In the

United States Court of Appeals

For the Seventh Circuit

No. 99-1286

VIRGINIA E. BROUWER, WESLEY BAXTER,

ALBERTA E. HAESSIG, HARDY HICKS, JR.,

NATALIE HICKS, GERALD J. MOSS,

VIOLA ROBINETTE, JUNE YOST, and

RUTH WILCHER, individually and on

behalf of all others similarly situated,

Plaintiffs-Appellants,

v.

RAFFENSPERGER, HUGHES & CO.,

CATHERINE L. BRIDGE, and

BARNES & THORNBURG,

Defendants-Appellees.

Appeal from the United States District Court

for the Southern District of Indiana, Indianapolis Division.

No. 92-753-C-D/F--S. Hugh Dillin, Judge.

Argued September 30, 1999--Decided January 13, 2000

 Before HARLINGTON WOOD, JR., COFFEY, and EVANS,

Circuit Judges.

 EVANS, Circuit Judge. Today we find ourselves

looking at the intersection between a substantive

RICO violation of 18 U.S.C. sec. 1962(c) (the

Racketeering and Corrupt Organizations Act) and

a conspiracy violation pursuant to sec. 1962(d),

that is, trying to reconcile Reves v. Ernst &

Young, 507 U.S. 170, 113 S. Ct. 1163 (1993), with

Salinas v. United States, 522 U.S. 52, 118 S. Ct.

469 (1997). Our vehicle for trying to reconcile

these cases is this suit brought by a class of

unhappy investors against several defendants,

including an underwriting firm and a law firm,

growing out of work they did for an Indianapolis

company called the Firstmark Corporation which is

now bankrupt. The underwriting firm, a "Qualified

Independent Underwriter" (a QIU in securities

argot), is Raffensperger, Hughes & Co., Inc.

which got out of the case on its motion to

dismiss; Attorney Catherine L. Bridge and her law

firm, Barnes & Thornburg of Indianapolis, were

granted summary judgment. Motions to reconsider

were filed, the last one based on what was then
the new decision in Salinas. The motions were

denied and this appeal was filed.

 The issue in this case is, says the plaintiffclass, a purely legal one regarding the

requirements for a RICO conspiracy violation

under 18 U.S.C. sec. 1962(d), specifically,

whether a party must agree to personally

participate in the operation, management, or

conduct of the racketeering enterprise for a

conspiracy violation to exist under sec. 1962(d),

as defendants claim and the district court found;

or whether it is enough that a party agrees that

some member of the conspiracy conduct or

participate in the operation or management of an

enterprise, as plaintiffs argue. It is not

exactly a matter of first impression in this

circuit, yet the starkness with which the issue

is raised requires that we take a close look at

several of our cases.

 The district court’s characterization of the

facts/1 is not disputed on this appeal; we will

present only a very brief summary. Firstmark is

an Indiana holding company whose subsidiaries

engaged in various financial services. The

conspiracy here is alleged to have begun around

1981 when two defendants, Leonard Rochwarger and

William Smith (who have settled the claims

against them, as have several other persons

originally named as defendants), devised a plan

for Firstmark to become a wholly owned subsidiary

of Rockmont Corporation, of which Rochwarger was

president and CEO. Firstmark immediately began to

have serious financial trouble. In fact, the

transaction caused what is described as "crushing

debt." As a result, Rochwarger began to sell off

Firstmark assets as well as debt securities,

including commercial paper. Firstmark’s troubles

continued in 1986, and its value as a going

concern dropped.

 At this time it is alleged that Rochwarger and

the other defendants devised a scheme to conceal

the true financial condition of Firstmark by

increasing the margin between the quantity of

notes sold to investors and those redeemed by

investors. Proceeds from the note sales were used

to pay interest and principal on previously sold

notes and to finance the sale of more notes. To

do this, the conspirators are alleged to have

deceived investors into purchasing new notes,

rolling over current notes, or otherwise

refraining from redeeming their notes. At the

same time, insiders were siphoning off the assets

of Firstmark. The result was an ever-growing

pyramid of debt that forced Firstmark into

bankruptcy in 1988. The plaintiff-class fell for

the scheme and lost a bundle--$57 million.
 The rules of the National Association of

Securities Dealers require its members (such as

Firstmark) to use the services of QIUs to perform

due diligence on registration statements and to

recommend a minimum yield for the sale of notes

like the ones involved here. That’s how

Raffensperger became involved with Firstmark;

then the Barnes & Thornburg law firm was hired to

perform the due diligence that would be the basis

for providing the minimum yields at which the

notes would be sold. The allegations are that the

yields bore no relation to reality. In fact, it

is alleged that the yields were set deceptively

low to make the notes appear less risky to

elderly investors. It is also alleged that both

defendants knew that the investors were likely,

if not certain, to lose their entire investment.

