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The U.S. Supreme court opinion regarding liability of outside
accounting firms, and by extrapolation, other outside
professionals outside a business under the Racketeering Act. The
Act was originally meant to provide a tool for the taking civil
action against organized crime. However, in its early days,
because of extremely broad drafting, many civil disputes changed
from suits on the particular issue to RICO actions. This case
continues the Court's trend of narrowing the applicability of
RICO to civil disputes. In this case, which at its heart appears
to be an accounting malpractice case, the plaintiff's chose RICO.
This is quite understandable since RICO provides for treble
damages as well as attorney's fees, which may not be recoverable
in a normal civil action. The accounting firm's response to a
RICO suit is that as outside professionals they were not
"participants" who "conducted " the illegal acts which the
defendants contend occurred. This case is thus important for
various outside professionals like attorneys, actuaries and
accountants. It is also one of the longest cases to ever parse
and dissect the word "conduct." */

NOTE: Where it is feasible, a syllabus (headnote) will be
released, as is being done in connection with this case, at the
time the opinion is issued. The syllabus constitutes no part of
the opinion of the Court but has been prepared by the Reporter of
Decisions for the convenience of the reader. See United States v.
Detroit Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

REVES et al. v. ERNST & YOUNG
certiorari to the united states court of appeals for
the eighth circuit
No. 91-886.   Argued October 13, 1992-Decided March 3, 1993

A provision of the Racketeer Influenced and Corrupt Organizations
Act  (RICO), 18 U. S. C. 1962(c), makes it unlawful ``for any
person employed by or associated with [an interstate]
enterprise . . . to conduct or participate, directly or
indirectly, in the conduct of such  enterprise's affairs through
a pattern of racketeering activity . . . ."

 After respondent's predecessor, the accounting firm of Arthur
Young  and Company, engaged in certain activities relating to
valuation of a gasohol plant on the yearly audits and financial
statements of a farming cooperative, the cooperative filed for
bankruptcy, and the bankruptcy trustee brought suit, alleging,
inter alia, that the activities in question rendered Arthur Young
civilly liable under 1962(c) to petitioner holders of certain of
the cooperative's notes.

 Among other things, the District Court applied Circuit precedent
requiring, in order for such liability to attach, ``some
participation in the operation or management of the enterprise


itself"; ruled that Arthur Young's activities failed to satisfy
this test; and granted summary judgment in its favor on the RICO
claim.  Agreeing with the lower court's analysis, the Court of
Appeals affirmed in this regard.

Held:  One must participate in the operation or management of the
enterprise itself in order to be subject to 1962(c) liability.
Pp. 6-16.

  (a)  Examination of the statutory language in the light of
pertinent dictionary definitions and the context of 1962(c)
brings the section's meaning unambiguously into focus.  Once it
is understood that the word "conduct" requires some degree of
direction, and that the word "participate" requires some part in
that direction, it is clear that one must have some part in
directing an enterprise's affairs in order to "participate,
directly or indirectly, in the conduct of such . . . affairs."
The -operation or management- test expresses this requirement in
a formulation that is easy to apply.  Pp. 6-9.

 (b)  The "operation or management" test finds further support in
1962's legislative history.  Pp. 9-13.

  (c)  RICO's "liberal construction" clause-which specifies that
the "provisions of this title shall be liberally construed to
effectuate its remedial purposes" -does not require rejection of
the "operation or management" test.  The clause obviously seeks
to ensure that Congress' intent is not frustrated by an overly
narrow reading of the statute, but it is not an invitation to
apply RICO to new purposes that Congress never intended.  It is
clear from the statute's language and legislative history that
Congress did not intend to extend 1962(c) liability beyond those
who participate in the operation or management of an enterprise
through a pattern of racketeering activity.  Pp. 13-14.

  (d)  The "operation or management" test is consistent with the
proposition that liability under 1962(c) is not limited to upper
management.  ``Outsiders" having no official position with the
enterprise may be liable under 1962(c) if they are "associated
with" the enterprise and participate in the operation or
management of the enterprise.  Pp. 14-15.

  (e)  This Court will not overturn the lower courts' findings
that respondent was entitled to summary judgment upon application
of the "operation or management" test to the facts of this case.
The failure to tell the cooperative's board that the gasohol
plant should have been valued in a particular way is an
insufficient basis for concluding that Arthur Young participated
in the operation or management of the cooperative itself.  Pp.
15-16. 937 F. 2d 1310, affirmed.

 Blackmun, J., delivered the opinion of the Court, in which
Rehnquist, C. J., and Stevens, O'Connor, and Kennedy, JJ.,
joined, and in all but Part IV-A of which Scalia and Thomas, JJ.,
joined. Souter, J., filed a dissenting opinion, in which White,
J., joined.


--------
No. 91-886
--------
BOB REVES, et al., PETITIONERS v.
ERNST & YOUNG
on writ of certiorari to the united states court
of appeals for the eighth circuit
[March 3, 1993]

  Justice Blackmun delivered the opinion of the Court.

