2 largely focused on its private civil enforcement mechanism; it now includes its criminal sanctions. RICO authorizes the criminal forfeiture of ill-gotten gains and the interest of an offender in an enterprise run corruptly. United States v. Porcelli, 865 F.2d 1352, 1354-66 (2d Cir. 1989) (forfeitures upheld, but subject to 8th Amendment proportionality). It also authorizes the issuance, on a proper showing, of pretrial restraints or the posting of a bond to prevent the dissipation before verdict of assets subject to forfeiture. United States V. Regan, 858 F.2d 115, 120-22 (2d Cir. 1988) (restraint or bond upheld). Such pretrial remedies are a common feature of litigation. e.g., Republic of Philippines v. Marcos, 863 F.2d 1355, 1359, 1361 (9th Cir. 1988) (injunction upheld to prevent dissipation of assets); Int'l Control Corp. v. Vesco, 490 F.2d 1334, 1347 (2d Cir.) (injunction upheld to prevent impairment of assets), cert. denied, 417 U.S. 932 (1974). See, The Milken indictment seeks a $1.85 billion in forfeitures from Milken and his co-defendants. N.Y. Times, March 30, 1989, p. 1, col. 1. If found guilty, Milken's illegal earnings will have been exceeded only by those of Al Capone. Wall Street Journal, March 31, 1989, p. 1, col. 4. Milken has agreed to post a bond to secure his portion of the forfeiture of $700 million in cash and other assets and to post bail in the amount of $1 million. N.Y. Times, April 15, 1989, p. 1, col. 1. Drexel itself has agreed to plead guilty to securities fraud and pay $650 million in fines and sanctions. Id. While Drexel publicly protests it was unfairly forced to plead guilty, since it feared that pretrial restrains would put it out of business, it privately told its employees that, if indicted under RICO, it would "have the opportunity to post a bond to forestall any pretrial restraint, [which] will permit us to continue operations." Wall Street Journal, Feb. 15, 1989, p. 1, col. 1. It also informed the United States District Court that its plea will be "voluntary." Wall Street Journal, March 31, 1989, p. A4, col. 6 ("voluntarily and without coercion"). Newspaper columnists decry RICO's pretrial restraints as an unconstitutional interference with the presumption of innocence. See Wall Street Journal, Feb. 15, 1989, p. 1, col. 1 (commentary of William Safire and other criticized). In fact, defendants, on a proper showing, may be detained in jail pretrial consistent with the constitution. See, e.g., United States v. Salerno, 107 S. Ct. 2095 (1987). It is doubtful that greater pretrial rights ought to be afforded to property than liberty. Nevertheless, those who seek to reform RICO are not moving to alter its criminal provisions. N.Y. Times, March 12, 1989, p. 2C, col. 1 (Cong. Boucher: "[T]here is no sentiment to limit RICO on the 3 Similar, but less restrictive, legislation failed to pass in the 100th Congress because it was widely perceived to be special interest legislation. Congressman John Conyers, a principal spokesman for those who opposed the legislation, aptly observed: [I]n light of the current scandals on Wall Street, I believe that it is wholly unjustifiable to treat securities or commodities fraud in any fashion different from, say, insurance or bank fraud. I see no valid reason why aggravated patterns of criminal behavior in the securities or commodities industries do not merit RICO's enhanced sanctions. I see no ground, in short, for a double standard. Similarly, I believe that it would be profoundly unwise, wholly inappropriate, and constitute both a troubling and unseemly precedent to make RICO reform retroactive so as to restrict the measure of recovery in pending cases. or I see no reason to give the likes of Boesky Butcher in their stock fraud or bank fraud activities a special bill of relief. Congress sits to legislate, not settle pending litigation. 134 Cong. Rec. E3720 (daily ed. Oct. 21, 1988) (remarks of Rep. John Conyers). A need exists both to fine-tune and strengthen RICO, but as the New York Times of October 6, 1988, p. 19, col. 1, editorially observed: Reducing damages would reduce deterrence. It makes no Unless it is substantially amended, the "RICO Reform Act of 1989" ought not pass the 101st Congress. This memorandum reviews the background of the 1970 Act, the myths that are used to promote its "reform," and the facts that ought to be considered in any effort to amend it. II. Background of 1970 Act. criminal side."). or In 1970, Congress enacted the Organized Crime Control Act, Title IX of which is known as the "Racketeer Influenced and Corrupt Organizations Act" (RICO), 18 U.S.C. § 1961 et seq. Congress enacted the 1970 Act "to strengthen[] the legal tools in the evidence gathering process, .. .. [to] establish[] new penal prohibitions, and [to] provide[] enhanced sanctions and new remedies.. " 84 Stat. 923. Among other things, Congress was concerned about "fraud." Id. at 922. In addition to fraud, RICO covers violence, the provision of illegal goods and services, corruption in labor or management relations, and corruption in government. Congress found that "the sanctions and remedies available" under the law then current were "unnecessarily limited in scope and impact." 84 Stat. 923. It then provided treble damage relief for "person[s] injured" in their "business property" by violations of the statute. 18 U.S.C. § 1964 (c). At the time, the private civil remedies had been called for by no less than the President, ("Message on Organized Crime," reprinted in, Hearings before the Subcommittee on Criminal Laws and Procedures, U.S. Senate Committee on the Judiciary, 91st Cong. 1st Sess. 449 (1969) (Senate Hearings)), the President's Commission on Crime and the Administration of Justice, (The Challenge of Crime in a Free Society 208 (1967)) and the American Bar Association. (Senate Hearings at 259; Hearings before Subcommittee No. 5, House Committee on the Judiciary, 91st Cong, 2nd Sess. 537 (1970) (House Hearings)). In response, the Senate passed the bill 73 to 1. 