Criminal Profiteering

The Criminal Profiteering Act of 1985 is Washington State’s version of the federal RICO law.[1] 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.[2]

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.[3]

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.[4] 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.[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.[6] General knowledge of the wrongfulness of the conduct is enough to prove willfulness.[7] Specific intent regarding fraudulent, misleading, or deceitful conduct is proof of willfulness.[8] 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).[9]

The attractiveness of the Criminal Profiteering claim to civil litigation plaintiffs 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.[10]

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.

[1] State 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).

[2] These include many violent felonies, as well as felonies relating to gambling, drugs, pornography, prostitution, extortion, and securities fraud.

[3] Winchester v. Stein, 135 Wash. 2d 835, 852, 959 P.2d 1077, 1083 (1998). See 16A WAPRAC § 26.51.

[4] Id.

[5] Id. see RCWA § 9A.82.010(15) and 18 U.S.C. § 1961(5).

[6] RCW § 21.20.400.

[7] State 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.

[8] State v. Markham , 40 Wash.App. 75, 697 P.2d 263(1985), reconsideration denied, review denied.

[9] State v. Casey, 81 Wn.App. 524, 531–32, 915 P.2d 587, 591 (1996).

[10] RCW § 9A.82.100(4)(d)