Insurance giant State Farm recently settled an $8 billion civil racketeering lawsuit before it got to court.
The suit alleged a conspiracy by the insurance agency to put a judge on the Illinois Supreme Court to gain a favorable ruling in a case 20 years ago.
Understanding racketeering and RICO
Racketeering is a label under which many potential criminal activities can take place. Initially, racketeering and the RICO act fought organized crime. It has since been adopted to address some business behaviors as well.
A racketeering charge can apply to businesses who partake in bribes, fraud or misleading customers to boost sales. The RICO (Racketeer Influenced and Corrupt Organizations) Act of 1970 allows federal and state prosecutors to charge groups as well as individuals involved in potential racketeering.
State Farm’s alleged infraction
According to customers, State Farm supposedly repaired their cars with generic, low-quality parts for years. Their policies had promised to use parts from their car manufacturers.
The lawsuit took place in Illinois, where it reached the supreme court. The Illinois Supreme Court threw out the lawsuit. It was later revealed that State Farm allegedly paid millions to help elect a judge to the Illinois Supreme Court.
Plaintiffs claim State Farm concealed their role in getting the Illinois judge elected. They then filed a federal racketeering lawsuit in court. The insurance company settled for $250 million before opening remarks. The settlement ended over 20 years of litigation.
The complexity of business law
The State Farm litigation demonstrates just how complex business laws can get. Companies are constantly striving for innovation. This can result in employees feeling pressured to push the envelope.
White collar crimes usually feature hefty fines and lengthy jail times. If you’re facing racketeering or other white-collar charges, talk to a skilled attorney. They can help you navigate the complex legal landscape and clear up misunderstandings.