Source: https://www.stimmel-law.com/en/articles/extortion-essential-elements-and-broader-reach-rico
Timestamp: 2020-06-07 09:17:08
Document Index: 461183086

Matched Legal Cases: ['§ 1951', '§ 1963', '§ 1961', '§ 1961', '§ 1961', '§ 3282', '§ 1962', '§ 1963']

Extortion - Essential Elements and the Broader Reach of RICO | Stimmel Law
Extortion essential elements and broader reach rico
Extortion - Essential Elements and the Broader Reach of RICO
Extortion is both a tort and a crime and is perhaps far more common than most of us think. The image of the sleazy blackmailer demanding money or threatening to publicize an old scandal is seldom the act that leads to litigation involving extortion. Instead, far more subtle actions can lead to allegations that one has committed extortion.
Extortion is a criminal offense that occurs when a person unlawfully obtains money, property, or services from another person or entity by means of particular types of threats. It is not all threats-for example, threatening to file suit unless someone pays you money owed is not extortion. Usually, it is threat of violence or reporting a matter to a public agency or the media that can create allegations of extortion.
As with many criminal offenses, the victim may have a private cause of action against the perpetrator.
A typical extortion threat is that one will report an alleged crime to the police unless the person pays a sum of money. Another typical threat is that a member of the family will be assaulted unless money is paid. Both such threats are actionable.
RICO (Racketeer Influenced and Corrupt Organizations Act ) is the federal law which includes sanctions for the crime of extortion but goes much further than that aspect in seeking to protect interstate commerce, as discussed below.
In common law, extortion is committed by a public officer. When a public officer takes money or other valuables from an individual that is not due to the officer, such act will not amount to robbery but extortion.
Traditionally, the valuables or money are extracted by using force or threat. To constitute the offense of extortion, the public officer should use a threat under the guise of exercising public duties. When an officer falsely claims authority to take that which the officer is not lawfully entitled to, such act is known as acting under color of office. Conway v. State, 8 N.J. Misc. 406 (Sup. Ct. 1930).
The unlawful exaction of money through intimidation was a complement of bribery in the early ages. This was because both the crimes were considered to be done by public officers only.
In the United States, the crime of extortion is usually statutorily defined. In some states, extortion is not limited to acts done by public officers, but includes actions of private individuals. Evans v. United States, 504 U.S. 255 (U.S. 1992). However, in some states, when a private person commits extortion it will come under the crime of blackmail. Blackmail is mostly used as a term that defines extortion. The crime of extortion includes an act involving moral turpitude or gross immorality. State ex rel. Mays v. Mason, 29 Ore. 18 (Or. 1896). Under some statutes, a corporation can also be considered liable for extortion.
Extortion can include threats of physical harm, criminal prosecution, or public exposure if the amount or valuable demanded by a person is not transferred. It can become a federal violation of the law if perpetrated across a computer system, phone, by mail, or in using any instrument of interstate commerce. Extortion is a federal offense when it interferes with interstate commerce. It is punishable by a fine, imprisonment, or both.
All extortion statutes require that a threat must be made to the person or property of the victim. A threat to harm a person in his/her career or reputation is also extortion. There should be an intention to take money from another person. In most statutes, the intention is expressed in terms such as ‘willfully’ or ‘purposefully’. When a person mistakenly believes that some other person owes him/her money and asks for payment, such acts will not amount to the offense of extortion. However, when an officer extracts money forcefully, this will amount to extortion. There is no need to prove that the public officer had intention to extract money from the person. But if an officer takes a fee not authorized by law, under the belief that s/he is by law entitled to it, and without any corrupt intent in the matter, s/he is not guilty of extortion.
Extortion is closely related to robbery and false pretenses. This is because all these crimes come under the common crime of theft. Robbery differs from extortion. In robbery, property is taken against the will and without the consent of the victim. In extortion, the victim unwillingly consents to surrender money or property. Smith v. State, 71 Fla. 639 (Fla. 1916).
