OVERVIEW - Law Related to Fraud

In the United States, a tax preparer can be liable for an understatement penalty if he acted in bad faith and knew or reasonably should have known that a position taken on the return was which of the following? A. Not realistically possible of being sustained on its merits B. Affirmed by previous tax courts C. One that would result in less tax liability for the client D. One that would result in greater tax liability for the client

A. Not realistically possible of being sustained on its merits

Which of the following is the MOST ACCURATE statement about the U.S. Truth in Negotiations Act (TINA)? A. TINA requires that government contractors submit cost or pricing data and certify that such information is current, accurate, and complete before the award of any negotiated contract. B. TINA regulates disclosure requirements for government contractors and provides administrative remedies against persons or entities that commit government contract fraud. C. TINA establishes the system of regulations that governs the government's budgeting process for acquiring goods and services. D. TINA establishes the system of regulations that governs the purchasing activities of private sector firms.

A. TINA requires that government contractors submit cost or pricing data and certify that such information is current, accurate, and complete before the award of any negotiated contract.

Which of the following is a legal element that must be shown to prove a claim for fraudulent misrepresentation of material facts? A. The defendant made a false statement (i.e., a misrepresentation of fact). B. The victim failed to exercise due care in relying on the representation. C. The defendant acted negligently. D. The defendant had a duty to disclose the information

A. The defendant made a false statement (i.e., a misrepresentation of fact).

Which of the following MOST ACCURATELY describes the legal elements that must be shown to prove a claim for commercial bribery? A. The defendant, while acting with corrupt intent and without the victim's knowledge or consent, gave or received a thing of value that was intended to influence the recipient's action in a business decision. B. The defendant, while acting with corrupt intent, gave or received a thing of value that was intended to influence the recipient's action in a business decision, causing his principal to suffer damages. C. The defendant, while acting negligently and without the victim's knowledge or consent, gave or received a thing of value that was intended to influence the recipient's action in a business decision. D. The defendant, while acting without due care, gave or received a thing of value that was intended to influence the recipient's action in a business decision, causing his principal to suffer damages.

A. The defendant, while acting with corrupt intent and without the victim's knowledge or consent, gave or received a thing of value that was intended to influence the recipient's action in a business decision.

Craig and Donna each own 40% of the shares of Indiewealth and serve on its board of directors. George is also a shareholder, but he is not a member of the board of directors. Donna dies, and her son, Steven, inherits her shares of Indiewealth and replaces her on the board. Steven, however, is inattentive to Indiewealth's corporate affairs. During this time, Craig diverts corporate funds for personal use, and consequently, Indiewealth becomes insolvent. If George decides to sue Steven for violating his fiduciary duties, under what theory is he likely to file the suit? A. Violating the duty of care B. Violating the duty of loyalty C. Violating the duty of reasonableness D. Violating the duty of responsibility

A. Violating the duty of care

Paul is on the boards of two companies that compete in the highway construction industry. Paul does not disclose this conflict, and he does not step down from the board of either company. If Paul's acts are discovered and he is sued for violating his fiduciary duties, under what theory is the suit most likely to be filed? A. Violating the duty of loyalty B. Violating the duty of care C. Violating the duty of fair competition D. Violating the duty to disclose

A. Violating the duty of loyalty

____________ is any intentional or deliberate act to deprive another of property or money by guile, deception, or other unfair means. A. Bribery B. Fraud C. Extortion D. Embezzlement

B. Fraud

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. Conspiring to defraud the United States B. Making a false return C. Failing to file and pay D. Making a frivolous return

B. Making a false return

Under Title 18, U.S. Code, Section 1001 (false statements), a statement is false if: A. The government was deceived by the misleading information. B. The defendant knew the statement was untrue when he made it. C. The statement was material. D. The defendant mistakenly provided incorrect information.

B. The defendant knew the statement was untrue when he made it.

Which of the following is NOT a legal element that must be shown to prove a claim for commercial bribery? A. The defendant acted without the victim's knowledge or consent. B. The principal suffered damages as a result of the bribe. C. The defendant gave or received a thing of value. D. The defendant acted with corrupt intent.

