On March 26, 2025, a federal judge in Philadelphia sentenced Joseph LaForte to 186 months in prison. LaForte was not a mob boss. He ran a merchant cash advance company called Par Funding, an operation that looked, at least on paper, like an ordinary alternative lender to small businesses.
Prosecutors built their case under 18 U.S.C. §§ 1961-1968, the Racketeer Influenced and Corrupt Organizations Act (RICO). That is the same law Congress wrote in 1970 to take down the American Mafia.
Fifty-five years later, RICO has moved a long way from the five families of New York. Federal prosecutors now reach for it against hedge funds, private lenders, sports marketing firms, and corporate boardrooms that never touched organized crime in the traditional sense.
For a high-net-worth executive or business owner, that shift matters enormously. An indictment built on racketeering theory does not just add years to a potential sentence. It reframes an entire company, and everyone who worked there, as part of a criminal enterprise.
What Does RICO Actually Prohibit?
18 U.S.C. § 1962 lays out four ways a person can violate RICO.
- Subsection (a) bars investing income from a pattern of racketeering activity into an enterprise engaged in interstate commerce.
- Subsection (b) bars acquiring or controlling an enterprise through that same pattern.
- Subsection (c), the version prosecutors reach for most often, bars conducting or participating in an enterprise's affairs through a pattern of racketeering activity.
- Subsection (d) criminalizes conspiring to do any of the above.
Put simply, RICO does not punish a single bad act. It punishes using a business, a partnership, or even a loose group of associates as the vehicle for repeated criminal conduct. That distinction is what turns an ordinary fraud case into something far larger.
What Counts as an “Enterprise” Under RICO?
Congress wrote the term broadly on purpose. An enterprise includes any individual, partnership, corporation, or association, plus any group of people associated in fact even without a formal legal structure. A hedge fund qualifies.
So does a law firm, a talent agency, or a five-person executive committee that never filed articles of incorporation.
Courts have never required the enterprise to exist for an illegal purpose. FIFA learned that lesson in 2015, when the Department of Justice indicted nine soccer officials and five sports marketing executives, alleging that soccer's global governing body, an entirely legitimate organization, had been corrupted into a vehicle for bribery and kickbacks.
The same logic now reaches domestic companies with no international profile at all.
What Is a “Pattern of Racketeering Activity”?
Demonstrating a pattern of racketeering activity requires at least two predicate acts within a ten-year window, and the acts have to relate to each other rather than sit as isolated incidents.
Two acts is a low bar, essentially the floor prosecutors need to clear before a RICO theory becomes viable. Common predicates include:
- Wire fraud under 18 U.S.C. § 1343
- Mail fraud under 18 U.S.C. § 1341
- Securities Fraud (18 U.S.C. § 1348)
- Bribery of public officials (18 U.S.C. § 201)
- Money laundering under 18 U.S.C. § 1956
- Honest Services Fraud (18 U.S.C. § 1346)
- Foreign Corrupt Practices Act (FCPA) (15 U.S.C. §§ 78dd-1 et seq.)
Prosecutors routinely stack a dozen or more counts of wire fraud alone to satisfy the pattern element, then layer a RICO charge on top of a fraud indictment that already existed on its own.
Why Are Prosecutors Using RICO Against Legitimate Businesses?
Two forces are driving the shift. Sentencing exposure is the biggest one. A RICO count can add 20 years on top of whatever the underlying fraud charges already carry, and prosecutors know that stacked exposure pushes defendants toward a plea.
Forfeiture is the second force, since RICO lets the government reach the enterprise's interest as a whole rather than just the proceeds tied to one transaction.
High-profile financial collapses draw public scrutiny too, and a RICO charge gives prosecutors one sweeping vehicle instead of a scattered fraud indictment. The LaForte case shows the pattern clearly.
Prosecutors did not stop at securities fraud. They added tax charges and a RICO conspiracy count, then used the racketeering structure to reach LaForte's private jet, a roughly $20 million investment account, a $120 million forfeiture judgment, and $314 million in restitution.
For a deeper look at how these prosecutions unfold and what defenses apply once a company is named as an enterprise, see our guide to corporate RICO defense strategy.
What Penalties Follow a Corporate RICO Conviction?
Under 18 U.S.C. § 1963, each RICO count carries up to 20 years in federal prison, or life if the underlying predicate offense allows for a life sentence. Fines run up to $250,000 per count, or twice the gross proceeds derived from the offense, whichever number is larger.
Forfeiture is where RICO becomes existential for a business. The statute reaches any interest the defendant acquired through the racketeering activity, along with any interest in the enterprise itself.
That can include bank accounts, real estate, an ownership stake in the company, and equipment used to carry out the scheme.
A frozen account before trial is often the most immediate threat. Executives sometimes cannot pay counsel because the government has already moved to restrain the very funds they would use to defend themselves.
Frequently Asked Questions (FAQs)
What is corporate racketeering under 18 U.S.C. §§ 1961–1968?
