Help
Options
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't Know
Remaining cards (0)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
CFE - Legal Elements
CFE - Legal Elements of Fraud
| Question | Answer |
|---|---|
| What is the supreme law of the land in the US | The U.S. Constitution |
| what is substantive law? | the basic laws of rights and duties (contract law, tort law, criminal law etc.) |
| what is common law | Law based on the usages and customs of a society as interpreted by the judiciary (often referred to as "judge-made" law)what is |
| what is statutory law | Statutes passed by the federal or state legislatures (and regulations passed by administrative bodies) |
| 2 sources of substantive law | statutory law and common law |
| What is legal precedent | court decisions that establish particular legal principles for other courts to apply |
| what is jurisdiction | the power of a court to hear and decide a given case |
| what is venue | an element of jurisdiction referring to the physical location where the lawsuit is to be tried |
| Elements required for a court to have jurisdiction in a case | subject matter jurisdiction, personal jurisdiction, proper venue |
| what is subject matter jurisdiction | a court's ability to hear the type of subject matter underlying the case |
| what is personal jurisdiction | a court's ability to exercise authority over a particular person |
| typical functions of lower-level state trial courts | try misdemeanors, hold preliminary hearings for felony cases, try civil disputes below a certain dollar amount |
| typical functions of higher-level state trial courts | try felony cases, try civil disputes above a certain dollar amount |
| typical function of state appellate courts | review trial court decisions |
| typical function of state superior appellate courts or supreme courts | review lower appellate court decisions |
| 3 tiers of federal courts | district courts, courts of appeal, supreme court |
| what is a writ of certiorari? | an order of a higher court for a lower court to deliver a case record for the higher court to review for appeal |
| who may appeal a criminal judgment on the merits | The defendant |
| who may appeal an adverse judgment in a civil case | Any party |
| What is double jeopardy | a constitutionally prohibited situation where a defendant is tried after an acquittal or conviction for the same criminal offense. |
| what are parallel proceedings? | Simultaneous criminal and civil actions against the same defendant that are based upon a single set of facts. |
| potential penalties for raising Fifth Amendment rights against self-incrimination in a civil case | dismissal of affirmative defenses, striking of defendant's testimony from the record |
| what are procedural laws | laws setting out the rules of the legal system and procedures to be followed in hearing a grievance |
| what is a "harmless error" in the context of an appeal | An error at trial that did not affect the "substantial rights" of a party and supposedly would not have affected the fact finder's decision |
| types of questions juries answer at trial | questions of fact |
| types of issues judges generally decide in a jury trial | rules of evidence and issues of law |
| what is the definition of fraud | Any intentional or deliberate act to deprive another of property or money by built, deception, or other unfair means. |
| elements to prove fraudulent misrepresentation of material facts | misrepresentation of a material fact, knowledge that the representation was false, reliance on the misrepresentation, damages resulting from the misrepresentation. |
| what is materiality? | statements sufficiently important or relevant to a reasonable person in acting or making a decision |
| 2 types of bribery | commercial bribery official bribery |
| elements to prove commercial bribery | giving or receiving a thing of value, with corrupt intent, to influence the recipient's action in a business decision, with the victim's knowledge or consent |
| elements to prove official bribery | giving or receiving a thing of value, with corrupt intent, to a public official, to influence an official act. |
| elements to prove a civil conflict of interest claim | an agent of a principal or employer, took an interest in a transaction, that is actually or potentially adverse to the principal, the interest was not disclosed to the principal |
| elements to prove embezzlement | Defendant took or converted, without the knowledge or consent of owner, money or property of another, that was properly entrusted to the defendant |
| elements to prove larceny | unlawfully taking or carrying away, money or property of another, with the consent of the owner, with the intent to permanently deprive the owner of its use or possession. |
| what does the fiduciary duty of loyalty require | employees/agents must act solely in the best interest of their employers/principals, free of any self=dealing, conflicts of interest, or other abuse of the principals for personal advantage. |
