Law 3

All of the following would violate rules prohibiting securities broker-dealers from making unsuitable recommendations on investments or investment strategies EXCEPT: A. A broker recommends an investment without ascertaining relevant financial information about the client. B. A broker recommends an investment strategy that is unsuitable for the client. C. A broker makes an investment without obtaining prior approval for making the transactions. D. A broker makes an investment that is inconsistent with the client's objectives.

A broker makes an investment without obtaining prior approval for making the transactions. Broker-dealers subject to a suitability requirement, such as those in the United States, are prohibited from recommending investments or investment strategies that are unsuitable for their clients. Thus, making unsuitable recommendations (e.g., recommending high-risk options to a senior citizen with limited assets) is prohibited. Essentially, there are two rules relating to suitability: the know-your-customer rule and the suitability rule. The know-your-customer rule provides that 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. Thus, this form of suitability violation occurs when a broker recommends an investment or investment strategy to a client without having conducted due diligence to ascertain relevant personal and financial information about the client. In addition to the know-your-customer requirement, there are suitability requirements that broker-dealers must follow when making recommendations to a client. Suitability rules prohibit broker-dealers from making recommendations to clients if they do not have reasonable grounds for believing that the recommendations are suitable for the respective clients. This form of suitability violation occurs when a broker recommends an investment, recommends an investment strategy, or makes an investment that is inconsistent with the client's objectives, and the broker knows or should know the investment is inappropriate. See pages 2.563-2.565 in the Fraud Examiner's Manual

In which of the following situations would a Fourth Amendment violation most likely be found? A. A private employer searches the call history on an employee's work phone B. A private company performs an archival search of data on its servers C. A government employer searches an employee's purse D. A subpoena orders a government agency to produce data from its spending reports

A government employer searches an employee's purse In short, the Fourth Amendment to the U.S. Constitution prohibits unreasonable searches and seizures, but it only applies to actions by the police or other governmental authorities. There must be some form of "state action" involved for an individual to recover for violations of constitutional rights. State action is involved during any investigation by a state or federal entity, including investigations of its own employees. But in some situations, state action can involve private individuals and companies. Thus, the Fourth Amendment prohibits government employers from unreasonably invading their employees' privacy to conduct a workplace search, and it prohibits government employers from conducting unreasonable surveillance of employees (e.g., video surveillance or wiretapping) where they would reasonably expect privacy. See pages 2.821-2.822 in the Fraud Examiner's Manual

According to the U.S. Federal Rules of Criminal Procedure, which of the following statements concerning grand juries is NOT correct? A. A grand jury's members meet in secret deliberation to hear evidence and vote on indictments. B. A grand jury may be used to obtain evidence of possible crimes. C. A grand jury may be used solely to obtain evidence to be used in a parallel civil trial. D. A grand jury has the power to subpoena witnesses and documents.

A grand jury may be used solely to obtain evidence to be used in a parallel civil trial. In the United States, the grand jury consists of 16 to 23 people sworn as jurors who meet in secret deliberation, usually in biweekly or monthly sessions, to hear witnesses and other evidence presented by prosecutors and to vote on indictments. The grand jury has the right to subpoena witnesses and documents, and refusals to appear or produce may be punishable as contempt, with fines or jail terms until the subpoena is complied with or the grand jury term expires. A witness or target of the grand jury retains the Fifth Amendment right against self-incrimination. A grand jury may be used to obtain evidence of possible violations of the criminal law, but the process may not be used as a ruse to obtain evidence for parallel civil actions. A common example of such parallel proceedings would be investigation of possible anti-trust violations. The grand jury may, however, make evidence available to the proper government authorities for a civil proceeding with the appropriate court order, as long as the primary purpose of its inquiry is to enforce the criminal laws. Access by private parties through court orders to grand jury evidence for use in private civil proceedings is unlikely to be granted because of secrecy requirements, unless substantial need is demonstrated. See pages 2.908-2.909 in the Fraud Examiner's Manual

Bob is an employee of ABC Company. He creates a blog at home and posts information about the ABC Company. Which of the following statements is MOST CORRECT? A. ABC Company can monitor information Bob posted publicly about it on the blog. B. ABC Company can monitor the blog, but it must provide notice and obtain consent first. C. ABC Company cannot monitor the blog because Bob created it at home. D. ABC Company cannot monitor the blog because Bob did not create the blog while on duty.

