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Criminal Law and Procedure

Non-US Companies and Executives at Risk from US RICO Law

By Kevin Walsh, Douglas Walter Mateyaschuk, Richard F. Hans, and Jean-Pierre Douglas-Henry

More frequently than ever before, American plaintiffs and prosecutors are using US laws to target conduct that has little, if any, connection to the United States.

Potential exposure to criminal and civil liability under US law must now be considered by businesses no matter where they are headquartered and operate. Mitigating that liability exposure requires diligent compliance effort and comprehensive compliance systems and policies. This Letter alerts you to a new development in this area: an expansive interpretation of a US law targeting money laundering and other racketeering crimes conducted outside of the United States.

The Racketeer Influenced and Corrupt Organization law (“RICO”) imposes significant criminal and civil penalties on those engaged in a pattern of racketeering activity conducted as part of an ongoing criminal enterprise, [subscribers can access an enhanced version of this statute: | Lexis Advance]. It was enacted in 1970 to combat organized crime, but since that time, prosecutors and plaintiffs have routinely invoked RICO’s broad provisions against defendants bearing little resemblance to the crime families initially targeted by the statute. Typical RICO defendants now include publicly-traded companies and corporate executives. A plaintiff who prevails in a civil RICO action may recover treble damages and attorney’s fees. A recent decision of the Second Circuit Court of Appeals, denying en banc review in European Community v. RJR Nabisco, Inc., [subscribers can access an enhanced version of this statute: | Lexis Advance], further expands the reach of RICO by permitting the assertion of claims against defendants for conduct that occurred outside of the United States. One member of the Court, writing in dissent, has concluded that the decision is in “direct tension” with recent decisions of the United States Supreme Court that limit extraterritorial claims and has predicted “a new litigation industry exposing business activities abroad to civil claims of ‘racketeering’; [that] . . will invite our courts to adjudicate civil RICO claims grounded on extraterritorial activities anywhere in the world.”

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'Letter from America' is a periodic alert from the US dispute resolution team on legal issues that could impact your business.

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