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Lionel Smith is right. Where the plaintiff is entitled to recover in restitution the defendant's profits, his right of recovery includes the defendant's ill-gotten gains. The fact that the defendant acted illegally will not shield him from liability provided of course that the plaintiff was not involved in the illegality. See e.g. Reading v. Att-Gen. Another example is discussed in 80 Columbia L. Rev. 504, 555-56. The same approach should apply in the context of tracing.

Daniel Friedmann

----- Original Message -----

From: "Lionel Smith"
To: <ENRICHMENT@LISTS.MCGILL.CA>
Sent: Wednesday, April 23, 2003 1:41 AM
Subject: Re: [RDG:] Tracing Into Proceeds of Illegal Investments

So long as the plaintiff only succeeds to whatever rights the defendant has, I am not sure there would be any difficulty, or any inconsistency in the law.

Eg if the defendant's rights are subject to forfeiture to the state, so too would be the plaintiff's once the trust was established. Or if a victim of the crime could recover from the defendant, presumably he could recover from the plaintiff as well. Such a plaintiff does not have the status of a bona fide purchaser for value without notice.