Fourth Circuit decision on RICO jurisdiction

The RICO statute (18 U.S.C. § 1962) requires federal prosecutors to prove, among other things, that the criminal enterprise affected interstate commerce.  In United States v. Cornell, the Fourth Circuit considered what kind of conduct meets this requirement.

Several alleged members of the Latin Kings, a gang, were convicted in the Middle District of North Carolina with conspiracy to violate RICO under 18 U.S.C. § 1962(d).  On appeal, they challenged a jury instruction which stated that only a “de minimis” effect on interstate commerce was necessary to meet 1962’s interstate commerce element.  They argued that where the racketeering activity is not economic in nature, the government has to prove more than a minimal effect on interstate commerce.  To support their argument, the appellants relied on Waucaush v. United States, in which the Sixth Circuit vacated a RICO conviction because the criminal conduct of the enterprise was limited to crimes of violence, and did not involve economic activity.  In such cases, Waucaush held, the government was required to prove a substantial effect on interstate commerce.

The Fourth Circuit rejected the Latin Kings’ argument on two grounds.  First, the court found that the holding in Waucaush was called into question by Gonzales v. Raich, in which the Supreme Court held that “when a general regulatory statute bears a substantial relation to commerce, the de minimis character of individual instances arising under that statute is of no consequence.”

The Fourth Circuit also declined to apply the reasoning of Waucaush to the Latin Kings because their enterprise involved acts of bank fraud, a quintessentially economic activity.  Additionally, the panel noted that the evidence at trial was that members of the gang regularly communicated by phone and used guns that traveled in interstate commerce to commit their crimes, which was yet another basis to satisfy the interstate commerce element.

The Fourth Circuit’s message to RICO defendants: tough luck raising jurisdictional challenges in this circuit!


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