  This case requires us once again to interpret the provisions of
the Racketeer Influenced and Corrupt Organizations (RICO) chapter
of the Organized Crime Control Act of 1970, Pub. L. 91-452, Title
IX, 84 Stat. 941, as amended, 18 U. S. C. 1961-1968 (1988 ed. and
Supp. II).  Section 1962(c) makes it unlawful for any person
employed by or associated with any enterprise engaged in, or the
activities of which affect, interstate or foreign commerce, to
conduct or participate, directly or indirectly, in the conduct of
such enterprise's affairs through a pattern of racketeering
activity . . . .  The question presented is whether one must
participate in the operation or management of the enterprise
itself to be subject to liability under this provision.

                            I

  The Farmer's Cooperative of Arkansas and Oklahoma, Inc. (the
Co-Op), began operating in western Arkansas and eastern Oklahoma
in 1946.  To raise money for operating expenses, the Co-Op sold
promissory notes payable to the holder on demand.  Each year,
Co-Op members were elected to serve on its board.  The board met
monthly but delegated actual management of the Co-Op to a general
manager.  In 1952, the board appointed Jack White as general
manager.

  In January 1980, White began taking loans from the Co-Op to
finance the construction of a gasohol plant by his company, White
Flame Fuels, Inc.  By the end of 1980, White's debts to the Co-Op
totaled approximately $4 million.  In September of that year,
White and Gene Kuykendall, who served as the accountant for both
the Co-Op and White Flame, were indicted for federal tax fraud.
At a board meeting on November 12, 1980, White proposed that the
Co-Op purchase White Flame.  The board agreed.  One month later,
however, the Co-Op filed a declaratory action against White and
White Flame in Arkansas state court alleging that White actually
had sold White Flame to the Co-Op in February 1980.  The
complaint was drafted by White's attorneys and led to a consent
decree relieving White of his debts and providing that the Co-Op
had owned White Flame since February 15, 1980.

/* A fairly unusual point. A suit in name only as the parties
agreed to the result before filing. */

  White and Kuykendall were convicted of tax fraud in January
1981.  See United States v. White, 671 F. 2d 1126 (CA8 1982)
(affirming their convictions).  Harry Erwin, the managing partner
of Russell Brown and Company, an Arkansas accounting firm,
testified for White, and shortly thereafter the Co-Op retained
Russell Brown to perform its 1981 financial audit.  Joe Drozal, a
partner in the Brown firm, was put in charge of the audit and Joe
Cabaniss was selected to assist him.  On January 2, 1982, Russell
Brown and Company merged with Arthur Young and Company, which
later became respondent Ernst & Young.

  One of Drozal's first tasks in the audit was to determine White
Flame's fixed-asset value.  After consulting with White and
reviewing White Flame's books (which Kuykendall had prepared),
Drozal concluded that the plant's value at the end of 1980 was
$4,393,242.66, the figure Kuykendall had employed.  Using this
figure as a base, Drozal factored in the 1981 construction costs
and capitalized expenses and concluded that White Flame's 1981
fixed-asset value was approximately $4.5 million.  Drozal then
had to determine how that value should be treated for accounting
purposes.  If the Co-Op had owned White Flame from the beginning
of construction in 1979, White Flame's value for accounting
purposes would be its fixed-asset value of $4.5 million.  If,
however, the Co-Op had purchased White Flame from White, White
Flame would have to be given its fair market value at the time of
purchase, which was somewhere between $444,000 and $1.5 million.
If White Flame were valued at less than $1.5 million, the Co-Op
was insolvent.  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.

/* No comment here from the court. However, from reading this
opinion one can come to the conclusion that this is an unusual.
*/

  On April 22, 1982, Arthur Young presented its 1981 audit report
to the Co-Op's board.  In that audit's Note 9, Arthur Young
expressed doubt whether the investment in White Flame could ever
be recovered.  Note 9 also observed that White Flame was
sustaining operating losses averaging $100,000 per month.  See
Arthur Young & Co. v. Reves, 937 F. 2d 1310, 1318 (CA8 1991).
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.

  On May 27, the Co-Op held its 1982 annual meeting.  At that
meeting, the Co-Op, through Harry C. Erwin, a partner in Arthur
Young, distributed to the members condensed financial statements.
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.  See 937 F. 2d, at 1318-1319.  Cabaniss was also present.
Erwin saw the condensed financial statement for the first time
when he arrived at the meeting.  In a 5-minute presentation, he
told his audience that the statements were condensed and that
copies of the full audit were available at the Co-Op's office.
In response to questions, Erwin explained that the Co-Op owned
White Flame and that the plant had incurred approximately $1.2
million in losses but he revealed no other information relevant
to the Co-Op's true financial health.