| what does the fiduciary duty of care require | individuals in a fiduciary relationship must act with such care as an ordinarily prudent person would employ in similar circumstances. |
| what does the mail fraud statute criminalize | use of the mail to perpetrate a scheme to defraud a victim of money or property |
| what does the wire fraud statute criminalize | defrauding a victim of money or property by means of wire or other electronic communications (e.g. computer, telephone, radio, or TV) in foreign or interstate commerce. |
| primary difference between mail and wire fraud | wire fraud statute requires an interstate or foreign communication for a violation to occur. |
| what does the principal federal false statements statute prohibit | a person lying to or concealing material information from a federal official |
| elements to prove false claims and statements | defendant knowingly and willingly (or with reckless disregard for truth or falsity), made a false statement (or used a false document), that was material, regarding a matter with jurisdiction of any agency of US, with knowledge of its falsity. |
| 2 major parts of the Foreign Corrupt Practices Act (FCPA) | anti-bribery provisions, accounting provisions (books and records and internal controls provisions |
| what do the anti-bribery provisions of the FCPA criminalize | bribery of a foreign official for business purposes |
| what is the primary purpose of the FCPA's accounting provisions | to compel corporate transparency to prevent publicly traded entities from disguising bribes as legitimate commercial transactions. |
| elements to prove an FCBA bribery violation | a regulated party, made a payment or offer, to a foreign official, with a corrupt intent to influence a decision, with a business purpose |
| elements to prove criminal conspiracy | an agreement with at least one other person to commit an illegal act, knowledge of the purpose of the agreement and intent to join in the agreement, at least one overt act in furtherance of the conspiracy |
| what is obstruction of justice | when an individual engages in an act designed to impede or obstruct the investigation or trial of other substantive offenses |
| what is perjury | an intentional false statement given under oath on a material point |
| what is a qui tam suit | a civil suit in which a private individual sues on behalf of the government to recover damages for criminal or fraudulent actions committed agains the government |
| 3 categories of offenses under the UK Bribery Act | general commercial bribery offenses, bribing a public foreign official, a corporate offense of failure to prevent bribery |
| what does the Racketeer Influenced and Corrupt Organizations (RICO) Act outlaw? | Investing ill-gotten gains in another business enterprise, acquiring an interest in an enterprise through certain illegal acts, and conducting an enterprise's affairs through certain illegal acts. |
| what does the Economic Espionage Act of 1996 outlaw | theft of commercial trade secrets to obtain and economic advantage and to benefit a foreign government, instrumentality, or agent |
| what does the aiding and abetting statute criminalize | inducing another to commit an offense or aiding another in the commission of an offense |
| what does the Criminal False Claims Act criminalize | Presenting or making any false, fictitious or fraudulent claim against any agency or department of the US |
| what is misappropriation of trade secrets | The intentional, illegal use of the trade secrets of another person for an unauthorized purpose |
| Elements of an illegal gratuity | at thing of value, was given, offer, or promised to (or demanded, sought, received or accepted by), a (present, former, or future) public official, for or because of any official act performed or to be performed by such public official |
| primary difference between a bribe and an illegal gratuity | an illegal gratuity charge doesn't require proof that the gratuity was given for the purpose of influencing an official act |
| what are breach notification laws | laws that require companies to notify their consumers of data breaches involving personal information |
| elements to prove computer fraud under the 18 U.S.C. 1030(a)(4)? | knowingly accessing a protected computer without authorization (or exceeding authorized access), with the intent to defraud, and thereby obtaining anything of value (more than 5K in the course of a year) |
| what does the Electronic Communications Privacy Act (ECPA) govern | illegal interception of electronic communication and the unauthorized access of electronically stored data |
| what is criminal restitution | money ordered by the court to repay a victim for financial losses |
| what are whistle blowers protection laws? | laws that prohibit taking any harmful action against a person for providing truthful information relating to the commission or possible commission of a crime |
| in which courts are bankruptcy cases heard | U.S Bankruptcy Courts |
