfg.

Co., Inc., 349 F.2d 389 (2d Cir. 1965)........... 20

Mon-Shore Management, Inc. v. Family Media, Inc.,

584 F. Supp. 186 (S.D.N.Y. 1984) ..............

Moss v. Morgan Stanley, Inc., 553 F. Supp. 1347

(S.D.N.Y. 1983), aff’d on other grounds, 719 F.2d

5 (2d Cir. 1983), cert. denied, 104 S. Ct. 1280

eared eer etter E eee eh. 6< ess

Plains Resource, Inc. v. Gable, No. 83-JM-2145, slip.

op. (D. Colo. 1984), appeal pending ............

Saine v. A.l.A., Inc., 582 F. Supp. 1299 (D. Colo.

al BREET ah SS et si Toe ate NE aA eI coe

Sedima, S.P.R.L. v. Imrex Co., 741 F.2d 482 (2d Cir.

ERS eee roe © 3, 9, 12, 16, 18, 19, 20,

Slattery v. Costello, 586 F. Supp. 162 (D.D.C. 1983)

United States v. Aleman, 609 F.2d 298 (7th Cir. 1979),

cert. denied, 445 U.S. 946 (1980) ..............

United States v. Altomare, 625 F.2d 5 (4th Cir.

Gest ES aL RR, AE AE a Oe ee a

United States v. Ragaric, 706 F.2d 42 (2d Cir.), cert.

denied, 104 S. Ct. 283 (1983) .................

United States v. Box, 530 F.2d 1258 (5th Cir. 1976)

United States v. Brooklier, 685 F.2d 1208 (9th Cir.

1982), cert. denied, 459 U.S. 1206 (1983) .......

United States v. Cappetto, 502 F.2d 1351 (7th Cir.

1974), cert. denied, 420 U.S. 925 (1975).........

United States v. Carter, 493 F.2d 704 (2d Cir. 1974)

United States v. Grande, 620 F.2d 1026 (4th Cir.),

cert. denied, 449 U.S. 919 (1980) ..............

United States v. Keresty, 465 F.2d 36 (3d Cir. 1972),

cert. denied, 409 U.S. 991 (1972) ..............

United States v. Koehler, 544 F.2d 1326 (5th Cir.

ies nage ig on is Us oe he A Oe a

22, 24

United States v. Licavoli, 725 F.2d 1040 (6th Cir.

a a cal i i acre ek eal Se ast

United States v. Local 560, International Brother-

hood of Teamsters, 581 F. Supp. 279 (D.N.J. 1984),

EE 0s be ods baueeccedcusuunduene

United States v. Mandel, 415 F. Supp. 997 (D. Md.

1976), rev'd on other grounds, 591 F.2d 1347, aff’d

by equally divided court en banc, 602 F.2d 653 (4th

Cir. 1979), cert. denied, 445 U.S. 961 (1980).....

United States v. Mandel, 591 F.2d 1347, aff'd en banc,

602 F.2d 653 (7th Cir. 1979), cert. denied, 445 U.S.

Ns olen Ce Wwh oss bs hen eae eeeaekiees

United States v. Marubeni America Corp., 611 F.2d

Se CE EE 6.6 Koc 4h hho ewe kekcconn

United States v. Parness, 503 F.2d 430 (2d Cir. 1974),

cert. denied, 419 U.S. 1105 (1975) .............

United States v. Sacco, 491 F.2d 995 (9th Cir. 1974)

United States v. Schell, 692 F.2d 672 (10th Cir.

Re ee ee

BUCO TO RT OE CET TTT TT ee

8 PT OE OT TE OT, Cn Pa a

PORTO EE eT OE en ee

United States v. Walsh, 544 F.2d 156 (4th Cir. 1976),

cert. denied, 429 U.S. 1093 (1977) .............

United States v. Wander, 601 F.2d 1251 (3d Cir.

I ae et ae Ona Re ee ee

USACO Coal Co. v. Carbomin Energy, Inc., 689 F.2d

eG PT eT eer Ree Or 11,

State Cases:

Americar Leasing, Inc. v. Maple, 406 N.E.2d 333

Se SUED 64-0 504s0 bares hae heeekekanees

Arizona ex. rel. Corbin v. Pickrell, 136 Ariz. 589, 667

I I A a A ae

vii

Baines v. Superior Court, 688 P.2d 1037 (Ariz. Ct.

Se Prrererrr eT Tyrer e TT eter etre

Banderas v. Banco Central del Ecuador, 10 Fla. Law

Wem Be, GUE. ED, BOs oc ccc scccscccceces

Boston & Worcester R.R. v. Dana, 67 Mass. (1 Gray)

EE Seat euad ests eakeseeKeeerackibeene

Carlson v. State, 405 So. 2d 173 (Fla. 1981).......

Commonwealth v. Taraschi, 475 A.2d 744 (Pa.Super

Pr rrr Pre re Tr rrr TT Trey

Dorsey v. State, 402 So. 2d 1178 (Fla. 1981).......

Jensen v. Brinks & Erb, Inc., 452 N.E.2d 414 (Ina.

Tk o's 4056s bhasccecnnckeoenseveseses

Moorehead v. State, 383 So. 2d 629 (Fla. 1980) ....

Roush v. State, 413 So. 2d 15 (Fla. 1982) .........

Senfeld v. Bank of Nova Scotia Trust Co., 450 So. 2d

Se HI, I oc erin nsccscadesccccsces

Small v. Rockfeld, 66 N.J. 231, 330 A.2d 335

| Maine hlitiPiSGRPS re

State v. Whiddon, 384 So. 2d 1269 (Fla. 1980).....

Watson v. Adams, 187 Ala. 490, 65 So. 528 (1914)...

Constitutions:

icine. wacemees abeebeuee ent

Federal Statutes and Regulations:

ee eet oa oe hae st eneaa emp YS

EE, on a kb ivcewsnacaneanes ues

4 eee eee ee

viii

18 U.S.C. §§ 891-894, 896 (1982)................

ee Ss Ss OE GUIs cv cvccccccesecucens

ey IS og occ caccovecesceueeses

es OO a vec cccicnccocsvenseavs

ee, cnc d suv bcenscesesessven

Ry Oe gs kc ccudiccnieveséuseees

I cc ccdickonetdasusauaes

cc cen nceduévessuueese

18 U.S.C. § 1961 (a)(b)(c)(d) (1982) ..............

ee ce csctedwsseccicnness

se ow ce cree ion saens evs

BP ee FD CIs oe ke ce ccedecescecceens

18 U.S.C. § 1964(a)(b)(c) (1982) .................

18 U.S.C. §§ 2113, 2114 (1982)........... advaue

18 U.S.C. §§ 2421-2424 (1982)..................

ee Ne Lc desevakhene ald

ee Ns nn cecesd sbeveseerares

18 U.S.C. § 3575(e)(1) (1982) ..............200

oe ae ania oben ee- be ea ake

ig it beets

ee A Udei ees ebaeaeeenkeseecs

hs Avi sb eu beh ee beeas a

sn ce Pee eucue veneer ee oh

es cia isd cece nena nnneene ee

cnc tee ease peeeneeneeneen

98 Stat. 2153 (1984)....... 0.0... eee cece e eee.

ee ee ee

Uniform Probate Code § 2-803(e) (1983)..........

Other Statutes:

Statute Against Monopolies 21 Jac. 1, ch. 3, § 4

SK i445. Siedicans Candeshs $Gd00000 ded eks

Statute of Gloucester 6 Edw. 1, ch. 5 (1278).......

The Laws and Liberties of Massachusetts (1648). . .

Legislative History:

115 Comg. Rec. 6,903 (1968)... ww ccc ccc ccces

116 Cong. Rec. 35,342 (1970) ...................

116 Cong. Rec. 35,343 (1970) ...................

116 Cong. Rec. 35,355 (1970) ...................

H.R. Rep. No. 1549, 91st Cong., 2d Sess. (1970) ...

S. Rep. No. 617, 91st Cong., 1st Sess. (1969) ......

Study of the Antitrust Treble Damage Remedy, Serial

No. 8, House Comm. on Judiciary, 98th Cong., 2d

i ss u's id op ahi hea ad 6 WTA wee eae

U.S. Dep’t of Justice Source Books of Criminal Jus-

Ee A ED 6.5 6 a5 ntddile stead soe0so.s

GAO: Fraud In Government Programs — How Ex-

tensive Is It? — How Can It Be Controlled?

ag SEE rT ee Sn. ea

Books and Other Sources:

American Law Institute, Restatement of the Law of

i oi oon ek aw 8 oe ee 8 ows

Annual Report of the Director of the Administrative

Office of the United States Courts (1983)........

Blakey and Gettings, Racketeer Influenced and Cor-

rupt Organizations (RICO): Basic Concepts —

Criminal and Civil Remedies, 53 Temple L. Q.

1009 (1980) (hereinafter cited as Basic Concepts)

6, 9

Blakey, The RICO Civil Fraud Action in Context:

Reflections on Bennett v. Berg, 58 Notre Dame L.

Rev. 237 (1982) (hereinafter cited as Civil

ED s wc cevcseccscenses 6, 7, 9, 10, 12, 15, 18, 20, 22

F. Dickerson, The Interpretation and Applications of

rE See rs CT ee Ts Par

te Oe a

EE Pee ee ee eee ee

D. Field, The Code of Criminal Procedure (1850

di tie conch he enh hh cee ke eh ake

D. Field, The Code of Penal Law (1865 ed.) .......

Galanter, Reading the Landscape of Disputes: What

We Know and Don’t Know (And Think We Know)

About Our Allegedly Contentious and Litigious So-

ciety, 31 UCLA L. Rev. 4 (1983) ...............

Groom, Proof of Crime in a Civil Proceeding, 13

Minn. L. Rev. 556 (1929). ................005-

L. Hand, The Spirit of Liberty (I. Dilliard ed., Vin-

Ca Gi Ne vob eh ieee ed No 0660 6 885%

4 W. Holdsworth, A History of English Law (3d ed.

DE Se ei bbws denn 644i ed sehen edie ok he

Horn, Judicial Plague Sweeps United States ‘Result-

orientitis’ Infects Civil RICO Decisions, 5 Nat’!| L.J.

Ee ee eae ee

J. Hurst, The Growth of American Law (1950) ....

The Institutes of Gaius (Part I) (F. de Zulueta trans.)

EE Re a le ee ed ee ak Ley

R. Jackson, The Struggle for Judicial Supremacy

re eee ee ee

C. Kaysen and D. Turner, Antitrust Policy (1959)

C. Kennedy, The Orations of Demosthenes, App. VI

EE er ee er ee

1 E. Livingston, Complete Works on Criminal Jur-

IIPS a5 ccc cccteascevccuseces 11

2 E. Livingston, Complete Works on Criminal Jur-

dk eau scecasecess’ 11

G. & C. Merriam Co., Webster’s Third New Inter-

national Dictionary (unabridged) (1961) ........ 18, 20

Note, Civil RICO: The Temptation and Impropriety

of Judicial Restriction, 95 Harv. L. Rev. 1101

TE AL ee a 6, 20

E. Patterson, Jurisprudence: Men and Ideas of the

Ph Leeds d eed edae Ghd ekee heehee os 8 12

R. Posner, Antitrust Law: An Economic Perspective

i eiteddW iss cone ied e abe ee neh bebe b be < 14

R. Posner, Economic Analysis of Law (2d ed. 1977) 13

TE 13

A. Watson, The Law of the Ancient Romans (1970) 13

D. Wigdor, Roscoe Pound: Philosopher of Law

Case tret caudal ddnalesecdSé ssc cess 12

9 J. Wigmore, Evidence, (3d ed. 1942)............ 22

J. Wigmore, Panorama of the World’s Legal Systems

SPP cK. ces Latent cece eee e nent ene ee eee eeees 13

C. Wright & A. Miller, Federal Practice and Proce-

ab ak bob h vole RNS ens ewes eke 11

No. 84-648

Jn the Supreme Court

OF THE

Gnited States

OCTOBER TERM, 1984

SEDIMA, S.P-R.L.

