case brief , white collar crime

452 U.S. 576 (1981)

UNITED STATES

v.

TURKETTE.

No. 80-808.

Supreme Court of United States.

Argued April 27, 1981.

Decided June 17, 1981.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIRST

CIRCUIT.

577*577 Mark I. Levy argued the cause for the United States. With him on the briefs

were Solicitor General McCree, Acting Assistant Attorney General Keeney, Deputy Solicitor

General Frey, and Joel M. Gershowitz.

John Wall argued the cause for respondent. With him on the brief was Harry C. Mezer.[*]

JUSTICE WHITE delivered the opinion of the Court.

Chapter 96 of Title 18 of the United States Code, 18 U. S. C. §§ 1961-1968 (1976 ed. and Supp.

III), entitled 578*578 Racketeer Influenced and Corrupt Organizations (RICO), was added to

Title 18 by Title IX of the Organized Crime Control Act of 1970, Pub. L. 91-452, 84 Stat. 941.

The question in this case is whether the term "enterprise" as used in RICO encompasses both

legitimate and illegitimate enterprises or is limited in application to the former. The Court of

Appeals for the First Circuit held that Congress did not intend to include within the definition of

"enterprise" those organizations which are exclusively criminal. 632 F. 2d 896 (1980). This

position is contrary to that adopted by every other Circuit that has addressed the issue.[1] We

granted certiorari to resolve this conflict. 449 U. S. 1123 (1981).

I

Count Nine of a nine-count indictment charged respondent and 12 others with conspiracy to

conduct and participate in the affairs of an enterprise[2] engaged in interstate

commerce 579*579 through a pattern of racketeering activities, in violation of 18 U. S. C. § 1962

(d).[3] The indictment described the enterprise as "a group of individuals associated in fact for the

purpose of illegally trafficking in narcotics and other dangerous drugs, committing arsons,

utilizing the United States mails to defraud insurance companies, bribing and attempting to bribe

local police officers, and corruptly influencing and attempting to corruptly influence the outcome

of state court proceedings . . . ." The other eight counts of the indictment charged the commission

of various substantive criminal acts by those engaged in and associated with the criminal

enterprise, including possession with intent to distribute and distribution of controlled

substances, and several counts of insurance fraud by arson and other means. The common thread

to all counts was respondent's alleged leadership of this criminal organization through which he

orchestrated and participated in the commission of the various crimes delineated in the RICO

count or charged in the eight preceding counts.

After a 6-week jury trial, in which the evidence focused upon both the professional nature of this

organization and the execution of a number of distinct criminal acts, respondent was convicted

on all nine counts. He was sentenced to a term of 20 years on the substantive counts, as well as a

2-year special parole term on the drug count. On the RICO conspiracy count he was sentenced to

a 20-year concurrent term and fined $20,000.

On appeal, respondent argued that RICO was intended 580*580 solely to protect legitimate

business enterprises from infiltration by racketeers and that RICO does not make criminal the

participation in an association which performs only illegal acts and which has not infiltrated or

attempted to infiltrate a legitimate enterprise. The Court of Appeals agreed. We reverse.

II

In determining the scope of a statute, we look first to its language. If the statutory language is

unambiguous, in the absence of "a clearly expressed legislative intent to the contrary, that

language must ordinarily be regarded as conclusive." Consumer Product Safety Comm'n v. GTE

Sylvania, Inc., 447 U. S. 102, 108 (1980). Of course, there is no errorless test for identifying or

recognizing "plain" or "unambiguous" language. Also, authoritative administrative constructions

should be given the deference to which they are entitled, absurd results are to be avoided and

internal inconsistencies in the statute must be dealt with. Trans Alaska Pipeline Rate Cases, 436

U. S. 631, 643 (1978); Commissioner v. Brown, 380 U. S. 563, 571 (1965). We nevertheless

begin with the language of the statute.