ABC Company can monitor information Bob posted publicly about it on the blog. Due to the prevalence of blogging, it is important for employers and employees to understand their rights and obligations with respect to such online activity. As a general rule, employers can monitor employee blogging because employees have a limited expectation of privacy with respect to their blog posts, which are posted publicly. However, the extent of an employer's rights to monitor largely depends on whether the employee blogged while on duty using the employer's computer system. Employees have no reasonable expectation of privacy when blogging on the employer's system because the system was set up to provide business communications. If there is no reasonable expectation of privacy, then there is no constitutional or common law restriction on monitoring such activity. Therefore, an employee who uses an employer's system to blog about violating company policy or illegal activity, or who engages in other unacceptable conduct, can generally be disciplined for such posts. However, employers should formalize their computer/Internet use policies to cover blogging and to maintain control over such use. See pages 2.837 in the Fraud Examiner's Manual

Which of the following could give rise to spoliation sanctions? A. Accidentally shredding documents relevant to a lawsuit B. Accidentally erasing a digital image relevant to a lawsuit C. Failing to suspend routine destruction of electronic data D. All of the above

All of the above Spoliation of evidence is broadly defined as the act of destroying evidence or making it otherwise unavailable. The act of spoliation can surface in just about any type of case, criminal or civil, and by any party, plaintiff, or defendant. The theory behind spoliation of evidence presumes that the individual who makes evidence unavailable following the probable initiation of a lawsuit is aware of its detrimental effect upon a case. Although few jurisdictions have a separate cause of action for spoliation of evidence, almost every jurisdiction allows for sanctions resulting from such acts. To impose sanctions for spoliation, some courts require the spoliation to be intentional, though others merely require negligence or reckless spoliation. Thus, spoliation sanctions can arise from intentional acts and negligent acts. Examples of situations that could give rise to spoliation sanctions include: Erasing (either intentionally or negligently) computer files (e.g., documents, images, databases) relevant to a lawsuit Losing or destroying physical evidence Accidentally shredding physical documents relevant to a lawsuit Altering documents or records Destroying tangible documents or records Losing or destroying physical evidence Failing to suspend routine destruction of electronic data Destroying evidence on a lawyer's desk by accident See pages 2.851-2.852 in the Fraud Examiner's Manual

Under U.S. federal law, which of the following could be considered a security subject to registration and regulation regarding trading? A. A notarized contract B. Anything of material value or usefulness C. An instrument that represents ownership interest D. An investment contract

An investment contract Under U.S. federal law, the default definition of a security is the term investment contract, which was defined in the case of SEC v. Howey Co. In Howey, the Supreme Court defined an investment contract as "a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of" someone other than the investor. Thus, in Howey, the Supreme Court established a four-factor test, which is known as the Howey test, to determine whether a financial instrument is an investment contract. All four factors must be present for an investment contract to exist. The leading global definition of investment contract parallels the Howey test established by the U.S. Supreme Court, and it provides that a contract, transaction, or scheme is an investment contract if all of the following four elements are met: There is an investment of money or other asset. The investment is in a common enterprise. The investment was made with expectations of making a profit. The profits are to come solely from the efforts of people other than the investor. See pages 2.502, 2.512-2.513 in the Fraud Examiner's Manual

Able is an auditor who works for XYZ, a private U.S. company. Able suspects that Beta, an at-will employee for the XYZ employee, has embezzled several thousand dollars from XYZ. Able plans to conduct an internal investigation into the missing funds, and during the investigation, Able plans to interview Beta. Based on these facts, which of the following is the MOST ACCURATE statement? A. XYZ cannot fire Beta if he refuses to cooperate with the investigation or participate in the interview. B. Beta has a duty to cooperate with the investigation as part of the employer/employee relationship. C. Able must give Miranda warnings to Beta before he interviews him. D. Beta has a constitutional right to have an attorney present at any interview conducted by Able.