PETITIONER,

Vv.

ImREX Co., INC.

RESPONDENT,

On Writ of Certiorari

to the Court of Appeals

for the Second Circuit

INTEREST OF AMICI CURIAE

This brief is submitted on behalf of the State of Ar-

izona, Alaska, California, Colorado, Connecticut, Florida,

Hawaii, Idaho, Illinois, Indiana, Kentucky, Louisiana,

Michigan, Mississippi, Missouri, Montana, Nevada, New

Jersey, New Mexico, New York*, North Carolina, North

Dakota, Ohio, Oklahoma, Oregon, Rhode Islarid, South Car-

olina, South Dakota, Tennessee, Utah, Vermont, Washing-

ton, West Virginia, Wisconsin, and Wyoming.**

*The State of New York wishes to express its support for the

positions expressed by Amici without formally joining on the brief.

**The assistance in the preparation of this brief of Professor G.

Robert Blakey of the Notre Dame Law School and Blake A. Bailey (Notre

Dame ’86), Thomas F. Merrick (Notre Dame ’86), Christine M. North

(Notre Dame ’85), Maryellen O’Neil (Notre Dame 86), Donald H. Pas-

senger (Notre Dame ’86), Olga F. Pribyl (Notre Dame ’85), David C.

Scheper (Notre Dame ’85), Beth A. Schneider (Notre Dame ’86), and Louis

J. Weber III (Notre Dame ’85), is hereby acknowledged.

In 1970, Congress enacted the Organized Crime Con-

trol Act, Title [IX of which is known as “RICO.” Congress

designed the Act to “strengthen[] the legal tools in the

evidence-gathering process, ... [to] establish{] new penal

prohibitions, and . . . [to] provide[] enhanced sanctions and —

new remedies ... .” Organized Crime Control Act of 1970,

Pub. L. No. 91-452, 84 Stat. 923 (1970) (codified at 18 U.S.C.

§ 1961 (1982)). Congress found that “the sanctions and rem-

edies available” under the current law were “unnecessarily

limited in scope and impact.” Jd. Since 1970, the govern-

ment has used RICO in criminal prosecutions against or-

ganized criminal groups, United States v. Brooklier, 685 F.2d

1208, 1213 (9th Cir. 1982) (“La Cosa Nostra”), cert. denied,

459 U.S. 1206 (1983); political corruption schemes, United

States v. Mandel, 591 F.2d 1347, 1353, aff'd by an equally

divided court en banc, 602 F.2d 653 (4th Cir. 1979) (governor

of Maryland), cert. denied, 445 U.S. 961 (1980); white-collar

business offenses, United States v. Tamura, 694 F.2d 591,

594 (9th Cir. 1982) (kickbacks from Japanese corporation);

United States v. Marubeni America Corp., 611 F.2d 763, 764

(9th Cir. 1980) (payoffs by Japanese corporation), and ter-

rorist groups, United States v. Bagaric, 706 F.2d 42, 46 (2d

Cir.) (Croatian nationalist), cert. denied, 104 S. Ct. 283

(1983). The government has also brought civil suits to free

unions dominated by criminal groups. United States v. Local

560, International Brotherhood of Teamsters, 581 F. Supp.

279, 282 (D.N.J. 1984), appeal pending.

Since 1970, twenty-two states, including Arizona,

have followed Congress’ lead by adopting similar legisla-

tion.! The states have employed this legislation in criminal

\See Appendix A for the text of Federal RICO. See Appendix B for

a resolution of the National Association of Attorneys Genvral.

prosecutions against a wide variety of illegal conduct.” Ad-

ditionally, both state governments and private plaintiffs

have used it in civil litigation. Federal RICO decisions have

played a vital role in interpreting and upholding analogous

state RICO legislation.*

Distressingly, however, recent decisions by the lower

federal courts manifest a distinct hostility toward the use

of civil RICO.° State civil RICO defendants are using these

decisions to challenge the state legislation and to urge the

narrowing of its scope.® In the context of federal litigation

with pendent state claims, federal courts are also unjusti-

fiably reading into state legislation limitations not intended

*See, e.g., Carlson v. State, 405 So. 2d 173, 174 (Fla. 1981) (house

of ill fame); Dorsey v. State, 402 So. 2d 1178, 1180 (Fla. 1981) (drugs);

State v. Whiddon, 384 So. 2d 1269, 1270 (Fla. 1980) (theft, burglary,

arson, and arson to defraud); Moorehead v. State, 383 So. 2d 629, 630-31

(Fla. 1980) (auto theft).

3See, e.g., Arizona ex rel. Corbin v. Pickrell, 136 Ariz. 589, 591, 667

P.2d 1304, 1306 (1983) (securities fraud); Banderas v. Banco Central del

Ecuador, 10 Fla. Law Weekly 107, Jan. 11, 1985 (foreign exchange fraud).

*See, e.g., Baines v. Superior Court, 688 P.2d 1037, 1040 (Ariz. Ct.

App. 1984) (“[iJn the absence of any Arizona cases, we will look to federal

decisional law for guidance”); Roush v. State, 413 So. 2d 15, 20-21 (Fla.

1982) (constitutionality of RICO-type civil remedies upheld relying on

federal decisions); Moorehead v. State, 383 So. 2d at 630-31 (constitu-

tionality of “pattern” in Fla. RICO statute upheld relying on federal

decisions.)

5See generally Horn, Judicial Plague Sweeps United States ‘Re-

sultorientitis’ Infects Civil RICO Decisions, 5 Nat’! L. J., May 23, 1983,

at 31, col. 1.

®See, e.g., Arizona ex rel. Corbin v. Pickrell, 136 Ariz. at 596, 667

P.2d at 1311 (distinct injury limitation rejected, but urged based on fed-

eral decisions); Banderas v. Banco Central del Ecuador, 10 Fla. Law

Weekly at 108-09 n.3 (organized crime limitation rejected; “garden va-

riety” fraud exclusion rejected, but urged, citing Sedima, SP.R.L. v.

Imrex, Co., 741 F.2d 482 (2d Cir. 1984)).

by the state legislature, threatening to frustrate the leg-

islative design.’ Amici view these developments as ominous

because they threaten the exercise of state sovereignty.

State legislatures have chosen to follow the 1970 Act, some-

times narrowing, sometimes expanding on the federal

model. “Resolution of the pros and cons of whether a statute

should sweep broadly or narrowly is for” the legislative

branch. United States v. Rodgers, 104 S. Ct. 1942, 1948

(1984). A court is “not at liberty to imply .. . condition|[s]

which .. . [are] opposed to the explicit terms of . . . [a] stat-

ute .... To [so] hold... is not to construe the . . . [statute]

but to amend it.” Fedorenko v. United States, 449 U.S. 490,

513 (1981) (quoting Detroit Trust Co. v. The Thomas Bar-

lum, 293 U.S. 21, 38 (1934)). Accordingly, Amici urge this

Court to set its hand firmly against these unconstitutional

encroachments of Article I legislative power by Article III

courts. See R. Jackson, The Struggle for Judicial Supremacy

40 (Vintage ed. 1941) (“unwelcome legislative [actions un-

dermined by] ‘interpretation’ ... [that] eviscerate[s]

them.”).

STATEMENT

For the statement of the facts and course of legal

proceedings below, the Court is respectfully directed to the

briefs of the parties.

Two issues are presented:

7See, e.g., Plains Resources, Inc. v. Gable, Civil No. 83-JM-2145,

slip op. at 3—5, (D. Colo. 1984) (organized crime limitation read into

federal and Colorado RICO statutes), appeal pending; Divco Construction

& Realty Corp. v. Merrill Lynch Pierce Fenner & Smith, Inc., 575 F. Supp.

712, 714 (S.D. Fla. 1983) (organized crime limitation read into federal

and Fla. RICO statutes in securities fraud area).

(1) Isa private plaintiff’s right to recover under

civil RICO conditioned on a showing of a

prior criminal conviction? (no)

(2) Is a private plaintiff’s right to recover under

civil RICO conditioned on a showing of dis-

tinct injury? (no)

This brief will address issue number one. Amici will

file a second brief that will address issue number two and

other considerations in behalf of respondents in American

National Bank and Trust Co. v. Haroco, Inc., No. 84-822.

SUMMARY OF ARGUMENT

In 1970, Congress enacted the Organized Crime Con-

trol Act, Title [IX of which is known as “RICO.” Neither the

Organized Crime Control Act generally, nor Title IX par-

ticularly, was limited to organized crime. RICO provides for

criminal and civil sanctions; it also mandates the liberal

construction of its provisions. Nothing in the text, legisla-

tive history, or purpose of RICO, justifies circumscribing its

private civil remedies with a prior criminal conviction re-

quirement or an organized crime limitation.

ARGUMENT

I. RICO WAS BROADLY DRAFTED WITH PUBLIC

AND PRIVATE REMEDIES AS GENERAL RE-

FORM AND IT IS TO BE LIBERALLY CON-

STRUED TO EFFECTUATE ITS REMEDIAL

PURPOSES.

In 1970, Congress enacted the Organized Crime Con-

trol Act, Title IX of which is known as the Racketeer Influ-

enced and Corrupt Organizations Title (RICO). RICO’s

“legislative history clearly demonstrates that ... [Con-

gress} intended [RICO] to provide new weapons of unprec-

edented scope for an assault upon organized crime and its

economic roots.” Russello v. United States, 104 S. Ct. 296,

302 (1983). “[T]he major purpose of Title IX [was] to address

the infiltration of legitimate business by organized crime.”

United States v. Turkette, 452 U.S. 576, 591 (1981). Never-

theless, “courts are all but unanimous in their refusal to

read RICO as prohibiting only the infiltration of legitimate

organizations.” United States v. Altomare, 625 F.2d 5, 7 n.7

(4th Cir. 1980) (emphasis added). As such, they faithfully

reflect the teaching of Turkette, 452 U.S. at 590 (“unper-

suaded that Congress ... confined ... RICO [to] only the

infiltration of legitimate business.”) (emphasis in original).

“{Rlejected [too, has been the] notion that. . . [RICO] applies

only to organized crime in the classic ‘mobster’ sense.”

United States v. Grande, 620 F.2d 1026, 1030 (4th Cir.) (em-

phasis added), cert. denied, 449 U.S. 919 (1980). No court

of appeals has applied a different rule in a civil context.?

8 See generally Blakey, The RICO Civil Fraud Action in Context:

Reflections on Bennett v. Berg, 58 Notre Dame L. Rev. 237 (1982) (here-

inafter cited as Civil Action); Blakey and Gettings, Racketeer Influenced

and Corrupt Organizations (RICO): Basic Concepts — Criminal and Civil

Remedies, 53 Temp. L. Q. 1009 (1980) (hereinafter cited as Basic Con-

cepts); Note, Civil RICO: The Temptation and Impropriety of Judicial

Restriction, 95 Harv. L. Rev. 1101 (1982).

9 See, e.g., Alexander Grant & Co. v. Tiffany Industries, 742 F.2d

408, 413 (8th Cir. 1984). District courts, however, continue to read into

the statute an organized crime limitation in civil litigation. See, e.g.,

Aliberti v. EF. Hutton & Co., Inc., 591 F. Supp. 632, 633 (D. Mass. 1984);

Mon-Shore Management, Inc. v. Family Media, Inc., 584 F. Supp. 186,

194-95 (S.D.N.Y. 1984). Accordingly, it is important that this Court firmly

establish that RICO sets one standard for all, to which alternative, but

not exclusive, criminal and civil sanctions may be applied and that RICO

may not be read differently depending on who is the defendant or wro

is the plaintiff. Basic concepts of the rule of law require no less. Magna

Carta, ch. 25 (“one measure of wine ... through .. . [the] Realm”).

