Our correspondent Andreas Frank notes a ruling by the US Court of Appeals in the cast of the European Union against RJ Reynolds, a tobacco company.  The lower court threw out the case because the racketeering was done in Europe.  The appeals court found: the alleged scheme began with the smuggling of illegal narcotics into Europe by Colombian and Russian crime groups, with euro-denominated proceeds from the sale of those drugs then “laundered” by money brokers.

Importers would allegedly use these proceeds later to buy RJ Reynolds cigarettes via wholesalers, with payments and shipments shielded from government scrutiny. Brokers using funds derived from the importers would then allegedly repeat the cycle.

The EU accused the RJ Reynolds entities of essentially directing the scheme from the United States, using U.S. mails and wires and frequent travel by employees to Colombia.

In dismissing the case, Garaufis said RICO did not apply because the scheme was centered on foreign crime groups operating outside the country.

Judge Leval in the Appeals Court said that standard could create “illogical” results, such as immunizing people from RICO liability for murders and kidnappings in the United States simply because they were done in conjunction with a foreign enterprise.  “Surely the presumption against extraterritorial application of United States laws does not command giving foreigners carte blanche to violate the laws of the United States in the United States,” he wrote.

“We conclude that RICO applies extraterritorially if, and only if, liability or guilt could attach to extraterritorial conduct under the relevant RICO predicate,” Leval added.
The 2nd Circuit took more than two years to decide the case, having heard oral arguments on February 24, 2012.