AND · 18usc1962:conduct
Reves v. Ernst & Young establishes the "operation or management" test: defendant must have some part in directing the enterprise's affairs (including lower-rung participants acting under upper management's direction, or outsiders exerting control via bribery). Merely furnishing professional services is insufficient.
Exact element source
to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairsSource:
docroot/ir/usc/title18.jsonl#title18_sec1962; Unicode character offsets [1726:1820] (end exclusive); SHA-256 6caae47f43b5ab0899b660616e298363bd36f9f540d915c2be11eb7126f5e27d.All variants
| Variant | Description | Merits instance blocks | Distinct cases | Example cases (up to 3 per group) |
|---|---|---|---|---|
| no-operation-or-management/outside-auditor | Outside professional providing accounting/legal services without directing enterprise affairs (Reves) | 0 Satisfied 0; not satisfied 0; excluded context 0 | 0 | No annotation uses in this snapshot |
| operation-or-management/leader-directing-distribution-network | 1 Satisfied 1; not satisfied 0; excluded context 0 | 1 | /f-supp-2d/926/1143-01 — United States District Court for the Central District of California · 2013 — satisfied | |
| operation-or-management/outside-auditor | 1 Satisfied 0; not satisfied 1; excluded context 0 | 1 | /us/507/0170-01 — Supreme Court of the United States · 1993 — not | |
| operation-or-management/outside-service-providers | 1 Satisfied 0; not satisfied 1; excluded context 0 | 1 | /f-supp-2d/118/0392-01 — United States District Court for the Southern District of New York · 2000 — not | |
| operation-or-management/peripheral-relatives-notary-and-later-purchaser | 1 Satisfied 0; not satisfied 1; excluded context 0 | 1 | /f-supp-2d/118/0392-01 — United States District Court for the Southern District of New York · 2000 — not | |
| operation-or-management/principals-of-scheme | 1 Satisfied 1; not satisfied 0; excluded context 0 | 1 | /f-supp-2d/118/0392-01 — United States District Court for the Southern District of New York · 2000 — satisfied | |
| operation-or-management/shell-entities-of-principals | 1 Satisfied 0; not satisfied 1; excluded context 0 | 1 | /f-supp-2d/118/0392-01 — United States District Court for the Southern District of New York · 2000 — not | |
| through-pattern/fraudulent-financing-of-own-company | 1 Satisfied 1; not satisfied 0; excluded context 0 | 1 | /f2d/624/1118-01 — United States Court of Appeals for the Second Circuit · 1980 — satisfied | |
| Unspecified variant | No variant assigned in the database. | 0 Satisfied 0; not satisfied 0; excluded context 8 | 0 | No counted merits examples Excluded context examples: /f-supp/567/1146-01 — United States District Court for the District of New Jersey · 1983 — applied/merits; /f2d/976/1016-01 — United States Court of Appeals for the Seventh Circuit · 1992 — applied/merits; /f3d/490/0575-01 — United States Court of Appeals for the Seventh Circuit · 2007 — background/merits |
How courts decided this element
| Case | Element | Holding and scope | Variant | Exact source quotations |
|---|---|---|---|---|
| /f-supp-2d/118/0392-01 — United States District Court for the Southern District of New York · 2000 | Conduct or participate in the conduct of enterprise affairs (§ 1962(c) operation or management test) | satisfied Counted merits instance applied / merits basis: pleaded; claim: (a),(c),(d); party: Michael Sichenzia, Lisa Sichenzia, Patrick Cottrell (the borrowers); subject: party=Michael Sichenzia, Lisa Sichenzia, Patrick Cottrell (the borrowers) Satisfied only on this element; the (c) claim against them still fails on enterprise, injury and predicate acts. The court states no supporting facts beyond the general narrative. | operation-or-management/principals-of-scheme | Liability under § 1962(c) requires a showing that each defendant employed by or associated with the enterprise “conduct or participate, directly or indirectly, in the conduct of [the] enterprise’s affairs”.Source: docroot/ir/caselaw/f_supp_2d_118.jsonl#/f-supp-2d/118/0392-01; Unicode character offsets [29389:29595] (end exclusive); SHA-256 7a6992301d8f07cdcfefb2ba1333ee88e7724e88e90a83145c93f1937232b139.Reading the allegations of the complaint most generously to the Plaintiffs, there are allegations sufficient to charge Michael and Lisa Sichenzia and Patrick Cottrell with leading, running, managing or directing any of the alleged enterprise.Source: docroot/ir/caselaw/f_supp_2d_118.jsonl#/f-supp-2d/118/0392-01; Unicode character offsets [32388:32630] (end exclusive); SHA-256 7a6992301d8f07cdcfefb2ba1333ee88e7724e88e90a83145c93f1937232b139. |
