at a highly inflated price and later receives a kickback from his friend. for performing this service.43

If this series of events involved the expenditure of pension plan funds, the crime would be prosecutable (both as to the officer and the friend) under 18 U.S.C. 1954, but because no embezzlement or conversion of union funds has occurred (and thus no violation of 29 U.S.C. 501 (c)), no Federal violation of any kind exists under present law. Yet, the danger to the union's membership is as great in one case as the other; indeed, the danger in the example given may even be greater, for a local union is more likely to be under the control of one man, able to manipulate its expenditures for his own aggrandizement, than a pension fund which is controlled by a board of trustees.

In the Committee's view, the offenses in this paragraph each would significantly strengthen existing Federal protection of the employees of labor organizations by punishing forms of corrupt practices not now subject to effective penal sanctions.

The conduct in paragraph (3) of section 1752 is offering, giving, or agreeing to give. As no culpability standard is set forth in this section, the applicable state of mind that must be proved with respect to this element is at least "knowing," i.e., that the offender was aware of the nature of his conduct.44

The element that the offer, gift, or agreement to give was "for or because of the recipient's conduct relating to" one of the matters enumerated in subparagraphs (A) through (C) states the particular purpose for which it must be shown that the conduct was performed.

The remaining elements-e.g., that the recipient was an officer of a labor organization are existing circumstances, as to which the applicable state of mind to be proved is at least "reckless.” 45

The terms "anything of value," "officer," and "labor organization” used in this paragraph, are defined in subsection (b). These terms have been discussed in connection with the foregoing paragraphs.

Paragraph (4) provides that a person is guilty of an offense if he solicits, demands, accepts, or agrees to accept anything of value, the offering of which constitutes an offense described in paragraphs (1) through (3).

This carries forward, inter alia, the offense in 29 U.S.C. 186 (b) (1) 47 and the aspect of 18 U.S.C. 1954 dealing with soliciting or receiving a bribe. Quite clearly the person who demands, solicits, or accepts a bribe is as blameworthy as the person who offers or gives it and should be equally subject to penal sanctions. This paragraph insures such

coverage.

Both 29 U.S.C. 186(b)(1) and 18 U.S.C. 1954 include the word "receives." The Committee has deleted this word as fully encompassed

43 Another example of the kind of situation sought to be reached by this section includes the conduct of a union official. who is seeking a loan from a bank for his personal use, agreeing to transfer a substantial amount of the union's funds to that bank if it will provide the needed loan. Frequently these amounts will be transferred into accounts bearing less interest. but even when they are not, there can be no justification for a union officer's using his union's assets to promote his personal gain.

44 See sections 303 (b) (1) and 302(b)(1).

45 See sections 303 (b) (2) and 302 (c) (1).

48 "Solicits" is intended to have the same meaning as in section 1351 (Bribery). See also section 111.

47 As applied to 29 U.S.C. 186 (a) (4).

Section 1753.

within the term "accepts." It is intended that "accepts" be given a broad interpretation so as to include the indirect as well as the direct receipt of a payment."

48

The conduct in this offense is soliciting, demanding, accepting, or agreeing to accept. Since no culpability standard is specifically prescribed, the applicable state of mind to be proved is at least "knowing," i.e., that the offender was aware of the nature of his actions.49

The fact that what was solicited, etc.,was "anything of value" 50 is an existing circumstance, and, as no culpability level is set forth in this section, the applicable state of mind that must be shown is at least "reckless." 51

The element that the offering of the thing of value would constitute an offense under paragraph (1), (2), or (3) requires no proof of any mental state on the part of the defendant.52

4. Jurisdiction

Subsection (d) provides that there is Federal jurisdiction over an offense in this section if the employer or labor organization is engaged in, or the employee welfare benefit plan or employee pension benefit plan covers employees engaged in, an industry affecting interstate or foreign commerce. This carries forward the jurisdictional criteria used in 18 U.S.C. 1954 and 29 U.S.C. 186. The Committee considered but decided against expanding Federal jurisdiction to include enclaves and ancillary jurisdiction (i.e., jurisdiction where labor bribery was committed in the course of another Federal offense), on the ground that the "affecting commerce" base is sufficiently broad to reach virtually every labor bribery incident in which there is a substantial Federal interest.

5. Grading

An offense under section 1752 is graded as a Class E felony (up to three years in prison). This represents an increase from the current one-year penalty under 29 U.S.C. 186 (a) (4), but a decrease from the five-year maximum penalty currently authorized under 18 U.S.C. 1954. As previously indicated, the Committee deems the increase with respect to the title 29 offenses here carried forward to be justified by the seriousness of the offense, which includes a specific intent element, as compared to the other essentially regulatory offenses in 29 U.S.C. 186 which will be retained as misdemeanors.

