AFTER FIVE years of discussion and debate, much-needed reform of the RICO statute suddenly stands a good chance of being passed. The Rico problem may be recounted as follows: 20 years ago, Congress passed RICO -- the Racketeer Influenced and Corrupt Organizations Act -- to give prosecutors more effective tools in dealing with mobsters. To supplement these changes in the criminal law, the act created new civil actions so that private individuals could bring racketeers to court too. As an incentive, plaintiffs were authorized to collect triple damages and to have their costs and attorneys' fees paid.

While the law was supposed to be used to combat organized crime, plaintiffs' attorneys soon began to bring ordinary commercial disputes to federal court under the RICO statute in order to collect the large awards. The courts, lamenting this turn of events, criticized the filing of simple fraud, landlord tenant, consumer and even divorce disputes as RICO cases, and repeatedly urged Congress to revise and clarify the statute. Last February, the Senate Judiciary Committee completed work on a bill, but it was never taken up on the floor. On Tuesday, however, the House Judiciary Committee reported a bill, and that action is expected to spur consideration in both Houses before adjournment.

The bills are different but they have the same objective: reserve civil RICO, with its multiple damage awards, for the most egregious cases, like the S&L frauds, major and far-reaching securities scams and true organized crime operations. These kinds of cases involve real criminal conduct of the kind RICO was enacted to combat, not simple contract disputes described as mail or wire fraud so as to get into court as RICO matters. The Senate Committee bill completely eliminates triple damages in civil suits unless they are sought by the government, but allows double damages in some kinds of cases. The House version is more flexible, giving judges the authority to be "gatekeepers," dismissing RICO cases that don't meet certain criteria relating to the seriousness of the conduct alleged and the role of the defendant in the scheme.

The list of RICO defendants in cases filed during the past five years includes not only the gangsters who were the intended targets of the law but small businessmen, abortion protesters, the Democratic Party and even a rabbi caught up in a dispute with part of his congregation. Aside from the fact that these defendants have been smeared by the label "racketeer," most of the cases against them belong in state courts where the threat of triple damages does not give plaintiffs such an advantage. Committees in both houses of Congress have done their jobs. Now it's up to the leadership to schedule floor action so that this last-minute opportunity for real reform will not be lost.