No, Shein has not been charged with RICO crimes

Shein is a Chinese-owned fast fashion retailer that’s become hugely popular for selling cheap clothes based on high-end designs.

It’s also drawn repeated controversy, facing accusations ranging from copyright infringement to human rights violations.

Numerous people online recently claimed those accusations have recently resulted in “RICO charges” – a form of criminal prosecution under the Racketeer Influenced and Corrupt Organizations Act that was passed in the 1970s as a way to attack organized crime.

THE QUESTION

Has Shein been charged with RICO crimes?

THE SOURCES

• Court documents, U.S. District Court for the Central District of California
• Racketeer Influenced and Corrupt Organizations Act
• Ken White, founding partner at Brown White & Osborn LLP, former federal prosecutor
• Price Benowitz LLP

THE ANSWER

No, Shein was not charged with RICO crimes by federal prosecutors. It is the defendant in a civil suit alleging RICO violations, which does not carry criminal penalties.

WHAT WE FOUND

RICO, the Racketeer Influenced and Corrupt Organizations Act, was passed in 1970 to give prosecutors a tool to take down organized crime. Previously, law enforcement had difficulty going after high-ranking mobsters because they were unlikely to be directly tied to individual crimes. RICO offered an avenue for the government to target the entire criminal enterprise, rather than slowly chipping away at it by arresting individual members.

Racketeering has a complex and specific legal definition under RICO, but generally speaking means an organized illegal scheme to make money. 

Though criminal prosecutions against the mafia and other gangs are the most well-known components of RICO, the law also has a civil component. That means private citizens can sue for damages if they believe they’re the victim of racketeering.

Civil suits can result in the judge ordering the defendant to stop partaking in certain activities, and ordering the defendant to pay the plaintiff large amounts of money. But they cannot result in anyone being sent to prison, the way a criminal prosecution brought by the government can.

On July 11, three individual designers filed a joint lawsuit in the U.S. District Court for the Central District of California. The 52-page complaint accuses Shein of repeatedly stealing their intellectual property, and using a complex business structure to avoid accountability. 

The suit requests that the court order Shein to pay damages to the designers and cease operations that infringe on copyright. Those damages include compensation for the loss of business they allege to have suffered as a result of Shein illegally using their designs, punitive damages to discourage similar activity in the future, and “treble damages,” a special legal provision available under RICO that triples the amount of money defendants can be ordered to pay.

Legal experts say, in general, civil RICO cases are difficult to win. 

Courts generally do not favor civil RICO complaints, as such actions carry treble damages, the award of attorney fees and label the defendant as a ‘racketeer.' Therefore, many courts may be prone to dismiss civil RICO complaints," the law firm Price Benowitz says on its website.

Ken White, an attorney who has written extensively about RICO, told VERIFY in an email: “You can sue for RICO — but, 95% of the time, the case is totally unsuitable for RICO… Judges tend to hate it. The statute is super-complicated [and] it’s incredibly hard to plead successfully.”

As of July 24, the case had been assigned a judge but no further motions had been made or hearings held, according to court records.

Shein did not immediately respond to VERIFY’s request for comment.