Beta has a duty to cooperate with the investigation as part of the employer/employee relationship. A duty to cooperate exists in every employer/employee relationship. The duty to cooperate extends to workplace investigations; therefore, employees have a duty to cooperate during an internal investigation as long as what is requested from them is reasonable. See pages 2.801 in the Fraud Examiner's Manual

Chad has been retained by an attorney to testify as an expert witness at John's trial. Coincidentally, Chad also met John while attending a university many years earlier. The attorney is compensating Chad for his services. Which of the following statements concerning conflicts of interest is MOST ACCURATE? A. Chad should not serve as an expert witness because he knew John from attending the university, which is a conflict of interest. B. Chad should not serve as an expert witness because he is being compensated, which is a conflict of interest. C. Chad can serve as an expert witness because there are not conflicts of interest in this case. D. Chad can only serve as an expert witness if he is able to objectively evaluate and present the case issues.

Chad can only serve as an expert witness if he is able to objectively evaluate and present the case issues. When retained, experts must quickly determine if any conflicts of interest exist—or even appear to exist—in a particular case because a conflict might preclude participation. A conflict of interest exists when an expert's ability to objectively evaluate and present an issue for a client will be impaired by any current, prior, or future relationship with parties to the litigation. Prior or ongoing relationships might suggest to others that the expert cannot provide undivided loyalty to the cause and the client. Whether a relationship causes a conflict of interest depends on the facts. Simply meeting a person does not necessarily cause a conflict, but a close personal or business relationship is more likely to give the perception of a conflict. Compensation (whether from the parties or from the court) for expert testimony services is standard, and it is not generally considered a conflict of interest. The amount of compensation can be brought up at trial, so the payment should not be above normal. See pages 2.1208 in the Fraud Examiner's Manual

A report by a Certified Fraud Examiner states that $11,354.56 was withdrawn without authorization from the plaintiff's business on Dec. 3, Year 1, and that on Dec. 6, Year 1, $11,354.56 was deposited into an account owned by the defendant. During a criminal trial for theft against the defendant, the government introduces this information as evidence of the defendant's guilt. What type of evidence is the information contained in this report? A. Circumstantial evidence B. Inferential evidence C. Indirect evidence D. None of the above

Circumstantial evidence There are two basic types of admissible evidence: direct evidence and circumstantial evidence. Direct evidence is evidence that tends to prove or disprove a fact in issue directly, such as eyewitness testimony or a confession. Circumstantial evidence is evidence that tends to prove or disprove facts in issue indirectly, by inference. See pages 2.1102 in the Fraud Examiner's Manual

U.S. grand jury proceedings are criminal in nature, and evidence obtained in a grand jury proceeding may NOT be used in civil or other legal proceedings. A. True B. False

False A grand jury may be used only to obtain evidence of possible violations of the U.S. criminal law, but the process may not be used as a ruse to obtain evidence for parallel civil actions. The grand jury may, however, with the appropriate court order, make evidence available to the proper government authorities for a civil proceeding, as long as the primary purpose of the grand jury inquiry was to enforce the criminal laws. Access by private parties to grand jury proceedings is difficult and unlikely. See pages 2.909 in the Fraud Examiner's Manual

After a civil jury trial in the United States, only the losing side may appeal from an adverse verdict. A. True B. False

False Both sides may appeal from an adverse verdict, either as to liability or damages. As in the U.S. criminal system, the appellate court is largely limited to reviewing the legal decision of the court rather than the factual determination of the fact finder. The appeals court may reverse and remand for a new trial on some or all of the issues, may order that a certain portion of the awarded damages be remitted, or may enter final judgment, if legal grounds are clear, in favor of either party. See pages 2.1023 in the Fraud Examiner's Manual

Walter Smith is being sued in a U.S. civil case for fraudulent conduct, and the conduct at issue could potentially form the basis of a criminal matter. The plaintiffs in the case have called Smith to testify in the civil case; however, he refuses to take the stand, asserting his Fifth Amendment privilege against self-incrimination. Smith's claim is invalid because the Fifth Amendment privilege cannot be asserted in civil proceedings. A. True B. False

