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Racketeering is the crime of extorting money from a victim. Bankrate explains.

What is racketeering?

Racketeering is a type of criminal activity in which money is extorted from a victim by threat or force. One of the most common forms is the protection racket, in which a criminal entity causes a problem and sells protection against that problem. Racketeering is usually the purview of organized crime rather than an individual and encompasses such activities as drug trafficking, loan sharking, and contract killing.

Deeper definition

In a protection racket, the criminal entity threatens a business owner or landlord with physical force if she doesn’t pay a fee. The criminal entity might offer some kind of extrajudicial service in return, such as protection from injury and theft or even from other criminal entities. When an entity like the mafia is large enough it might even overpower the police force, in which case paying for protection might be the business owner’s only recourse.

Other forms of racketeering include running an illegal gambling operation or loan sharking. In those cases, often exorbitant debts are extracted through threats of violence, including seizure or destruction of property, or injury, including murder. Such threats back up other racketeering enterprises, such as the trafficking in people or illegal drugs, by silencing potential witnesses and enforcing payment for the services. Racketeers also compel innocent people to commit crimes, such as rigging a vote, with the threat of violence.

Still another form of racketeering happens after the illegal business has prospered. It may invest some of its cash into a legitimate business, which is called money laundering.

The U.S. government prosecutes racketeering cases using the Racketeering Influenced and Corrupt Organizations (RICO) Act. That law is designed to target the head of an organized criminal organization, who can be difficult to convict because he has himself not committed any of its crimes, having outsourced them to underlings. After demonstrating the existence of an extant criminal organization, RICO prosecutors can convict any member of the group without proving that any one member committed a particular crime.

Stay away from a loan shark and take out a clean personal loan, with a helpful comparison tool from Bankrate.

Racketeering example

Tony runs what he calls a “sanitation business” in east New Jersey. While there really is a sanitation business, Tony is the head of a large criminal enterprise that compels businesses to use his sanitation business instead of another company’s or risk seeing their property burn to the ground. The police can’t quite pin a recent string of arsons on him, although they suspect something. Meanwhile, Tony’s raking it in.


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