§ 140A.103.Constructive Trust

An equitable remedy stated in statutory form.

Subsection (a): a person or enterprise that through racketeering acquires property, or prevents another person from receiving property that by law is required to be transferred or paid to that person, is an involuntary trustee. That trustee — or any other person or enterprise other than a protected purchaser — holds the property and its proceeds in constructive trust for anyone entitled to remedies under the chapter.

The second limb is drafted for this subject. Preventing someone from receiving property owed to them by law describes unpaid wages, which is what labour trafficking consists of.

A constructive trust is more powerful than a damages judgment. It attaches to the property itself, so a claimant can follow the asset rather than queue as an unsecured creditor — which matters against defendants with more assets than cash.

"Or any other person or enterprise" is what makes it work. The trust binds people down the chain who received the property, not only the racketeer.

Subsection (b) supplies the necessary limit. A bona fide purchaser for value who was reasonably without notice of unlawful conduct and did not knowingly take part in an illegal transaction is neither an involuntary trustee nor subject to the trust.

All three conditions are required, and the middle one is objective — reasonably without notice, so wilful blindness will not do.

Without that protection, property that passed through a racketeering enterprise would be permanently unmarketable.