False In the United States, the Fifth Amendment privilege can be asserted in any proceeding, civil or criminal, administrative or judicial, investigatory, or adjudicatory. Criminal and civil actions for fraud may proceed simultaneously even though such parallel proceedings present a dilemma for the defendant. For example, a defendant lawfully may assert his Fifth Amendment right against self-incrimination to avoid answering questions or producing certain documents in the criminal investigation. But he may not do so in the corresponding civil case without suffering the possibility of sanctions that can include the dismissal of affirmative defenses or the striking of testimony. Additionally, if a defendant takes the stand in a civil case and testifies on his own behalf, he cannot later invoke the Fifth Amendment and refuse to answer questions concerning the same subject matter on cross-examination. If he does, the judge may order that his testimony on direct examination be stricken from the record. See pages 2.121-2.122 in the Fraud Examiner's Manual

Since a grand jury can only indict an individual, not sentence him, witnesses who appear before a U.S. grand jury do not have a Fifth Amendment right against self-incrimination. A. True B. False

False In the United States, the grand jury has the right to subpoena witnesses and documents, and refusals to appear or produce may be punishable as contempt, with fines or jail terms until the subpoena is complied with or the grand jury term expires. A witness or target of the grand jury retains the Fifth Amendment right against self-incrimination. See pages 2.909 in the Fraud Examiner's Manual

In the United States, the federal government prosecutes all white-collar crimes, such as embezzlement, larceny, and false pretenses. A. True B. False

False In the United States, the prosecution of most white-collar crimes, such as embezzlement, larceny, and false pretenses, is left to the states. But some white-collar crimes are litigated at the federal level. See pages 2.301 in the Fraud Examiner's Manual

To be guilty of larceny, the perpetrator must have lawful possession of the cash or property that he steals. A. True B. False

False Larceny is defined as the wrongful taking of money or property of another with the intent to convert or to deprive the owner of its possession and use. In larceny, unlike embezzlement, the defendant never has lawful possession of the property, although he might have custody of the property. The elements of larceny typically include: Unlawfully taking or carrying away Money or property of another Without the consent of the owner With the intent to permanently deprive the owner of its use or possession See pages 2.211 in the Fraud Examiner's Manual

A decision to immunize a witness in a U.S. criminal trial is solely within the discretion of the defense. A. True B. False

False A decision to immunize a witness in a U.S. criminal trial is solely within the discretion of the prosecution. If the prosecution decides to immunize a witness, it applies for a court order compelling testimony from the witness under a grant of immunity. If the application meets statutory requirements, the court must grant the order. See pages 2.910 in the Fraud Examiner's Manual

To convict a defendant under Title 18, U.S. Code, Section 1341 for committing mail fraud, the victim must suffer a loss. A. True B. False

False In general, mail fraud is the use of the mail to perpetrate a scheme to defraud a victim of money or property. The gist of the offense is the use of the mail, which includes the use of the U.S. postal system or private interstate commercial carriers (e.g., FedEx, UPS, and DHL) for the purpose of executing, or attempting to execute, a fraud scheme. Thus, where the mail is not used, no matter how large or serious the fraud, there is no federal jurisdiction under this statute. Yet, a mail fraud offense can occur even if the mailing itself does not contain false and fraudulent representations. Thus, routine mailings are sufficient to invoke the mail fraud statute even when they are innocent (nondeceptive) mailings. The mailing element is satisfied as long as the mailing helps advance the scheme in any significant way. For a scheme to violate the mail fraud statute, it is not necessary that the scheme succeed or that the victim suffer a loss. See pages 2.302 in the Fraud Examiner's Manual

The primary reason for maintaining the chain of custody on an item of evidence is to deter or prevent unauthorized individuals from handling the evidence before its production in court. A. True B. False

False The primary reason for maintaining the chain of custody on an item of evidence is to establish that the evidence has not been altered or changed. If evidence is subject to change over time, or is susceptible to alteration, the offering party might need to establish that the evidence has not been altered or changed from the time it was collected through its production in court. This is done by establishing a chain of custody. Thus, the chain of custody can be an important factor in establishing authenticity. The chain of custody is both a process and a document that memorializes (1) who has had possession of an object and (2) what they have done with it. See pages 2.1125 in the Fraud Examiner's Manual

A __________ is a tax return that is incorrect on its face or one that does not contain enough information to determine the tax liability. A. Fraudulent tax return B. Frivolous tax return C. Negligent tax return D. Deficient tax return

Frivolous tax return In the United States, taxpayers who file frivolous tax returns—returns that are incorrect on their face or that do not contain enough information to make tax liability determinations—or act on frivolous positions may be subject to civil penalties. See pages 2.321 in the Fraud Examiner's Manual

Green, a Certified Fraud Examiner working in the United States, is employed by the ABC Corporation. He conducts an admission-seeking interview of White, a fraud suspect. Under these facts, which of the following is CORRECT? A. Green must give Miranda warnings to White, but only if White is not free to leave. B. Green must give Miranda warnings to White, but only if White is being interrogated in a custodial setting. C. Green must give Miranda warnings to White, but only if White has not waived his constitutional rights. D. Green is not required to give White Miranda warnings under these facts.