Note that extortion differs from other conversion crimes in that it usually does not include immediate physical threat of harm, such as a robbery. The threat for robbery is limited to immediate physical harm to the victim or his or her home. Extortion encompasses a greater variety of threats. Extortion can be committed with or without the use of force and with or without the use of a weapon. A major difference between extortion and robbery is that extortion always involves a written or verbal threat whereas robbery can occur without any verbal or written threat. Concerning the difference between false pretenses or fraud, and extortion, in fraud the property is obtained by misrepresentations as opposed to a threat.
The punishment for extortion is a fine, imprisonment, or both. United States v. Xiao Qin Zhou, 428 F.3d 361, 371 (2d Cir. N.Y. 2005). However, when the offense is committed by a public officer, the penalty can include forfeiture of office. In some states, including California, an extortion victim can bring a civil action and recover pecuniary and punitive damages from the accused.
Generally, blackmail is synonymous with extortion. Some states distinguish blackmail from extortion by demanding that blackmail must be in writing in order to make it punishable. The terms extortion and blackmail are sometimes said to involve different behaviors. Often, extortion refers to a threat made by a public official, while blackmail refers to a threat to collect money illegally.
A threat involves an act of coercion. It is an expression of an intention to inflict an evil or injury on another person. Robinson v. Bradley, 300 F. Supp. 665 (D. Mass. 1969). The threat must be to act in such a way that the victim will reasonably fear a negative response. A threat is also defined as a menace that keeps the mind of a person upon whom a threat operates unsettled.
Generally, a threat is one of the elements of extortion or blackmail. In order to punish an offense of extortion, the prosecution must show that the motive of the threat was to obtain money, property, or some other thing of value. But under some statutes, the threat is considered as an independent offense. Thus a threat without any motive may also punishable in some jurisdictions.
In its most basic definition, extortion is the obtaining of property from another, with his/her consent, induced by the wrongful use of actual or threatened force, violence, fear, or under color of official right. United States v. Hooks, 2005 U.S. Dist. LEXIS 37466 (W.D. Tenn. Dec. 12, 2005). Most essential is the use of a threat in order to obtain money or anything of value which constitutes the crime of extortion. Intent is also regarded as an element of extortion. Extortion is a specific intent crime requiring a state of mind to commit the crime. Generally, a demand or a request for a specific sum of money is not considered a prerequisite to a conviction of extortion. People v. Hesslink, 167 Cal. App. 3d 781 (Cal. App. 4th Dist. 1985).
It was observed in People v. Fort, 138 Mich. App. 322 (Mich. Ct. App. 1984) , that the elements of extortion are:
It is to be noted that a threat was not considered to be necessary for the commission of extortion in common law. However, in many jurisdictions, the crime of extortion has been expanded to include the obtaining of money, property, or anything of value by any person, by means of a threat.
It is vital to differentiate between nature of threats which are required to constitute an extortion or black mail. One receives “threats” every day in that creditors threaten to file suit, competitors threaten to take your market share, landlords threaten to evict if rent is not paid, etc. Generally, a threat means something that ordinarily creates fear. In extortion, such fear can be induced by a threat either to do an unlawful injury to the person or property of the individual threatened or of a third person; or to accuse him/her of any crime, or to expose or to impute to him/her any disgrace or crime; or to expose any secret affecting him/her. People v. Oppenheimer, 209 Cal. App. 2d 413 (Cal. App. 2d Dist. 1962). The threat may consist of destruction or of injury to a person, his/her character, or his/her property.
A threat is used as a means to obtain money or other things of value for the purpose of gain to the person making the threat. However, it is not necessary that a person who causes a threat must obtain something for himself/herself. Even an attempt to obtain something for another person is sufficient for the crime of extortion. State v. Taylor, 30 Wn. App. 89 (Wash. Ct. App. 1981).
The Hobbs Act:
For extortion by a government official, under the Hobbs Act, (Anti Racketeering Act) proof of actions under color of office is essential to prove the crime and the offense requires the jury to find that the public official did something under color of his/her office to cause the giving of benefits. United States v. Aguon, 813 F.2d 1413 (9th Cir. Guam 1987). In other words, to prove the offense of extortion under color of official right in violation of the Hobbs Act, the government need only show that a public official has obtained a payment to which s/he was not entitled, knowing that the payment was made in return for official acts. Evans v. United States, 504 U.S. 255 (U.S. 1992).
