In Part I of this series Defending RICO Claims in the Business Context, we described why a plan to defend against potential claims under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961–68, should be in every business's toolkit. In Part II, we explained that one of the best tools businesses have in that toolkit is moving to dismiss a RICO claim early because the plaintiff failed to allege that his purported injuries are sufficient to convey what is known as "RICO standing." Both of these parts specifically addressed the federal RICO laws. However, because many states have their own versions of these laws, which are often called "Little RICO Acts," businesses should also be aware of the potential risks of liability under analogous RICO laws in the states where they operate.

More than half of states have adopted their own RICO laws, often modeled after the federal RICO counterpart. Although these states' laws are sometimes found in criminal codes, many states also allow civil RICO claims. In these states, plaintiffs may be permitted to plead state civil RICO violations in addition to federal RICO violations, even in federal court. While federal case law under RICO is usually instructive in how to interpret these parallel state provisions, businesses should be aware that each state may have nuances that differ from federal RICO laws.

For example, Colorado's state RICO law is the Colorado Organized Crime Control Act (COCCA), C.R.S. § 17-17-101, et seq. Although COCCA is found in Colorado's criminal code, plaintiffs can assert violations of COCCA in civil lawsuits.

Like its federal counterpart, COCCA applies to a variety of crimes and prohibited conduct committed in the context of an "enterprise," which is a term somewhat synonymous with a conspiracy. The act generally prohibits "racketeering activity," which means to commit, attempt to commit, conspire to commit, or solicit, coerce, or intimidate another person to commit certain conduct. COCCA further defines racketeering broadly to include a number of criminal offenses and prohibited activities more typically associated with organized crime, such as distributing illegal substances, gambling activities and human trafficking. However, businesses should note that prohibited activities include more common offenses, such as security offenses, white collar crimes, offenses relating to taxation, and offenses involving the making, financing or collection of loans, to name a few. COCCA specifically makes it unlawful to:

  • Knowingly receive or derive proceeds from a pattern of racketeering activity or through the collection of an unlawful debt;
  • Knowingly acquire or maintain, directly or indirectly, any interest in or control of any enterprise or real property through a pattern of racketeering activity or through collection of an unlawful debt;
  • Knowingly conduct or participate, directly or indirectly, in any enterprise through a pattern of racketeering activity or the collection of an unlawful debt; or
  • Conspire or endeavor to violate any of these racketeering provisions.

Despite their obvious similarities, RICO and its state law equivalents often diverge in material ways. The limitations period to bring a state RICO claim may differ from the four-year limitations period for federal civil RICO claims, which means that certain state RICO claims could be dismissed because they are barred by the applicable statute of limitations while their federal counterparts may not be, and vice versa. Additionally, the standard of proof under these laws may differ. For example, Florida RICO claims require a plaintiff to prove the claim by "clear and convincing evidence," as opposed to the typical civil "preponderance of the evidence" standard.

If a plaintiff is successful, COCCA and many other Little RICO Acts allow recovery of not only actual damages, but also treble damages and attorney fees. Therefore, businesses should not take these state law claims lightly, even if they are flawed.

Civil RICO claims are complex, and RICO defendants should develop a defense strategy early in order to dismiss meritless claims, including those that fail to allege RICO standing, and to avoid costly discovery that can distract a business from its important day-to-day operations. If you have any civil RICO questions, the authors listed below can assist.

This article is Part III of a multipart series on Civil RICO. Please stay tuned for additional articles.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.