/* The statement made by the accountant is a true one. However,
it again appears that the Court is pointing this out to show that
this is perhaps irregular. */

  The Co-Op hired Arthur Young also to perform its 1982 audit.
The 1982 report, presented to the board on March 7, 1983, was
similar to the 1981 report and restated (this time in its Note 8)
Arthur Young's doubt whether the investment in White Flame was
recoverable.  See 937 F. 2d, at 1320.  The gasohol plant again
was valued at approximately $4.5 million and was responsible for
the Co-Op's showing a positive net worth.  The condensed
financial statement distributed at the annual meeting on March
24, 1983, omitted the information in Note 8.  This time, Arthur
Young reviewed the condensed statement in advance but did not act
to remove its name from the statement.  Cabaniss, in a 3-minute
presentation at the meeting, gave the financial report.  He
informed the members that the full audit was available at the
Co-Op's office but did not tell them about Note 8 or that the
Co-Op was in financial difficulty if White Flame were written
down to its fair market value.  Ibid.

  In February 1984, the Co-Op experienced a slight run on its
demand notes.  On February 23, when it was unable to secure
further financing, the Co-Op filed for bankruptcy.  As a result,
the demand notes were frozen in the bankruptcy estate and were no
longer redeemable at will by the noteholders.

                           II

  On February 14, 1985, the trustee in bankruptcy filed suit
against 40 individuals and entities, including Arthur Young, on
behalf of the Co-Op and certain noteholders. The District Court
certified a class of noteholders, petitioners here, consisting of
persons who had purchased demand notes between February 15, 1980,
and February 23, 1984.  Petitioners settled with all defendants
except Arthur Young.  The District Court determined before trial
that the demand notes were securities under both federal and
state law.  See Robertson v. White, 635 F. Supp. 851, 865 (WD
Ark. 1986).  The court then granted summary judgment in favor of
Arthur Young on the RICO claim. See Robertson v. White, Nos.
85-2044, 85-2096, 85-2155, and 85-2259 (WD Ark. Oct. 15, 1986),
App. 198-200.  The District Court applied the test established by
the Eighth Circuit in Bennett v. Berg, 710 F. 2d 1361, 1364 (en
banc), cert. denied, sub nom. Prudential Ins. Co. of America v.
Bennett, 464 U. S. 1008 (1983), that 1962(c) requires some
participation in the operation or management of the enterprise
itself.  App. 198.  The court ruled: "Plaintiffs have failed to
show anything more than that the accountants reviewed a series of
completed transactions, and certified the Co-Op's records as
fairly portraying its financial status as of a date three or four
months preceding the meetings of the directors and the
shareholders at which they presented their reports."  We do not
hesitate to declare that such activities fail to satisfy the
degree of management required by Bennett v. Berg.  Id., at
199-200.   The case went to trial on the state and federal
securities fraud claims.  The jury found that Arthur Young had
committed both state and federal securities fraud and awarded
approximately $6.1 million in damages.  The Court of Appeals
reversed, concluding that the demand notes were not securities
under federal or state law.  See Arthur Young & Co. v. Reves, 856
F. 2d 52, 55 (1988). On writ of certiorari, this Court ruled that
the notes were securities within the meaning of 3(a)(10) of the
Securities Exchange Act of 1934, 48 Stat. 882, as amended, 15 U.
S. C. 78c(a)(10).  Reves v. Ernst & Young, 494 U. S. 56, 70
(1990).

/* It's hard to see what the Court of appeals could have been
thinking about as such promissory notes are garden variety
securities. Any payment of money, which the return thereon is
contingent on the management of others is a security. Notes for a
co-op of this source are clearly securities. */

  On remand, the Court of Appeals affirmed the judgment of the
District Court in all major respects except the damages award,
which it reversed and remanded for a new trial.  See 937 F. 2d,
at 1339-1340.  The only part of the Court of Appeals' decision
that is at issue here is its affirmance of summary judgment in
favor of Arthur Young on the RICO claim.  Like the District
Court, the Court of Appeals applied the operation or management
test articulated in Bennett v. Berg and held that Arthur Young's
conduct did not rise to the level of participation in the
management or operation of the Co-op.  See 937 F. 2d, at 1324.
The Court of Appeals for the District of Columbia Circuit also
has adopted an operation or management test.  See Yellow Bus
Lines, Inc. v. Drivers, Chauffeurs & Helpers Local Union 639, 286
U. S. App. D.C. 182, 188, 913 F. 2d 948, 954 (1990) (en banc),
cert. denied, 501 U. S. ___ (1991).  We granted certiorari, 502
U. S. ___ (1992), to resolve the conflict between these cases and
Bank of America National Trust & Savings Assn. v. Touche Ross &
Co., 782 F. 2d 966, 970 (CA11 1986) (rejecting requirement that a
defendant participate in the operation or management of an
enterprise).

