Aiding and Abetting the Investment of Dirty Money - Mens Rea and the Nonracketeer Under RICO (Racketeer Influenced and Corrupt Organization) Section 1962(a)

• NCJ Number: 87354
• Journal: Columbia Law Review Volume: 82 Issue: 3 Dated: (1982) Pages: 574-592
• Author(s): A R Friedman
• Date Published: 1982
• Length: 20 pages
• Publication Format: Article
• Language: English
• Country: United States of America

Annotation

By requiring an intent to aid and profit from racketeering, section 1962(a) of the Racketeer Influenced and Corrupt Organizations Act (RICO) can conform with the traditional mens rea standard used in seller-of-goods cases and with the congressional intent for the statute.

Abstract

Section 1962(a) of RICO prohibits the investment by a racketeer of income earned from racketeering crimes. Traditionally, this section has been applied only to racketeers. In two recent cases, however, the courts have faced the issue of holding nonracketeers, such as lawyers and investment advisors acting in the ordinary course of their business, liable for aiding and abetting the investment of such 'dirty money.' In at least one of these cases, the court ruled that nonracketeers can be held liable. The central problem raised by such a ruling is whether such persons, whose actions in aid of investments may be blameless except for the origin of the money being invested, act with the requisite mens rea to criminalize their conduct. The legislative history of RICO indicates an intent to apply a standard that would require a nonracketeer to have a 'stake in the enterprise' to be held liable. An analysis of Federal criminal law bearing upon the selling of goods to criminals suggests that mere knowledge of the identity of the investor and the source of the funds is insufficient to incur nonracketeer liability. Under the 'stake in the enterprise' concept, there must also be an intent to profit from the criminality of the racketeer's activities. Evidence bearing upon the existence of such an intent relates to the quantity of the sales, the continuity of the relationship between seller and buyer, the seller's initiative or encouragement, and the nature of the goods. The failure of the seller to submit sales reports required by Government regulations has also been considered relevant, as has the failure to keep the usual business records or other secretive techniques. Intent may also be inferred from sellers having made inflated charges, having supplied goods or services which have no legitimate use, or having sales to the illegal operative become the dominant portion of the seller's business. Ninety footnotes are listed.