In legal terms, RICO stands for the Racketeer Influenced and Corrupt Organizations Act, and refers to violations of 18 USC Chapter 96. RICO cases refer to the prosecution and defense of individuals who engage in organized crime. Although almost exclusively prosecuted as a criminal case, the law permits civil action for money damages.

Following a three week trial, Alton Burkhalter and Ros Lockwood recently obtained a unanimous civil jury verdict against three individuals for violation of the RICO statute. This novel legal theory allowed the Court to award treble damages plus attorney fees for Burkhalter Kessler Clement & George LLP‘s client.

The victim was a local car dealer. The RICO defendants perpetrated a massive con job in which they created shell companies, forged critical documents, paid kick backs and mislead the dealer into believing that the buyer was a legitimate leasing company that would be “upfitting” and then leasing vehicles to high-end clients in Nevada. In actuality, the vehicles were being exported to China. The profit to the RICO defendants was derived almost entirely from manufacturer’s rebates and incentives unwittingly passed on to them by the dealer.

The scam was discovered when the manufacturer conducted a routine incentive audit and then contacted US Customs who revealed that the vehicles had actually been exported. As a result, the manufacturer threatened to charge back the dealer and to rescind various monthly performance bonuses. Using Burkhalter Kessler Clement & George LLP, the dealer challenged the manufacturer charge backs and also sued the RICO defendants.

After contentious litigation in which the defendants repeatedly challenged the viability of the RICO claims, Burkhalter and Lockwood were able to establish all the elements necessary to prove a civil violation of the RICO statute. To do so, Burkhalter designed demonstrative evidence illustrating each of the complex steps used by the defendants to conceal their identities, the true source of the money and where the vehicles were actually going. Burkhalter Kessler Clement & George LLP also called upon industry experts to rebut defendants’ claims that “half the dealers want to sell cars for export” and that this dealership knew the vehicles were being exported but wanted to be able to portray “plausible deniability” to the manufacturer. At the close of the trial the jury voted 12-0 in favor of the dealership. Not only did the win ensure that the dealership was fully reimbursed for its loss, it also fully vindicated the dealership in the eyes of the manufacturer. The only remaining question is whether or not these defendants will now be criminally prosecuted.

For more information on RICO and how it might apply to protect your business, contact Alton Burkhalter or Ros Lockwood.