Corporate racketeering occurs when federal prosecutors apply the Racketeer Influenced and Corrupt Organizations (RICO) Act to legitimate businesses, financial funds, or executive teams. Instead of targeting traditional organized crime, prosecutors use the statute to charge individuals who use a business entity as a vehicle to commit a pattern of financial crimes, such as wire fraud, mail fraud, or money laundering.
What constitutes a "pattern of racketeering activity" in a corporate setting?
A pattern requires at least two predicate criminal acts committed within a ten-year period that are related to one another rather than isolated incidents. In white-collar cases, prosecutors frequently satisfy this requirement by stacking multiple counts of wire fraud, mail fraud, bribery, or money laundering stemming from an ongoing business operation.
How can a legitimate business be considered a RICO "enterprise"?
Under 18 U.S.C. § 1961, an enterprise is defined broadly to include any individual, corporation, partnership, association, or informal group of individuals associated in fact. The entity does not need to be created for an illegal purpose; legitimate corporations, hedge funds, sports organizations, and law firms can all be classified as RICO enterprises if their affairs are conducted through illegal acts.
What are the legal penalties for a federal corporate RICO conviction?
Under 18 U.S.C. § 1963, a RICO conviction carries up to 20 years in federal prison per count (or life imprisonment if the underlying predicate offense allows it). Defendants also face fines up to $250,000 per count or twice the gross financial proceeds of the offense, along with mandatory asset forfeiture and restitution judgments that can reach tens or hundreds of millions of dollars.
How does RICO asset forfeiture affect a company and its executives before trial?
RICO allows the federal government to seek restraining orders and freeze assets acquired through alleged racketeering, as well as property tied to the enterprise itself. This often happens early in the investigation, freezing bank accounts, real estate, and investment funds. As a result, executives often find themselves unable to pay for legal defense counsel or keep business operations running before trial even begins.
Why do federal prosecutors choose RICO over standard mail or wire fraud charges?
Prosecutors favor RICO charges because they carry significantly higher sentencing exposure (adding up to 20 years per count) and grant sweeping pre-trial asset forfeiture powers. The severe potential penalties give the government enormous leverage to encourage plea bargains, while allowing prosecutors to frame the entire company culture and history as part of a single, overarching criminal scheme.
How can defense attorneys challenge a corporate RICO indictment?
A defense team typically attacks a corporate RICO case on several key fronts: arguing that alleged bad acts were isolated rogue employee decisions rather than company policy, demonstrating a lack of continuity required for a "pattern," performing forensic accounting to prove transactions were legitimate, and showing that executives acted in good faith reliance on outside legal auditors or compliance advisors.
What immediate steps should executives take if targeted in a RICO investigation?
Executives should retain experienced federal white-collar defense counsel immediately upon receiving a grand jury subpoena or learning of an investigation. They must issue a strict document hold to preserve all records, initiate an internal compliance audit, and refrain from discussing the investigation with colleagues or co-workers to prevent potential conspiracy or obstruction allegations.
The Boutique Credit Fund Indictment
A Los Angeles-based private credit fund raises $80 million from accredited investors, promising steady returns from short-term loans to mid-sized businesses.
The fund's CEO and CFO are indicted after a whistleblower alleges the firm's real return figures were fabricated for three years running, and that new investor money quietly covered returns owed to earlier investors while the executives personally drew millions in undisclosed fees.
The indictment names the fund itself as the RICO enterprise, alleging the CEO and CFO conducted its affairs through a pattern of wire fraud and money laundering.
A defense team would attack the case on four fronts:
- Whether the conduct reflects institutional policy or the isolated decisions of two individuals who concealed their actions from compliance staff.
- Whether the alleged acts form a continuous scheme or a handful of related transactions that fall short of RICO's continuity requirement.
- Whether a forensic accounting review reveals legitimate transactions the government mischaracterized as fraudulent.
- Whether the executives reasonably relied on outside auditors and counsel who reviewed and approved the fund's disclosures.
None of this guarantees dismissal. But each angle narrows the government's theory, and a narrower theory in a RICO case usually means a lighter sentence or a resolution well short of trial.
How Should Executives Respond to a RICO Investigation?
Timing controls almost everything in a RICO case. By the time a target receives a grand jury subpoena, prosecutors have often spent a year or more interviewing former employees and mapping financial transactions to build the enterprise theory.
Executives who act early can sometimes resolve exposure before charges attach. That means retaining counsel immediately, preserving documents rather than deleting anything, auditing the company's own compliance history, and avoiding any conversations with co-workers that could later read as coordination or conspiracy.
Waiting rarely helps. Once an indictment names the company as an enterprise, the options narrow considerably, and the business itself becomes a co-defendant in everything but name.
RICO was never really about labels. It was about giving prosecutors a tool broad enough to reach whoever sat at the center of a criminal scheme, regardless of whether that person wore a suit or carried a nickname.
Fifty years on, the tool still works exactly as designed. It just points in a different direction now. For more information on how Eisner Gorin LLP can help your case, contact our offices today.