Green is not required to give White Miranda warnings under these facts. Green is not required to give White Miranda warnings under any circumstances. Miranda warnings (named after the Miranda v. Arizona U.S. Supreme Court case) are only required if the suspect is (1) interrogated (2) while held in custody (3) by government authorities. The warnings are not required at all when a person is being questioned by private parties; however, some fraud examiners may choose to do so as a matter of policy. See pages 2.905 in the Fraud Examiner's Manual

Which of the following statements about criminal charging documents in the U.S. federal legal system is CORRECT? A. According to Rule 7 of the Federal Rules of Criminal Procedure, an indictment should contain sufficient facts indicating that the defendant will be convicted. B. Indictments are accusations in writing of offenses and are brought in the name of the government. C. The reading of the indictment or information in open court where the defendant pleads to the charges is called the pretrial hearing. D. All crimes must be charged by indictment (unless waived by the defendant).

Indictments are accusations in writing of offenses and are brought in the name of the government. An indictment is an accusation in writing of a serious (that is, indictable) offense and is brought in the name of the government. Under Rule 7 of the U.S. Federal Rules of Criminal Procedure, the indictment must contain a plain, concise, and definite statement of the essential facts constituting the charge(s) against the defendant. In the U.S. federal system, all offenses punishable by death must be charged by indictment; all felonies (generally crimes punishable by imprisonment for a year or more) must be prosecuted by indictment, unless the defendant waives the requirement, in which case the prosecution may proceed by filing an information. An information is a charging document stating that the person or persons named or described committed an offense. An information may be signed only by the prosecutor without the involvement of the grand jury. Misdemeanor crimes may be charged by indictment or information. The arraignment takes place in open court and consists of the reading of the charges in the indictment or information. The defendant may plead guilty, not guilty, or nolo contendere. See pages 2.910-2.911 in the Fraud Examiner's Manual

Spencer knowingly omits $15,000 of income from his U.S. federal income tax return. He signs the return and remits it with the understated amount of tax due. Which of the following offenses did Spencer most likely commit? A. Making a false return B. Conspiring to defraud the United States C. Making a frivolous return D. Failing to file and pay

Making a false return Spencer most likely committed the crime of making a false return. This offense occurs when a taxpayer uses false or misleading information on his tax return. The elements of this crime include all of the following: The defendant made and subscribed a return, statement, or other document that was false with regard to a material matter. The document contained a written declaration that it was made under the penalties of perjury. The defendant did not believe the document was true and correct as to every material matter. The defendant falsely subscribed to the document willfully, with the specific intent to violate the law. See pages 2.320 in the Fraud Examiner's Manual

For which of the following crimes could U.S. prosecutors not use an information to charge the defendant (unless the defendant waived his right to an indictment)? A. Offenses punishable by imprisonment for a year or more B. Fines over $10,000 C. Criminal contempt D. Misdemeanor offenses

Offenses punishable by imprisonment for a year or more In the U.S. federal system, all offenses punishable by death must be charged by indictment; all felonies (generally crimes punishable by imprisonment for a year or more) must be prosecuted by indictment, unless the defendant waives the requirement, in which case the prosecution may proceed by filing an information. An information is a charging document stating that the person or persons named or described committed an offense. An information may be signed only by the prosecutor without the involvement of the grand jury. Misdemeanor crimes may be charged by indictment or information. See pages 2.910 in the Fraud Examiner's Manual

A money laundering scheme cannot be successful until the _________ is eliminated or made so complex that individual steps cannot be easily traced. A. Evidence of the initial fraud B. Placement C. Paper trail D. Modus operandi