One court has objected that so reading RICO works

“a revolutionary consequence [nowhere noted] in the leg-

islative history.” Moss v. Morgan Stanley Inc., 553 F. Supp.

1347, 1361 (S.9.N.Y. 1983), aff’d on other grounds, 719 F.2d

5 (2d Cir. 1983), cert. denied, 104 S. Ct. 1280 (1984). The

facts do not support that proposition. First, the scope of

RICO, as general reform not limited to organized crime, is

noted repeatedly in the legislative history. See Civil Action,

supra n.8, at 272-73, particularly nn.112-13; 275-79, par-

ticularly n.116. Second, and most importantly, this propo-

sition ignores the structure of the entire Organized Crime

Control Act. The Act is composed of eleven substantive ti-

tles, each of which (with two principal exceptions) Congress

drafted in light of the problem of organized crime, but con-

sciously enacted as general reform.!° This structure is rel-

evant in construing the Organized Crime Control Act, Jan-

nelli v. United States, 420 U.S. 770, 786-91 (1975), including

RICO, Russeilo, 104 S. Ct. at 300.

Only Titles V (witness protection) and VI (deposi-

tions) were limited by Congress to “organized criminal ac-

tivity.” 84 Stat. 933 (1970); 84 Stat. 934 (1970) (cod: ied at

18 U.S.C. § 3503 (1982)).!! The presence of this limitation

in Titles V and VI clearly indicates Congress’ intent not to

have it (or any phrase similarly limiting the scope of the

Act) read into its general provisions. Russello, 104 S. Ct. at

10 See Title I (grand jury: indictments not limited, but reports lim-

ited to “organized crime conditions”); Title II (immunity: applicable to

all court, administrative and congressional proceedings), Title III (all

recalcitrant witnesses); Title IV (all false declarations); Title VII (all

sources of evidence); Title VIII (all syndicated gambling); Title X (all

sentencing); and Title XI (all explosives).

11 Even that phrase has been appropriately read broadly to include

“white collar crime.” United States v. Carter, 493 F.2d 704, 708 (2d Cir.

1974) (construction of Section 3503). But see United States v. Singleton,

460 F.2d 1148, 1155-59 (2d Cir. 1972) (Oakes, J., dissenting).

300; United States v. Aleman, 609 F.2d 298, 303-04 (7th Cir.

1979) (“Congress knew ... how to limit a provision ... if

that was what was intended.”), cert. denied, 445 U.S. 946

(1980). See also Ohio v. Kovacs, 105 S. Ct. 705, 709 (1985).

Congress, in effect, removed that limitation from Title VI

in 1975, 89 Stat. 373, 374 (1975). It was removed from Title

VI in 1975, 89 Stat. 373, 374 (1975). It was removed from

Title V in 1984, Witness Security Reform Act of 1984, 98

Stat. 2153 (1984). Indeed, on each subsequent occasion that

Congress has acted and amended the Organized Crime Con-

trol Act or RICO, it has broadened, not narrowed it. Finally,

courts have rejected efforts to deny that the 1970 Act

worked general reform under its other titles.'* Accordingly,

the Organized Crime Control Act, including Title IX, con-

forms to a consistent pattern of federal legislation enacted

over the past half century as general reform aimed at a

specific target, but not restricted in its drafting to that spe-

cific target.'*

12 See, e.g., United States v. Box, 530 F.2d 1258, 1265 n.19 (5th Cir.

1976) (Title VIII (18 U.S.C. § 1955 (1982)) not limited to organized crime);

United States v. Sacco, 491 F.2d 995, 1011-13 (9th Cir. 1974) (Ely, J.,

dissenting) (Title VIII unconstitutional under commerce clause, since not

limited to organized crime); United States v. Schell, 692 F.2d 672, 674

(10th Cir. 1982) (Title X (18 U.S.C. § 3575 (1982)) not limited to organized

crime); United States v. Schwanke, 598 F.2d 575, 578 (10th Cir. 1979)

(Title XI (18 U.S.C. § 844 (1982)) not limited to organized crime).

13 See, e.g., 18 U.S.C. § 224 (1982) (sports bribery) held not limited

to organized crime in United States v. Walsh, 544 F.2d 156, 159 (4th Cir.

1976), cert. denied, 429 U.S. 1093 (1977); 18 U.S.C. §§ 891-894, 896 (1982)

(loan sharking) held not limited to organized crime in United States v.

Keresty, 465 F.2d 36, 43 (3d Cir. 1972), cert. denied, 409 U.S. 991 (1972);

18 U.S.C. § 1510 (1982) (obstruction of criminal investigation) held not

limited to organized crime in United States v. Koehler, 544 F.2d 1326,

1330 n.6 (5th Cir. 1977); 18 U.S.C. § 1951 (1982) (extortion) held not

limited to racketeering in United States v. Culbert, 435 U.S. 371, 373-74

(1978); 18 U.S.C. § 1952 (1982) (Travel Act) held not limited to organized

crime bribery in Perrin v. United States, 444 U.S. 37, 46 (1979); United

States v. Wander, 601 F.2d 1251, 1257-58 (3d Cir. 1979) (not limited to

organized crime); 18 U.S.C. § 1953 (1982) (lottery tickets) held not limited

to organized crime in United States v. Fabrizio, 385 U.S. 263, 265-67

18 U.S.C. § 1962 sets forth “standards” of “unlawful”

conduct, which are enforced through “criminal” and “civil”

sanctions. Section 1962 says “unlawful,” not “criminal.” As

such, RICO is not, as some courts have stated, “primarily

a criminal statute.” Jn re Action Industries Tender Offer,

572 F. Supp. 846, 849 (E.D. Va. 1983). Section 1963 sets out

the criminal remedies, which include imprisonment, fine

and criminal forfeiture. Section 1964 provides civil reme-

dies, including injunctive and other equitable relief, as well

as treble damages. “Person” under 18 U.S.C. § 1961(3) de-

fines the class who may sue or be sued civilly under Section

1964 for violations of Section 1962; by contrast, “whoever”

under 1 U.S.C. § 1 defines the class who may be indicted

for violations of Section 1962 under the criminal provisions

of Section 1963. See Civil Action at 243 n.20; Basic Concepts,

supra, n.8 at 1021 n.71. Accordingly, the class of defendants

under criminal RICO is more restricted than the class of

defendants under civil RICO. As such, RICO’s civil scope is

broader than its criminal scope; RICO is not, therefore, pri-

marily criminal or punitive, but primarily civil and reme-

dial. See United States v. One Assortment of 89 Firearms,

104 S. Ct. 1099, 1105-06 (1984) (dealing with 18 U.S.C.

§§ 922(a)(1), 924(d) (1982)).!4 Its civil remedies, which re-

quire no more than a showing of a preponderance of the

(1966); 18 U.S.C. § 2113(b) (1982) (bank robbery) held not limited to

gangsters in Bell v. United States, 103 S. Ct. 2398, 2400-02 (1983); 18

U.S.C. § 2114 (1982) (assault on custodian of property of United States)

held not limited to postal carriers in Garcia v. United States, 105 S. Ct.

479, 481-85 (1984); 18 U.S.C. §§ 2421-2424 (1982) (white slave traffic)

held not limited to commercial prostitution in Caminetti v. United States,

242 U.S. 470, 485-90 (1917).

'4 See also 115 Cong. Rec. 6,993 (1969) (statement of Sen. Hruska:

“The criminal provisions [of RICO] are intended primarily as an adjunct

to the civil provisions which I consider as the more impcrtant feature of

the bill”). The reliance of Sedima, SP.R.L. v. Imrex Co., 741 F.2d 482,

500 n.49 (2d Cir. 1984) on Boyd v. United States, 116 U.S. 616, 634-35

(1886) in arguing for a contrary view is misplaced in light of this Court’s

decisions, not only in One Assortment of 89 Firearms, 104 S. Ct. at 1104

evidence, are available to either the government or private

parties. United States v. Cappetto, 502 F.2d 1351, 1357 (7th

Cir. 1974) (government suit), cert. denied, 420 U.S. 925

(1975); Alcorn County, Miss. v. U.S. Interstate Supplies, Inc.,

731 F.2d 1160, 1166-67 (5th Cir. 1984) (private suit).

Congress could not have more clearly manifested its

intent that courts construe RICO as a remedial statute con-

taining both criminal and civil sanctions. 84 Stat. 947

(1970) (“remedial purposes’); S. Rep. No. 617, 91st Cong.,

lst Sess. 82 (1969) (Title IX “is remedial rather than

penal”). When Congress so classifies a statute, the classi-

fication is entitled to great deference. One Assortment of 89

Firearms, 1048S. Ct. at 1196. Statutory classifications, more-

over, control over federal common law classifications. City

of Milwaukee v. Illinois, 451 U.S. 304, 312-15 (1981). Ac-

cordingly, this Court has recognized the remedial character

of civil RICO. Turkette, 452 U.S. at 593 (RICO is “both

preventive and remedial”). The traditional canon of statu-

tory construction for such statutes requires courts to con-

strue them liberally. Brady v. Daly, 175 U.S. 148, 154-58

(1899) (certain sum damages); Farmers’ and Mechanics’

Nat’l Bank v. Dearing, 91 U.S. 29, 35 (1875) (statutory for-

feiture). Congress, of course, settled the issue of what canon

of construction courts should use in interpreting RICO by

including a liberal construction clause. 84 Stat. 947 (1970)

(“The provisions of . . . [RICO] shall be liberally construed

to effectuate its remedial purposes.”) A majority of the lower

courts have faithfully followed the liberal construction

clause under RICO’s criminal provisions. Civil Action at 245

n.25, 288 n.150. Those judges who have questioned its ap-

plication in criminal cases have generally conceded its ap-

plication in civil cases. See, e.g., United States v. Mandel,

(Coffey v. United States, 116 U.S. 476 (1886) (Boyd extended) “disap-

proved”) but also Fisher v. United States, 425 U.S. 391, 407-08 (1976)

(Boyd “not stood the test of time”).

415 F. Supp. 997, 1022 (D. Md. 1976), rev'd on other grounds,

591 F.2d 1347, aff’d by equally divided court en banc, 602

F.2d 653 (4th Cir. 1979), cert. denied, 445 U.S. 961 (1980).

Nevertheless, judicial acceptance of the liberal construction

directive has, in fact, been mixed on the civil side.'5 Judicial

hostility to the application of the liberal construction clause

to civil RICO is unjustified, and its impact on these appeals

is decisive.'® The language of RICO should be read in the

18 Compare USACO Coal Co. v. Carbomin Energy, Inc., 689 F.2d

94, 95 n.1 (6th Cir. 1982) (“Congress intended that RICO be liberally

construed ...”) with Saine v. AJ.A., Inc., 582 F. Supp. 1299, 1305 (D.

Colo. 1984) (treble damages must be strictly construed).

16 This Court in Russello, 104 S. Ct. at 302 noted the unusual

character of the liberal construction clause in a federal criminal statute.

Such a liberal construction clause is not unusual in state law. It had its

origins in the codification movement of the 19th century. Edward Liv-

ingston suggested the rejection of the old common law rule of strict

construction in the farsighted code he drafted for Louisiana between 1820

and 1825. 1 E. Livingston, Complete Works on Criminal Jurisprudence

231 (1873 ed.) and 2 Complete Works 14 (“all penal laws whatever are

to be construed according to the plain import of their words... . ”), Liv-

ingston’s suggestion for Louisiana was followed by David Dudley Field

in his influential draft of codes of penal Jaw and criminal procedure for

New York. The Code of Penal Law 5 (1865 ed.) (“fair import”); The Code

of Criminal Procedure 470-71 (1850 ed.) (“liberal construction”) (old rule

had no support in any “principle of substantial justice, and ... [its]

highest aim, practically considered seem/ed] to be, to render that law

inconsistent with its spirit and as a consequence, absurd and ridiculous.”)