| Responsibility of bankruptcy judges | hear cases involving debtor and creditor rights, approve plans for reorganization, award fees to professionals appointed by the court, conduct hearings and trials |
| responsibilities of the Office of the US Trustee | perform administrative tasks in bankruptcy cases, appoint trustees, examiners, and Chapter 11 committees, oversee and monitor trustees, review employment and fee applications, appear in court on matters of interest to the estate and creditors |
| why would a bankruptcy court appoint an examiner | to investigate certain allegations of fraud and misconduct on the part of the debtor )or principals of the debtor |
| powers of examiners in bankruptcy proceedings | subpoena records, depose witnesses, perform certain duties of trustees (as expanded by the court) |
| what does it mean for a security interest to be "perfected"? | every legally required step has been met to make the security interest enforceable against a debtor in bankruptcy |
| what is a secured creditor | a creditor who has property perfected security interest in a debtor's property; these creditors will typically be paid first in distributions to creditors in a bankruptcy |
| what is an unsecured creditors | a creditor who has no collateral or interest in the debtor's property that could be used to satisfy the debt. |
| what is an unsecured deb | a debt where the amount of the note is greater than the value of the security interest |
| role of an adjustor in a bankruptcy proceeding | to handle the peripheral duties of the trustee and aid both the trustee and the debtor |
| most common type of bankruptcy proceeding | Chapter 7 bankruptcy |
| types of debts not discharged during a personal bankruptcy | taxes, fines, alimony, child support, most student loans |
| what is Chapter 7 bankruptcy | a type of bankruptcy that involves the liquidation of the debtor's assets to pay creditors' claims and a discharge of all dischargeable debts |
| what is Chapter 11 bankruptcy | type of bankruptcy that reorganizes the debtor's financial affairs and allows it to continue as a growing concern |
| power that Bankruptcy Rule 2004 gives to the bankruptcy trustee | Power to subpoena records of testimony |
| What is 341(a) examination in a bankruptcy proceeding | a fact-finding meeting in which creditors and the trustee may examine and ask pertinent questions of the debtor |
| types of items a fraudster might hide in a concealed assets bankruptcy scheme | personal property (cash, consumer property etc.), real property, interests in partnerships and corporations, lawsuits in which the debtor is the plaintiff, books and records |
| what is a concealed assets scheme in a bankruptcy case | a scheme in which the debtor hides assets or other relevant information to harm the creditor's ability to collect payment |
| what is a planned bustout scheme | a planned bankruptcy in which a fraudster orders goods on credit with no intention of repaying the debt and then conceals the proceeds or flees the jurisdiction with them |
| elements of a bankruptcy crime | committed during the pendency of a bankruptcy proceeding, with the defendant's knowledge, with the fraudulent intent to defeat bankruptcy laws |
| under what chapters of the Bankruptcy Code may involuntary bankruptcies be filed | Chapters 7 and 11 |
| what is an involuntary bankruptcy? | a bankruptcy where unpaid creditors file a petition forcing the debtor into bankruptcy |
| what agency usually prosecutes bankruptcy fraud cases | US Attorney's Office |
| What does the Securities Office of1933 regulate | issuance (public offering) of securities |
| what does the Securities Exchange Act of 1934 regulate | the post-issuance trading of securities through brokers and exchanges |
| Purpose of Rule 10b-5 under the Securities Exchange Act of 1934 | to prohibit false statement and other fraudulent activity in connection with the purchase or sale of any security |
| what is the Financial Industry Regulatory Authority (FINRA) | a self-regulatory organization (SRO) that oversees the stock and bond markets |
| what is a self-regulatory organization (SRO) | a non-governmental organization (NGO) that has some degree of regulatory authority over an industry or profession |
| what is the Uniform Securities Act | A model statute to help each state draft its own securities laws and to help bring uniformity to state regulation of securities |
| what is a security | a fungible, negotiable financial instrument that represents financial value |
| 4 elements of the Howey test | an investment of money or other asset, in a common enterprise, expectations of making a profit, profits to be derived sole from the efforts of someone besides the investor |
| what is churning | the excessive trading of a customer account to generate commissions while disregarding the customer's interests |
| what are suitability violations by securities broker-dealers | when security broker-dealers recommend investments or strategies that are unsuitable for their clients |