B. The principal suffered damages as a result of the bribe.

Which of the following is NOT an element of an offense under the bribery of public officials statute, Title 18, U.S. Code, Section 201(b)? A. The recipient was (or was selected to be) a public official. B. The recipient performed a favorable action on behalf of the defendant. C. The defendant gave or received something of value. D. The defendant acted with corrupt intent.

B. The recipient performed a favorable action on behalf of the defendant.

In the United States, anyone who induces another to commit an offense can be held guilty of: A. Obstruction of justice (18 U.S.C. § 1503) B. Conspiracy to commit fraud (18 U.S.C. § 1349) C. Aiding and abetting (18 U.S.C. § 2) D. Misprision of a felony (18 U.S.C. § 4)

C. Aiding and abetting (18 U.S.C. § 2)

Which of the following U.S. laws prohibits deceptive and fraudulent practices commonly used in email? A. Gramm-Leach-Bliley Act B. USA PATRIOT Act C. CAN-SPAM Act D. The Computer Fraud and Abuse Act

C. CAN-SPAM Act

A wire communication does not violate the U.S. federal wire fraud statute unless it traveled via _________________ commerce in furtherance of the scheme. A. Electronic B. Intrastate C. Interstate or international D. Business-to-business

C. Interstate or international

Michael, a salesman for the Pearl Company, conspired with the president of Pearl Company to defraud the federal government, and Michael fraudulently billed a government intelligence agency for defective work in furtherance of the agreement. Which of the following statements is MOST ACCURATE? A. Michael and the Pearl Company may be liable for conspiracy to defraud the government but not for making false statements to the government. B. Michael and the Pearl Company cannot be liable for either making false statements to the government or conspiracy to defraud the government. C. Michael and the Pearl Company may be liable for making false statements to the government but not for conspiracy to defraud the government. D. Michael and the Pearl Company may be liable for both making false statements and conspiracy to defraud the government.

C. Michael and the Pearl Company may be liable for making false statements to the government but not for conspiracy to defraud the government.

In the United States, there are several federal statutes related to false claims and statements made to the federal government. Which of the following is the MOST ACCURATE statement concerning the false statements statute under Title 18, U.S. Code, Section 1001? A. An individual can be prosecuted for making a false statement only if the statement was made under oath. B. To violate Section 1001, it is not necessary that the individual knew the statement was false at the time the statement was made. C. The statement can be actionable even if the government did not suffer a loss in reliance on it. D. To violate Section 1001, the statement must be made directly to a governmental department or agency.

C. The statement can be actionable even if the government did not suffer a loss in reliance on it.

Which of the following acts would constitute violations under the U.S. Foreign Corrupt Practices Act's (FCPA) anti-bribery provisions? A. A U.S. company transfers $45,000 to a foreign official to influence the official to award it a public construction contract B. To induce a public construction contract award, a U.S. company promises to pay a foreign official $45,000 upon securing the contract C. A German company that is publicly traded on the New York Stock Exchange transfers $45,000 to a foreign official to influence the official to award it a public construction contract D. All of the above

D. All of the above

Which of the following is a legal element that must be shown to prove a claim for fraudulent misrepresentation of material facts? A. The victim suffered damages as a result of the misrepresentation B. The defendant knew the representation was false C. The victim relied on the misrepresentation D. All of the above

D. All of the above

Which of the following is a legal element that the government must show to prove a criminal conspiracy? A. The defendant entered into an agreement to commit an illegal act B. At least one of the conspirators knowingly committed at least one overt act in furtherance of the conspiracy C. The defendant knew the purpose of the agreement and intentionally joined in the agreement D. All of the above

D. All of the above

Which of the following is an element that must be established to prove fraud based on the concealment of material facts? A. The defendant failed to disclose a material fact that he had a duty to disclose B. The defendant had knowledge of a material fact that he had a duty to disclose C. The defendant acted with intent to mislead or deceive the victim(s) D. All of the above

D. All of the above

Which of the following is an element that must be proven to establish a perjury offense? A. The defendant made the statement with knowledge of its falsity B. The defendant made a false statement that was material C. The defendant made a false statement while under oath D. All of the above

D. All of the above

Which of the following is an element that the U.S. government must prove to convict a defendant under Title 18, U.S. Code, Section 1341 for committing mail fraud? A. The defendant knowingly participated with the intent to defraud the victim B. The defendant used the mail in furtherance of the scheme C. The defendant undertook a scheme to defraud a victim of money or property D. All of the above