The law firm allegedly had three main roles: to

provide due diligence; to conceal the conspiracy

and the substantive violations in registration

statements and, when informed of a problem with

cash flow by the Indiana Securities Commission,

to halt the issuance of certain notes so that

Firstmark’s problems would not become public;

and, once all hope of further note sales was

lost, to facilitate the sale of Firstmark to

another of the law firm’s clients, Capitol

Securities, despite knowing of the dire straits

that the company was in.

 The RICO conspiracy statute [sec. 1962(d)]

provides:

It shall be unlawful for any person to conspire

to violate any of the provisions of subsection

(a), (b), or (c) of this section.

The defendants in this case were accused of

conspiring to violate subsection (c), which

provides:

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.

The elements of a subsection (c) offense are (1)

conduct (2) of an enterprise (3) through a

pattern of racketeering activity. A pattern is

the commission of at least two statutorily

enumerated "predicate acts." Sedima, S.P.R.L. v.

Imrex Co., 473 U.S. 479 (1985).

 What the Court did in Reves was to clarify what

"participate" and "to conduct" mean under

subsection (c); in other words, what the
substantive offense is. Reves involved whether an

outside accounting firm could be liable under

subsection (c) for its activities relating to an

inflated valuation of a gasohol plant on the

financial statements of a farm cooperative. The

Court said no, observing that although liability

is not limited to the "upper management" of an

enterprise, to "’conduct or participate, directly

or indirectly, in the conduct of such

enterprise’s affairs,’ sec. 1962(c), one must

participate in the operation or management of the

enterprise itself." 507 U.S. at 185. The Court

concluded that "participate" requires that one

have some part in directing the affairs of the

enterprise, not primary responsibility, but "some

part in directing the enterprise’s affairs is

required." 507 U.S. at 179. In other words, the

statute applies not to "any person," but to any

person associated with an enterprise who

participates in the operation or management of

the enterprise.

 As to "outsiders," the Court rejected the

argument that its analysis meant that they could

never be held accountable under sec. 1962(c).

What the Court said, in part, is:

Of course, "outsiders" may be liable under sec.

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 . . . .

507 U.S. at 185.

 The question remains, however, as to what is

required to conspire to violate the substantive

provision. This is where Salinas comes in.

Salinas, which was a criminal RICO prosecution,

involved the requirement for predicate acts. The

defendant in Salinas argued that he could not be

convicted of a subsection (d) conspiracy offense

unless the government proved that he personally

agreed to commit two predicate acts. Using

general conspiracy principles, the Court rejected

the argument, concluding:

A conspirator must intend to further an endeavor

which, if completed, would satisfy all of the

elements of a substantive criminal offense, but

it suffices that he adopt the goal of furthering

or facilitating the criminal endeavor. He may do

so in any number of ways short of agreeing to

undertake all of the acts necessary for the

crime’s completion.

118 S. Ct. at 477. To be convicted of conspiracy

a person must agree with other persons that they

will engage in conduct that constitutes a crime.

The purpose of the agreement is to facilitate the
commission of a crime, even though a particular

defendant need not perform all of the criminal

acts. A conspirator must intend to further an

endeavor which, if completed, would satisfy all

of the elements of a criminal offense. Salinas.

 Salinas, applying as it does to predicate acts,

did not specifically change the law of this

circuit. As far back as United States v.

Neapolitan, 791 F.2d 489 (7th Cir. 1986), we said

that a conspiracy to violate RICO can be analyzed

as two agreements: "an agreement to conduct or

participate in the affairs of an enterprise and

an agreement to the commission of at least two

predicate acts." At 499. As the sentence

structure indicates, we have not required

personal participation in the commission of the

predicate acts. But also the sentence structure

shows, at least implicitly, that we have required

personal participation in the affairs of the

enterprise. It is this requirement that the

plaintiffs argue must be altered in light of

Salinas. The argument is that if the general law

of conspiracy applies to subsection (d), then it

is wrong to require personal participation in the

conduct of the affairs of the enterprise. Rather,

if it is enough that one agree that someone

commit the predicate acts, it should also be

enough for a subsection (d) claim that a person

agree that someone should conduct the affairs of

the enterprise.

 Thus the issue before us is whether Salinas

means that one does not need to personally

participate in the operation or management of the

enterprise in order to violate subsection (d).

Salinas, focused as it was on the issue of

predicate acts, is not directly helpful in

supplying an answer to the question. It referred,

however fleetingly, to the enterprise requirement

but said only that although an enterprise can

exist with only one actor to conduct it, in most

cases there will be more than one. That fact may

"make it somewhat difficult to determine just

where the enterprise ends and the conspiracy

begins . . . ." 118 S. Ct. at 478.