Section 1962 (c) makes it unlawful "for any person employed by or associated with any

enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to

conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a

pattern of racketeering activity or collection of unlawful debt." The term "enterprise" is defined

as including "any individual, partnership, corporation, association, or other legal entity, and any

union or group of individuals associated in fact although not a legal entity." § 1961 (4). There is

no restriction upon the associations embraced by the definition: an enterprise includes any union

or group of individuals associated in fact. On its face, the definition appears to include both

legitimate and illegitimate enterprises within its scope; it no more excludes 581*581criminal

enterprises than it does legitimate ones. Had Congress not intended to reach criminal

associations, it could easily have narrowed the sweep of the definition by inserting a single word,

"legitimate." But it did nothing to indicate that an enterprise consisting of a group of individuals

was not covered by RICO if the purpose of the enterprise was exclusively criminal.

The Court of Appeals, however, clearly departed from and limited the statutory language. It gave

several reasons for doing so, none of which is adequate. First, it relied in part on the rule

of ejusdem generis, an aid to statutory construction problems suggesting that where general

words follow a specific enumeration of persons or things, the general words should be limited to

persons or things similar to those specifically enumerated. See 2A C. Sands, Sutherland on

Statutory Construction § 47.17 (4th ed. 1973). The Court of Appeals ruled that because each of

the specific enterprises enumerated in § 1961 (4) is a "legitimate" one, the final catchall phrase—

"any union or group of individuals associated in fact"— should also be limited to legitimate

enterprises. There are at least two flaws in this reasoning. The rule of ejusdem generis is no more

than an aid to construction and comes into play only when there is some uncertainty as to the

meaning of a particular clause in a statute. Harrison v. PPG Industries, Inc., 446 U. S. 578, 588

(1980); United States v. Powell, 423 U. S. 87, 91 (1975); Gooch v. United States, 297 U. S. 124,

128 (1936). Considering the language and structure of § 1961 (4), however, we not only perceive

no uncertainty in the meaning to be attributed to the phrase, "any union or group of individuals

associated in fact" but we are convinced for another reason that ejusdem generis is wholly

inapplicable in this context.

Section 1961 (4) describes two categories of associations that come within the purview of the

"enterprise" definition. The first encompasses organizations such as corporations and

partnerships, and other "legal entities." The second covers 582*582"any union or group of

individuals associated in fact although not a legal entity." The Court of Appeals assumed that the

second category was merely a more general description of the first. Having made that

assumption, the court concluded that the more generalized description in the second category

should be limited by the specific examples enumerated in the first. But that assumption is

untenable. Each category describes a separate type of enterprise to be covered by the statute—

those that are recognized as legal entities and those that are not. The latter is not a more general

description of the former. The second category itself not containing any specific enumeration

that is followed by a general description, ejusdem generis has no bearing on the meaning to be

attributed to that part of § 1961 (4).[4]

A second reason offered by the Court of Appeals in support of its judgment was that giving the

definition of "enterprise" its ordinary meaning would create several internal inconsistencies in

the Act. With respect to § 1962 (c), it was said:

"If `a pattern of racketeering' can itself be an `enterprise' for purposes of section 1962 (c), then

the two phrases `employed by or associated with any enterprise' and `the conduct of such

enterprise's affairs through [a pattern of racketeering activity]' add nothing to the meaning of the

section. The words of the statute are coherent and logical only if they are read as applying to

legitimate enterprises." 632 F. 2d, at 899.