                           III

     In determining the scope of a statute, we look first to its
language.  If the statutory language is unambiguous, in the
absence of `a clearly expressed legislative intent to the
contrary, that language must ordinarily be regarded as
conclusive.'  United States v. Turkette, 452 U. S. 576, 580
(1981), quoting Consumer Product Safety Comm'n v. GTE Sylvania,
Inc., 447 U. S. 102, 108 (1980).  See also Russello v. United
States, 464 U. S. 16, 20 (1983).  Section 1962(c) makes it
unlawful for any person employed by or associated with any
enterprise . . . "to conduct or participate, directly or
indirectly, in the conduct of such enterprise's affairs through a
pattern of racketeering activity . . . ."  The narrow question in
this case is the meaning of the phrase "to conduct or
participate, directly or indirectly, in the conduct of such
enterprise's affairs."  The word conduct is used twice, and it
seems reasonable to give each use a similar construction.  See
Sorenson v. Secretary of the Treasury, 475 U. S. 851, 860 (1986).
As a verb, conduct means to lead, run, manage, or direct.
Webster's Third New International Dictionary 474 (1976).
Petitioners urge us to read conduct as "carry on",  Brief for
Petitioners 23, so that almost any involvement in the affairs of
an enterprise would satisfy the conduct or participate
requirement.  But context is important, and in the context of the
phrase "to conduct . . . [an] enterprise's affairs", the word
indicates some degree of direction.

  The dissent agrees that, when conduct is used as a verb, it is
plausible to find in it a suggestion of control. Post, at 2.  The
dissent prefers to focus on conduct as a noun, as in the phrase
participate, directly or indirectly, in the conduct of [an]
enterprise's affairs.  But unless one reads conduct to include an
element of direction when used as a noun in this phrase, the word
becomes superfluous.  Congress could easily have written
participate, directly or indirectly, in [an] enterprise's
affairs, but it chose to repeat the word conduct.  We conclude,
therefore, that as both a noun and a verb in this subsection
conduct requires an element of direction.

  The more difficult question is what to make of the word
participate.  This Court previously has characterized this word
"as a ter[m] . . . of breadth."  Russello, 464 U. S., at 21-22.
Petitioners argue that Congress used participate as a synonym for
aid and abet.  Brief for Petitioners 26.  That would be a term of
breadth indeed, for aid and abet comprehends all assistance
rendered by words, acts, encouragement, support, or presence.
Black's Law Dictionary 68 (6th ed. 1990).  But within the context
of 1962(c), participate appears to have a narrower meaning.  We
may mark the limits of what the term might mean by looking again
at what Congress did not say.  On the one hand, to
participate . . . in the conduct of . . . affairs must be broader
than to conduct affairs or the participate phrase would be
superfluous.  On the other hand, as we already have noted, to
participate . . . in the conduct of . . . affairs must be
narrower than to participate in affairs or Congress' repetition
of the word conduct would serve no purpose.  It seems that
Congress chose a middle ground, consistent with a common
understanding of the word participate-- to take part in.
Webster's Third New International Dictionary 1646 (1976).   Once
we understand the word conduct to require some degree of
direction and the word participate to require some part in that
direction, the meaning of 1962(c) comes into focus.  In order to
participate, directly or indirectly, in the conduct of such
enterprise's affairs, one must have some part in directing those
affairs.  Of course, the word participate makes clear that RICO
liability is not limited to those with primary responsibility for
the enterprise's affairs, just as the phrase directly or
indirectly makes clear that RICO liability is not limited to
those with a formal position in the enterprise, but some part in
directing the enterprise's affairs is required.  The operation or
management test expresses this requirement in a formulation that
is easy to apply.

                           IV

                            A

  This test finds further support in the legislative history of
1962.  The basic structure of 1962 took shape in the spring of
1969.  On March 20 of that year, Senator Hruska introduced S.
1623, 91st Cong., 1st Sess., which combined his previous
legislative proposals.  See Lynch, RICO: The Crime of Being a
Criminal, Parts I & II, 87 Colum. L. Rev. 661, 676 (1987); Blakey
& Gettings, Racketeer Influenced and Corrupt Organizations
(RICO): Basic Concepts  Criminal and Civil Remedies, 53 Temp. L.
Q. 1009, 1017 (1980).  S. 1623 was titled the "Criminal
Activities Profits Act" and was directed solely at the investment
of proceeds derived from criminal activity. It was 2(a) of this
bill that ultimately became 1962(a).   On April 18, Senators
McClellan and Hruska introduced S. 1861, 91st Cong., 1st Sess.,
which recast S. 1623 and added provisions that became 1962(b) and
(c).  See Blakey, The RICO Civil Fraud Action in Context:
Reflections on Bennett v. Berg, 58 Notre Dame L. Rev. 237, 264,
n. 76 (1982).  The first line of S. 1861 reflected its expanded
purpose: to prohibit the infiltration or management of legitimate
organizations by racketeering activity or the proceeds of
racketeering activity.

     On June 3, Assistant Attorney General Will Wilson presented
the views of the Department of Justice on a number of bills
relating to organized crime, including S.1623 and S. 1861, to the
Subcommittee on Criminal Laws and Procedures of the Senate
Committee on the Judiciary. Wilson criticized S. 1623 on the
ground "that it is too narrow in that it merely prohibits the
investment of prohibited funds in a business, but fails to
prohibit the control or operation of such a business by means of
prohibited racketeering activities."  Measures Related to
Organized Crime: Hearings before the Subcommittee on Criminal
Laws and Procedures of the Senate Committee on the Judiciary,
91st Cong., 1st Sess., 387 (1969) (emphasis added).  He praised
S. 1861 because the "criminal provisions of the bill contained in
Section 1962 are broad enough to cover most of the methods by
which ownership, control and operation of business concerns are
acquired."  Ibid.  See Blakey, supra, at 258, n. 59.

