DOJ pitches Senate on use of anti-mafia laws to seize Russian assets

The Department of Justice (DOJ) asked Congress for permission on Tuesday to use a sweeping set of laws originally designed to break up the mafia as part of their efforts to pursue the assets of the Russian elite following the country’s war in Ukraine.

The DOJ wants to include violations of sanctions and export controls in its definition of racketeering under the Racketeer Influenced and Corrupt Organizations Act, or RICO Act, which allowed federal prosecutors in the 1980s and 1990s to go after organized crime rings on charges of extortion and murder for hire.

Under current law, the DOJ can only freeze assets that are deemed to be illicit, which means it can only prosecute people for transacting with them. The proposed rule changes would allow authorities to actually take control of certain Russian assets, extending what it describes as a “powerful forfeiture tool against racketeering enterprises engaged in sanctions evasion.”

The DOJ’s request at a Senate Judiciary Committee won immediate support from some senators — including Sen. Chuck Grassley (Iowa), the top Republican on the panel, who said beefing up the RICO statute would help prosecutors secure convictions.

But some senators on Tuesday wondered how far laws originally built to piece together vast criminal conspiracies from smaller bits of evidence could be extended in the international realm.

“You talked a little bit about RICO with Sen. Grassley and the enhancements you’re doing there with money laundering,” Sen. Marsha Blackburn (R-Tenn.) said to DOJ official Andrew Adams, director of the interagency KleptoCapture task force, set up in March to pursue Russian assets in response to the war in Ukraine.

“So these proposals that would aid in the prosecution and the asset forfeitures for Russia — is that going to extend to other high-level, cash-rich criminals like the cartels or the Chinese Communist Party?”

Defense lawyers characterize the RICO laws as somewhat malleable and say they’ve been used to go after different sorts of networks and organizations considered criminal by the U.S. government.

“RICO was designed for a particular purpose, which was to go after the mafia and in particular the mafia’s corruption of labor unions and other organizations like that,” defense attorney Noam Biale of law firm Sher Tremonte said in an interview. “It’s been criticized in other contexts, for example, [for being used against] loosely affiliated groups of young people in housing projects who sell drugs together. There have been lots of prosecutions of those kinds of groups as RICO enterprises even though they may not be particularly well organized.” 

“But the courts have been quite open to prosecutors using RICO in expansive ways to charge different kinds of organizations,” he added. “For all the criticisms, I don’t see the courts being likely to move in a different direction on this if the government is going to use this statute against Russian oligarchs.”

Martin Sabelli, president of the board of directors of the National Association of Criminal Defense lawyers, said that RICO laws are now mostly used to bust up gangs.

“RICO laws were designed to tell the full story on organized crime, but for the last 40 or 50 years, they’ve been much more commonly used against gangs,” he said in an interview.

“They’re used against Black and brown people, economically challenged people. Rather than organizations with significant money from organized crime, the prosecutions are often against Bloods, Crips, Latin Kings, MS-13,” he said, referring to various gangs.

Sabelli also said RICO cases can rely disproportionately on expert testimony and can effectively become what he called “trials by opinion.”

“There’s even something called a conspiracy to commit RICO, which means you’ve made an agreement to make an agreement, which is something I find conceptually quite difficult,” he added

The application of RICO laws to sanctions and export control violations could add a layer of complexity — or potentially remove one — for investigators who already have to navigate the U.S.’s labyrinthine financial code, which even Treasury Secretary Janet Yellen has said enables money laundering on a global scale.

“The degree of creativity” when it comes to hiding assets “is vast,” the DOJ’s Adams said during the Judiciary Committee hearing. “There are a number of different typologies for laundering and for hiding. You very often see, as Sen. [Sheldon] Whitehouse pointed out earlier, layer upon layer of opaque shell companies, sham corporations, et cetera, essentially skipping from jurisdiction to jurisdiction.”

Despite all the secrecy, the Justice Department has had some success uncovering illicit assets from behind the veil of U.S. laws that allows the wealthy to hide their money from public view.

In June, the Treasury froze the assets of Russian government official Suleiman Kerimov, who it accused of keeping more than a billion dollars stashed away in Delaware despite being sanctioned back in 2018.

Yachts, aircraft and other high-valued goods belonging to members of the Russian elite have also been seized.

But efforts to punish Russia economically for its invasion of Ukraine seem to have brought the war — now approaching its sixth month — no closer to an end.

The war has displaced around a third of the Ukrainian population, according to the United Nations High Commissioner for Refugees. The U.N.’s human rights monitoring mission has verified more than 11,800 civilian casualties of the war, including more than 5,100 people killed, nearly 350 of which have been children. The real total may be significantly higher.

“The U.N. is extremely concerned about the growing number of reports of indiscriminate attacks affecting civilians. The parties to the conflict must comply with their obligations under international humanitarian law to protect civilians and civilian infrastructure in Ukraine,” Farhan Haq, deputy spokesman for the U.N. secretary-general, said during a briefing on Tuesday.