The Anti-Racketeering Act or Hobbs Act prescribes heavy criminal penalties for acts of robbery or extortion that affect interstate commerce. To be more specific, the Anti-Racketeering Act or Hobbs Act manifests a purpose to use all the constitutional power Congress has to punish interference with interstate commerce by extortion, robbery, or physical violence. United States v. Bailey, 990 F.2d 119 (4th Cir. S.C. 1993). Courts have consistently held that the Hobbs Act must be given an expansive interpretation to cover a wide range of extortionate activity.
The Hobbs Act provides for the criminal punishment of persons who interfere with commerce by the use of threats or violence. United States v. Blair, 762 F. Supp. 1384 (N.D. Cal. 1991). The Act provides that whoever obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion, or attempts, conspires, commits or threatens physical violence to any person or property is subject to a fine and/or imprisonment. 18 USCS § 1951. It is to be noted that the Anti-Racketeering Act is considered to be constitutional.
-Stirone v. United States, 361 U.S. 212 (U.S. 1960).
There must be a nexus between the alleged extortionate conduct and interstate commerce. It is to be noted that both elements must be charged. When only one particular kind of commerce is charged, conviction must rest on that particular charge and not another. However, actual extortion and attempted extortion are separate offenses under the Hobbs Act. If a separate and discrete attempted extortion is present, then it must be charged separately. United States v. Blair, 762 F. Supp. 1384 (N.D. Cal. 1991).
Generally, legitimate labor activities are not prohibited by the Hobbs Act. However, the ramifications of legitimate labor activities can become unlawful. The Act does not proscribe the use of force to achieve legitimate collective-bargaining demands. The use of force, violence, or fear is not wrongful unless the obtaining of the property itself is wrongful because the alleged extortionist has no lawful claim to that property. Therefore, the Hobbs Act indicates that extortion can be accomplished through the wrongful use of an actual or threatened force, violence, fear, or under color of official right. United States v. Russo, 708 F.2d 209 (6th Cir. Mich. 1983).
RICO (Racketeer Influenced and Corrupt Organizations Act):
“Racketeering activity” for purposes of the RICO Act means any act “chargeable” under several generically described state criminal laws, any act “indictable” under numerous specific federal criminal provisions, including mail and wire fraud, and any “offense” involving bankruptcy or securities fraud or drug-related activities that is “punishable” under federal law. The RICO Act prohibits the use of income derived from a “pattern of racketeering activity” to acquire an interest in or establish an enterprise engaged in or affecting interstate commerce; the acquisition or maintenance of any interest in an enterprise “through” a pattern of racketeering activity; conducting or participating in the conduct of an enterprise through a pattern of racketeering activity; and conspiring to violate any of these provisions.
Also, violations of state law which constitute “racketeering activity” under the federal RICO Act must be punishable by imprisonment for more than one year. The offenses falling under this category include murder, kidnapping, gambling, arson, robbery, bribery, extortion, dealing in obscene matter, and dealing in narcotic or other dangerous drugs. Courts have held that the list of state law crimes that can constitute “racketeering activity” under RICO is exclusive. Overnite Transp. Co. v. International Broth. of Teamsters, Chauffeurs, Warehousemen & Helpers of America, AFL-CIO, 168 F. Supp. 2d 826 (W.D. Tenn. 2001).
Thus, in order to establish a RICO violation, a plaintiff must prove 1) the existence of an enterprise, 2) the defendant’s derivation of income from a pattern of racketeering activity, and 3) the use of any part of that income in acquiring an interest in or operating the enterprise. United States v. Cauble, 706 F.2d 1322, 1331 (5th Cir. 1983).In addition, there must be a nexus between the claimed violation and the plaintiff’s injury, which must flow from the use or investment of racketeering income. Crowe v. Henry, 43 F.3d 198, 205 (5th Cir. 1995), St. Paul Mercury Ins. Co. v. Williamson, 224 F.3d 425, 441 (5th Cir. La. 2000).