Ultimately, Livingston’s and Field’s work formed the intellectual basis

for the Federal Rules of Civil and Criminal Procedure. C. Wright &

A. Miller, Federal Practice and Procedure § 104 (1969). Judicial hostility

to change through legislation, however, was common at that time. J.

Hurst, The Growth of American Law 186 (1950):

“[WIhere [judges] were not ready boldly to declare [it] un-

constitutional, [they were ready] to interpret it so restric-

tively as to narrow its effect.

These factors found expression in the abstract canons of sta-

tutory interpretation ...: strict construction of statutes in

derogation of the common law; strict construction of penal

statutes, or of legislation that imposed ‘drastic’ burdens, or

of legislation that imposed special damages ... .

The effect was to put a primarily obstructive, if not destruc-

tive, connotation on the process of statutory interpretation.”

same fashion whether the character of the suit is criminal

or civil. Alcorn County, Miss. v. U.S. Interstate Supplies,

Inc., 731 F.2d 1160, 1170-71 (5th Cir. 1984); Slattery v. Cos-

tello, 586 F. Supp. 162, 164 (D.D.C. 1983) (“hard pressed to

justify a narrower construction of RICO’s civil cause of ac-

tion than afforded RICO’s criminal provisions.”).!’

The public and private civil enforcement provisions

of RICO are modeled on, but are not identical to, the an-

titrust laws.!® Like the antitrust laws, RICO creates “a pri-

vate enforcement mechanism that . . . deter[s) violators...

[and] provide[s] ample compensation to the victims.” Blue

Shield v. McCrewdy, 457 U.S. 465, 472 (1982). A private

Legislatures reacted: “[I}t became standard practice in drafting statutes

to insert a preamble stating broadly the purpose of the act and to close

with a provision declaring that the statute should be liberally construed.”

D. Wigdor, Roscoe Pound: Philosopher of Law 174 (1974); see also, E.

Patterson, Jurisprudence: Men and Ideas of the Law 421 (1953). In fact,

a majority of states has abolished the common law rule. The statutes

and relevant decisions are collected in Civil Action at 245 n.25. The

reliance of Sedima, 747 F.2d at 188 n.17 on Church of the Holy Trinity

uv. United States, 143 U.S. 457, 459 (1892) in arguing for a contrary view

is misplaced in light of TVA v. Hill, 437 U.S. 153, 187 n.33 (1978). United

Steelworkers of America v. Weber, 443 U.S. 193, 201-03 (1979), a civil

rights decision, did not purport to reestablish Church of the Holy Trinity

as a general rule. See Rubin v. United States, 449 U.S. 424, 430 (1981)

(Hill followed).

17 See Northern Securities Co. v. United States, 193 U.S. 197, 401

(1904) (antitrust) (Holmes, J., dissenting) (“The words cannot be read

one way in a suit which is to end in fine and imprisonment and another

way in one which seeks an injunction.”)

18S. Rep. No. 617, 91st Cong., 1st Sess. 81 (1969); H.R. Rep. .No.

1549, 91st Cong., 2nd Sess. 56-60 (1970). RICO and the antitrust laws

are well integrated. “There are three possible kinds of force which a firm

can resort to: violence (or the threat of it), deception, or market power.”

C. Kaysen and D. Turner, Antitrust Policy 17 (1959). RICO focuses on

the first two; antitrust focuses on the third.

“treble-damages remedy [is needed] ... precisely for the

purpose of encouraging private challenges to. . . violations.”

Reiter v. Sonotone Corp., 442 U.S. 330, 344 (1979) (emphasis

in original).!9 “Private ... litigation is one of the surest

19 The idea of multiple damages for certain kinds of unlawful prac-

tices has deep roots. The earliest such provision in English law was the

_ Statute of Gloucester, 6 Edw. 1, ch. 5 (1278) (treble damages for waste).

Modern antitrust statutes had their origin in the Statute Against Mon-

opolies, 21 Jac. 1, ch. 3, § 4 (1624) (authorizing treble damages for those

injured by unlawful monopolies). Parliament recognized that it was “one

thing to pass statutes and ... quite another then to insure that [they

were] actually enforced.” 4 W. Holdsworth, A History of English Law 355

(3d ed. 1945). Accordingly, “it was a common expedient [in the Middle

Ages and beyond] to give the public at large an interest in seeing that

a statute was enforced . .. .” Jd. It was also an idea found in early colonial

laws. See, e.g., The Laws and Liberties of Massachusetts 5 (pilfering and

theft: treble damages), 24 (gaming: treble damages) (1648). In turn, the

idea of multiple damages for various kinds of wrongs was a characteristic

feature of Roman law. The “delict” of theft ran back at least to the Twelve

Tables (450 B.C.). The Institutes of Gaius (Part I) (Text with Critical

Notes and Translation by F. de Zulueta) at 217 (1958). “[T]he penalty

... [was] four times the value of the thing stolen” when the offender was

caught in the act; otherwise, it was “double.” A. Watson, The Law of the

Ancient Romans 76 (1970). Extortion was remedied by four times the

loss. Jd. at 80. Possession of stolen property was remedied by three times

the value of the property. Jd. at 77. Greek law provided for double damage

if stolen property was recovered; tenfold damages otherwise. 5 C. Ken-

ne nedy, The Orations of Demosthenes, app. V1 187 (1909) (quoting a law of

Solon), quoted in, J. Wigmore, Panorama of the Worlds Legal Systems

343 (1936). Biblical law, too, reflected multiple damage recovery. Exodus

22:1 (theft of ox or sheep, if killed, restoration of five for ox and four for

sheep); Exodus 22:9 (trespass to property double damages); 2 Samuel

12:1-6 (restoration of fourfold for taking of lamb).

Modern economic analysis supports the wisdom of this history. See

generally, R. Posner, Economic Analysis of Law § 7.2 (2d ed. 1977). Pro-

____ fessor (now Judge) Posner argues for private enforcement mechanisms

___ of more than actual damages against deliberate anti-social conduct, par-

_____ ticularly where the factor of concealment is present. Id. at 462 (private

___ enforcement); 143, 272 (more than actual damages for deliberate con-

___< duct); 235 (concealment). Concealment is the sine qua non of most P.{CO-

___ type behavior particularly fraud. See GAO: Fraud In Government Pro-

grams — How Extensive Is It? — How Can It Be Controlled? (1980) (“Most

_-_____ fraud is undetected. For those . . . committing fraud, the chances of being

_-__ prosecuted and eventually going to jail are slim.... The sad truth is

weapons for effective enforcement” of the law. Leh v. General

Petroleum Corp., 382 U.S. 54, 59 (1965), (quoting Minnesota

Mining & Mfg. Co. v. New Jersey Wood Finishing Co., 381

U.S. 311, 318 (1965)). Private civil suits “provide a signif-

icant supplement to the limited resources available to the

government.” Jd.2° No need exists “to burden the private

litigant beyond what is specifically set forth” in the

statute. Id.

that crime against the Government often does pay.”) If we authorize the

recovery of only actual damages for deliberate anti-social conduct en-

gaged in for profit, we let the perpetrator know that if he is caught, he

must return the misappropriated sums. If he is not caught, he may keep

the money. Even if he is caught and sued, he may be able to defeat part

of the damage claim or at least compromise it. In short, the balance of

economic risk under traditional single damage recovery provides little

economic disincentive to those who engage in such conduct. See R. Posner,

Antitrust Law: An Economic Perspective 223 (1976) (“If, because of con-

cealability, the probability of being punished for a particular . . . violation

is less than unity, the prospective violator will discount (i.e., multiply)

the punishment cost by that probability in determining the expected

punishment cost for the violation.”) In fact, as the court in Haroco, Inc.

v. American National Bank & Trust Co. of Chicago, 747 F.2d 384, 399

n.16 (7th Cir. 1984) observed:

[It is also true that] the delays, expense and uncertainties of

litigation often compel plaintiffs to settle completely valid

claims for a mere fraction of their value. By adding to the

settlement value of such valid claims in certain cases clearly

involving criminal conduct, RICO may arguably promote

more complete satisfaction of plaintiffs’ claims without fa-

cilitating indefensible windfalls.

Similarly, studies under the antitrust statute show that most treble dam-

age suits are now settled at close to actual damages. Study of the Antitrust

Treble Damage Remedy, Serial No. 8, House Comm. on the Judiciary,

98th Cong., 2d Sess. 14 (1984). No reason exists to believe that a similar

pattern will not develop under RICO, at least in the commercial fraud

area. Ironically, it may be necessary to authorize treble damages to assure

that deserving victims receive actual damages in the RICO area.

20 In fact, between 1960 and 1980, of the 22,585 civil and criminal

antitrust cases brought, 84% were instituted by private plaintiffs. US.

Dep't of Justice Source Books of Criminal Justice Statistics 1981 431.

While the language of a statute “must ordinarily be

regarded as conclusive,” it can, of course, give way to a

“clearly expressed legislative intention to the contrary”

found in the statute’s legislative history. Consumer Product

Safety Comm’n v. GTE Sylvania, Inc., 447 U.S. 102, 108

(1980).2! When RICO’s legislative history is carefully and

fully reviewed, it confirms that “Congress meant what it

said.” INS v. Phinpathya, 104 S. Ct. 584, 593 (1984). See

Civil Action at 280:

[A] review of the legislative history of ... [the

Organized Crime Control Act] in general, and Ti-

tle IX in particular, establishes the following

points beyond serious question:

(1) Congress fully intended, after specific debate,

to have RICO apply beyond any limiting con-

cept like “organized crime” or “racketeering”;

21 Four basic assumptions are integral to any principled effort to

interpret a statute. F. Dickerson, The Interpretation and Applications of

Statutes 7-12 (1975): (1) legislative supremacy within the constitutional

framework (U.S. Const. art. I, § 1); (2) the use of the statutory vehicle

to exercise that supremacy; (3) reliance on accepted means of commu-

nication; and (4) reasonable availability of the statutory vehicle to those

to be governed by it, not only its text, but any other part of its legislative

context that serves to give it meaning.

See L. Hand, “The Contribution of an Independent Judiciary,” in

The Spirit of Liberty 119-20 (I. Dilliard ed., Vintage ed. 1959):

‘Enacted lawis]’ ... [are] ordinarily a compromise of con-

flicts .... [TJhey should be loyally enforced until they are

amended by the same process which made them. That is the

presupposition upon which the compromises were originally

accepted; to disturb them ... imperils the possibility of any

future settlements and ... upsets the whole system.

See also, Garcia v. United States, 105 S. Ct. 479, 483 (1984); Blum uv.

Stenson, 104 S. Ct. 1541, 1548 (1984); United States v. Apfelbaum, 445

U.S. 115, 121 (1980) (construction of Title Il of Organized Crime Control

Act).

(2) Congress deliberately redrafted RICO outside

of the antitrust statutes, so that it would not

be limited by antitrust concepts like “compet-

itive,” “commercial,” or “direct or indirect”

injury;

(3) Both immediate victims of racketeering activ-

ity and competing organizations were con-

templated as civil plaintiffs for injunction,

damage, and other relief;

(4) Over specific objections raising issues of

federal-state relations and crowded court

dockets, Congress deliberately extended RICO

to the general field of commercial and other

fraud; and

(5) Congress was well aware that it was creating

important new federal criminal and civil rem-

edies in a field traditionally occupied by com-

mon law fraud. (emphasis in original).

Il. RICO DOES NOT REQUIRE A PRIOR CRIMINAL

CONVICTION AS A PREREQUISITE FOR A PRI-

VATE CIVIL SUIT.

Sedima, S.P.R.L. v. Imrex Co., Inc., 741 F.2d 482,

496, 501 (2d Cir. 1984) holds that a private litigant’s right

to bring a claim for relief under RICO is conditioned on a

showing of a prior criminal conviction under either RICO

or one of its predicate offenses. Because that holding has

no support in the text, legislative history, or jurisprudence

of RICO, this Court should reject it.”