| /f-supp-2d/118/0392-01 — United States District Court for the Southern District of New York · 2000 | Conduct or participate in the conduct of enterprise affairs (§ 1962(c) operation or management test) | not Counted merits instance applied / merits basis: pleaded; claim: (a),(c),(d); party: Betty Grahn and Denise Grahn (relatives of a borrower); subject: party=Betty Grahn and Denise Grahn (relatives of a borrower) | operation-or-management/peripheral-relatives-notary-and-later-purchaser | The only allegations against Betty and Denise Grahn are that Betty Grahn purchased two of the parcels several months after the Plaintiffs made the loans, and that Denise Grahn notarized the signatures of other defendants.Source: docroot/ir/caselaw/f_supp_2d_118.jsonl#/f-supp-2d/118/0392-01; Unicode character offsets [33056:33277] (end exclusive); SHA-256 7a6992301d8f07cdcfefb2ba1333ee88e7724e88e90a83145c93f1937232b139.But there is no allegation that the other Defendants were leaders or managers of the enterprise.Source: docroot/ir/caselaw/f_supp_2d_118.jsonl#/f-supp-2d/118/0392-01; Unicode character offsets [32631:32727] (end exclusive); SHA-256 7a6992301d8f07cdcfefb2ba1333ee88e7724e88e90a83145c93f1937232b139. |
| /f-supp-2d/118/0392-01 — United States District Court for the Southern District of New York · 2000 | Conduct or participate in the conduct of enterprise affairs (§ 1962(c) operation or management test) | not Counted merits instance applied / merits basis: pleaded; claim: (a),(c),(d); party: title agent (Artesian defendants), title insurer (Old Republic), attorney (DeEsso); subject: party=title agent (Artesian defendants), title insurer (Old Republic), attorney (DeEsso) Reves: providing services that help the scheme (title work, recording, legal opinions) is not directing the enterprise's affairs. | operation-or-management/outside-service-providers | The specific allegations of the complaint identify what they did as, in essence, failing to record mortgages and other instruments affecting the loans made by Plaintiffs, wrongfully issuing priority of title insurance, offering false documents for filing, and engaging in various acts of negligence and breach of duty.Source: docroot/ir/caselaw/f_supp_2d_118.jsonl#/f-supp-2d/118/0392-01; Unicode character offsets [34115:34433] (end exclusive); SHA-256 7a6992301d8f07cdcfefb2ba1333ee88e7724e88e90a83145c93f1937232b139.He represented various of the Sichenzia defendants and/or Artesian (it is not clear which, or whether the client differed in different deals) in connection with some of the loan transactions at issue.Source: docroot/ir/caselaw/f_supp_2d_118.jsonl#/f-supp-2d/118/0392-01; Unicode character offsets [5809:6009] (end exclusive); SHA-256 7a6992301d8f07cdcfefb2ba1333ee88e7724e88e90a83145c93f1937232b139.In addition, the mere fact that a defendant may have aided in the alleged scheme to defraud, even if that aid was intentional, does not give rise to liability under § 1962(c).Source: docroot/ir/caselaw/f_supp_2d_118.jsonl#/f-supp-2d/118/0392-01; Unicode character offsets [31621:31796] (end exclusive); SHA-256 7a6992301d8f07cdcfefb2ba1333ee88e7724e88e90a83145c93f1937232b139.None of those pages and pages of contentions remotely suggests how this transformed the non-Sichenzia Defendants into leaders, managers or directors of the enterprise of which they are not even alleged to be membersSource: docroot/ir/caselaw/f_supp_2d_118.jsonl#/f-supp-2d/118/0392-01; Unicode character offsets [34434:34649] (end exclusive); SHA-256 7a6992301d8f07cdcfefb2ba1333ee88e7724e88e90a83145c93f1937232b139. |
