In RICO Prosecutions, Why is the Distinction Between a “Person” and an “Enterprise” Important?


“RICO” stands for the Racketeer Influenced and Corrupt Organizations Act.  In order to establish that someone has violated this law, a prosecutor must prove the following five things:

1.  The existence of an enterprise;

2.  The enterprise affected interstate commerce;

3.  The defendants were employed by or associated with the enterprise;

4.  The defendants participated, either directly or indirectly, in the conduct of the affairs of the enterprise; and

5.  The defendants participated through a pattern of racketeering activity.

In the case of United States of America versus Goldin Industries, Inc., the defendants were corporations that were convicted of RICO.  They appealed to the Eleventh Circuit Court of Appeals where they argued that their convictions should be reversed because the law requires that a “person” who is prosecuted under the RICO statute be “separate and distinct from the RICO ‘enterprise’ which has its affairs conducted through a pattern of racketeering activity.”  In other words, a corporation cannot be named in an indictment both as a liable “person” and as the “enterprise” in RICO prosecutions. Because the indictment in this particular case did precisely that, the defendants argued that their convictions were unlawful and should therefore be reversed.

The appellate court agreed with the defendants and in doing so stated that “the RICO enterprise is necessary because the enterprise itself can be a passive instrument or victim of the racketeering activity. . . .  [T]he indictment must name a RICO person distinct from the RICO enterprise.  The plain language of the statute requires that the entities be distinct.”