22 It is significant that counsel in Sedima did not even consider the

point worthy of mention before the District Court or in the briefs in the

Court of Appeals. The Court of Appeals raised the point sua sponte. Had

Sedima had the benefit of adversary argument, it might have had brought

to its attention the substantial policy reasons rooted in considerations

of the administration of criminal RICO, matters beyond the scope of

Amici interests, why Congress would not have required a criminal con-

viction as a condition for a private civil suit. It is doubtful that Congress

Analysis of RICO must, of course, begin with its text.

Russello, 104 S. Ct. at 299 (quoting United States v. Tur-

kette, 452 U.S. at 580). The “assumption [is] that the leg-

islative purpose is expressed by the ordinary meaning of

the words used.” Jd. (quoting Richards v. United States, 369

U.S. 1, 9 (1962)). See also Park ’N Fly, Inc. v. Dollar Park

and Fly, Inc., 105 S. Ct. 658, 662 (1985). “The language of

... [RICO is] the most reliable evidence of . . . [Congress’]

intent... .” Turkette, 452 U.S. at 593. The plain language

of RICO, however, nowhere requires that a civil defendant

be “convicted,” but only requires that the acts in question

be “indictable,” or that there be a “violation” — not a

“conviction.”2%

would have equipped prosecutors with the power to use the threat of a

private treble damage action to coerce a guilty plea. Nor would Congress

have subjected prosecutors to the possibility of private importuning to

bring RICO-related criminal prosecutions or charges of acting as stalking

horses for such private interests. Similarly, it would not have undermined

the credibility of complaining witnesses in RICO criminal cases by mak-

ing them vulnerable to cross-examination about their hopes to obtain

treble damage relief, if, but only if, the government secures a conviction.

23 “Racketeering activity” includes any act involving certain state

offenses “chargeable” and “punishable” under state law. 18 U.S.C.

§ 1961(A) (1982).

“Racketeering activity” also includes any act involving certain fed-

eral offenses “indictable” or “punishable” under federal law. 18 U.S.C.

§ 1961(B)(C)(D) (1982).

18 U.S.C. § 1962 sets out that conduct that is unlawful under RICO.

It prohibits certain investments, acquisitions and operations involving

racketeering activity.

18 U.S.C. § 1963 provides that “[w!hoever violates any provision of

Section 1962” may be criminally sanctioned.

18 U.S.C. § 1964(a) provides that district courts have jurisdiction

to prevent and restrain “violations of Section 1962.”

18 U.S.C. § 1964(b) authorizes the Attorney General to institute

suits under Section 1964.

18 U.S.C. § 1964(c) authorizes “[a}ny person injured in his business

or property by a violation of Section 1962” to sue.

For the purposes of this analysis, the key words are “chargeable,”

“indictable,” “punishable” and “violation.”

The Organized Crime Control Act is “a carefully

crafted piece of legislation.” Jannelli v. United States, 420

U.S. 770, 786-89 (1975). Accordingly, it is significant that

when Congress wanted to say “conviction,” it said “convic-

tion,” not “violation.””4

Sedima suggests that “had Congress considered .. .

{a criminal conviction limitation] it would have explicitly

required previously established convictions in the context

of section 1964(c).” 741 F.2d at 501. The record contradicts

Sedima’s suggestion that Congress did not consider the

question. Congressman (now Judge) Mikva, a vocal and

knowledgeable” opponent of RICO in the House Judiciary

Committee and on the House floor, specifically objected that

RICO’s private claim for relief might lead to the federali-

zation of state offenses and frivolous law suits that would

harass legitimate business. Accordingly, he proposed an

The ordinary meaning of the suffix “able” is “capable of, fit for, or

worthy of (being so acted upon or toward) — chiefly in adjectives derived

from verbs... .” Webster’s Third New International Dictionary 4 (una-

bridged) (1961). Accordingly, it does not mean, in fact, so acted upon.

The ordinary meaning of the term “violation” is “an infringement

or transgression.” Jd. at 2554. Accordingly, it is not limited to criminal

infringements or transgressions.

2418 U.S.C. § 1963(c) (1982) (“conviction”) (provision dealing with

seizure); 18 U.S.C. § 3575(e)(1) (1982) (“convicted,” “convictions,” and

“conviction”) (enhanced sentencing provisions for dangerous special of-

fenders enacted as part of Title X, 84 Stat. 949 (1970)). Sedima asks why

Congress chose “violation” rather than “forbidden” as in the antitrust

statutes. 741 F.2d at 498 n.46. The court did not explain why Congress

needed a specific reason to prefer modern to late Victorian word usage.

See also “Trademark Counterfeiting Act of 1984,” 98 Stat. 2182 (1984)

(treble damages for “violation” of Lanham Act).

25 Congressman Mikva, along with Senators McClellan and Hruska

and Congressman Poff, the chief sponsors of the Organized Crime Control

Act including its RICO provisions, served together on the National Com-

mission on the Reform of Federal Criminal Law, from which came a

number of key concepts embodied in RICO. Civil Action at 253 n.47.

amendment authorizing treble damages for businesses sub-

jected to frivolous RICO suits. 116 Cong. Rec. 35,342 (1970).

Pointing out the breadth of RICO, Congressman Mikva

noted: “[T]here need not be a conviction under any of these

laws for it to be racketeering.” No member of Congress

objected to Mikva’s remarks or even suggested that the

statute, as drafted, required convictions; they could not, for

Mikva’s charge was true. The House, however, soundly de-

feated Congressman Mikva’s proposed amendment. /d. at

35,343.76

Not surprisingly, Sedima’s criminal conviction re-

quirement sets it apart from the other courts of appeals that

have interpreted RICO in either criminal or civil contexts.

Prior criminal indictments for the predicate offenses are

not required for a RICO prosecution. United States v. Par-

ness, 503 F.2d 430, 441 (2d Cir. 1974), cert. denied, 419 U.S.

1105 (1975). See also Commonwealth v. Taraschi, 475 A.2d

744, 749 (Pa. Super 1984) (no requirement of conviction of

predicate crime under Pa. RICO). Indeed, the cases uni-

formly establish that the terms “chargeable,” “indictable,”

and “punishable” merely incorporate the definitions of state

and federal law; they play no other role. The government

may, for example, bring a federal RICO prosecution, when

it is not possible to bring a state prosecution because of a

prior not guilty verdict. See, e.g., United States v. Licavoli,

725 F.2d 1040, 1047 (6th Cir. 1984). The other courts of

appeals that have directly faced the issue have held that

no prior criminal conviction is required in government civil

suits, Cappetto, 502 F.2d at 1356-57, or private civil suits,

Bunker Ramo Corp. v. United Business Forms, Inc., 713 F.2d

1272, 1286-87 (7th Cir. 1983); USACO Coal Co., 689 F.2d

26 The Sedima opinion notes (without quoting) the objections of

Congressman Mikva only in the context of its general discussion of

RICO’s legislative history. 741 F.2d at 490 n.22.

at 95 n.1. Thus, this Court should reject the criminal con-

viction requirement.?’

Adopting a prior criminal conviction requirement is

a radical and an unwise departure from precedent. Yet Se-

dima seeks to justify this departure, based not so much on

RICO’s text or legislative history, but on the Court’s as-

sessment of RICO’s wisdom. RICO, the court argued, carries

with it a stigma — that of “racketeer.”** The Sedima ma-

jority argued that if it did not impose the criminal conviction

requirement, it would have to impose a proof beyond a rea-

sonable doubt standard. 741 F.2d at 499. Even Haroco, Inc.

v. American Nat’l Bank and Trust Co., 747 F.2d 384, 404

(7th Cir. 1984), considered increasing the burden of proof

in the context of civil RICO.

The concerns of these courts are unfounded. Con-

gress modeled RICO on the antitrust laws, which are also

27 RICO’s operative terms play an identical role in both government

criminal and civil litigation and in private civil suits. “There is a unity

of verbal structure that is a symptom of an inner unity, a unity of plan

and function.” Moore Ice Cream Co., Inc. v. Rose, 289 U.S. 373, 378 (1933)

(Cardozo, J.) “An interpretation of [a] statute which would render dif-

ferent sections inconsistent with each other cannot be the true one.”

Perrine v. Chesapeake and Delaware Canal Co., 50 U.S. (9 How.) 172,

187 (1850) (Taney, C.J.). Accordingly, it is difficult to see how the same

words are to be given such radically different constructions in govern-

ment and private RICO suits. See also Mills Music, Inc. v. Snyder, 105

S. Ct. 638, 646 (1985).

28 On the use of the word “racketeer” in RICO, see Civil Action at

250 n.41. Compare Webster’s Third New International Dictionary 1871

(unabridged) (1961) (“use fraud or intimidation in extorting money or

commercial or political advantage”) with Monsanto Chemical Co. v. Per-

fect Fit Products Mfg. Co., Inc., 349 F.2d 389, 396 (2d Cir. 1965) (Lumbard,

C.J.) (trademark infringement litigation: defendant labeled “commercial

racketeer”). See also Note Civil RICO: The Temptation and Impropriety

of Judicial Restriction, 95 Harv. L. Rev. 1101, 1107 (1982) (“RICO claims

can stigmatize defendants only if courts restrict the applicability of the

broad statutory language to proven organized criminals”). Indeed, the

stigma flows, if at all, from the criminal conviction, not a civil complaint

or verdict.

enforced through government criminal and civil actions as

well as private claims for relief, including suits for treble

damages. Civil antitrust actions require no criminal con-

viction. Standard Sanitary Mfg. Co. v. United States, 226

U.S. 20, 52 (1912) (a conviction requirement would “take

from the statute a great deal of its power”). Proof by a

preponderance is sufficient in civil proceedings. Ramsey v.

UMW, 401 U.S. 302, 307-11 (1971). No sound reason exists

to treat RICO differently.

Perspective is called for. Our society knows no mark

of shame more stigmatizing than that of Cain, yet homicide

may be both murder and wrongful death. Halberstam uv.

Welch, 705 F.2d 472 (D.C. Cir. 1983). Traditionally, civil

recovery for wrongful death having criminal characteristics

may be obtained without showing a prior criminal convic-

tion or meeting an increased burden of proof. See, e.g., Louis-

ville Evansville and St. Louis R.R. v. Clarke, 152 U.S. 230,

235-42 (1894) (“wholly civil in character”).?9 Similarly, mur-

der may be an issue in the imposition of a constructive trust

or the voiding of a bequest, yet a conviction is not required,

and the homicide may be shown by a preponderance of the

evidence.*°

29 See Watson v. Adams, 187 Ala. 490, 494, 65 So. 528, 533 (1914)

(wrongful death) (“Great as the love of money may be in some human

beings, it cannot be presumed that to be held liable for damages is, to

the ordinary man, the equivalent of the impending, unless diverted,

exaction of his freedom or his life . . .”) See also, Boston and Worcester

R.R. v. Dana, 67 Mass. (1 Gray) 83, 96. .0v (1854) (Rejection of English

rule requiring conviction in felonious taking « f goods rejected) (“If a party

is compelled to wait the determination of a criminal prosecution before

he is permitted to seek his private redress, he certainly has a strong

motive to stifle the prosecution and compound with the felon.”)