SECTION 1753. SPORTS BRIBERY

1. In General and Present Federal Law

This section brings forward 18 U.S.C. 224 as well as part of the coverage of 18 U.S.C. 1952. A special provision dealing with sports bribery was deemed justified by the unique nature of this offense.

18 U.S.C. 224 punishes by up to five years in prison whoever "carries into effect" (or attempts or conspires to do so) any "scheme in commerce to influence, in any way, by bribery any sporting contest,

48 See United States v. Lanni, 466 F. 2d 1102, 1108-1109 (3d Cir. 1972), and cases cited therein.

49 See sections 303(b) (1) and 302 (b) (1).

50 This term has been amply discussed in connection with paragraph (1) and that discussion should be consulted here.

51 See sections 303(b) (2) and 302(c) (1).

52 See section 303 (d) (1) (A).

with knowledge that the purpose of such scheme is to influence by bribery that contest." The term "sporting contest" is defined to mean any contest in any sport, between individual contestants or teams of contestants (without regard to the amateur or professional status of the contestants therein), the occurrence of which is publicly announced before its occurrence. The term "scheme in commerce" is defined to mean any scheme effectuated in whole or part through the use in interstate or foreign commerce of any facility for transportation or communication.

This statute was enacted in 1964 in response to the periodic "pointshaving" and game-throwing that occurred in sports, particularly college basketball. When amateur and professional sports became a target of organized crime and gamblers, Congress concluded that national legislation was needed.53 However, since its enactment, there have been few prosecutions under this statute.54

18 U.S.C. 1952, the so-called Travel Act, also reaches sports bribery. It punishes by up to five years in prison whoever travels in interstate or foreign commerce or uses any facility in interstate or foreign commerce, including the mail, with intent to (1) distribute the proceeds of any "unlawful activity," (2) commit any crime of violence in furtherance of any "unlawful activity," or (3) otherwise promote, manage, establish, carry on, or facilitate the promotion, etc., of any "unlawful activity" and who thereafter performs or attempts to perform any of the acts specified in the above subparagraphs. The term "unlawful activity" is defined, inter alia, to include bribery in violation of the laws of the State in which committed or of the United States.

55

As of 1960, some thirty-two States proscribed sports bribery in some form. Since then the number of States having such statutes has increased, although the content of the statutes varies greatly.

56

2. The Offense

Subsection (a) provides that a person is guilty of an offense if, with intent improperly to influence the outcome, result, or margin of victory of a publicly exhibited sporting contest, (1) he offers, gives, or agrees to give anything of value to a participant, official, or other person associated with the contest, or (2) as a participant, official, or other person associated with the contest, he solicits, demands, accepts, or agrees to accept anything of value.

57

The term "publicly exhibited sporting contest" is defined in subsection (b) to mean a contest in any sport involving human beings or animals, whether as individual participants or teams of participants, the occurrence of which is publicly announced in advance of the event. This definition, which is similar to that suggested by the National Commission,58 is derived from 18 U.S.C. 224. No substantial change is intended, except that the present definition makes clear that contests involving animals (e.g., dog racing) are included.

53 See S. Rept. No. 593, 88th Cong.. 1st Sess., p. 2 (1963).

54 See United States v. Nolan, 402 F. 2d 552 (5th Cir. 1969), cert. denied, 400 U.S. 819 (1970).

See Note. Control of Nongovernment Corruption by Criminal Legislation, 108 U. Pa. L. Rev. 848. 858 (1960).

56 See H. Rept. No. 1053. 88th Cong.. 1st Sess.. p. 2 (1963).

57 "Solicits" does not mean the conduct described in section 1003 (criminal solicitation), see section 111. and is intended to bear the same meaning as in section 1351 (Bribery). 58 See Final Report, § 1757(3).

The Committee determined, as did the National Commission, not to punish mere knowing participation in a rigged sports contest.59 The normal complicity requirement of an active role in the bribery (see section 401) is considered an appropriate standard, here as elsewhere, for the imposition of criminal liability.60

The term "anything of value" is defined in section 111. Because of its breadth, which clearly would include the rendering of an athlete's services on behalf of his team or association, the term "improperly" has been inserted in the intent element. Thus, it must not only be shown that the accused had an intent to influence the outcome of the contest, but that he intended to do so improperly.