583*583 This conclusion is based on a faulty premise. That a wholly criminal enterprise comes

within the ambit of the statute does not mean that a "pattern of racketeering activity" is an

"enterprise." In order to secure a conviction under RICO, the Government must prove both the

existence of an "enterprise" and the connected "pattern of racketeering activity." The enterprise

is an entity, for present purposes a group of persons associated together for a common purpose of

engaging in a course of conduct. The pattern of racketeering activity is, on the other hand, a

series of criminal acts as defined by the statute. 18 U. S. C. § 1961 (1) (1976 ed., Supp. III). The

former is proved by evidence of an ongoing organization, formal or informal, and by evidence

that the various associates function as a continuing unit. The latter is proved by evidence of the

requisite number of acts of racketeering committed by the participants in the enterprise. While

the proof used to establish these separate elements may in particular cases coalesce, proof of one

does not necessarily establish the other. The "enterprise" is not the "pattern of racketeering

activity"; it is an entity separate and apart from the pattern of activity in which it engages. The

existence of an enterprise at all times remains a separate element which must be proved by the

Government.[5]

Apart from § 1962 (c)'s proscription against participating in an enterprise through a pattern of

racketeering activities, RICO also proscribes the investment of income derived from racketeering

activity in an enterprise engaged in or which 584*584 affects interstate commerce as well as the

acquisition of an interest in or control of any such enterprise through a pattern of racketeering

activity. 18 U. S. C. §§ 1962 (a) and (b).[6] The Court of Appeals concluded that these provisions

of RICO should be interpreted so as to apply only to legitimate enterprises. If these two sections

are so limited, the Court of Appeals held that the proscription in § 1962 (c), at issue here, must

be similarly limited. Again, we do not accept the premise from which the Court of Appeals

derived its conclusion. It is obvious that §§ 1962 (a) and (b) address the infiltration by organized

crime of legitimate businesses, but we cannot agree that these sections were not also aimed at

preventing racketeers from investing or reinvesting in wholly illegal enterprises and from

acquiring through a pattern of racketeering activity wholly illegitimate enterprises such as an

illegal gambling business or a loan-sharking 585*585 operation. There is no inconsistency or

anomaly in recognizing that § 1962 applies to both legitimate and illegitimate enterprises.

Certainly the language of the statute does not warrant the Court of Appeals' conclusion to the

contrary.

Similarly, the Court of Appeals noted that various civil remedies were provided by §

1964,[7] including divestiture, dissolution, reorganization, restrictions on future activities by

violators of RICO, and treble damages. These remedies it thought would have utility only with

respect to legitimate enterprises. As a general proposition, however, the civil remedies could be

useful in eradicating organized crime from the social fabric, whether the enterprise be ostensibly

legitimate or admittedly criminal. The aim is to divest the association of the fruits of its ill-gotten

gains. See infra, at 591-593. Even if one or more of the civil remedies might be inapplicable to a

particular illegitimate enterprise, this fact would not serve to limit the enterprise concept.

Congress has provided civil remedies for use when the circumstances so warrant. It is untenable

to argue that their existence limits the scope of the criminal provisions.[8]

586*586 Finally, it is urged that the interpretation of RICO to include both legitimate and

illegitimate enterprises will substantially alter the balance between federal and state enforcement

of criminal law. This is particularly true, so the argument goes, since included within the

definition of racketeering activity are a significant number of acts made criminal under state law.

18 U. S. C. § 1961 (1) (1976 ed., Supp. III). But even assuming that the more inclusive definition

of enterprise will have the effect suggested,[9] the language of the statute and its legislative

history indicate that Congress was well aware that it was entering a new domain of federal

involvement through the enactment of this measure. Indeed, the very purpose of the Organized

Crime Control Act of 1970 was to enable the Federal Government to address a large and

seemingly neglected problem. The view was that existing law, state and federal, was not

adequate to address the problem, which was of national dimensions. That Congress included

within the definition of racketeering activities a number of state crimes strongly indicates that

RICO criminalized conduct that was also criminal under state law, at least when the requisite

elements of a RICO offense are present. As the hearings and legislative debates reveal, Congress

was well aware of the fear that RICO would "mov[e] large substantive areas formerly totally

within the police power of 587*587 the State into the Federal realm." 116 Cong. Rec. 35217

(1970) (remarks of Rep. Eckhardt). See also id., at 35205 (remarks of Rep. Mikva); id., at 35213