  With alterations not relevant here, S. 1861 became Title IX of
S. 30.  The House and Senate Reports that accompanied S. 30
described the three-part structure of 1962: (1) making unlawful
the receipt or use of income from `racketeering activity' or its
proceeds by a principal in commission of the activity to acquire
an interest in or establish an enterprise engaged in interstate
commerce; (2) prohibiting the acquisition of any enterprise
engaged in interstate commerce through a `pattern' of
`racketeering activity;' and (3) proscribing the operation of any
enterprise engaged in interstate commerce through a `pattern' of
`racketeering activity.'  H.R. Rep. No. 91-1549, p. 35 (1970); S.
Rep. No. 91-617, p. 34 (1969) (emphasis added). In their comments
on the floor, members of Congress consistently referred to
subsection (c) as prohibiting the operation of an enterprise
through a pattern of racketeering activity and to subsections (a)
and (b) as prohibiting the acquisition of an enterprise.
Representative Cellar, who was Chairman of the House Judiciary
Committee that voted RICO out in 1970, described 1962(c) as
proscribing the "conduct of the affairs of a business by a person
acting in a managerial capacity, through racketeering
activity."  116 Cong. Rec. 35196 (1970) (emphasis added).

     Of course, the fact that members of Congress understood
1962(c) to prohibit the operation or management of an enterprise
through a pattern of racketeering activity does not necessarily
mean that they understood 1962(c) to be limited to the operation
or management of an enterprise.  Cf. Turkette, 452 U. S., at 591
(references to the infiltration of legitimate organizations do
not "requir[e] the negative inference that [RICO] did not reach
the activities of enterprises organized and existing for criminal
purposes."  It is clear from other remarks, however, that
Congress did not intend RICO to extend beyond the acquisition or
operation of an enterprise.  While S. 30 was being considered,
critics of the bill raised concerns that racketeering activity
was defined so broadly that RICO would reach many crimes not
necessarily typical of organized crime.  See 116 Cong. Rec.
18912-18914, 18939-18940 (1970) (remarks of Sen. McClellan).
Senator McClellan reassured the bill's critics that the critical
limitation was not to be found in 1961(1)'s list of predicate
crimes but in the statute's other requirements, including those
of 1962:


       The danger that commission of such offenses by other
      individuals would subject them to proceedings under
      title IX [RICO] is even smaller than any such danger
      under title III of the 1968 [Safe Streets] [A]ct, since
      commission of a crime listed under title IX provides
      only one element of title IX's prohibitions.  Unless an
      individual not only commits such a crime but engages in
      a pattern of such violations, and uses that pattern to
      obtain or operate an interest in an interstate
      business, he is not made subject to proceedings under
      title IX.  116 Cong. Rec., at 18940.

Thus, the legislative history confirms what we have already
deduced from the language of 1962(c) that one is not liable under
that provision unless one has participated in the operation or
management of the enterprise itself.

                            B

  RICO's liberal construction clause does not require rejection
of the operation or management test.  Congress directed, by
904(a) of Pub. L. 91-452, 84 Stat. 947, see note following 18
U. S. C. 1961, p. 438, that the provisions of this title shall be
liberally construed to effectuate its remedial purposes.  This
clause obviously seeks to ensure that Congress' intent is not
frustrated by an overly narrow reading of the statute, but it is
not an invitation to apply RICO to new purposes that Congress
never intended.  Nor does the clause help us to determine what
purposes Congress had in mind.  Those must be gleaned from the
statute through the normal means of interpretation.  The clause
'only serves as an aid for resolving an ambiguity; it is not to
be used to beget one.'  Sedima, S. P. R. L. v. Imrex Co., 473 U.
S. 479, 492, n. 10 (1985), quoting Callanan v. United States, 364
U. S. 587, 596 (1961).  In this case it is clear that Congress
did not intend to extend RICO liability under 1962(c) beyond
those who participate in the operation or management of an
enterprise through a pattern of racketeering activity.

                            V

  Petitioners argue that the "operation or management" test is
flawed because liability under 1962(c) is not limited to upper
management but may extend to "any person employed by or
associated with [the] enterprise." Brief for Petitioners 37-40.
We agree that liability under 1962(c) is not limited to upper
management, but we disagree that the operation or management test
is inconsistent with this proposition.  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.