| what is the "know your customer" rule for securities broker-dealers? | securities broker-dealers must know their customer financially to effectively service the customer's account and to minimize the risk of recommending an inappropriate investment |
| what is insider trading | trading in securities based on material, non-public information |
| what is futures contact | a legally binding commitment to make delivery (i.e.sell) or to take delivery of (i.e.buy) a given quantity and quality of a commodity at a specified price and on a specified future date |
| what is stock | an equity that represents a right of ownership in an enterprise |
| what are bonds (in the securities context)? | Securities that have a stated interest rate that is paid semi-annually until maturity. |
| what is an option contract | a contract that confers the right--not an obligation--to the option buyer to take delivery of (i.e. buy) and imposes obligations on the option seller |
| what are certificates of deposit (CD's) | Interest-bearing investment products that provide limited access to the money invested and a modest rate of interest |
| what is a general partnership | an association of 2 or more persons acting as co-owners in a business for profit |
| what is a limited partnership | a form of partnership comprised of both limited partners and general partners |
| What does the Commodities Futures Trading Commission (CFTC) regulate | activities of futures commission merchants (FCM's) and their associated persons |
| 5 elements to prove a 10b-5 action | material (false statement) or omission, in connection with the purchase and sale of a security, defendant acted with a specific intent to defraud, plaintiff relied on the misrepresentation or omission, |
| more elements | plaintiff suffered economic loss caused by the misrepresentation or omission |
| what is the Howey test | test the Supreme Court established to determine if a financial investment is a security |
| what is front running | a type of insider trading that involves the privileged knowledge of an order, placed by a customer, to buy or sell a large amount of a commodity, options, or securities that, because of its size, is likely to move the market |
| what is a joint venture | a contractual agreement between 2 businesses in which the parties agree to undertake a particular business task. |
| what are hedge funds | private pooled investment vehicles managed by advisors who generally have a very large financial interest in the funds based on a management fee that includes a percentage of the funds' performance. |
| what is a promissory note | a contract in which 1 party (the maker or issuer) makes an unconditional promise in writing to pay a sum of money to the other party (the payee), under specify terms, at a stated time, or on demand of the payee |
| what is selling away? | a securities fraud scheme that occurs when an investment professional trades, or solicits the trade of, securities not held or offered by the brokerage firm with whom he is affiliated |
| What is parking (in the securities fraud context)? | Practice of selling a security to 1 party with the understanding that the seller will repurchase the security later at an agreed-upon price |
| what does unauthorized trading occur | when brokers purchase stock without the investor's authorization |
| what is market manipulation | a type of securities fraud consisting of a series of transaction designed to artificially raise or lower prices or to give the appearance of trading activity for the purpose of inducing others to buy or sell |
| what is backdating | Practice of marking a document with a date that precedes the actual date |
| 3 stages of money laundering | placement, layering, integration |
| what happens during the integration stage of the money laundering process | Assets are integrated back into the economy in such a way as to make them appear as if they were derived from a legitimate business transaction |
| what happens during the placement stage of the money laundering process | illicit or stolen assets are deposited into a financial institution or taken out of the country |
| what happens during the layering stage of the money laundering process | numerous transactions are created to prevent detection, such as moving funds between bank accounts, transferring funds from 1 form of currency to another, or transferring money between businesses. |
| what is money laundering | Disguising of the existence, nature, source, ownership,location, and disposition of property derived from criminal activity. |
| what is front business | a seemingly legitimate business that is used by criminals to launder illicit assets |
| what is income statement laundering | overstating recorded revenues on the books of a front business in order to secretly insert illicit funds into the company |
| what is balance sheet laundering | disguising illicit assets as items on a from business's balance sheetalue |
