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RICO Penalties for Prohibited I-9 and Employment Eligibility Verification (EEV) PracticesActions by Competitors RICO Overview

Many employers are not aware that the Racketeer Influenced and Corrupt Organizations Act (RICO) has been creatively used by firms against competitors for certain criminal Immigration and Nationality Act (INA) violations. RICO was originally intended to make it easier for the federal government o prosecute organized crime figures, but it has been applied in several other contexts.

A RICO lawsuit may be brought in either Federal or State court. RICO provides for the recovery of treble damages (damages in triple the amount of actual/compensatory damages), costs, and attorney's fees. In addition, a court can order an individual or company to divest itself of any interest in the enterprise and to refrain from engaging in any commercial activity.

RICO provides extended penalties for criminal acts performed as part of an ongoing criminal enterprise or organization.

Under RICO, a person or group who commits any two of 35 crimes, includimh 27 federal crimes and 8 state crimes, within a 10-year period with similar purpose or results, can be charged with racketeering. Those found guilty of racketeering can be fined up to $25,000 and/or sentenced to 20 years in prison per racketeering count. In addition, the racketeer must forfeit all ill-gotten gains and interest in any business gained through a pattern of "racketeering activity."

In many cases, a government threat the of a RICO indictment can force defendants to plead guilty to lesser charges. RICO-related charges may be less difficult to establish in court because they focus on patterns of behavior as opposed to criminal acts.

RICO includes a provision for private parties to sue. A "person damaged in his business or property" can sue one or more "racketeers" under RICO. The plaintiff must prove the existence of a "criminal enterprise".

An enterprise can be a legal entity, or an individual, or a relatively loose-knit group of people or legal entities. These latter groups are referred to as "association-in-fact" enterprises under the statute. Most courts will accept any informal group as an association-in-fact enterprise so long as the group possesses three characteristics:

  • Some continuity of structure and personnel;
  • A common or shared purpose; and,
  • An ascertainable structure distinct from that inherent in the pattern of racketeering.

The common purpose of making money can support the enterprise element of a RICO claim.

RICO requires that the defendant "conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs". This generally includes not only upper management but also lower-rung participants in the enterprise who are under the direction of upper management.

If an employer is charged, let alone convicted of a RICO crime it isvery likely its competitiors will pile on with civil RICO actions.

RICO and Employment of Unauthorized Workers
In 1996, Congress expanded RICO to include violations of federal immigration law. While this expansion may not have received much publicity it could potentially change the face of U.S. immigration law enforcement. Under these RICO provisions, violations of certain provisions of the INA meet the definition of racketeering activity, also known as a "predicate offense".

RICO Liability for Encouraging or Employing Illegal Aliens
The INA makes it unlawful to encourage illegal immigration or employ illegal aliens, both of which were included as predicate offenses under RICO. Other INA prohibitions under RICO include encouraging or inducing illegal immigration, smuggling, and harboring illegal aliens. Together, these additions make the RICO Act potentially a very strong tool in the hands of private parties against persons and companies that profit by violating U.S. immigration law.

Companies competitively injured by a competitor's employment of unauthorized workers have a remedy under RICO based on business lost as a result of a competitor's pattern of hiring illegal aliens, for example enabling the vioilator to reduce costs and underbid the plaintiff on new contracts.

RICO actions have also been brought by groups of employees who claimed that due to their employer's practice of hiring illegal aliens, their wages were depressed. There have been employee actions under RICO based on changed working conditions. For example, longer hours or a more demanding work load resulting from an employer's use or unauthorized workers. The argument is that the American workers were driven out of their jobs because the employer was willing to exploit illegal alien workers who would do anything in order to keep their jobs.

Any company or person that knowingly hires, within any 12-month period, at least ten illegal aliens, commits a criminal violation of the INA, and is liable under RICO.

RICO Liability for encouraging or Inducing an Alien to Come to, Enter, or Reside in the U.S.
Another RICO predicate act is encouraging or inducing "an alien to come to, enter, or reside in the United States, knowing or in reckless disregard of the fact that such coming to, entry, or residence is or will be in violation of law". "Encouraging" relates to actions taken to convince the illegal alien to come to this country or to stay in this country. Creative lawyers can develop a plethora of theories how an employer or competitor encourages illegal aliens already in the United States to remain or induces further illegal immigration.

RICO Liability for Harboring an Illegal Alien
Other violations of the INA may serve as RICO predicate acts in addition to employing illegal aliens ands encouraging illegal immigration. "Harboring" illegal aliens, if done for financial gain, is a predicate act. "Harboring" means any conduct that tends to substantially facilitate an alien to remain in the U.S. illegally. The sheltering need not be clandestine, and harboring covers aliens arrested outdoors, as well as in a building. This provision includes harboring an alien who entered the U.S. legally, but has since lost his/her legal status, including out of status and visa overstay.

Actual or Consstructive Knowledge or Reckless Disregard
The primary hurdle in establishing illegal hiring as a RICO predicate act is the knowledge requirement. What constitutes "knowledge" or "constructive knowledge"? Every employer should know there are many creative lawyers.

A RICO claim requires the plaintiff show injury. Lost wages, lost contracts, lost profits, unfair competitive advantage are all bases for a RICO injury claim. No company owner, executive, or manager worth his/her salt should doubt that creative lawyers may also find proving "injury" fertile ground.

A RICO Award Can Have Devastating Consequences
There are severe penalties for RICO violations. A successful plaintiff is entitled to treble damages, which means three-fold the actual injury suffered, plus costs and reasonable attorney's fees. In addition, a court can "pile on" and order the defendant to divest itself of any interest in any enterprise, to refrain from engaging in any commercial activity, or make commercial investment. The court can also order the "dissolution or reorganization of any enterprise". In short, the losing company in a RICO case can lose the business, be forced to provide high levels of compensation to the plaintiff, and even be prohibited from engaging in future business activities.

Given the devastating consequences of a competitior RICO lawsuit an employer who does not carefully manage and review its I-9 employment eligibility verification (EEV) practices, procedures and policies engages in negligence, and its executives quite possibily breach their fiduciary duties to the company and any shareholders.


This is an advertisement. The Goulder Immigration Law Firm is the law office of Gerald Goulder and limits its practice predominantly to US immigration and naturalization law; and we do not claim expertise in the laws of states other than Nort Carolina. The information contained on this site is intended to educate members of the public generally and is not intended to provide solutions to individual problems. Readers are cautioned not to attempt to solve individual problems on the basis of information contained herein and are strongly advised to seek advice from an experienced immigration attorney regarding specific case situations. The information on this website may not be up to date and should not be relied on without the advice and representation of your attorney. The links to government agencies and other websites are provided as a convenience only and no warranty express or implied is made regarding the accuracy of information obtained from those websites.