The Justice Department may hit SAC Capital Advisors and its founder Steve Cohen with the most brutal prosecution tactic possible, as far as tools for securities fraud go. According to the Wall Street Journal:

Federal prosecutors are considering charging hedge fund SAC Capital Advisors LP as a criminal enterprise through a powerful legal tool used against the Mafia and drug gangs, people familiar with the probe said.

It is rare for investment firms to be charged criminally under the Racketeer Influenced and Corrupt Organizations Act, commonly known as RICO. Such a step would require approval from top Justice Department officials.

The potential RICO strategy comes amid an escalating investigation into whether SAC and its billionaire founder, Steven A. Cohen, traded on inside information. It is now crunchtime for the U.S. as it approaches a five-year legal deadline in July on whether to file securities-fraud charges in the probe.

Under RICO, prosecutors could file charges in connection with crimes committed over a decade, as long as any act that is part of the alleged enterprise occurred within the past five years. The law also contains stiff forfeiture provisions. Each fraud count could carry up to 20 years in prison.

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