 To summarize that which is clear, subsection

(d) of sec. 1962 requires an agreement to violate

another provision of the statute, in this case

subsection (c). As we have seen, after Reves

subsection (c) applies only to those with some

degree of management or control over the RICO

enterprise. But under general conspiracy law,

which Salinas says applies to subsection (d), a

defendant does not have to agree personally to

perform every aspect of a violation and, in

particular, one does not need to agree personally

to commit the predicate acts. But that leaves a

question: what level of participation in the
conduct of the enterprise, then, does it take to

conspire to violate subsection (c)? It is a

question which has received a bit of attention

both before and after Salinas. See, e.g., United

States v. Antar, 53 F.3d 568 (3d Cir. 1995);

Neibel v. Trans World Assurance Co., 108 F.3d

1123 (9th Cir. 1997); United States v. PosadaRios, 158 F.3d 832 (5th Cir. 1998).

 There are various possible answers. Conceivably,

it could mean one must agree to actually manage

or control, a notion we rejected in United States

v. Quintanilla, 2 F.3d 1469 (1993). It could mean

one has to agree to participate in the conduct of

the enterprise. It could mean one has to agree to

"maintain an interest in or control of an

enterprise or to participate in the affairs of an

enterprise through a patten of racketeering

activity," which was our formulation in Goren v.

New Vision Int’l, Inc., 156 F.3d 721 (1998). It

could mean one has to agree to exercise "some

measure" of control over the corporation, as we

put it in Bachman v. Bear, Stearns & Co., 178

F.3d 930 (1999). It could mean, as the plaintiffs

argue, that one agrees that someone will

participate in the control of the enterprise--

that is, that one does not need to agree to

personally participate in the control of the

enterprise, one needs to agree only that someone

should be in charge. Or it could mean something

like the formulation of the plaintiffs, offered

at oral argument, that a RICO defendant must have

knowledge of a violation and agree to facilitate

any part of the subsection (c) violation.

 In our long-established, two-part analysis of

subsection (d) we have consistently required

personal participation as to the first element

and only an agreement that someone should perform

the predicate acts. Neapolitan, 791 F.2d at 499.

In Goren we concluded that a defendant can be

charged under (d) even if he cannot be

characterized as an operator or manager of a RICO

enterprise under Reves. However, we also said

that subsection (d) should not be used to

criminalize mere association with an enterprise.

In order to state a claim under subsection (d)

Ms. Goren must allege (1) that each defendant

agreed to maintain an interest in or control of

an enterprise or to participate in the affairs of

an enterprise through a pattern of racketeering

activity and (2) that each defendant further

agreed that someone would commit at least two

predicate acts to accomplish those goals. 

156 F.3d at 732. Goren indicates that the first

element requires "each defendant" to participate,

while the second requires only that each

defendant agree that someone should commit the
predicate acts.

 In Bachman we noted that Bear Stearns, which

was allegedly hired to undervalue a business,/2

was a mere hireling. As to a subsection (d)

claim, we said, in dicta, that Bear Stearns

cannot be thought to have been conducting or to

have agreed to conduct the affairs of any

corporation. "That would require Bear Stearns to

have exercised (or agreed to exercise, in order

to be liable as a RICO conspirator) at least some

measure of control over the corporations." 178

F.3d at 932.

 We see no reason to disturb the requirement for

some degree of personal participation as to the

first element. It is not enough that one agree

that someone should run the enterprise and then

have no further concern about it. The

participation element is different in kind from

the requirement for a pattern of racketeering

activity. Reves makes clear that subsection (c)

does not criminalize the actions of everyone who

works for a RICO enterprise, nor does it bring

within RICO everyone who commits what would be

two predicate acts. It only applies to those who

participate in the conduct of the enterprise

through a pattern of racketeering activity.

Agreeing to participate somehow in an enterprise

is active; it is personal. In Salinas the Court

noted a close identity between the enterprise

itself and the conspiracy to run it. An agreement

to join a conspiracy is highly personal;

similarly, an agreement to participate in the

conduct of an enterprise is also personal and

active. But how one agrees to get the job done--

through a pattern of racketeering activity--is

not necessarily personal; it can be delegated.

 We suspect that the perception of a conflict

between Reves and Salinas does not arise solely

or even primarily over a requirement for some

degree of personal participation in the affairs

of the enterprise. Rather, the conflict is over

the level at which personal participation in the

enterprise is required. The conflict is a result

of the limitation set out in Reves as to who can

be liable for the substantive offense--not

everyone associated with the enterprise, but only

those who somehow operate or manage the

enterprise. How does that square with conspiracy

law? Intuitively, it seems wrong that a person

could conspire to violate a law which does not

apply to him. The problem can be illustrated by

contrasting a RICO conspiracy to violate

subsection (c) with a more familiar conspiracy--

say one to distribute narcotics. To oversimplify,

in a drug distribution conspiracy, a street

seller can be a member of the conspiracy if he

agrees with the goal of the conspiracy--to
distribute drugs. The underlying statute which he