The conduct in paragraph (1) is offering, giving, or agreeing to give, and in paragraph (2) the conduct is soliciting, demanding, accepting, or agreeing to accept. Since no culpability standard is specifically designated, the applicable state of mind to be proved is at least "knowing," i.e., that the offender was aware of the nature of his

actions.6 61

The remaining elements in paragraph (1) and (2) are existing circumstances. Since no culpability level is prescribed in this section, the applicable state of mind that must be shown is, at a minimum, "reckless," i.e., that the offender was aware of but disregarded the risk that the circumstances existed (e.g., that the offer involved "anything of value" and was made to a "participant").62

The element common to both offenses of an intent improperly to influence the outcome, result, or margin of victory of a publicly exhibited sporting contest states the purpose for which it must be proved that the conduct was performed.

3. Jurisdiction

There is Federal jurisdiction over an offense described in this section. in two instances. The first is if the United States mail or a facility of interstate or foreign commerce is used in the planning, promotion, management, execution, consummation, or concealment of the of fense, or in the distribution of the proceeds of the offense. This basically brings forward the jurisdictional scope of 18 U.S.C. 224 and part of the scope of 18 U.S.Č. 1952.

The second instance is when movement across a State or United States boundary by the actor, or by a participant, official, or other person associated with the sporting contest occurs in the planning, promotion, etc., of the offense. This carries forward the aspect of 18 U.S.C. 1952 covering interstate or foreign travel but broadens it to embrace such travel not only by the offender but by the other listed categories of persons.

4. Grading

An offense under this section is graded as a Class E felony (up to three years in prison). This represents a slight reduction in grading from the maximum five-year prison term currently imposable.

59 See Final Report, § 1757. Comment, p. 233; Working Papers, pp. 972-973.

By contrast, the Model Penal Code proposed to penalize a player who is not himself bribed, but who is aware that other participants have been bribed but does nothing about it. See Model Panel Code. § 2249 (P.O.D., 1962).

61 See sections 303 (b) (1) and 302 (b) (1). 62 See sections 303 (b) (2) and 302 (c) (1).

SUBCHAPTER G.-INVESTMENT AND MONETARY OFFENSES

(Sections 1761-1763)

This subchapter brings forward, largely by cross-reference and unchanged, various offenses currently outside title 18, relating to the securities, banking, and commodities fields, all of which are subject to complex regulatory requirements. Section 1761 deals with securities offenses; it preserves current law as to the definitions of the offenses, except that the vague culpability term "willfully," which has resulted in diverse interpretations, has been replaced. In addition, the Committee has established new grading distinctions among the offenses, transferring those deemed most serious into the proposed new Code as felonies, while retaining others as misdemeanors in title 15. Sections 1762 (Monetary Offenses) and 1763 (Commodities Exchange Offenses) carry forward certain serious offenses in titles 7, 12, and 31, United States Code, without substantial change.

1. In General

SECTION 1761, SECURITIES OFFENSES

This section incorporates those provisions of the securities laws in title 15 that will be treated in the criminal Code as felonies. The remaining offense are retained in title 15 as misdemeanors. The only significant changes made are in the areas of culpability and grading. There has been no attempt to change the substantive definitions of the offense (except to use standardized language for all the false statements provisions). The Committee has eliminated the prevalent but vague culpability term "willfully" in present law and has replaced it (via the conforming amendments) with the requirement that felonies be committed "knowingly." The Committee has also created additional penalty distinctions, with different offenses graded as Class D felonies, Class E felonies, and Class A misdemeanors.1

1 The misdemeanors, while being downgraded as to penalty, have been modified in the conforming amendments to require only "recklessness" rather than willfulness as the applicable culpability level. The reckless standard, of course, operates only as to existing circumstances or results of conduct; it does not operate as to the conduct element itself, where the requisite culpability is "knowing." See section 301 (c). For example, a reckless violation of the prohibitions against trading by persons interested in a distribution of securities in violation of Exchange Act Rule 10b-6, 17 C.F.R. 240, 10b-6, would require proof that a broker, participating as a member of an underwriting group for the distribution, recklessly bid for or purchased the securities in the open market prior to the completion of the distribution. The proof must establish that the offending broker was aware that the other members of the underwriting group may not have completed their share of the distribution, but consciously disregarded a substantial risk that his bids or purchases would have a manipulative effect on the price of the security or that the manipulative result would occur. The risk of price manipulation must be of such a nature or degree that its disregard constitutes a gross deviation from the standard of conduct that an ordinary broker would exercise under all of the circumstances. A broker who is a member of a large underwriting group for a widely traded security, who placed an isolated bid in the open market for a small quantity of the security, would not be subject to criminal sanctions. While his actions may have technically violated the rule, there was an absence of a substantial and unjustifiable risk that manipulation would occur.