United States v. Zichettello

Ronald Reale, Richard Hartman, James Lysaght, and Peter Kramer (defendants) were indicted for, among other things, participating in and conspiring to participate in a pattern of racketeering in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO). Reale was the former president of the New York City Transit Police Benevolent Association (TPBA). Hartman was the TPBA’s former labor negotiator and insurance broker. Lysaght and Kramer were partners in a law firm that received millions in legal fees from the TPBA in exchange for kickbacks. The district court dismissed the substantive RICO charges against Reale, Hartman, Lysaght, and Kramer on the ground that they did not directly or indirectly operate or manage the RICO enterprise. However, the charges against Reale, Hartman, Lysaght, and Kramer for conspiring to violate RICO proceeded to trial, where Reale, Hartman, Lysaght, and Kramer were convicted. Reale, Hartman, Lysaght, and Kramer appealed their RICO conspiracy convictions, arguing that pursuant to the United States Supreme Court’s decision in Reves v. Ernst & Young, they could not have conspired to violate RICO because they were outsiders who did not directly or indirectly manage the enterprise. Alternatively, Reale, Hartman, Lysaght, and Kramer argued that outsiders like them could be guilty of conspiring to violate RICO only if they knew about and agreed to all the enterprise’s racketeering activities, including activities with which they were not personally involved. Per Reale, Hartman, Lysaght, and Kramer, they did not know that the TPBA was accepting bribes from other vendors, precluding their conspiracy conviction.