| /f-supp-2d/118/0392-01 — United States District Court for the Southern District of New York · 2000 | Conduct or participate in the conduct of enterprise affairs (§ 1962(c) operation or management test) | not Counted merits instance applied / merits basis: pleaded; claim: (a),(c),(d); party: the corporate/LLC defendants owned by the borrowers; subject: party=the corporate/LLC defendants owned by the borrowers | operation-or-management/shell-entities-of-principals | all of which are entities that were or are owned by the Sichenzias and/or Mr. Cottrell.Source: docroot/ir/caselaw/f_supp_2d_118.jsonl#/f-supp-2d/118/0392-01; Unicode character offsets [4095:4182] (end exclusive); SHA-256 7a6992301d8f07cdcfefb2ba1333ee88e7724e88e90a83145c93f1937232b139.The business entities named by the Plaintiffs in their § 1962(c) claim, as opposed to the individual defendants, cannot possibly “lead, run, manage or direct” the affairs of the alleged enterprise, or, for that matter, act “intentionally” at all, since corporations can act only through their individual officers, directors or agents (who are not explicitly identified).Source: docroot/ir/caselaw/f_supp_2d_118.jsonl#/f-supp-2d/118/0392-01; Unicode character offsets [33448:33818] (end exclusive); SHA-256 7a6992301d8f07cdcfefb2ba1333ee88e7724e88e90a83145c93f1937232b139. |
| /f-supp-2d/926/1143-01 — United States District Court for the Central District of California · 2013 | Conduct or participate in the conduct of enterprise affairs (§ 1962(c) operation or management test) | satisfied Counted merits instance applied / merits basis: triable; claim: (c),(d) Decided only as part of the causation argument: "the enterprise's affairs" include what the leader does alone in furtherance of the common purpose, not only its dealings with fellow members. Tension with distinctness (Reves: the enterprise's affairs, not the defendant's own) is noted by the court and resolved for plaintiffs. | operation-or-management/leader-directing-distribution-network | This also includes the allegedly excessive commissions and lucrative incentive programs that Allianz created for all FMOs and their agents, see PSGI ¶¶ 133, 135, which purportedly furthered the enterprise’s “common purpose” of increasing the sales of Allianz products in the senior marketSource: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [35719:36007] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.Allianz cannot unilaterally redefine the alleged enterprise’s affairs based upon an exceedingly narrow conception of Allianz’s “operation or management” of the 19 FMO members of the enterprise, while ignoring plaintiffs’ evidence that Allianz undertook all of these actions in furtherance of the enterprise’s affairs — and not simply its own.Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [36585:36927] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee. |
| /f-supp/567/1146-01 — United States District Court for the District of New Jersey · 1983 | Conduct or participate in the conduct of enterprise affairs (§ 1962(c) operation or management test) | not_reached Excluded from merits counts applied / merits claim: (b),(c),(d) | Unspecified variant | No source quotation recorded for this block. |
| /f2d/624/1118-01 — United States Court of Appeals for the Second Circuit · 1980 | Conduct or participate in the conduct of enterprise affairs (§ 1962(c) operation or management test) | satisfied Counted merits instance applied / merits basis: proved; claim: (c); party: Weisman; subject: party=Weisman The nexus decided is "predicate act committed in the conduct of the enterprise's affairs" (raising its capital), not the later Reves operation/management question. | through-pattern/fraudulent-financing-of-own-company | This pattern emerged in 1973, when Weisman, along with his partners and eventual co-defendants Gregory J. DePalma and Richard Fusco, sought through a fraudulent public offering of common stock to raise over two million dollars for construction of the Theatre.Source: docroot/ir/caselaw/f2d_624.jsonl#/f2d/624/1118-01; Unicode character offsets [1998:2257] (end exclusive); SHA-256 9f02652be952ebf06fe5bc7850efdd6237ac4cd8110d7ce9690b75ad54eaa6ed.The procurement of additional funds through the 1973 public offering was thus simply another, admittedly crucial, part of the Theatre’s continuing affairs, and the jury could therefore conclude that the fraud that occurred in connection with the public offering constituted an act of racketeering activity undertaken in the conduct of the Theatre’s affairs.Source: docroot/ir/caselaw/f2d_624.jsonl#/f2d/624/1118-01; Unicode character offsets [20173:20530] (end exclusive); SHA-256 9f02652be952ebf06fe5bc7850efdd6237ac4cd8110d7ce9690b75ad54eaa6ed. |
| /f2d/976/1016-01 — United States Court of Appeals for the Seventh Circuit · 1992 | Conduct or participate in the conduct of enterprise affairs (§ 1962(c) operation or management test) | not_reached Excluded from merits counts applied / merits claim: (c),(d) | Unspecified variant | No source quotation recorded for this block. |