(comments of the American Civil Liberties Union); Hearings on Organized Crime Control before

Subcommittee No. 5 of the House Committee on the Judiciary, 91st Cong., 2d Sess., 329, 370

(1970) (statement of Sheldon H. Eisen on behalf of the Association of the Bar of the City of New

York). In the face of these objections, Congress nonetheless proceeded to enact the measure,

knowing that it would alter somewhat the role of the Federal Government in the war against

organized crime and that the alteration would entail prosecutions involving acts of racketeering

that are also crimes under state law. There is no argument that Congress acted beyond its power

in so doing. That being the case, the courts are without authority to restrict the application of the

statute. See United States v. Culbert, 435 U. S. 371, 379-380 (1978).

Contrary to the judgment below, neither the language nor structure of RICO limits its application

to legitimate "enterprises." Applying it also to criminal organizations does not render any portion

of the statute superfluous nor does it create any structural incongruities within the framework of

the Act. The result is neither absurd nor surprising. On the contrary, insulating the wholly

criminal enterprise from prosecution under RICO is the more incongruous position.

Section 904 (a) of RICO, 84 Stat. 947, directs that "[t]he provisions of this Title shall be liberally

construed to effectuate its remedial purposes." With or without this admonition, we could not

agree with the Court of Appeals that illegitimate enterprises should be excluded from coverage.

We are also quite sure that nothing in the legislative history of RICO requires a contrary

conclusion.[10]

588*588 III

The statement of findings that prefaces the Organized Crime Control Act of 1970 reveals the

pervasiveness of the problem that Congress was addressing by this enactment:

"The Congress finds that (1) organized crime in the United States is a highly sophisticated,

diversified, and widespread activity that annually drains billions of dollars from America's

economy by unlawful conduct and the illegal use of force, fraud, and corruption; (2) organized

crime derives a major portion of its power through money obtained from such illegal endeavors

as syndicated gambling, loan sharking, the theft and fencing of property, the importation and

distribution of narcotics and other dangerous drugs, and other forms of social exploitation; (3)

this money and power are increasingly used to infiltrate and corrupt legitimate business and labor

unions and to subvert and corrupt our democratic processes; (4) organized crime activities in the

United States weaken the stability of the Nation's economic system, harm innocent investors and

competing organizations, interfere with free competition, seriously burden interstate and foreign

commerce, threaten the domestic security, and undermine the general welfare of the Nation and

its citizens; and (5) organized crime continues 589*589 to grow because of defects in the

evidence-gathering process of the law inhibiting the development of the legally admissible

evidence necessary to bring criminal and other sanctions or remedies to bear on the unlawful

activities of those engaged in organized crime and because the sanctions and remedies available

to the Government are unnecessarily limited in scope and impact." 84 Stat. 922-923.

In light of the above findings, it was the declared purpose of Congress "to seek the eradication of

organized crime in the United States by strengthening the legal tools in the evidence-gathering

process, by establishing new penal prohibitions, and by providing enhanced sanctions and new

remedies to deal with the unlawful activities of those engaged in organized crime." Id., at

923.[11] The various Titles of the Act provide the tools through which this goal is to be

accomplished. Only three of those Titles create substantive offenses, Title VIII, which is directed

at illegal gambling operations, Title IX, at issue here, and Title XI, which addresses the

importation, distribution, and storage of explosive materials. The other Titles provide various

procedural and remedial devices to aid in the prosecution and incarceration of persons involved

in organized crime.