3° See, e.g., Small v. Rockfeld, 66 N.J. 231, 245, 330 A.2d 335, 343

(1974) (no conviction required); Burns v. United States, 200 F.2d 106, 107

(4th Cir. 1952) (acquittal in criminal case not defense in civil case where

murder at issue); Uniform Probate Code § 2-803(e) (1983) (conviction for

murder not required and killing may be shown by preponderance of the

evidence); Restatement of the Law of Restitution § 187, comment f. (1937)

The underlying problem with Sedima’s analysis is

that it fails to recognize that society treats a criminal con-

viction much differently than it treats an adverse civil judg-

ment. It is manifest that Congress did not intend to impose

a criminal conviction requirement or to circumscribe RICO

by increased burdens of proof.*! Accordingly, no valid reason

(conviction not required before imposition of constructive trust for mur-

der). The cases are comprehensively collected and analyzed in Groom,

Proof of Crime in a Civil Proceeding, 13 Minn. L. Rev. 556 (1929). Gen-

erally, neither a conviction nor a special burden of proof is imposed, for

example, when it is necessary to show a kickback that is subject to both

criminal and civil sanctions. United States v. Acme Process Co., 385 U.S.

138, 146 (1966). A different rule on the burden of proof has, of course,

been applied for special historical reasons in the area of fraud, but this

Court has refused to extend it to remedial statutes. Herman & MacLean

v. Huddleston, 103 S. Ct. 683, 691 n.27 (1983). State courts, too, in con-

struing state treble damage legislation have not imposed special burdens

of proof, Jensen v. Brinks & Erb, Inc., 452 N.E.2d 414, 416 (Ind. App.

1983), or required a criminal conviction, Americar Leasing, Inc. v. Maple,

406 N.E.2d 333, 335 (Ind. App. 1980). See also Senfeld v. Bank of Nova

Scotia Trust Co., 450 So. 2d 1157, 1163-64 n.9 (Fla. App. 1984). State

RICO legislation generally requires on its face neither a conviction nor

a special burden of proof. See Appendix A. This Court has rejected such

state legislative policy choices on burden of proof in civil proceedings

and has imposed specia! requirements on federal legislation only in nar-

row classes of areas. Stantosky v. Kramer, 455 U.S. 745, 766-67 (1982)

(termination of parental rights), Addington v. Texas, 441 U.S. 418, 433

(1979) (involuntary civil commitment); Jn re Winship, 397 U.S. 358, 361-

368 (1970) (juvenile delinquency); Woodby v. INS, 385 U.S. 276, 285-86

(1966) (deportation). See generally 9 J. Wigmore, Evidence, § 2498 at 327

(3d ed. 1942) (“Policy suggests that . . . [the reasonable doubt rule] should

be strictly confined to its origina! field and that there ought to be no

attempt to employ it in any civil case.”); Civil Action 258 n.59 (legislative

history of RICO reviewed under prevailing jurisprudence: preponderance

proper standard).

31 The imposition of a criminal conviction requirement would have

a debilitating effect on the private civil claim for relief, and its adoption

would amount to the de facto rejection of the concept of the private

attorney general embodied in the very design of RICO. No separate

statistics on RICO legislation are kept by the Administrative Office of

the United States Courts. Nevertheless, it may be possible to make order

of magnitude estimates from the information published. See generally,

Annual Report of the Director of the Administrative Office of the United

exists to impose a criminal conviction requirement on pri-

vate civil RICO. Blue Chips Stamps v. Manor Drug Store,

421 U.S. 723, 748 (1975) (“[T]he Judiciary may not circum-

scribe a right which Congress has conferred because of any

disagreement it might have with Congress about the wis-

dom of creating so expansive a liability.”).

States Courts (1983). Approximately 250,000 civil cases are filed each

year in U'S. district court. Jd. at 122. Approximately 35,000 criminal-

prosecutions are brought. Jd. at 164. Slightly more than 95,000 of the

civil cases involve the United States as a plaintiff or defendant; private

litigation comprises approximately 145,000 filings, of which 60% is fed-

eral question and 40% is diversity litigation. Jd. at 121. The principal

areas of litigation are recovery of overpayments and enforcement of judg-

ments (41,000), prisoner petitions (30,000), social security (20,000), civil

rights (20,000) and labor (11,000). Jd. at 122. Antitrust includes 1,200

civil filings, id., and 74 criminal cases. Jd. at 164. All criminal prose-

cutions of extortion, racketeering and threats amount to 478. Jd. at 320.

Securities, commodities, and exchange related civil filings make up 3,000,

id. at 122, and 26 criminal cases. Jd. at 319. Fraud related civil filings

make up 1,848. Jd. at 245. Accordingly, if most securities and fraud-

related cases were also RICO cases, RICO filing would not exceed 5,000,

not more than 2% of all federal filings. How much new litigation, par-

ticularly in the fraud area, RICO will draw into the federal courts cannot

be reliably determined. It is doubtful, however, that the amount will be

relatively high, as most significant commercial litigation is now in the

federal courts under other federal statutes or diversity jurisdiction. On

the litigation explosion, see Galanter, Reading the Landscape of Disputes:

What We Know and Don’t Know (And Think We Know) About Our Al-

legedly Contentious and Litigious Society, 31 UCLA L. Rev. 4 (1983).

What these data do show, particularly in the antitrust and securities

areas, is that the prior criminal conviction limitation would reduce civil

RICO litigation to the point where its promise of “enhanced sanctions

and new remedies,” 84 Stat. 923 (1970), would be hollow, if not wholly

broken.

CONCLUSION

This Court should reject the judicial effort to read

into civil RICO a prior criminal conviction requirement.*”

Respectfully Submitted,

Robert K. Corbin

Attorney General of Arizona

32 The comments of Congressman Steiger in the closing hours of

the House debate on the Organized Crime Control Act are worth noting:

[Ijn this country today, if a poor man’s son commits a crime

and a rich man’s son commits the same crime, the chances

are that the poor man’s son will receive the full weight of

justice and the rich man’s son will either get off or receive a

much lighter sentence. It is unfortunate, but this is a fact of

life.

I will submit to all of you distinguished members of the bar

that is exactly what happened with organized crime. It is a

fact of life. Because of the sophistication, because of the

wealth, and because of the ability of organized crime to keep

the best counsel, they have been able to abrogate the law.

116 Cong. Rec. 35,355 (1970).

If the “sophisticated” argument of the Sedima opinion is accepted, Con-

gressman Steiger will have proven himself not only a sponsor of civil

RICO, but a prophet of its fate in the hand of the courts.

— _

Appendix A

RACKETEER INFLUENCED AND

CORRUPT ORGANIZATIONS STATUTE

(18 U.S.C. 1961-1968)

As amended, October 25, 1984

§ 1961. Definitions

As used in this chapter —

(1) “racketeering activity” means (A) any act or

threat involving murder, kidnapping, gambling, arson, rob-

bery, bribery, extortion, dealing in obscene matter, or deal-

ing in narcotic or other dangerous drugs, which is charge-

able under State law and punishable by imprisonment for

more than one year; (B) any act which is indictable under

any of the following provisions of title 18, United States

Code: Section 201 (relating to bribery), section 224 (relating

to sports bribery), sections 471, 472, and 473 (relating to

counterfeiting), section 659 (relating to theft from interstate

shipment) if the act indictable under section 659 is felon-

ious, section 664 (relating to embezzlement from pension

and welfare funds), sections 891-894 (relating to extortion-

ate credit transactions), section 1084 (relating to the trans-

mission of gambling information), section 1341 (relating to

mail fraud), section 1343 (relating to wire fraud), sections

1461-1465 (relating to obscene matter), section 1503 (re-

lating to obstruction of justice), section 1510 (relating to

obstruction of criminal investigations), section 1511 (relat-

ing to the obstruction of State or local law enforcement),

section 1951 (relating to interference with commerce, rob-

bery, or extortion), section 1952 (relating to racketeering),

section 1953 (relating to interstate transportation of wag-

ering paraphernalia), section 1954 (relating to unlawful

welfare fund payments), section 1955 (relating to the pro-

hibition of illegal gambling businesses), sections 2312 and

2313 (relating to interstate transportation of stolen motor

vehicles), sections 2314 and 2315 (relating to interstate

transportation of stolen property), section 2320 (relating to

trafficking in certain motor vehicles or motor vehicle parts),

sections 2341-2346 (relating to trafficking in contraband

cigarettes), sections 2421-24 (relating to white slave traffic),

A-1

Code, section 186 (dealing with restrictions on payments

and loans to labor organizations) or section 501(c) (relating

to embezzlement from union funds), (D) any offense involv-

ing fraud connected with a case under title 11, fraud in the

sale of securities, or the felonious manufacture, importa-

tion, receiving, concealment, buying, selling, or otherwise

dealing in narcotic or other dangerous drugs, punishable

under any law of the United States, or (E) any act which is

indictable under the Currency and Foreign Transactions

Reporting Act;

(2) “State” means any State of the United States,

the District of Columbia, the Commonwealth of Puerto Rico,

any territory or possession of the United States, any polit-

ical subdivision, or any department, agency, or instrumen-

tality thereof;

(3) “person” includes any individual or entity ca-

pable of holding a legal or beneficial interest in property;

(4) “enterprise” includes any individual, partner-

ship, corporation, association, or other legal entity, and any

union or group of individuals associated in fact although

not a legal entity;

(5) “pattern of racketeering activity” requires at

least two acts of racketeering activity, one of which occurred

after the effective date of this chapter and the last of which

occurred within ten years (excluding any period of impris-

onment) after the commission of a prior act of racketeering

activity;

(6) “unlawful debt” means a debt (A) incurred or

contracted in gambling activity which was in violation of

the law of the United States, a State or political subdivision

thereof, or which is unenforceable under State or Federal

law in whole or in part as to principal or interest because

of the laws relating to usury, and (B) which was incurred

A-2

in connection with the business of gambling in violation of

the law of the United States, a State or political subdivision

thereof, or the business of lending money or a thing of value

at a rate usurious under State or Federal law, where the

usurious rate is at least twice the enforceable rate;

(7) “racketeering investigator” means any attorney

or investigator so designated by the Attorney General and

charged with the duty of enforcing or carrying into effect

this chapter;

(8) “racketeering investigation” means any inquiry

conducted by any racketeering investigator for the purpose

of ascertaining whether any person has been involved in

any violation of this chapter or of any final order, judgment,

or decree of any court of the United States, duly entered in

any case or proceeding arising under this chapter;

(9) “documentary material” includes any book, pa-

per, document, record, recording, or other material; and

(10) “Attorney General” includes the Attorney Gen-

eral of the United States, the Deputy Attorney General of

the United States, any Assistant Attorney General of the

United States, or any employee of the Department of Justice

or any employee of any department or agency of the United

States so designated by the Attorney General to carry out

the powers conferred on the Attorney General by this chap-

ter. Any department or agency so designated may use in

investigations authorized by this chapter either the inves-

tigative provisions of this chapter or the investigative power

of such department or agency otherwise conferred by law.

§ 1962. Prohibited activities

(a) It shall be unlawful for any person who has re-

ceived any income derived, directly or indirectly, from a

pattern of racketeering activity or through collection of an

A-3

unlawful debt in which such person has participated as a

principal within the meaning of section 2, title 18, United

States Code, to use or invest, directly or indirectly, any part

of such income, or the proceeds of such income, in acqui-

sition of any interest in, or the establishment or operation

of, any enterprise which is engaged in, or the activities of

which affect, interstate or foreign commerce. A purchase of

securities on the open market for purposes of investment,

and without the intention of controlling or participating in

the control of the issuer, or of assisting another to do sv,

shall not be unlawful under this subsection if the securities

of the issuer held by the purchaser, the members of his

immediate family, and his or their accomplices in any pat-

tern of racketeering activity or the collection of an unlawful

debt after such purchase do not amount in the aggregate to

one percent of the outstanding securities of any one class,

and do not confer, either in law or in fact, the power to elect

one or more directors of the issuer.

(b) It shall be unlawful for any person through a

pattern of racketeering activity or through collection of an

unlawful debt to acquire or maintain, directly or indirectly,

any interest in or control of any enterprise which is engaged

in, or the activities of which affect, interstate or foreign

commerce.

or associated with any enterprise engaged in, or the activ-

ities of which affect, interstate or foreign commerce, to con-

duct or participate, directly or indirectly, in the conduct of

such enterprise’s affairs through a pattern of racketeering

activity or collection of unlawful debt.