| /f3d/490/0575-01 — United States Court of Appeals for the Seventh Circuit · 2007 | Conduct or participate in the conduct of enterprise affairs (§ 1962(c) operation or management test) | not_reached Excluded from merits counts background / merits claim: (d) | Unspecified variant | No source quotation recorded for this block. |
| /f3d/660/0346-01 — United States Court of Appeals for the Eighth Circuit · 2011 | Conduct or participate in the conduct of enterprise affairs (§ 1962(c) operation or management test) | not_reached Excluded from merits counts applied / merits claim: (c) | Unspecified variant | No source quotation recorded for this block. |
| /f3d/80/1293-01 — United States Court of Appeals for the Ninth Circuit · 1996 | Conduct or participate in the conduct of enterprise affairs (§ 1962(c) operation or management test) | not_reached Excluded from merits counts applied / merits claim: (c),(d) Dictum only: had the brokerage itself been pleaded as the enterprise, the sellers could not be defendants absent management/control over it (Reves). | Unspecified variant | No source quotation recorded for this block. |
| /us/507/0170-01 — Supreme Court of the United States · 1993 | Conduct or participate in the conduct of enterprise affairs (§ 1962(c) operation or management test) | not Counted merits instance applied / merits basis: no-evidence; claim: (c); party: Arthur Young (outside accounting firm, later Ernst & Young), as to the Co-Op; subject: party=Arthur Young (outside accounting firm, later Ernst & Young), as to the Co-Op Auditor prepared audit reports and condensed statements from the client's own records and failed to disclose an insolvency-determining valuation choice; providing (even deficient) professional services to the enterprise is not taking part in directing it. Basis: summary judgment for the auditor, affirmed on facts the majority calls undisputed, hence [no-evidence] (was [law]); the step that decides the case is the statutory construction in the rule lines. | operation-or-management/outside-auditor | Drozal concluded that the Co-Op had owned White Flame from the start and that the plant should be valued at $4.5 million on its books.Source: docroot/ir/caselaw/us_507.jsonl#/us/507/0170-01; Unicode character offsets [3759:3893] (end exclusive); SHA-256 2419fe5704d7ee89eb2a2ed333e17382cbc6492e0021af1984bb9a47dcfe95a2.Arthur Young did not tell the board of its conclusion that the Co-Op always had owned White Flame or that without that conclusion the Co-Op was insolvent.Source: docroot/ir/caselaw/us_507.jsonl#/us/507/0170-01; Unicode character offsets [4262:4416] (end exclusive); SHA-256 2419fe5704d7ee89eb2a2ed333e17382cbc6492e0021af1984bb9a47dcfe95a2.These included White Flame’s $4.5 million asset value among its total assets but omitted the information contained in the audit’s Note 9.Source: docroot/ir/caselaw/us_507.jsonl#/us/507/0170-01; Unicode character offsets [4606:4743] (end exclusive); SHA-256 2419fe5704d7ee89eb2a2ed333e17382cbc6492e0021af1984bb9a47dcfe95a2.In this case, it is undisputed that Arthur Young relied upon existing Co-Op records in preparing the 1981 and 1982 audit reports.Source: docroot/ir/caselaw/us_507.jsonl#/us/507/0170-01; Unicode character offsets [24097:24226] (end exclusive); SHA-256 2419fe5704d7ee89eb2a2ed333e17382cbc6492e0021af1984bb9a47dcfe95a2.it is clear that Arthur Young was not acting under the direction of the CoOp’s officers or boardSource: docroot/ir/caselaw/us_507.jsonl#/us/507/0170-01; Unicode character offsets [29599:29695] (end exclusive); SHA-256 2419fe5704d7ee89eb2a2ed333e17382cbc6492e0021af1984bb9a47dcfe95a2.In order to “participate, directly or indirectly, in the conduct of such enterprise’s affairs,” one must have some part in directing those affairs.Source: docroot/ir/caselaw/us_507.jsonl#/us/507/0170-01; Unicode character offsets [13559:13706] (end exclusive); SHA-256 2419fe5704d7ee89eb2a2ed333e17382cbc6492e0021af1984bb9a47dcfe95a2.An enterprise is “operated” not just by upper management but also by lower rung participants in the enterprise who are under the direction of upper management. An enterprise also might be “operated” or “managed” by others “associated with” the enterprise who exert control over it as, for example, by bribery.Source: docroot/ir/caselaw/us_507.jsonl#/us/507/0170-01; Unicode character offsets [21209:21518] (end exclusive); SHA-256 