Paper Trail A money laundering scheme cannot be successful until the paper trail is eliminated or made so complex that individual steps cannot be easily traced. The number of steps used depends on how much distance the money launderer wishes to put between the illegally earned cash and the laundered asset into which it is converted. A greater number of steps increases the complexity of tracing the funds, but it also increases the length of the paper trail and the chance that the transaction will be reported. See pages 2.603 in the Fraud Examiner's Manual

If the prosecution or defense counsel simply doesn't like a prospective juror in a U.S. criminal trial, which of the following can sometimes be used to remove the potential juror from the jury panel without comment or justification? A. Venire B. Challenge for cause C. Peremptory challenge D. Voir dire

Peremptory challenge In the United States, a juror may be dismissed with a peremptory challenge (also called a strike). A peremptory challenge allows a litigant to remove someone from the jury panel without comment or justification. Peremptory challenges allow a party to remove a juror for virtually any reason. A party cannot, however, use its peremptory challenges in a way that is solely influenced by race, ethnicity, or gender. And unlike challenges for cause, peremptory challenges are limited in number. See pages 2.922 in the Fraud Examiner's Manual

There are exceptions for the Fourth Amendment requirement that a police officer must obtain a search warrant before conducting a search in the United States. Which of the following is NOT an exception? A. Searches performed as an incident to arrest B. Searches when emergency circumstances exist C. Searches where there is "reasonable belief" in the suspect's guilt D. Searches conducted pursuant to a valid, voluntary consent

Searches where there is "reasonable belief" in the suspect's guilt There are a number of recognized exceptions to the warrant requirement under the Fourth Amendment to the U.S. Constitution, including: Workplace searches by government employers Searches performed as an incident to arrest Searches of motor vehicles Searches in exigent or emergency circumstances, to prevent the destruction of evidence, or while in "hot pursuit" of a suspect Searches conducted pursuant to valid, voluntary consent Searches when the evidence is in "plain view" Border, customs, and prison searches See pages 2.824 in the Fraud Examiner's Manual

If a U.S. taxpayer embezzles money from his employer, reports the illicit income on his federal income tax return, and later pays the embezzled money back, what might the taxpayer be able to deduct on his tax return? A. Any interest paid on the original amount embezzled B. Nothing C. The amount stolen and paid back as an ordinary and necessary business expense D. The amount stolen and paid back as a theft loss

The amount stolen and paid back as an ordinary and necessary business expense In the United States, individuals are taxed on their taxable income, and income from illegal activities, such as money from illegal kickbacks, must be reported and taxed just like legitimate income. If, however, a criminal pays taxes on his illegal gains even though he is under a duty to repay the illegal funds, the taxpayer, upon repayment, gets a deduction for the repayment. For example, in Stephens v. Commissioner, 905 F.2d 667 (7th Cir. 1990), a taxpayer embezzled about $530,000 from his employer and recorded it on his tax return as "consulting income." The taxpayer was ordered to pay restitution to the employer, plus interest. But he was allowed deductions under IRS Code Section 165(c)(2), relating to ordinary and necessary business expense, for the restitution amount in the year paid. The court, however, did not allow the taxpayer to take a deduction for the interest. See pages 2.711 in the Fraud Examiner's Manual

Blue, a fraud defendant, was tried in U.S. federal criminal court and acquitted on the merits. Under these facts, which of the following is MOST ACCURATE? A. The government can appeal the acquittal if the trial judge committed an error. B. The government cannot appeal an acquittal on the merits. C. The government can appeal the acquittal if it obtains new evidence. D. The government cannot appeal any lower court decisions in criminal cases.

The government cannot appeal an acquittal on the merits. Because of the Fifth Amendment's double jeopardy provisions, only a convicted defendant in a U.S. criminal case can appeal a verdict. The government cannot appeal an acquittal on the merits. If a statute authorizes the prosecution to appeal, such an appeal is constitutional only if the appellate court can decide the appeal without subjecting the defendant to a second trial. The prosecution may, however, appeal adverse pretrial rulings on the admissibility of evidence and certain other matters that can terminate a prosecution temporarily (but do not result in a decision on the merits in favor of the defendant). Either party in a civil case may appeal a judgment. See pages 2.117-2.118 in the Fraud Examiner's Manual

