The Justice Department, in an abrupt about-face, is supporting changes to sharply limit an antiracketeering law that currently allows both citizens and prosecutors to sue corporations for triple damages.

A growing number of plaintiffs have charged companies with civil fraud under the Racketeering Influenced and Corrupt Organizations Act (RICO), a statute whose criminal forfeiture provisions are aimed mainly at organized crime. But a bill sponsored by Rep. Frederick C. Boucher (D-Va.) would restrict such civil suits to companies that have a prior criminal conviction.

Last September, John C. Keeney, a deputy assistant attorney general in the Criminal Division, told a House subcommittee that Boucher's proposal was "not the best approach" and would "virtually eliminate the deterrent potential" of civil RICO suits.

Last week, however, the department reversed field and backed Boucher's bill, which is strongly supported by the insurance, banking, securities and accounting industries.

John R. Bolton, assistant attorney general for congressional affairs, wrote Congress that the concept of private RICO enforcement is "severely flawed" and that such suits "have not achieved their intended purpose . . . . There is today no valid reason to permit civil RICO's continued use in this manner."

The department's switch was denounced by two nonprofit groups that oppose changing the RICO law, Public Citizen's Congress Watch and the U.S. Public Interest Research Group. "The American public deserves an explanation of why the Justice Department has abruptly changed its mind and chosen to put corporate criminals' interests above victims' interests," said Priscilla Budeiri of Congress Watch.

Keeney and Bolton declined to comment, but other Justice Department officials acknowledged the reversal. "We thought we could come up with a better approach than the Boucher bill," spokesman John K. Russell said. "After several months of tinkering with it, we couldn't come up with a better approach, so we backed it."

Boucher said the turnabout came after he met two months ago with Attorney General Edwin Meese III, Deputy Attorney General D. Lowell Jensen and Assistant Attorney General Richard K. Willard of the Civil Division. He said they backed the bill after he agreed that Justice Department lawsuits would be exempted.

Under current law, Boucher said, "It is possible for any businessman who's involved in a commercial dispute to become the target of a civil RICO case. It is possible to turn a mere contract dispute into a federal action with triple damages . . . . Legitimate businessmen have been branded as racketeers."

Plaintiffs now must show a "pattern of racketeering" by proving that a company committed two separate acts of fraud during a 10-year period. Boucher's bill would also restrict civil suits by state prosecutors, who oppose the measure.

The Justice Department shift is clear from a comparison of Keeney's House testimony last September and Bolton's July 22 letter:

Keeney said that "adoption of a prior conviction requirement is not the best approach to limiting the scope of RICO ." But Bolton said it "would respond in a sensible and effective manner to increasingly serious problems."

Keeney said private RICO suits are important because "only a small percentage of suspected activities can be investigated thoroughly, and only a fraction of those investigated can be effectively prosecuted." But Bolton said, "Persons who engage in serious fraud can be, and freqently are, prosecuted for criminal offenses."

Keeney said that civil RICO suits "may have had a greater deterrent impact than is commonly recognized." But Bolton said there is a "fundamental problem" with the law's "underlying premise."

Keeney said the burden of RICO suits on the courts is not that great, but Bolton complained of "an explosion of private civil RICO lawsuits over the past several years."

Keeney also testified that the bill would place "unhealthy pressures" on prosecutors, since a decision not to seek criminal charges against a company would bar victims from pursuing a triple-damage civil suit. Witnesses might also be accused of having a financial stake in the outcome, he suggested.

Bolton did not address this point. But his letter said that the RICO law "extorts settlements" and has been abused for "claims of sexual harassment, disputes over the leadership of a synagogue and routine divorce controversies."

A spokesman for Rep. John Conyers Jr. (D-Mich.), chairman of the House Judiciary subcommittee on criminal justice, said the small number of abusive suits "is being used as a stalking horse for a major rollback of a key white-collar crime law."

Conyers, who has delayed subcommittee action on Boucher's bill, may take up a compromise measure offered by Rep. Barney Frank (D-Mass.), which would make it more difficult to file civil RICO suits without requiring a prior criminal conviction.