is conspiring to violate makes it unlawful for

"any person knowingly or intentionally (1) to

manufacture, distribute, or dispense, or possess

with intent to manufacture, distribute, or

dispense, a controlled substance[.]" (Emphasis

added.) 21 U.S.C. sec. 841. The law makes clear

that any person who conspires to commit a drug

offense is subject to the same penalties as a

person who violates the substantive provision. 21

U.S.C. sec. 846. In other words, sec. 841 does

not apply only to those persons who "participate,

directly or indirectly, in the control" of the

distribution network. If it did, would we

confidently say that a street seller could be a

conspirator?/3 In contrast, the limitation on

the universe of people that subsection (c) of

sec. 1962 applies to is what makes a conspiracy

to violate that section conceptually difficult.

It is a conspiracy to violate a very specific

statute which only applies to those who meet the

operation or management test of Reves.

 Yet we previously have said that to be a

conspirator under subsection (d) one does not

need to be an operator or manager. MCM Partners

v. Andrews-Bartlett & Assocs., 62 F.3d 967 (7th

Cir. 1995), cert. denied, ___ S. Ct. ___ (Oct. 4,

1999). Although in Bachman we said that one must

agree to exercise "at least some measure of

control" over the corporation, we most often say

that a defendant may conspire to violate

subsection (c) "if [he] agreed ’to conduct or

participate in the affairs of an enterprise

through a pattern of racketeering activity . . .

.’" 62 F.3d at 980; see also Neapolitan, Goren,

and Quintanilla. We think our formulation

continues to describe in a general way the proper

standard.

 But it needs to be clarified because of a

discussion in Reves which may cause the phrase to

be misunderstood or to have taken on a meaning

slightly different from that we intended prior to

Reves.

 We know now that our phrase "conduct or

participate in the affairs" of the corporation is

broader than the formulation under Reves for the

underlying substantive offense. The Court in

Reves explained:

 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." Petitioners argue that Congress used

"participate" as a synonym for "aid and abet."

That would be a term of breadth indeed, for "aid

and abet" "comprehends all assistance rendered by

words, acts, encouragement, support, or
presence." But within the context of sec.

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.

507 U.S. at 178-179 (internal citations omitted).

The phrase "participate in the conduct of affairs

of an enterprise" has taken on the attributes of

a term of art. It follows that our long-used

phrase "participate in the affairs" may also have

a subtly altered meaning after Reves, a meaning

we could not have anticipated in Neapolitan. At

the risk of splitting hairs that are already

split, we will attempt to make sense out of all

of this, reconcile Salinas and Reves, and explain

the kind of personal participation we hold is

necessary to violate subsection (d).

 To conspire to commit a subsection (c) offense,

one would not need, necessarily, to meet the

Reves requirements: one does not need to agree

personally to be an operator or manager. On the

other hand, one cannot conspire to violate

subsection (c) by agreeing that somehow an

enterprise should be operated or managed by

someone. That would impose a meaningless

requirement and cast a frighteningly wide net.

Rather, one’s agreement must be to knowingly

facilitate the activities of the operators or

managers to whom subsection (c) applies. One must

knowingly agree to perform services of a kind

which facilitate the activities of those who are

operating the enterprise in an illegal manner. It

is an agreement, not to operate or manage the

enterprise, but personally to facilitate the

activities of those who do.

 All of this said, we are painfully aware that

this is not a bright line, that district judges

will have to evaluate whether what a defendant

agreed to do is sufficient to bring his conduct

within subsection (d). The district court in this

case did a remarkable job of evaluating these

issues. His conclusion, however, was that to be

in violation of subsection (d) one must agree to

personally participate in the operation or

management of the enterprise. That conclusion was

wrong. Therefore, we must reverse the court’s

judgment and remand the case for reevaluation of

the liability of these defendants consistent with

this opinion./4 
REVERSED AND REMANDED.

/1 The district court correctly assumed facts

favorable to the plaintiffs to be true when

considering the defendants’ motions. We, of

course, must do the same.

/2 When we reviewed Bachman, which came to us on a

challenge to a Rule 12(b)(6) dismissal, we

assumed all alleged facts to be true without, as

Chief Judge Posner noted, "vouching for their

truth."

/3 The drug laws, of course, contain provisions

which apply only to those in control; e.g.,

enhanced sentencing penalties for organizers or

leaders. See 21 U.S.C. sec. 848(c). But that

limitation is not found in sec. 841.

/4 Because this case presents a close question, our

opinion has been circulated, pre-publication, to

the full court under Circuit Rule 40(e). No judge

voted in favor of hearing the case en banc.

Circuit Judge Joel M. Flaum did not participate

in this case.