Which of the following describes the process of granting an immunity order in the United States? A. The judge requests that the prosecution grant the witness immunity, and the prosecution decides whether it will do so B. The prosecution makes an application to immunize the witness, and the court grants immunity if certain conditions are met C. The witness submits an application to the court to request immunity, and the court has discretion to decide the issue D. None of the above

The prosecution makes an application to immunize the witness, and the court grants immunity if certain conditions are met In the United States, a decision to immunize a witness is solely within the discretion of the prosecution. If the prosecution decides to immunize a witness, it applies for a court order compelling testimony from the witness under a grant of immunity. If the application meets statutory requirements, the court must grant the order. See pages 2.910 in the Fraud Examiner's Manual

During a deposition, the deponent or counsel can object to particular questions as in a trial, but even if an objection is made, generally, the deponent must answer the questions. A. True B. False

True During a deposition, the deponent or counsel can object to particular questions as in a trial, but even if an objection is made, the deponent must answer the questions. The evidence is taken subject to the objections. This means that if an objection is made to a particular question asked during a deposition, the objection is duly noted, and if the depositional evidence is presented at trial, the judge will be asked to rule on the objection before that part of the deposition is read to the jury. See pages 2.1005 in the Fraud Examiner's Manual

In the United States, the Commodities Futures Trading Commission (CFTC) regulates the activities of futures commission merchants (FCMs) and their associated persons. A. True B. False

True In the United States, the Commodities Futures Trading Commission (CFTC), which can be described as the SEC's counterpart for the futures and commodities industry, regulates the activities of futures commission merchants (FCMs) and their associated persons. See pages 2.578 in the Fraud Examiner's Manual

To launder funds, a consultant reports payments for services that he never actually provided. He then deposits unrelated illicit assets disguised as payments for the fake services. This laundering technique is called overstating revenues. A. True B. False

True Overstating revenues occurs when the money launderer records more income on a business's books than the business actually generates. The fictitious revenue accounts for the illegal funds that are secretly inserted into the company. See pages 2.604 in the Fraud Examiner's Manual

Testimonial evidence refers to the oral or written statements made by witnesses under oath. A. True B. False

True There are three basic forms, as distinguished from types, of evidence: testimonial, real, and demonstrative. Testimonial evidence refers to the oral or written statements made by witnesses under oath. Real evidence refers to physical objects that played a part in the issues being litigated. Demonstrative evidence is a tangible item that illustrates some material proposition (e.g., a map, a chart, or a summary). See pages 2.1102 in the Fraud Examiner's Manual

Under the U.S. Supreme Court case Miranda v. Arizona, which of the following is LEAST relevant to whether law enforcement officials are required to inform a suspect of his constitutional rights? A. Whether a government authority is involved B. Whether the suspect is in custody C. Whether the suspect is interrogated D. Whether there is probable cause of a crime

Whether there is probable cause of a crime Miranda warnings (named after the Miranda v. Arizona U.S. Supreme Court case) are required only if the suspect is (1) interrogated (2) while held in custody (3) by government authorities. Certain exceptions to the warning requirement apply, such as when immediate questioning is necessary to ensure public safety. The warnings generally are not required when a person is being questioned by private parties. Probable cause is involved in several constitutional rights issues, such as search and seizure laws, but is not directly relevant to whether officers must provide a subject with Miranda warnings. See pages 2.905 in the Fraud Examiner's Manual

Which of the following must a plaintiff show to recover for a claim of false imprisonment? A. The defendant was a law enforcement officer. B. The defendant knew his conduct was illegal. C. The defendant restrained the plaintiff without consent or legal justification. D. The defendant was not protected under the qualified business privilege.

he defendant restrained the plaintiff without consent or legal justification. False imprisonment is the unlawful restraint by one person of the physical liberty of another without consent or legal justification. To recover for a claim of false imprisonment, the plaintiff generally must prove all of the following elements: The defendant used words or actions intended to restrain the plaintiff. The defendant's words or actions resulted in the restraint of the plaintiff without the plaintiff's consent (i.e., against the plaintiff's will) and without legal justification. The plaintiff was aware that he was being restrained. A claim of false imprisonment might arise if an employee is detained in any way during a search or interview. Generally, an employer is entitled to question an employee at work about a violation of company policy without incurring liability as long as the employee submits to the questioning voluntarily; that is, not as a result of threats or force. See pages 2.820 in the Fraud Examiner's Manual