  The United States also argues that the operation or management
test is not consistent with 1962(c) because it limits the
liability of outsiders who have no official position within the
enterprise.  Brief for United States as Amicus Curiae 12 and 15.
The United States correctly points out that RICO's major purpose
was to attack the "infiltration of organized crime and
racketeering into legitimate organizations," S. Rep. No. 91-617,
at 76, but its argument fails on several counts.  First, it
ignores the fact that 1962 has four subsections.  Infiltration of
legitimate organizations by outsiders is clearly addressed in
subsections (a) and (b), and the operation or management test
that applies under subsection (c) in no way limits the
application of subsections (a) and (b) to outsiders.  Second,
1962(c) is limited to persons "employed by or associated with an
enterprise," suggesting a more limited reach than subsections (a)
and (b), which do not contain such a restriction.  Third, 1962(c)
cannot be interpreted to reach complete outsiders because
liability depends on showing that the defendants conducted or
participated in the conduct of the enterprise's affairs, not just
their own affairs.  Of course, outsiders may be liable under
1962(c) if they are associated with an enterprise and participate
in the conduct of its affairs that is, participate in the
operation or management of the enterprise itself but it would be
consistent with neither the language nor the legislative history
of 1962(c) to interpret it as broadly as petitioners and the
United States urge.

  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.

                           VI

  Both the District Court and the Court of Appeals applied the
standard we adopt today to the facts of this case, and both found
that respondent was entitled to summary judgment.  Neither
petitioners nor the United States have argued that these courts
misapplied the "operation or management" test.  The dissent
argues that by creating the Co-Op's financial statements Arthur
Young participated in the management of the Co-Op because
`financial statements are management's responsibility.' Post, at
5, quoting 1 CCH AICPA Professional Standards, SAS No. 1, 110.02
(1982).  Although the professional standards adopted by the
accounting profession may be relevant, they do not define what
constitutes management of an enterprise for the purposes of
1962(c).

  In this case, it is undisputed that Arthur Young relied upon
existing Co-Op records in preparing the 1981 and 1982 audit
reports.  The AICPA's professional standards state that an
auditor may draft financial statements in whole or in part based
on information from management's accounting system.  See 1 CCH
AICPA Professional Standards, SAS No. 1, 110.02 (1982).  It is
also undisputed that Arthur Young's audit reports revealed to the
Co-Op's board that the value of the gasohol plant had been
calculated based on the Co-Op's investment in the plant. See App.
in No. 87-1726 (CA8), pp. 250-251, 272-273.  Thus, we only could
conclude that Arthur Young participated in the operation or
management of the Co-Op itself if Arthur Young's failure to tell
the Co-Op's board that the plant should have been given its fair
market value constituted such participation.  We think that
Arthur Young's failure in this respect is not sufficient to give
rise to liability under 1962(c).

  The judgment of the Court of Appeals is affirmed.

It is so ordered.

  In the word conduct, the Court today finds a clear
congressional mandate to limit RICO liability under 18 U. S. C.
1962(c) to participants in the operation or management of a RICO
enterprise.  Ante, at 6-9.  What strikes the Court as clear,
however, looks at the very least hazy to me, and I accordingly
find the statute's liberal construction provision not irrelevant,
but dispositive.  But even if I were to assume, with the
majority, that the word conduct clearly imports some degree of
direction or control into 1962(c), I would have to say that the
majority misapplies its own "operation or management" test to the
facts presented here.  I therefore respectfully dissent.

  The word conduct occurs twice in 1962(c), first as a
verb, then as a noun.


      It shall be unlawful for any person employed by or
      associated with any enterprise engaged in, or the
      activities of which affect, interstate or foreign
      commerce, to conduct or participate, directly or
      indirectly, in the conduct of such enterprise's affairs
      through a pattern of racketeering activity or
      collection of unlawful debt.  18 U. S. C. 1962(c).


Although the Court is surely correct that the cognates should
receive consistent readings, see ante, at 7, and correct again
that context is important in coming to understand the sense of
the terms intended by Congress, ibid., the majority goes astray
in quoting only the verb form of conduct in its statement of the
context for divining a meaning that must fit the noun usage as
well.

Thus, the majority reaches its pivotal conclusion that in the
context of the phrase `to conduct . . . [an] enterprise's
affairs,' the word indicates some degree of direction. Ibid.
(footnote omitted).  To be sure, if the statutory setting is so
abbreviated as to limit consideration to the word as a verb, it
is plausible to find in it a suggestion of control, as in the
phrase "to conduct an orchestra."

(Even so, the suggestion is less than emphatic, since even
when -conduct- is used as a verb, [t]he notion of direction
or leadership is often obscured or lost; e.g. an investigation is
conducted by all those who take part in it.  3 Oxford English
Dictionary 691 (2d ed. 1989) (emphasis in original).)