The term “enterprise,” as defined in the Act, includes any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity. RICO applies to both illegitimate and legitimate enterprises. United States v. Thevis, 665 F.2d 616 (5th Cir. Ga. 1982).
The term “racketeering activity” has been defined broadly under the Act in order to embrace any act indictable under a host of federal statutes, in both civil and criminal cases. Courts have held that the RICO Act’s applicability is not limited to members of organized crime and hence no connection with organized crime need be shown. The RICO Act provides for criminal penalties of imprisonment, fines, and forfeiture for violation of its provisions. 18 U.S.C.S. § 1963.
A RICO violation requires proof of a “pattern of racketeering activity,” through “at least two acts of racketeering activity, the last of which occurred within ten years.” 18 U.S.C. § 1961(5), Blue Cross & Blue Shield of N.J. Inc. v. Philip Morris, Inc., 36 F. Supp. 2d 560, 567 (E.D.N.Y. 1999). Courts generally construe RICO liberally in order to effectuate its remedial purposes. In order to establish a pattern, the plaintiff should prove a relationship between the acts of racketeering activity charged and a threat of continuing activity, or continuity of such activity. In other words, “continuity plus relationship” produces a pattern of racketeering activity. H. J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229 (U.S. 1989). The term “pattern” thus requires at least two acts of racketeering activity within a 10-year period. 18 U.S.C.S. § 1961(5).
An alternative to showing a pattern of racketeering activity is to show the collection of an unlawful debt. While there should be at least two wrongful acts to establish a pattern, only one collection is necessary to establish a violation. 18 U.S.C.A. § 1961(6). The collection of an unlawful debt can be shown either by showing gambling activity violating federal, state, or local law, or a debt incurred in connection with that gambling activity and collection of the debt. This method of proving the collection of an unlawful debt applies even in a state that has no specific statutory proscription of the business of gambling.
“While enterprise and pattern of racketeering activity are separate elements of RICO offense, proof of these two elements need not be separate or distinct, but may in fact coalesce.” United States v. Patrick, 248 F.3d 11 (1st Cir. Mass. 2001).
RICO creates three substantive offences which prohibit the acquisition, establishment, or operation of an enterprise with illegally derived income. Therefore, it is illegal to acquire control of an enterprise through extortion or a scheme to defraud, or may maintain an interest in an enterprise through bribery. United States v. Parness, 503 F.2d 430 (2d Cir. N.Y. 1974).
It is a substantive offense under the RICO Act to use an enterprise to commit illegal acts. In this connection, the plaintiffs must prove (1) the existence of an enterprise that affects interstate or foreign commerce, (2) that the defendant was employed by or associated with the enterprise, (3) that the defendant participated in the conduct of the enterprise’s affairs, and (4) that such participation was through a pattern of racketeering activity. However, the plaintiff need not prove defendant’s actual employment or association with the enterprise independent of racketeering activity. The RICO Act only requires proof of the defendant’s association with illegal activities of the enterprise and associated outsiders who participate in a racketeering enterprise’s affairs may also be held liable for a RICO violation. United States v. Tille, 729 F.2d 615 (9th Cir. Wash. 1984).
In addition to the substantive offenses, the RICO Act also creates a conspiracy offense, which requires proof of violation of a substantive RICO provision. In order to be made liable, a member of an enterprise conspiracy, by his/her words or actions, must have objectively manifested an agreement to participate, directly or indirectly, in the affairs of an enterprise through the commission of two or more predicate crimes. A defendant need not have to actually carry out the predicate acts; a defendant may be convicted as long as he/she agreed to commit such acts. Aiding and abetting the commission of two predicate acts is also punishable if all of RICO’s other requirements are satisfied.
In a criminal action, a sufficient indictment must contain the elements of the offense and apprise the defendant of the nature of the charge. In a RICO prosecution, the indictment must sufficiently allege that the enterprise at issue had an effect upon or was engaged in interstate commerce so as to form a jurisdictional basis for the violation under the Act. United States v. Teitler, 802 F.2d 606 (2d Cir. N.Y. 1986). Thus, the government has to particularize its indictment by identifying the type of interests subject to forfeiture under the RICO Act. Also, acts which are seemingly unrelated can be jointed through a RICO substantive count, which will provide an overall connection to the indictment. A RICO conspiracy count can provide the connection between two otherwise unrelated conspiracies necessary to satisfy the requirements of joinder. United States v. Welch, 656 F.2d 1039 (5th Cir. Tex. 1981).