D. All of the above

Which of the following is an element the U.S. federal government must prove to establish a violation of Title 18, U.S. Code, Section 1001 (false statements)? A. The false statement was material B. The statement concerned a matter within the jurisdiction of a U.S. agency C. The defendant willfully made a false statement D. All of the above

D. All of the above

Which of the following is the federal U.S. statute that criminalizes the theft of commercial trade secrets to obtain an economic advantage? A. Commercial Bribery Theft Act B. Identify Theft and Trade Secret Deterrence Act C. Computer Fraud and Theft Act D. Economic Espionage Act

D. Economic Espionage Act

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. Negligent tax return B. Deficient tax return C. Fraudulent tax return D. Frivolous tax return

D. Frivolous tax return

For a conflict of interest claim to be actionable against an agent, the agent must have: A. Purported to act on behalf of, or as an agent for, an identified principal B. Informed the principal of his actions C. Breached the duty of fidelity that he owed to his principal D. Had an undisclosed interest in a matter that could influence his professional role

D. Had an undisclosed interest in a matter that could influence his professional role

Which of the following statements about the UK Bribery Act is NOT correct? A. The UK Bribery Act exercises jurisdiction over all individuals and corporate entities for acts of corruption when any part of the offense occurs in the UK. B. The UK Bribery Act has a broader application than the FCPA because, unlike the FCPA, it makes commercial bribery a crime. C. Unlike the FCPA, the UK Bribery Act does not contain an explicit exception for facilitating payments. D. If an organization's anti-corruption program complies with the FCPA, it will be sufficient for the purpose of complying with the UK Bribery Act.

D. If an organization's anti-corruption program complies with the FCPA, it will be sufficient for the purpose of complying with the UK Bribery Act.

Davis sends people information about an "investment opportunity" via the U.S. postal system, but the communication is part of a scam Davis devised to defraud victims. If the U.S. government decides to prosecute Davis, which of the following would provide the most likely basis for the charges? A. Insider trading B. Interstate transportation of stolen property C. Wire fraud D. Mail fraud

D. Mail fraud

Wright, a CFE, was retained to investigate a fraud at the ABC Company, a U.S. company. The perpetrator used the telephone in connection with the fraud, but he did not engage in any interstate communication. Also, the perpetrator used a private mail carrier in connection with the fraud, but he did not use the U.S. postal system. Wright advises the company officials that the perpetrator can be charged federally with: A. Both mail fraud and wire fraud B. Wire fraud, but not mail fraud C. Neither mail fraud nor wire fraud D. Mail fraud, but not wire fraud

D. Mail fraud, but not wire fraud

Which of the following is an element that must be established to prove fraud based on the concealment of material facts? A. The defendant knew for certain the victim would be harmed. B. The victim failed to exercise due care in relying on the defendant's actions. C. The defendant had knowledge of a material fact that concerned a matter within the jurisdiction of a government agency. D. The defendant acted with intent to mislead or deceive the victim(s).

D. The defendant acted with intent to mislead or deceive the victim(s).

All the following are elements required to prove that a defendant violated the U.S. federal wire fraud statute EXCEPT: A. The defendant undertook a scheme designed to defraud a victim of money or property. B. The defendant used wire communications in furtherance of the scheme. C. The defendant knowingly participated in the scheme. D. The defendant used, or caused the use of, the mail in furtherance of the scheme.

D. The defendant used, or caused the use of, the mail in furtherance of the scheme.

Which of the following MOST ACCURATELY describes the legal elements that must be shown to prove a claim for official bribery? A. The defendant, while acting negligently, gave or received a thing of value that was intended to influence an act or duty of the recipient who was (or was selected to be) a public official. B. The defendant, while acting negligently, gave or received a thing of value that was intended to influence an act or duty of the recipient who was (or was selected to be) a public official, causing the government to suffer damages. C. The defendant, while acting without due care, gave or received a thing of value that was intended to influence an act or duty of the recipient who was (or was selected to be) a public official. D. The defendant, while acting with corrupt intent, gave or received a thing of value that was intended to influence an act or duty of the recipient who was (or was selected to be) a public official.