  In any event, the context is not so limited, and several
features of the full subsection at issue support a more inclusive
construction of -conduct.-  The term, when used as a noun, is
defined by the majority's chosen dictionary as, for example,
-carrying forward- or -carrying out,- Webster's Third New
International Dictionary 473 (1976), phrases without any
implication of direction or control.  The suggestion of control
is diminished further by the fact that 1962(c) covers not just
those -employed by- an enterprise, but those merely -associated
with- it, as well. And associates (like employees) are prohibited
not merely from conducting the affairs of an enterprise through a
pattern of racketeering, not merely from participating directly
in such unlawful conduct, but even from indirect participation in
the conduct of an enterprise's affairs in such a manner.  The
very breadth of this prohibition renders the majority's reading
of -conduct- rather awkward, for it is hard to imagine how the
-operation or management- test would leave the statute with the
capacity to reach the indirect participation of someone merely
associated with an enterprise.  I think, then, that this
contextual examination shows -conduct- to have a long arm,
unlimited by any requirement to prove that the activity includes
an element of direction.  But at the very least, the full context
is enough to defeat the majority's conviction that the more
restrictive interpretation of the word -conduct- is clearly the
one intended.

  What, then, if we call it a tie on the contextual analysis?
The answer is that Congress has given courts faced with uncertain
meaning a clear tie-breaker in RICO's liberal construction
clause, which directs that "the provisions of this title shall be
liberally construed to effectuate its remedial purposes."  Pub.
L. 91-452, 904(a), 84 Stat. 947, note following 18 U. S. C. 1961.
We have relied before on this express admonition to read RICO
provisions broadly, see Sedima, S. P. R. L. v. Imrex Co., 473 U.
S. 479, 497-498 (1985), and in this instance, the liberal
construction clause plays its intended part, directing us to
recognize the more inclusive definition of the word conduct, free
of any restricting element of direction or control.  Because the
Court of Appeals employed a narrower reading, I would reverse.

 Even if I were to adopt the majority's view of 1962(c), however,
I still could not join the judgment, which seems to me
unsupportable under the very "operation or management" test the
Court announces.  If Arthur Young had confined itself in this
case to the role traditionally performed by an outside auditor, I
could agree with the majority that Arthur Young took no part in
the management or operation of the Co-op.

/* Useful in the future for attorney's defending RICO claims that
"the role of an outside auditor" is not within RICO's scope,
according to all of the justices. */

But the record on summary judgment, viewed most favorably to
Reves, shows that Arthur Young created the very financial
statements it was hired, and purported, to audit.  Most
importantly, Reves adduced evidence that Arthur Young took on
management responsibilities by deciding, in the first instance,
what value to assign to the Co-op's most important fixed asset,
the White Flame gasohol plant, and Arthur Young itself conceded
below that the alleged activity went beyond traditional auditing.
Because I find, then, that even under the majority's "operation
or management test" the Court of Appeals erroneously affirmed the
summary judgment for Arthur Young, I would (again) reverse.

  For our purposes, the line between managing and auditing is
fairly clear.  In describing the respective responsibilities of
management and auditor, Arthur Young points to the Code of
Professional Conduct developed by the American Institute of
Certified Public Accountants (AICPA).  Brief for Respondent 31.
This auditors' code points up management's ultimate
responsibility for the content of financial statements: "The
financial statements are management's responsibility.  The
auditor's responsibility is to express an opinion on the
financial statements.  Management is responsible for adopting
sound accounting policies and for establishing and maintaining an
internal control structure that will, among other things, record,
process, summarize, and report financial data that is consistent
with management's assertions embodied in the financial
statements. . . .  The independent auditor may make suggestions
about the form or content of the financial statements or draft
them, in whole or in part, based on information from management's
accounting system."  1 CCH AICPA Professional Standards, SAS No.
1, 110.02 (1982). In short, management chooses the assertions to
appear in financial statements; the auditor "simply expresses an
opinion on the client's financial statements."  Brief for
Respondent 30.  These standards leave no doubt that an accountant
can in no sense independently audit financial records when he has
selected their substance himself.  See In re Thomas P. Reynolds
Securities, Ltd., Exchange Act Release No. 29689, 1991 SEC Lexis
1855, *6-*7 (Sept. 16, 1991) (A company may, of course, rely on
an outside firm to prepare its books of account and financial
statements. However, once an accounting firm performs those
functions, it has become identified with management and may not
perform an audit).

  The evidence on summary judgment, read favorably to Reves,
indicates that Arthur Young did indeed step out of its auditing
shoes and into those of management, in creating the financial
record on which the Co-op's solvency was erroneously predicated.
The Co-op's 1980 financial statement gave no fixed asset value
for the White Flame gasohol plant (although the statement did say
that the Co-op had advanced the plant $4.1 million during 1980,
App. in No. 87-1726 (CA8), pp. 291, 295), and there is no
indication that a valuation statement occurred anywhere else in
the Co-op's records at that time.  When Arthur Young accepted the
job of preparing the Co-op's financial statement for 1981, the
value to be given the plant was a matter of obvious moment.
Instead of declaring the plant's valuation to be the Co-op's
responsibility, and instead even of turning to management for
more reliable information about the plant's value, Arthur Young
basically set out to answer its own questions and to come up with
its own figure for White Flame's fixed asset value.  In doing so,
it repeatedly made choices calling for the exercise of a judgment
that belonged to the Co-op's management in the first instance.