| Types of financial institutions defined as money-services businesses (MSBs) | currency exchangers, check cashers, issuers, sellers, or redeemers of traveler's checks, money orders, or stored value, US Postal Service, Money transmitters, prepaid access providers or sellers |
| What does Title I of the Bank Secrecy Act require | Certain financial institutions must keep extensive records of the transactions and accounts of their customers |
| what does Title II of the Bank Secrecy Act require | Financial institutions and other persons must report certain financial transactions to the government |
| What is a Currency Transaction Report (CTR) | a report that must be filed with the government when there is a currency transaction above a certain threshold |
| What is the reporting threshold for CTRs in the US | $10,000 or more |
| To what US agency are CTR's submitted | Financial Crimes Enforcement Network (FinCEN) |
| Under what conditions must an individual or entity file IRS Form 8300? | A non-financial entity or person engaged in trade or business, in the course of trade or business, receives more than $10K in cash, in one or more related transactions |
| What legislation requires non-financial businesses to report cash receipts over 10K? | USA PATRIOT ACT |
| Which U.S. agencies must IRS Form 8300 be filed with | Internal Revenue Service (IRS) Financial Crimes Enforcement Network (Fin CEN) |
| what is a CMIR? | a report of International Transportation of Currency or Monetary Instrument |
| What is dollar-value threshold for a CMIR to be filed? | $10,000 |
| By when must a CMIR be filed | at the time of transportation 9if transporting out of the country) or within 15 days of receipt |
| what is a Report of Foreign Bank and Financial Accounts (FBAR)? | A report that must be filed when a person maintains a financial interest or signature authority over a foreign bank account with a balance of more than 10K during the calendar year |
| Who must file Suspicious Activity Reports | financial institutions, securities broker-dealers, casinos and card clubs, insurance companies, unregistered investment firms |
| When must a financial institution file a Suspicious Activity Report | The institution has reason to suspect: funds in transaction were derived from illegal activity, transaction is designed to evade any regulations under the Bank Secrecy Act, Transaction appears to have no business purpose or appears unusual normal practice |
| Anti-money laundering program requirements under the USA PATRIOT Act | development of internal policies, procedures, and controls to prevent money laundering, designation of a money laundering compliance officer, an on-going training program for awareness of money laundering, an independent audit function to test programs. |
| what is the function of the U.S Office of Foreign Assets Control? | administering and enforcing U.S. sanction policies against targeted foreign organizations and individuals that sponsor terrorism and international narcotics trafficking |
| What is the Financial Action Task Force? | A multilateral policy-making and standard-setting body designed to combat money laundering |
| What are the Financial Action Task Force's Recommendations used for | To measure a country's anti-money laundering,counterterrorism, and nuclear proliferation laws and policies |
| Most common types of front businesses for money laundering | bars, restaurants, nightclubs, vending machine operators, whole sale distributors |
| Requirements of Customer Id(CIPs) under the USA PATRIOT Act | verifying the identity of any person seeking to open an account to the extent reasonable and practicable, maintaining records of the information used to verify a person's identity, including name, address, and other identifying info, |
| more requirements of CIPs under the USA PATRIOT Act | consulting lists of known or suspected terrorists or terrorist organizations to determine if the person seeking to open the account is on it. |
| what is a smurfing scheme | A money laundering scheme in which a subject structures a financial deposit into several transactions |
| What agency is the central financial intelligence unit in the United States? | Financial Crimes Enforcement Network (FinCEN) |
| What is tax avoidance | A lawful means of lowering one's tax bill by using provisions written into the tax code |
| What is tax evasion | Any fraudulent actions that a taxpayer commits to avoid reporting or paying his taxes |
| When is a tax return considered fraudulent under federal law | When the responsible party willfully attempts to defraud the government to owed tax dollars |
| What is the presumption of correctness in tax cases | A presumption in favor of the IRS that requires the taxpayer to come forward with prima facie evidence to prove that the IRS's liability determination was erroneous |
| What must the taxpayer do to transfer the burden of proof to the IRS in civil tax proceedings | Provide credible evidence on the factual issue, keep records and back up items as required under the rules, cooperation with the IRS in regard to reasonable evidence requests |
Created by:
Monatlo