2419fe5704d7ee89eb2a2ed333e17382cbc6492e0021af1984bb9a47dcfe95a2.In sum, we hold that “to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs,” § 1962(c), one must participate in the operation or management of the enterprise itself.Source: docroot/ir/caselaw/us_507.jsonl#/us/507/0170-01; Unicode character offsets [23127:23334] (end exclusive); SHA-256 2419fe5704d7ee89eb2a2ed333e17382cbc6492e0021af1984bb9a47dcfe95a2.We think that Arthur Young’s failure in this respect is not sufficient to give rise to liability under § 1962(c).Source: docroot/ir/caselaw/us_507.jsonl#/us/507/0170-01; Unicode character offsets [24899:25012] (end exclusive); SHA-256 2419fe5704d7ee89eb2a2ed333e17382cbc6492e0021af1984bb9a47dcfe95a2. |
| /us/510/0249-01 — Supreme Court of the United States · 1994 | Conduct or participate in the conduct of enterprise affairs (§ 1962(c) operation or management test) | not_reached Excluded from merits counts rule-announced / merits claim: (c),(d) | Unspecified variant | No source quotation recorded for this block. |
| /us/533/0158-01 — Supreme Court of the United States · 2001 | Conduct or participate in the conduct of enterprise affairs (§ 1962(c) operation or management test) | not_reached Excluded from merits counts applied / merits claim: (c) | Unspecified variant | No source quotation recorded for this block. |
| /us/556/0938-01 — Supreme Court of the United States · 2009 | Conduct or participate in the conduct of enterprise affairs (§ 1962(c) operation or management test) | not_reached Excluded from merits counts rule-announced / merits claim: (c),(d) | Unspecified variant | No source quotation recorded for this block. |
Court interpretations
interpretation
In order to “participate, directly or indirectly, in the conduct of such enterprise’s affairs,” one must have some part in directing those affairs.
/us/507/0170-01 — Supreme Court of the United States · 1993
In order to “participate, directly or indirectly, in the conduct of such enterprise’s affairs,” one must have some part in directing those affairs.Source:
docroot/ir/caselaw/us_507.jsonl#/us/507/0170-01; Unicode character offsets [13559:13706] (end exclusive); SHA-256 2419fe5704d7ee89eb2a2ed333e17382cbc6492e0021af1984bb9a47dcfe95a2.Reves v. Ernst & Young establishes the "operation or management" test: defendant must have some part in directing the enterprise's affairs (including lower-rung participants acting under upper management's direction, or outsiders exerting control via bribery). Merely furnishing professional services is insufficient.
interpretation
In sum, we hold that “to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs,” § 1962(c), one must participate in the operation or management of the enterprise itself.
/us/507/0170-01 — Supreme Court of the United States · 1993
In sum, we hold that “to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs,” § 1962(c), one must participate in the operation or management of the enterprise itself.Source:
docroot/ir/caselaw/us_507.jsonl#/us/507/0170-01; Unicode character offsets [23127:23334] (end exclusive); SHA-256 2419fe5704d7ee89eb2a2ed333e17382cbc6492e0021af1984bb9a47dcfe95a2.Reves v. Ernst & Young establishes the "operation or management" test: defendant must have some part in directing the enterprise's affairs (including lower-rung participants acting under upper management's direction, or outsiders exerting control via bribery). Merely furnishing professional services is insufficient.
interpretation
In addition, the mere fact that a defendant may have aided in the alleged scheme to defraud, even if that aid was intentional, does not give rise to liability under § 1962(c).
/f-supp-2d/118/0392-01 — United States District Court for the Southern District of New York · 2000
In addition, the mere fact that a defendant may have aided in the alleged scheme to defraud, even if that aid was intentional, does not give rise to liability under § 1962(c).Source:
docroot/ir/caselaw/f_supp_2d_118.jsonl#/f-supp-2d/118/0392-01; Unicode character offsets [31621:31796] (end exclusive); SHA-256 7a6992301d8f07cdcfefb2ba1333ee88e7724e88e90a83145c93f1937232b139.Reves v. Ernst & Young establishes the "operation or management" test: defendant must have some part in directing the enterprise's affairs (including lower-rung participants acting under upper management's direction, or outsiders exerting control via bribery). Merely furnishing professional services is insufficient.