Considering this statement of the Act's broad purposes, the construction of RICO suggested by

respondent and the court below is unacceptable. Whole areas of organized criminal activity

would be placed beyond the substantive reach of the enactment. For example, associations of

persons engaged solely in "loan sharking, the theft and fencing of property, 590*590 the

importation and distribution of narcotics and other dangerous drugs," id., at 922-923, would be

immune from prosecution under RICO so long as the association did not deviate from the

criminal path. Yet these are among the very crimes that Congress specifically found to be typical

of the crimes committed by persons involved in organized crime, see 18 U. S. C. § 1961 (1)

(1976 ed., Supp. III), and as a major source of revenue and power for such organizations. See

Hearings on S. 30 et al. before the Subcommittee on Criminal Laws and Procedures of the Senate

Committee on the Judiciary, 91st Cong., 1st Sess., 1-2 (1969).[12] Along these same lines,

Senator McClellan, the principal sponsor of the bill, gave two examples of types of problems

RICO was designed to address. Neither is consistent with the view that substantive offenses

under RICO would be limited to legitimate enterprises: "Organized criminals, too, have flooded

the market with cheap reproductions of hit records and affixed counterfeit popular labels. They

are heavily engaged in the illicit prescription drug industry." 116 Cong. Rec. 592 (1970). In view

of the purposes and goals of the Act, as well as the language of the statute, we are unpersuaded

that Congress nevertheless confined the reach of the law to only narrow aspects of organized

crime, and, in particular, under RICO, only the infiltration of legitimate business.

591*591 This is not to gainsay that the legislative history forcefully supports the view that the

major purpose of Title IX is to address the infiltration of legitimate business by organized crime.

The point is made time and again during the debates and in the hearings before the House and

Senate.[13] But none of these statements requires the negative inference that Title IX did not reach

the activities of enterprises organized and existing for criminal purposes. See United

States v. Naftalin, 441 U. S. 768, 774-775 (1979); United States v. Culbert, 435 U. S., at 377.

On the contrary, these statements are in full accord with the proposition that RICO is equally

applicable to a criminal enterprise that has no legitimate dimension or has yet to acquire one.

Accepting that the primary purpose of RICO is to cope with the infiltration of legitimate

businesses, applying the statute in accordance with its terms, so as to reach criminal enterprises,

would seek to deal with the problem at its very source. Supporters of the bill recognized that

organized crime uses its primary sources of revenue and power— illegal gambling, loan sharking

and illicit drug distribution— as a springboard into the sphere of legitimate enterprise. Hearings

on S. 30, supra, at 1-2. The Senate Report stated:

"What is needed here, the committee believes, are new approaches that will deal not only with

individuals, but also with the economic base through which those individuals 592*592 constitute

such a serious threat to the economic well-being of the Nation. In short, an attack must be made

on their source of economic power itself, and the attack must take place on all available fronts."

S. Rep. No. 91-617, p. 79 (1969) (emphasis supplied).

Senator Byrd explained in debate on the floor, that "loan sharking paves the way for organized

criminals to gain access to and eventually take over the control of thousands of legitimate

businesses." 116 Cong. Rec. 606 (1970). Senator Hruska declared that "the combination of

criminal and civil penalties in this title offers an extraordinary potential for striking a mortal

blow against the property interests of organized crime." Id., at 602.[14] Undoubtedly, the

infiltration 593*593 of legitimate businesses was of great concern, but the means provided to

prevent that infiltration plainly included striking at the source of the problem. As Representative

Poff, a manager of the bill in the House, stated: "[T]itle IX . . . will deal not only with

individuals, but also with the economic base through which those individuals constitute such a

serious threat to the economic well-being of the Nation. In short, an attack must be made on their

source of economic power itself . . . ." Id., at 35193.

As a measure to deal with the infiltration of legitimate businesses by organized crime, RICO was

both preventive and remedial. Respondent's view would ignore the preventive function of the

statute. If Congress had intended the more circumscribed approach espoused by the Court of

Appeals, there would have been some positive sign that the law was not to reach organized

criminal activities that give rise to the concerns about infiltration. The language of the statute,

however—the most reliable evidence of its intent—reveals that Congress opted for a far broader

definition of the word "enterprise," and we are unconvinced by anything in the legislative history

that this definition should be given less than its full effect.

The judgment of the Court of Appeals is accordingly

Reversed.