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Racketeering Act turns on corporations

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There was a time when only mobsters had anything to fear from the federal government's anti-racketeering laws. Those days are gone. Today, reputable corporations and businesses -- companies such as Shearson-American Express, Lloyd's of London, and Price Waterhouse -- are just as likely as underworld mobsters to face racketeering charges.

The culprit in this development is the increasingly popular civil section of the 1970 Racketeer Influenced and Corrupt Organizations (RICO) Act. Today, it is being used by creative private-sector lawyers against the very companies it was designed 15 years ago to protect.

``It seems redundant to say that the Racketeer Influenced and Corrupt Organizations Act . . . of the Organized Crime Control Act of 1970 was intended to deal with organized crime,'' says John M. Finch of the National Association of Manufacturers. ``Redundant, perhaps, but necessary,'' he adds.

``This is not what Congress had in mind when it passed RICO,'' says Irvin B. Nathan, a Washington lobbyist for the insurance industry.

RICO has proved to be one of the government's most powerful weapons in striking back at organized crime nationwide. In recent years mafia bosses have been convicted or indicted on broad criminal RICO charges in New York, Cleveland, Los Angeles, and many others cities. But now, private-sector lawyers are discovering that the same broad interpretation of RICO, so essential to gaining convictions against mobsters, can also be useful in boosting the stakes in favor of their clients in common commercial lega l disputes.

On July 1, the Supreme Court upheld this broad reading of RICO, in effect giving lawyers nationwide a go-ahead to tack civil RICO counts on lawsuits ranging from routine contract disputes, to landlord-tenant and possibly even divorce suits. Not only are RICO suits relatively easy to file, but they offer a reward of triple damages plus legal fees for anyone who can prove he or she was a victim of a ``pattern of racketeering.''

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