Prosecutions for both substantive violations of RICO and RICO conspiracies are governed by a five-year federal statute of limitations. 18 U.S.C.A. § 3282. In the matter of substantive RICO violations, the limitations period begins to run at the time of the last substantive violation committed by the defendant. Where as in the case of RICO conspiracies, the limitation period begins to run at the time the objectives of the conspiracy are either accomplished or abandoned by the conspirators, or at the time of the commission of the last overt act in furtherance of such conspiracy. United States v. Persico, 832 F.2d 705 (2d Cir. N.Y. 1987). It is to be noted that prosecutions for both substantive violations of RICO and RICO conspiracies are governed by the above mentioned five-year federal statute of limitations and state law statute of limitations are inapplicable in this regard.
18 U.S.C.A. § 1962 lists the prohibited activities under the RICO Act and states that persons violating the Act are subject to a fine, or imprisonment, or both in addition to the penalty of forfeiture of property. The penalty of forfeiture is intended to destroy the economic base through which individuals constitute a serious threat. A court may order forfeiture in the case of both RICO conspiracies as well as substantive RICO offenses. United States v. Caporale, 806 F.2d 1487 (11th Cir. Fla. 1986). However, if a defendant is convicted of conspiracy to violate RICO, when he/she has not in fact received any proceeds from the illegal venture, then forfeiture would be inappropriate since law only permits forfeiture of interests acquired or maintained as a result of a RICO violation. 18 U.S.C.S. § 1963(a)(1).
Third parties are prohibited from intervening in the trial or appeal of a criminal case involving forfeiture and are allowed to assert their interests only in post conviction proceedings. However, as a means to safeguard third party interests, each such party is provided a right to a hearing to adjudicate the validity of his/ her alleged interest in the property.
Civil Damages for RICO Violations:
To establish a RICO claim, a plaintiff must show a violation of the RICO statute, an injury to business or property and that the injury was caused by the violation of the statute. De Falco v. Bernas, 244 F.3d 286 (2d Cir. N.Y. 2001).
The limitation period for civil enforcement actions is four years. A RICO cause of action will accrue only if the damages or injury are clear and definite and when a plaintiff can prove multiple RICO injuries, a separate cause of action will accrue and a new four-year statute of limitations will begin to run for each injury. Rodriguez v. Banco Cent., 917 F.2d 664 (1st Cir. P.R. 1990).
The RICO Act provides for treble damages and an injured person can recover threefold the damage he/she sustains. The general presumption is that punitive damages are inappropriate in a civil RICO action. However, there is contrary authority. For instance, in the District of Columbia, an award of punitive damages is permissible when there is a valid basis for an award of compensatory damages. “Where a plaintiff has sustained actual damages, he may obtain punitive damages by showing that the defendants acted with gross fraud, wantonness, maliciousness, or willful disregard for the rights of others.” Al-Kazemi v. General Acceptance & Inv. Corp., 633 F. Supp. 540 (D.D.C. 1986).The injured person is also entitled to costs and a reasonable attorney’s fee.
The ability to receive treble damages and costs and attorneys fees makes utilization of RICO when claiming damages for extortion or other racketeering acts of extreme value, but note that such remedies are only available if interstate commerce was somehow involved. With e mail, the internet and telephones a part of most transactions now, such a requirement may no longer be as much a barrier as it once was.
That said, an action for extortion whether or not combined with a RICO claim is a substantive claim requiring careful strategic planning and an expectation that the defense will be aggressive and prolonged. See our companion article on Cost Benefit in Litigation.
This is not to say you should not seek relief. It is to say that the claim is one that will require significant expenditure of resources, both in terms of expense and time allocated. Defending against such a claim is equally draining of resources and for that reason most cases settle before trial.