(d) It shall be unlawful for any person to conspire

to violate any of the provisions of subsections (a), (b), or (c)

of this section.

A-4

CAR nt eee ee ee

§ 1963. Criminal penalties

(a) Whoever violates any provision of section 1962

of this chapter shall be fined not more than $25,000 or

imprisoned not more than twenty years, or both, and shall

forfeit to the United States, irrespective of any provision of

State law —

(1) any interest the person has acquired or main-

tained in violation of section 1962;

(2) any —

(A) interest in;

(B) security of;

(D) property or contractual right of any kind af-

fording a source of influence over;

any enterprise which the person has established, operated,

controlled, conducted, or participated in the conduct of, in

violation of section 1962; and

(3) any property constituting, or derived from, any

proceeds which the person obtained, directly and indirectly,

from racketeering activity or unlawful debt collection in

violation of section 1962.

The court, in imposing sentence on such person shall order,

in addition to any other sentence imposed pursuant to this

section, that the person forfeit to the United States all prop-

erty described in this subsection. In lieu of a fine otherwise

authorized by this section, a defendant who derives profits

or other proceeds from an offense may be fined not more

than twice the gross profits or other proceeds.

(b) Property subject to criminal forfeiture under this

section includes —

A-5

(1) real property, including things growing on, af-

fixed to, and found in land; and

(2) tangible and intangible personal property, in-

cluding rights, privileges, interests, claims, and securities.

in subsection (a) vests in the United States upon the com-

mission of the act giving rise to forfeiture under this section.

Any such property that is subsequently transferred to a

person other than the defendant may be the subject of a

special verdict of forfeiture and thereafter shall be ordered

forfeited to the United States, unless the transferee estab-

lishes in a hearing pursuant to subsection (m) that he is a

bona fide purchaser for value of such property who at the

time of purchase was reasonably without cause to believe

that the property was subject to forfeiture under this

section.

(e)(1) Upon application of the United States, the

court may enter a restraining order or injunction, require

the execution of a satisfactory performance bond, or take

any other action to preserve the availability of property

described in subsection (a) for forfeiture under this

section —

(A) upon the filing of an indictment or information

charging a violation of section 1962 of this chapter and

alleging that the property with respect to which the order

is sought would, in the event of conviction, be subject to

forfeiture under this section; or

(B) prior to the filing of such an indictment or in-

formation, if, after notice to persons appearing to have an

interest in the property and opportunity for a hearing, the

court determines that —

(i) there is a substantial probability that the United

States will prevail on the issue of forfeiture and that failure

A-6

ren eee

to enter the order will result in the property being de-

stroyed, removed from the jurisdiction of the court, or oth-

erwise made unavailable for forfeiture; and

(ii) the need to preserve the availability of the prop-

erty through the entry of the requested order outweighs the

hardship on any party against whom the order is to be

entered:

Provided, however, That an order entered pursuant to sub-

paragraph (B) shall be effective for not more than ninety

days, unless extended by the court for good cause shown or

unless an indictment or information described in subpar-

agraph (A) has been filed.

(2) A temporary restraining order under this sub-

section may be entered upon application of the United

States without notice or opportunity for a hearing when an

information or indictment has not yet been filed with re-

spect to the property, if the United States demonstrates that

there is probable cause to believe that the property with

respect to which the order is sought would, in the event of

conviction, be subject to forfeiture under this section and

that provision of notice will jeopardize the availability of

the property for forfeiture. Such a temporary order shall

expire not more than ten days after the date on which it is

entered, unless extended for good cause shown or unless the

party against whom it is entered consents to an extension

for a longer period. A hearing requested concerning an order

entered under this paragraph shall be held at the earliest

possible time, and prior to the expiration of the temporary

order.

(3) The court may receive and consider, at a hearing

held pursuant to this subsection, evidence and information

that would be inadmissible under the Federal Rules of

Evidence.

A-7

(f) Upon conviction of a person under this section,

the court shall enter a judgment of forfeiture of the property

to the United States and shall also authorize the Attorney

General to seize all property ordered forfeited upon such

terms and conditions as the court shall deem proper. Fol-

lowing the entry of an order declaring the property forfeited,

the court may, upon application of the United States, enter

such appropriate restraining orders or injunctions, require

the execution of satisfactory performance bonds, appoint

receivers, conservators, appraisers, accountants, or trust-

ees, or take any other action to protect the interest of the

United States in the property ordered forfeited. Any income

accruiag to, or derived from, an enterprise or an interest in

an enterprise which has peejitordered forfeited under this

section may be used to offset ordinary and necessary ex-

penses to the enterprise which are required by law, or which

are necessary to protect the interests of the United States

or third parties.

(g) Following the seizure of property ordered for-

feited under this section, the Attorney General shall direct

the disposition of the property by sale or any other com-

mercially feasible means, making due provision for the

rights of any innocent persons. Any property right or in-

terest not exercisable by, or transferable for value to, the

United States shall expire and shall not revert to the de-

fendant, nor shall the defendant or any person acting in

concert with or on behalf of the defendant be eligible to

purchase forfeited property at any sale held by the United

States. Upon application of a person, other than the defen-

dant or a person acting in concert with or on behalf of the

defendant, the court may restrain or stay the sale or dis-

position of the properiy pending the conclusion of any ap-

peal of the criminal case giving rise to the forfeiture, if the

applicant demonstrates that proceeding with the sale or

disposition of the property will result in irreparable injury,

A-8

harm or loss to him. Notwithstanding 31 U.S.C. 3302(b),

the proceeds of any sale or other disposition of property

forfeited under this section and any moneys forfeited shall

be used to pay all proper expenses for the forfeiture and the

sale, including expenses of seizure, maintenance and cus-

tody of the property pending its disposition, advertising and

court costs. The Attorney General shall deposit in the Treas-

ury any amounts of such proceeds or moneys remaining

after the payment of such expenses.

(h) With respect to property ordered forfeited under

this section, the Attorney General is authorized to —

(1) grant petitions for mitigation or remission of for-

feiture, restore forfeited property to victims of a violation

of this chapter, or take any other action to protect the rights

of innocent persons which is in the interest of justice and

which is not inconsistent with the provisions of this chapter;

(2) compromise claims arising under this section;

(3) award compensation to persons providing infor-

mation resulting in a forfeiture under this section;

(4) direct the disposition by the United States of all

property ordered forfeited under this section by public sale

or any other commercially feasible means, making due pro-

vision for the rights of innocent persons; and

(5) take appropriate measures necessary to safe-

guard and maintain property ordered forfeited under this

section pending its disposition.

(i) The Attorney General may promulgate regula-

tions with respect to —

(1) making reasonable ef:orts to provide notice to

persons who may have an interest in property ordered for-

feited under this section;

A-9

(2) granting petitions for remission or mitigation of

forfeiture;

(3) the restitution of property to victims of an offense

petitioning for remission or mitigation of forfeiture under

this chapter; ‘%

(4) the disposition by the United States of forfeited

property by public sale or other commercially feasible

means;

(5) the maintenance and safekeeping of any prop-

erty forfeited under this section pending its disposition; and

(6) the compromise of claims arising under this

chapter.

Pending the promulgation of such regulations, all provi-

sions of law relating to the disposition of property, or the

proceeds from the sale thereof, or the remission or miti-

gation of forfeitures for violation of the customs laws, and

the compromise of claims and the award of compensation

to informers in respect of such forfeitures shall apply to

forfeitures incurred, or alleged to have been incurred, under

the provisions of this section, insofar as applicable and not

inconsistent with the provisions hereof. Such duties as are

imposed upon the Customs Service or any person with re-

spect to the disposition of property under the customs law

shall be performed under this chapter by the Attorney

General. ea

(j) Except as provided in subsection (m), no party

claiming an interest in property subject to forfeiture under

this section may —

(1) intervene in a trial or appeal of a criminal case

involving the forfeiture of such property under this section;

A-10

. ee ee eee

(2) commence an action at law or equity against the

United States concerning the validity of his alleged interest

in the property subsequent to the filing of an indictment or

information alleging that the property is subject to forfei-

ture under this section.

(k) The district courts of the United States shall

have jurisdiction to enter orders as provided in this section

without regard to the location of any property which may

be subject to forfeiture under this section or which has been

ordered forfeited under this section.

(1) In order to facilitate the identification or location

of property declared forfeited and to facilitate the disposi-

tion of petitions for remission or mitigation of forfeiture,

after the entry of an order declaring property forfeited to

the United States the court may, upon application of the

United States, order that the testimony of any witness re-

lating to the property forfeited be taken by deposition and

that any designated book, paper, document, record, record-

ing, or other material not privileged be produced at the same

time and place, in the same manner as provided for the

taking of depositions under Rule 15 of the Federal Rules of

Criminal Procedure.

(m)(1) Following the entry of an order of forfeiture

under this section, the United States shall publish notice

of the order and of its intent to dispose of the property in

such manner as the Attorney General may direct. The Gov-

ernment may also, to the extent practicable, provide direct

written notice to any person known to have alleged an in-

terest in the property that is the subject of the order of

forfeiture as a substitute for published notice as to those

persons so notified.

(2) Any person, other than the defendant, asserting

a legal interest in property which has been ordered forfeited

to the United States pursuant to this section may, within

A-11

thirty days of the final publication of notice or iis .eceipt

of notice under paragraph (1), whichever is earlier, petition

the court for a hearing to adjudicate the validity of his

alleged interest in the property. The hearing shall be held

before the court alone, without a jury.

(3) The petition shall be signed by the petitioner

under penalty of perjury and shall set forth the nature and

extent of the petitioner’s right, title, or interest in the prop-

erty, the time and circumstances of the petitioner’s acqui-

sition of the right, title, or interest in the property, any

additional facts supporting the petitioner’s claim, and the

relief sought.

(4) The hearing on the petition shall, to the extent

practicable and consistent with the interests of justice, be

held within thirty days of the filing of the petition. The

court may consolidate the hearing on the petition with a

hearing on any other petition filed by a person other than

the defendant under this subsection.

(5) At the hearing, the petitioner may testify and

present evidence and witnesses on his own behalf, and cross-

examine witnesses who appear at the hearing. The United

States may present evidence and witnesses in rebuttal and

in defense of its claim to the property and cross-examine

witnesses who appear at the hearing. In addition to testi-

mony and evidence presented at the hearing, the court shall

consider the relevant portions of the record of the criminal

case which resulted in the order of forfeiture.

(6) If, after the hearing, the court determines that

the petitioner has established by a preponderance of the

evidence that —

(A) the petitioner has a legal right, title, or interest

in the property, and such right, title, or interest renders the

order of forfeiture invalid in whole or in part because the

A-12

right, title, or interest was vested in the petitioner rather

than the defendant or was superior to any right, title, or

-interest of the defendant at the time of the commission of

the acts which gave rise to the forfeiture of the property

under this section; or

(B) the petitioner is a bona fide purchaser for value

of the right, title, or interest in the property and was at the

time of purchase reasonably without cause to believe that

the property was subject to forfeiture under this section;

the court shall amend the order of forfeiture in accordance

with its determination.

(7) Following the court’s disposition of all petitions

filed under this subsection, or if no such petitions are filed

following the expiration of the period provided in paragraph

(2) for the filing of such petitions, the United States shall

have clear title to property that is the subject of the order

of forfeiture and may warrant good title to any subsequent

purchaser or transferee.

§ 1964. Civil remedies

(a) The district courts of the United States shall

have jurisdiction to prevent and restrain violations of sec-

tion 1962 of this chapter by issuing appropriate orders, in-

cluding, but not limited to: ordering any person to divest

himself of any interest, direct or indirect, in any enterprise;

imposing reasonable restrictions on the future activities or

investments of any person, including, but not limited to,

prohibiting any person from engaging in the same type of

endeavor as the enterprise engaged in, the activities of

which affect interstate or foreign commerce; or ordering

dissolution or reorganization of any enterprise, making due

provision for the rights of innocent persons.