116 Cong. Rec. 972 (1970). The House passed an amended bill 431 to 26. Id. at 35,363. The Senate then passed the House bill without objection, and the President signed the legislation on Oct. 15, 1970. Id. at 36,296; 37,264. Today, however, RICO is under sharp attack from a variety of quarters. See generally Goldsmith & Keith, Civil RICO Abuse: The Allegations in Context, 1986 Brigham Young U. L. Rev. 55; Note, Congress Responds to Sedima: Is There a Contract Out on Civil RICO?, 19 Loy. L. A. L. Rev 851 (1986). In fact, stands largely without friends or supporters. III. Myths and Facts. "Myth"--"a belief 1.1 Myth: The Courts Are Litigation Under Civil RICO. whose truth is The Random House RICO now Being Inundated With New (Oct. 7, 1986, daily ed.) See 132 Cong. Rec. H. 9371 (remarks of Rep. Frederick C. Boucher): 5 1.2 [T]he federalization of thousands of mere Fact: Civil RICO Litigation Is Neither Wholly New Nor of Floodgate Proportions. Previously, separate data on Civil RICO litigation were not kept by the Administrative Office of the United States Courts. 1985 is a typical year. See Annual Report of the Director of the Administrative Office of the United States Courts (1985). Approximately 275,000 civil cases were filed that year. Id. at 11. Approximately 39,000 criminal prosecutions were brought. Id. at 16. slightly more than 118,000 of the civil cases involved the United States as a plaintiff or defendant; private litigation embraced approximately 160,000 filings, of which 60% is federal question and 40% were diversity litigation. Id. at 11. The principal areas of litigation were recovery and overpayments and enforcement of judgments (47,000), prisoner petitions (30,000), social security (25,000), civil rights (20,000), and labor (11,000). Id. at A-12-13. Antitrust included 959 civil filings, id. A-12, and 47 criminal cases. Id. at A-47. Securities, commodities, and exchange-related civil cases made up 3,200 filings, id, at A-13, and 13 criminal prosecutions. Id. at A-46. Fraud-related civil filings made up 1,700. Id. at A12. In fact, securities and fraud-based RICO litigation, which was initiated pre-Sedima, comprised 77% of the ABA study on Civil RICO. Ad Hoc Civil RICO Task Force: ABA, Corporations, etc. 5556 (1985). Accordingly, if most securities and fraud-related cases were also RICO cases, RICO filings would not exceed 5,000, not more than 2% of all federal filings. How many wholly new pieces of litigation, particularly in the fraud area, RICO will draw into the federal courts cannot be reliably determined. It is doubtful, however, that the number will be relatively high, as most significant commercial litigation is now in the federal courts under other federal statutes or diversity jurisdiction. In fact, the Department of Justice indicated that of the approximately 500 civil RICO cases brought pre-Sedima, 61% of them had an independent basis for federal jurisdiction. Oversight on Civil RICO Suits, Hearings before the Senate Judiciary Committee, 99th Cong., 1st Sess. at 127 (1985) (Oversight) More recently, Administrative Office data indicate that in 1988, the latest year for which complete information is available, only 950 civil RICO cases were filed--not thousands.3 As such, "the perceived problem of civil RICO case load is 3 Appendix B includes a chart on RICO November, 1985 to December, 1988. filings from 6 exaggerated. 2 Civil RICO Report No. 34 at 3 Feb. 4, 1987). (remarks of Judge Pamela A. Rymer). In fact, the decisions have now "calmed down" and "actually present no greater problem than antitrust or complicated securities cases." Id. In fact, too, docket congestion is not everywhere a problem. See, e.q. Penvert Development Corp. Ltd. v. Dow Chemical Co., 667 F.Supp. 436, 441 (E.D. Mich. 1987) ("not tremendously overburdened"). See also, Bok, A Flawed System of Law Practice and Training, 33 J. Leg. Educ. 570, 571 (1983) ("The number of disputes actually litigated does not appear to be rising much faster than the population"). While the absolute number of general filings has increased by roughly one half, the average number of cases per federal judge from 1960 to 1980 has stayed about the same. Clark, Adjudication to Administration: A Statistical Analysis of Federal District Courts in the Twentieth Century, 55 So. Calif. L. Rev. 65, 81-85 (1981). Indeed, from 1900 to 1980, the length of civil cases fell by over one half. Id. The literature complaining about the litigation explosion, in short, shows "a strong admixture of naive speculation and undocumented assertion." Glanter, Reading the Legal Landscape of Disputes, 31 UCLA L. Rev. 4, 62 (1983). Dire predictions of an explosion of new federal litigation, moveover, need to be put into perspective. Litigation itself, as the Supreme Court recognized in Zauderer V. Office of Disciplinary Counsel of the Supreme Court of Ohio, 105 S.Ct. 2265, 2278 (1985), is not "an evil." "Over the course of centuries," the Court noted, "our society has settled upon civil litigation as a means for redressing grievances, resolving disputes, and vindicating rights when other means fail." Id. "That our citizens have access to their civil court," the Court concluded, "is not an evil to be regretted; rather, it is an attribute of a system of justice in which we ought to take pride." Accordingly, it ought to be recognized that the mere fact of RICO suits is not a matter to be decried or deplored. Crime. 2.1 Myth: RICO was Designed to Deal Only With Organized See Oversight at 241 (remarks of Ray J. Grover, American Institute of Certified Public Accountants): [T]he legislative history of the civil RICO |