  Arthur Young realized it could not rely on White Flame's 1980
financial statement, which had been prepared by a convicted felon
(who also happened to be the Co-op's former accountant),  see
Arthur Young & Co. v. Reves, 937 F. 2d 1310, 1316-1317 (CA8
1991), and an internal memo that appears in the record shows that
Arthur Young had a number of serious questions about White
Flame's cost figures for the plant.  See App. in No. 87-1726
(CA8), pp. 1189-1191.  Nonetheless, Arthur Young essentially
invented a cost figure that matched, to the penny, the phony
figure that Kuykendall, White Flame's convicted accountant, had
created.  App. 138-140.  With this invented cost figure in hand,
Arthur Young then proceeded to decide, again without consulting
management, when the Co-op had acquired White Flame. Although the
Co-op's 1980 financial statement indicated an acquisition of
White Flame in February 1980, as did a local court decree, see
App. in No. 87-1726 (CA8), pp. 295, 1212-1214, Arthur Young
adopted a blatant fiction-- that the Co-op [had] owned the entire
plant at its inception in May, 1979-- in order to justify
carrying the asset on [the Co-op's] books at its total cost, as
if the Co-op had built it from scratch.  App. 137.  Apparently,
the idea that the Co-op had owned the gasohol plant since 1979
was reflected nowhere in the Co-op's books, and Arthur Young was
solely responsible for the Co-op's decision to treat the
transaction in this manner.

  Relying on this fiction, the unreality of which it never shared
with the Co-op's Board of Directors, let alone the membership,
Arthur Young prepared the Co-op's 1981 financial statement and
listed a fixed asset value of more than $4.5 million for the
gasohol plant.  App. in No. 87-1726 (CA8), p. 238.  Arthur Young
listed a similar value for White Flame in the Co-op's financial
statement for 1982.  Id., at 261.  By these actions, Arthur Young
took on management responsibilities, for it thereby made
assertions about the fixed asset value of White Flame that were
derived, not from information or any figure provided by the
Co-op's management, but from its own financial analysis.

  Thus, the District Court, after reviewing this evidence,
concluded that petitioners could show from the record that Arthur
Young had -created the Co-op's financial statements.-  App. 199.
The court also took note of evidence supporting petitioners'
allegation that Arthur Young had participated in the creation of
condensed financial statements that were handed out each year at
the annual meeting of the Co-op.  Ibid.  Before the Court of
Appeals, although Arthur Young disputed petitioners' claim that
it had been functioning as the Co-op's de facto chief financial
officer, Supplemental Reply Brief on Remand for Appellant in No.
87-1726 (CA8), p. 2, it did not dispute the District Court's
conclusion that Reves had presented evidence showing that Arthur
Young had created the Co-op's financial statements and had
participated in the creation of condensed financial statements.
Supplemental Brief on Remand for Appellant in No. 87-1726 (CA8),
p. 20.  Instead, Arthur Young argued that "[e]ven if, as here,
the alleged activity goes beyond traditional auditing, it was
neither an integral part of the management of the Co-op's affairs
nor part of a dominant, active ownership or managerial role."
Id., at 21 (emphasis added).

  It was only by ignoring these crucial concessions, and the
evidence that obviously prompted them, that the Court of Appeals
could describe Arthur Young's involvement with the Co-op as
limited to the audits, meetings with the Board of Directors to
explain the audits, and presentations at the annual meetings.
937 F. 2d, at 1324.  And only then could the court have ruled
that, as a matter of law, Arthur Young's involvement with the
Co-op did not rise to the level required for a RICO violation,
which it described (quoting Bennett v. Berg, 710 F. 2d 1361 (CA8
1983)) as requiring only "some participation in the operation or
management of the enterprise itself."  Ibid. (internal quotes
omitted).

  But petitioners' evidence and respondent's concessions of
activity going beyond outside auditing can neither be ignored nor
declared irrelevant.  As the Court explains today, `outsiders'
may be liable under 1962(c) if they are `associated with' an
enterprise and participate in the conduct of its affairs "that
is, participate in the operation or management of the enterprise
itself . . . ."  Ante, at 15 (emphasis in original).  Thus, the
question here is whether Arthur Young, which was associated with
the Co-op, participated in the Co-op's operation or management.
As the Court has noted, participate should be read broadly in
this context, see ante, at 8 (citing Russello v. United States,
464 U. S. 16, 21-22 (1983)), since Congress has provided that
even indirect participation will suffice.

Cf. Sedima, S. P. R. L. v. Imrex Co., 473 U. S., at 497-498
(Congress' self-consciously expansive language supports the
conclusion that RICO is to be read broadly).

 The evidence petitioners presented in opposing the motion for
summary judgment demonstrated Arthur Young's participation in
this broad sense.  By assuming the authority to make key
decisions in stating the Co-op's own valuation of its major fixed
asset, and by creating financial statements that were the
responsibility of the Co-op's management, Arthur Young crossed
the line separating outside auditors from inside financial
managers.  Because the majority, like the Court of Appeals,
affirms the grant of summary judgment in spite of this evidence,
I believe that it misapplies its own operation or management
test, and I therefore respectfully dissent.