An underwriter, an attorney, and her law firm could be held liable for conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act if they knowingly facilitated the racketeering activities of the promoters of a fraudulent investment scheme for which they were engaged to conduct due diligence, the 7th U.S. Circuit Court of Appeals concluded Jan. 13 (Brouwer v. Raffensperger, Hughes & Co., 7th Cir., No. 99-1286, 1/13/00).
The court thus reversed the dismissal of RICO conspiracy claims against the underwriter and the attorneys who allegedly aided the promoters in setting yields “deceptively low to make the notes appear less risky to elderly investors.”
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