Criminal Profiteering

Criminal Profiteering: Washington State’s “Baby” RICO Act

The Criminal Profiteering Act of 1985 is Washington State’s version of the federal RICO law.¹State v. Thomas, 103 Wash. App. 800, 14 P.3d 854 (2000); Bowcutt v. Delta North Star Corp., 95 Wash. App. 311, 976 P.2d 643 (1999) (trial court erred in failing to provide full scope of equitable remedies authorized by Washington statute). It provides civil penalties and remedies for a variety of criminal activities. “Criminal profiteering” is defined to include the commission, or attempted commission, for financial gain, of any one of a number of crimes listed in the statute.²These include many violent felonies, as well as felonies relating to gambling, drugs, pornography, prostitution, extortion, and securities fraud.

The act provides that a “pattern of criminal profiteering activity” means engaging in at least three acts of criminal profiteering within a five-year period. To constitute a “pattern,” the three acts must have the same or similar intent, results, accomplices, principals, victims or methods of commission, or be otherwise interrelated by distinguishing characteristics including a nexus to the same enterprise, and must not be isolated events. A “pattern” of profiteering is usually required before any of the special civil remedies apply.³Winchester v. Stein, 135 Wash. 2d 835, 852, 959 P.2d 1077, 1083 (1998). See 16A WAPRAC § 26.51.

There are many similarities between the Washington statute and the federal statute, and as a result, Washington courts look to the case law interpreting the federal statute as a guide to interpretation of the Washington statute.⁴Id. However, the Washington statute has been characterized as being somewhat narrower. For example, whereas the federal statute requires only two predicate crimes committed over ten years to show a pattern of racketeering activity, the Washington statute requires three crimes in five years to show a pattern of criminal profiteering.⁵Id. see RCWA § 9A.82.010(15) and 18 U.S.C. § 1961(5).

The most likely crimes to be alleged in a civil action for Criminal Profiteering are money laundering or securities fraud. Criminal securities fraud requires proof beyond a reasonable doubt that defendants “willfully” violated the securities statutes.⁶RCW § 21.20.400. General knowledge of the wrongfulness of the conduct is enough to prove willfulness.⁷State v. Cox , 17 Wash.App. 896, 566 P.2d 935 (1977), review denied, certiorari denied 99 S.Ct. 90, 439 U.S. 823, 58 L.Ed.2d 115. Specific intent regarding fraudulent, misleading, or deceitful conduct is proof of willfulness.⁸State v. Markham, 40 Wash.App. 75, 697 P.2d 263(1985), reconsideration denied, review denied. Money laundering is the conducting of a financial activity using money which the person knows is the proceeds of an unlawful activity (e.g. securities fraud).⁹State v. Casey, 81 Wn.App. 524, 531–32, 915 P.2d 587, 591 (1996).

The attractiveness of the Criminal Profiteering claim to civil litigation plaintiffs, in addition to a possible award of attorney fees, is the possibility of convincing a judge to increase the award to three times the amount of actual damages to a maximum of $250,000.¹⁰RCW § 9A.82.100(4)(d)

As a practical matter, this claim is rarely brought in civil actions and there are no relevant appellate decisions on the statute. It is unlikely that a judge will find civil conduct criminal unless it amounted to theft. The criminal law is involved in theft-like cases where investors’ money is used for the promoter’s excessive lifestyle and investors’ money is lost.