Is There a Good Faith Claim for the Rico Enterprise Plaintiff?

72 Pages Posted: 22 Nov 2003  

Lee Applebaum

Fineman Krekstein & Harris, P.C.

Abstract

RICO was created to seek the annihilation of organized criminal conduct. Instead of the impulsive act of violence or even well planned single crime, RICO pursues crimes that are part of a broader design, carried out in discernable patterns. The multi-dimensional statute marries this pattern of prohibited conduct concept to the concept of an "enterprise." RICO's creators recognized this connection between patterns of criminal conduct and some entity or organization as essential to the illicit conduct they wanted to eradicate. Thus, roughly speaking, RICO is concerned with entities that are taken over through patterns of prohibited conduct (e.g., a protection racket), entities that receive the proceeds of that conduct (e.g., money laundering), and entities that are used as the means to carry out that criminal conduct.

This last concern is addressed in 18 U.S.C. ยง 1962(c) which punishes those who conduct the affairs of an enterprise through a pattern of racketeering activity. In Jaguar Cars, Inc. v. Royal Oaks Motor Car Co., the court found that a RICO enterprise used to carry out a pattern of racketeering activity could not also be the victim of that activity. This article sets forth a list of arguments to the contrary; reasoning that RICO is meant to punish the parasitic insider who uses the enterprise against itself as well as others. Thus, the corporate officer directing a corporation's affairs against that corporation through an ongoing pattern of actionable fraudulent conduct should not be exempt from a RICO action brought by the corporation itself.

Suggested Citation

Applebaum, Lee, Is There a Good Faith Claim for the Rico Enterprise Plaintiff?. The Delaware Journal of Corporate Law, Vol. 27, No. 2, pp. 519-590, 2002. Available at SSRN: https://ssrn.com/abstract=398880

Lee Applebaum (Contact Author)

Fineman Krekstein & Harris, P.C. ( email )

30 South 17th Street
Suite 1800
Philadelphia, PA 19103
United States

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