Whenever you hear about a racketeering or RICO-related allegation it refers to allegations related to organized criminal activity. Organized crime rings run what are informally referred to as "rackets" because they engage in "racketeering." Racketeering is what happens when someone is running an illegal business. RICO and racketeering laws also cover the illegal use of legitimate organizations to carry out criminal acts -- like embezzling funds, laundering money and other white collar crimes.
The federal government created racketeering and RICO laws because it was finding it very difficult to prosecute and convict people at the head of rackets and organized crime rings. It was relatively straightforward to charge and convict the lower-level individuals who committed crimes like drug dealing, prostitution, weapons trafficking or counterfeiting, but often illegal businesses organized to make money of these activities were headed by individuals who kept their hands "clean." By enacting racketeering and RICO laws, the federal government acquired the ability to prosecute the leaders of criminal organizations.
Organized crime violations fall under the Racketeer Influenced and Corrupt Organizations Act, also known as the RICO Act, which was enacted in 1978 by Congress. Most states have similar state-level laws on the books as well. Under the RICO Act, in order to convict an individual of racketeering or organized crime activity, prosecutors must prove:
-- The person owned or managed an organization.
-- The organization regularly performed or engaged in illegal actions.
Those accused of RICO crimes face very serious criminal allegations that could land them in prison for many years if they are convicted. Those accused of RICO violations, however, will be afforded their day in court to defend themselves against the charges.
Source: FindLaw, "Racketeering/RICO," accessed Dec. 23, 2016