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Racketeering is a genre of organized crime in which the perpetrators set up a coercive, fraudulent, extortionary, or otherwise illegal coordinated scheme or operation (a racket) to repeatedly or consistently collect money or other profit.
Originally and often still specifically, racketeering may refer to an organized criminal act in which the perpetrators offer a service that will not be put into effect, offer a service to solve a nonexistent problem, or offer a service that solves a problem that would not exist without the racket. In many other cases, however, traditional racketeering may also involve perpetrators or racketeers offering an ostensibly effectual service (such as protection from other criminals) that may in fact solve an actual existing problem, with the racketeers offering to protect a business from robbery or vandalism; however, these racketeers will themselves coerce or threaten the business into accepting this service, often with the threat (implicit or otherwise) that failure to acquire the offered services will lead to the racketeers themselves contributing to the existing problem. Particularly, in many cases, the potential problem may be caused by the same party that offers to solve it, but that fact may be concealed, with the specific intent to engender continual patronage for this party.
The traditional and most common example of a racket is the "protection racket", which promises to protect the target business or person from dangerous individuals in the neighborhood and then either collects the money or causes damage to the business until the owner pays. The racket exists as both the problem and its solution, and it is used as a method of extortion.
However, the term "racket" has expanded in definition over time and may now be used less strictly to refer to any continuous or repeated illegal organized crime operation, including those that do not necessarily involve fraudulent or coercive practices or extortion. For example, "racket" may refer to the "numbers racket" or the "drug racket", neither of which generally or necessarily involve extortion, coercion, fraud, or deception with regard to the intended clientele.
The term "racketeering" was coined by the Employers' Association of Chicago in June 1927 in a statement about the influence of organized crime in the Teamsters union. Specifically, a racket was defined by this coinage as being a service, such as protection (see below) which calls forth its own demand, and would not have been needed otherwise.
Examples of crimes that may be alleged to be part of a pattern of racketeering activity include
On October 15, 1970, the Racketeer Influenced and Corrupt Organizations Act (18 U.S.C. §§ 1961-1968), commonly referred to as the "RICO Act", became United States law. The RICO Act allowed law enforcement to charge a person or group of people with racketeering, defined as committing multiple violations of certain varieties within a ten-year period. The purpose of the RICO Act was stated as "the elimination of the infiltration of organized crime and racketeering into legitimate organizations operating in interstate commerce". S.Rep. No. 617, 91st Cong., 1st Sess. 76 (1968). However, the statute is sufficiently broad to encompass illegal activities relating to any enterprise affecting interstate or foreign commerce.
Section 1961(10) of Title 18 provides that the Attorney General of the United States may designate any department or agency to conduct investigations authorized by the RICO statute and such department or agency may use the investigative provisions of the statute or the investigative power of such department or agency otherwise conferred by law. Absent a specific designation by the Attorney General, jurisdiction to conduct investigations for violations of 18 U.S.C. § 1962 lies with the agency having jurisdiction over the violations constituting the pattern of racketeering activity listed in 18 U.S.C. § 1961.
In the US, civil racketeering laws are also used in federal and state courts.