RICO Laws Protect Against Estate Fraud

In criminal matters where the intent to commission, conspire to commission, or commission acts of intimidation, coercion, or solicitation for purpose of “racketeering,” as defined under the  Racketeer Influenced and Corrupt Organization (RICO) Act, is illegal in the United States. The RICO Act prohibits family businesses and other enterprises transferred to an estate from fraudulent and criminal racketeering activities associated with foreign commerce and interstate trade. Federal rules protect estates against fraud, yet the costs associated with a RICO crime, can result in excessive losses to estate or trust held business assets and future income and proceeds from those ventures. Informed estate trustees, owners, and beneficiaries are more likely to protect themselves from fraud with knowledge of federal and state RICO laws and rules of estate. Planned giving specialists will be interested the rules protecting estate trusts participating in philanthropic contribution to nonprofit charitable giving plans.

The Case of a Nearly Lost Estate

On August 14, 2018 the U.S. federal Court of Appeals declined to exercise supplemental jurisdiction over a Connecticut Superior Court denying Virginia A. D’Addario compensatory remedy for loss of beneficiary rights to inheritance from her mother’s estate. The Superior Court decision coinciding with the conviction of her sibling, David D’Addario, is outcome to  a RICO violation case (D’Addario v. D’Addario, No. 17-1162 (2d Cir. 2018). The Second Circuit appellate court subsequently vacated and remanded the case, upholding D’Addario’s claim to her mother’s estate, plus cited legal expenses incurred pursuant to the complaint against her brother and other RICO defendants in the lawsuit. It was substantiated that RICO losses were speculative; and therefore, the estate was not closed. The Appellate court decided that award of the plaintiff rested on this fact, and she sustained full rights to distribution of the nearly lost estate.

RICO Rules Protecting Estates

Racketeering is an act of corruption commissioned via a legitimate enterprise, and evidenced by organized association through: 1) intentional participation; 2) acquisition or maintenance of an interest; 3) and/or investment of proceeds from a felony crime, New York Penal Code Article 460, et seq. RICO violation exists where an defendant is proven to have engaged in any of the three requisite rule requirements, or is evidenced to have “knowledge of the existence of a criminal enterprise and the nature of its activities and was employed by or associated with that enterprise.” Defenses within both federal and state laws are: entrapment; duress or compulsion; lack of knowledge related to criminal enterprise or criminal activity; and preceding withdrawal from the organization or activity. The conviction of RICO violations is guided by the Modern Penal Code (MPC) in all states, yet sentencing rules vary slightly by state. In New York, convicted RICO defendants receive up to 20 years prison time; and are responsible for up to $25,000 in restitution costs per offense. Some state laws require unlimited restitution payment of all monies owed to RICO crime victims, including the heirs and beneficiaries of an estate or trust.

Federal RICO laws protect estates and trusts from civil and criminal racketeering violations so that heirs have maintain their rights to business assets and other valued inheritable assets.

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