A majority panel of New York State Appellate Court judges reversed a lower court’s decision to throw out an indictment against an online money-transfer business for catering to buyers and sellers of stolen credit card information. The court determined that providing an online forum that facilitates some transactions between criminals is an ascertainable structure distinct from the criminal conduct itself.

Unlike an “enterprise” under the federal Racketeer Influenced and Corrupt Organizations (RICO) Act, New York state law requires an enterprise to have “an ascertainable structure distinct from that pattern of [criminal] activity.” Section 460.10. However, New York law does not require any particular structure for the enterprise, and nowhere does it indicate that it contemplates a traditional hierarchial organized model. Relying heavily on this last point, the court further eroded the difference between federal and state corrupt enterprises when it decided to reinstate the indictment against Western Express International.

The court stated that nothing in the statute requires the structure of a targeted enterprise to represent a “corporate flow chart,” “structure,” or “chain of command.” The opinion stated further that the indictment’s allegation that Western Express was a “cyber crime” enterprise was accurate since it enabled criminals to associate. The court opined that Western Express and its internet based business knowingly provided the forum and means with which criminals sold and purchased stolen credit card information. The court summarized the critical element opening Western Express to criminal liability with this: “the ‘structure’ at issue here is, essentially, a web site.”

The court went on to justify its position by stating that “although the forms of Internet crime have been evolving and becoming far more sophisticated over the decades since the [corrupt enterprises law] was first enacted, the question is not whether the Legislature had this particular type of criminal enterprise in mind when it formulated the language of the statute. Rather, we need only decide whether the structure of the enterprise at issue falls within its definition of enterprise corruption.”

The dangers of including websites as distinct structures for purposes of establishing a corrupt enterprise are apparent. Very little keeps an aggressive prosecutor from indicting websites that host chat rooms, publish comments, or any other online services that can be used by criminals to facilitate their activities. Blurring the line between reality and the seemingly anonymous world of the internet can sweep up more innocent individuals into the web that is criminal investigations.

The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.

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