A-13

(b) The Attorney General may institute proceedings

under this section. In any action brought by the United

States under this section, the court shall proceed as soon

as practicable to the hearing and determination thereof.

Pending final determination thereof, the court may at any

time enter such restraining orders or prohibitions, or take

such other actions, including the acceptance of satisfactory

performance bonds, as it shall deem proper.

by reason of a violation of section 1962 of this chapter may

sue therefore in any appropriate United States district court

and shall recover threefold the damages he sustains and

the cost of the suit, including a reasonable attorney’s fee.

(d) A final judgment or decree rendered in favor of

the United States in any criminal proceeding brought by

the United States under this chapter shall estop the defen-

dant from denying the essentiai allegations of the criminal

offense in any subsequent civil proceeding brought by the

United States.

§ 1965. Venue and process

(a) Any civil action or proceeding under this chapter

against any person may be instituted in the district court

of the United States for any district in which such person

resides, is found, has an agent, or transacts his affairs.

(b) In any action under section 1964 of this chapter

in any district court of the United States in which it is shown

that the ends of justice require that other parties residing

in any other district be brought before the court, the court

may cause such parties to be summoned, and process for

that purpose may be served in any judicial district of the

United States by the marshal thereof.

A-14

stituted by the United States under this chapter in the

district court of the United States for any judicial district,

subpoenas issued by such court to compel the attendance of

witnesses may be served in any other judicial district, ex-

cept that in any civil action or proceeding no such subpoena

shall be issued for service upon any individual who resides

in another district at a place more than one hundred miles

from the place at which such court is held without approval

given by a judge of such court upon a showing of good cause.

(d) All other process in any action or proceeding un-

der this chapter may be served on any person in any judicial

district in which such person resides, is found, has an agent,

or transacts his affairs.

§ 1966. Expedition of actions

In any civil action instituted under this chapter by

the United States in any district court of the United States,

the Attorney General may file with the clerk of such court

a certificate stating that in his opinion the case is of general

public importance. A copy of that certificate shall be fur-

nished immediately by such clerk to the chief judge or in

his absence to the presiding district judge of the district in

which such action is pending. Upon receipt of such copy,

such judge shall designate immediately a judge of that dis-

trict to hear and determine action. The judge so designated

shall assign such action for hearing as soon as practicable,

participate in the hearings and determination thereof, and

cause action to be expedited in every way.

A-15

§ 1967. Evidence

In any proceeding ancillary to or in any civil action

instituted by the United States under this chapter the pro-

ceedings may be open or closed to the public at the discretion

of the court after consideration of the rights of affected

persons.

§ 1968. Civil investigative demand

(a) Whenever the Attorney General has reason to

believe that any person or enterprise may be in possession,

custody, or control of any documentary materials relevant

to a racketeering investigation, he may, prior to the insti-

tution of a civil or criminal proceeding thereon, issue in

writing, and cause to be served upon such person, a civil

investigative demand requiring such person to produce such

material for examination.

(b) Each such demand shall —

(1) state the nature of the conduct constituting the

alleged racketeering violation which is under investigation

and the provision of law applicable thereto;

(2) describe the class or classes of documentary ma-

terial produced thereunder with such definiteness and cer-

tainty as to permit such material to be fairly identified;

(3) state that the demand is returnable forthwith or

prescribe a return date which will provide a reasonable

period of time within which the material so demanded may —

be assembled and made available for inspection and copying

or reproduction; and

(4) identify the custodian to whom such material

shall be made available.

A-16

(1) contain any requirement which would be held to

be unreasonable if contained in a subpoena duces tecum

issued by a court of the United States in aid of a grand jury

investigation of such alleged racketeering violation; or

(2) require the production of any documentary evi-

dence which would be privileged from disclosure if de-

manded by a subpoena duces tecum issued by a court of the

United States in aid of a grand jury investigation of such

alleged racketeering violation.

(d) Service of any such demand or any petition filed

under this section may be made upon a person by —

(1) delivering a duly executed copy thereof to any

partner, executive officer, managing agent, or general agent

thereof, or to any agent thereof authorized by appointment

or by law to receive service of process on behalf of such

person, or upon any individual person;

(2) delivering a duly executed copy thereof to the

principal office or place of business of the person to be

served; or

(3) depositing such copy in the United States mail,

by registered or certified mail duly addressed to such person

at its principal office or place of business.

(e) A verified return by the individual serving any

such demand or petition setting forth the manner of such

service shall be prima facie proof of such service. In the case

of service by registered or certified mail, such return shall

be accompanied by the return post office receipt of delivery

of such demand.

(f(D) The Attorney General shall designate a rack-

eteering investigator to serve as racketeer document cus-

todian, and such additional racketeering investigators as

A-17

he shall determine from time to time to be necessary to

serve as deputies to such officer.

(2) Any person upon whom any demand issued un-

der this section has been duly served shall make such ma-

terial available for inspection and copying or reproduction

to the custodian designated therein at the principal place

of business of such person, or at such other place as such

custodian and such person thereafter may agree and pre-

scribe in writing or as the court may direct, pursuant to

this section on the return date specified in such demand, or

on such later date as such custodian may prescribe in writ-

ing. Such person may upon written agreement between such

person and the custodian substitute for copies of all or any

part of such material originals thereof.

(3) The custodian to whom any documentary ma-

terial is so delivered shall take physical possession thereof,

and shall be responsible for the use made thereof and for

the return thereof pursuant to this chapter. The custodian

may cause the preparation of such copies of such documen-

tary material as may be required for official use under reg-

ulations which shall be promulgated by the Attorney Gen-

eral. While in the possession of the custodian, no material

so produced shall be available for examination, without the

consent of the person who produced such material, by any

individual other than the Attorney General. Under such

reasonable terms and conditions as the Attorney General

shall prescribe, documentary material while in the posses-

sion of the custodian shall be available for examination by

the person who produced such material or any duly au-

thorized representatives of such person.

(4) Whenever any attorney has been designated to

appear on behalf of the United States before any court or

grand jury in any case or proceeding involving any alleged

violation of this chapter, the custodian may deliver to such

A-18

attorney such documentary material in the possession of

the custodian as such attorney determines to be required

for use in the presentation of such case or proceeding on

behalf of the United States. Upon the conclusion of any such

case or proceeding, such attorney shall return to the cus-

todian any documentary material so withdrawn which has

not passed into the control of such court or grand jury

through the introduction thereof into the record of such case

or proceeding.

(5) Upon the completion of —

(i) the racketeering investigation for which any doc-

umentary material was produced under this chapter, and

(ii) any case or proceeding arising from such inves-

tigation, the custodian shall return to the person who pro-

duced such material all such material other than copies

thereof made by the Attorney General pursuant to this sub-

section which has not passed into the control of any court

or grand jury through the introduction thereof into the

record of such case or proceeding.

(6) When any documentary material has been pro-

duced by any person under this section for use in any rack-

eteering investigation, and no such case or proceeding aris-

ing therefrom has been instituted within a reasonable time

after completion of the examination and analysis of all evi-

dence assembled in the course of such investigation, such

person shall be entitled, upon written demand made upon

the Attorney General, to the return of all documentary ma-

terial other than copies thereof made pursuant to this sub-

section so produced by such person.

(7) In the event of the death, disability, or separation

from service of the custodian of any documentary material

produced under any demand issued wnder this section or

the official relief of such custodian from responsibility for

A-19

the custody and control of such material, the Attorney Gen-

eral shall promptly —

(i) designate another racketeering investigator to

serve as custodian thereof, and

(ii) transmit notice in writing to the person who pro-

duced such material as to the identity and address of the

successor so designated.

Any successor so designated shall have with regard to such

materials all duties and responsibilities imposed by this

section upon his predecessor in office and with regard

thereto, except that he shall not be held responsible for any

default or dereliction which occurred before his designation

as custodian.

(g) Whenever any person fails to comply with any

civil investigative demand duly served upon him under this

section or whenever satisfactory copying or reproduction of

any such material cannot be done and such person refuses

to surrender such material, the Attorney General may file,

in the district court of the United States for any judicial

district in which such person resides, is found, or transacts

business, and serve upon such person a petition for an order

of such court for the enforcement of this section, except that

if such person transacts business in more than one such

district such petition shall be filed in the district in which

such person maintains his principal place of business, or in

such other district in which such person transacts business

as may be agreed upon by the parties to such petition.

(h) Within twenty days after the service of any such

demand upon any person, or at any time before the return

date specified in the demand, whichever period is shorter,

such person may file, in the district court of the United

States for the judicial district within which such person

resides, is found, or transacts business, and serve upon such

A-20

ee ee

AOL ent lL ct

er ae

lee Ro

custodian a petition for an order of such court modifying or

setting aside such demand. The time allowed for compliance

with the demand in whole or in part as deemed proper and

ordered by the court shall not run during the pendency of

such petition in the court. Such petition shall specify each

ground upon which the petitioner relies in seeking such

relief, and may be based upon any failure of such demand

to comply with the provisions of this section or upon any

constitutional or other legal right or privilege of such

person.

(i) At any time during which any custodian is in

custody or control of any documentary material deljvered

by any person in compliance with any such demand, such

person may file, in the district court of the United States

for the judicial district within which the office of such cus-

todian is situated, and serve upon such custodian a petition

for an order of such court requiring the performance by such

custodian of any duty imposed upon him by this section.

(j) Whenever any petition is filed in any district

court of the United States under this section, such court

shall have jurisdiction to hear and determine the matter so

presented, and to enter such order or orders as may be

required to carry into effect the provisions of this section.

A-21

Appendix B

The Racketeer Influenced and Corrupt Organizations

Statute

WHEREAS, Congress enacted in 1970 the Rack-

eteer Influenced and Corrupt Organizations provisions (Ti-

tle IX) of the Organized Crime Control Act; and

WHEREAS, Title IX is applicable to patterns of

racketeering activity involving:

1. personal violence;

provision of illegal goods and services;

corruption in private or public life; and

. various forms of fraud; and

pwr

WHEREAS, Title [X provides important new crim-

inal and civil sanctions to protect victims of racketeering

activity, including,

1. criminal forfeiture of proceeds of racketeering

activity;

2. criminal forfeiture of interests in enterprises;

3. equitable relief for the government;

4. equitable relief for victims of racketeering activ-

ity; and

5. treble damages, costs and attorneys fees for vic-

tims of racketeering activity; and

WHEREAS, twenty-two States have enacted leg-

islation patterned after Title IX; and

WHEREAS, other States are actively considering

the passage of legislation patterned after Title IX; and

WHEREAS, state and local units of government

have begun to make effective use of Title [X and state leg-

islation patterned after it; and

B-1

WHEREAS, Title [X provides important new sanc-

tions in the area of fraud against state and local units of

government; and

WHEREAS, fraud against state and local govern-

ment has a multi-billion dollar annual import; and

WHEREAS, state and local units of government

have found that Title IX and state legislation patterned

after it are effective and essential means of redressing

wrongs;

NOW, THEREFORE, BE IT RESOLVED, that

the National Association of Attorneys General supports ef-

forts by states to enact legislation patterned after Title IX

and to strengthen the criminal and ‘civil provisions of Title

IX, particularly in their application to public and private

civil sanctions in the area of fraud against the government;

and

BE IT FURTHER RESOLVED, that the National

Association of Attorneys General opposes efforts to repeal

or modify, in whole or in part, the provisions of Title IX,

particularly in their application to public and private civil

sanctions in the area of fraud against the governinent; and

BE IT FURTHER RESOLVED, that the Executive

Director and General Counsel of the National Association of

Attorneys General is authorized to transmit this Resolution

to appropriate committees of Congress, the Administration,

and other appropriate individuals and associations.

B-2

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.