D. The defendant, while acting with corrupt intent, gave or received a thing of value that was intended to influence an act or duty of the recipient who was (or was selected to be) a public official.

Which of the following is NOT a legal element that must be shown to prove a claim for official bribery? A. The defendant acted with corrupt intent. B. The recipient was (or was selected to be) a public official. C. The defendant gave or received a thing of value. D. The government suffered damages as a result.

D. The government suffered damages as a result.

T or F: A private UK company transfers $60,000 to a Chinese public official to influence the award of a public construction contract. This act would constitute a violation of the U.S. Foreign Corrupt Practices Act (FCPA).

Fa;lse

T or F: Generally, to establish an illegal gratuity violation, the government must prove that the gratuity was given for the purpose of influencing an official act.

False

T or F: In addition to prohibiting bribes to foreign officials for business purposes, the U.S. Foreign Corrupt Practices Act (FCPA) prohibits facilitating payments, or grease payments, made to foreign officials to facilitate the officials' ability to perform their duties.

False

T or F: Officers and directors of a corporation have a fiduciary duty to act solely in the best interest of non-shareholder constituencies.

False

T or F: The U.S. Foreign Corrupt Practices Act (FCPA) has two major parts. The first part criminalizes the bribery of a foreign public official to obtain or retain business. The second part pertains to money laundering, requiring publicly traded companies to adopt policies, procedures, and internal controls reasonably designed to prevent money laundering.

False

T or F: The duty of loyalty means that people in a fiduciary relationship must act with such care as an ordinarily prudent person would employ in similar positions.

False

T or F: To convict a defendant under Title 18, U.S. Code, Section 1341 for committing mail fraud, the mailing must contain a false or fraudulent representation.

False

T or F: To convict a defendant under Title 18, U.S. Code, Section 1341 for committing mail fraud, the victim must suffer a loss.

False

T or F: To establish that a defendant violated Section 1001 of Title 18, U.S. Code (false statements), the U.S. government must prove that the defendant made a false statement (or used a false document) regarding a matter within the jurisdiction of a U.S. agency, and the agency relied on the false statement to its detriment.

False

T or F: To prove a criminal conspiracy, the government must prove that the defendant knew all the details or objectives of the conspiracy, that the defendant knew the identity of all the participants in the conspiracy, and that the conspirators accomplished the purpose of the conspiracy.

False

T or F: To prove that a defendant committed criminal perjury, the government prosecutor must show that the defendant, while in a court of law, knowingly made a false statement that influenced the jury's decision.

False

T or F: Unlike the U.S. Foreign Corrupt Practices Act, the UK Bribery Act makes it a crime to bribe a foreign public official in connection with international business transactions.

False

T or F: A qui tam suit is a suit in which a private individual sues on the government's behalf to recover damages for criminal or fraudulent actions.

True

T or F: For a conflict of interest claim to be actionable, the conflict must be undisclosed.

True

T or F: For a false statement to violate the U.S. False Statements statute (Title 18, U.S. Code, Section 1001), it need not be made directly to the government; it can be made to a third party as long as it involves a matter within the jurisdiction of any governmental department or agency.

True

T or F: Moore, a transportation officer for the U.S. Army National Guard, is responsible for awarding contracts to private freight carriers for Guard freight shipments. Moore awarded Zantigo Freight a shipment contract to transport Guard equipment, and, as a gesture of thanks, Zantigo gave Moore a new laptop computer. Based on these facts, the government would be more likely to bring illegal gratuity charges against Moore than bribery charges.

True

T or F: The ABC Company, a UK company with securities that are registered in the United States, transferred $40,000 to a Japanese public official to influence the award of lucrative overseas contracts. This act would constitute a violation of the U.S. Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act.

True

T or F: The U.S. Foreign Corrupt Practices Act (FCPA) not only prohibits bribes to foreign officials, it also requires publicly traded companies subject to the FCPA's jurisdiction to keep accurate books and records and adopt internal controls to prevent improper use of corporate funds.

True

T or F: The U.S. federal wire fraud statute makes it a crime to use telephone, television, Internet, or other electronic communications to perpetrate a scheme to defraud a victim of money or property.

True

T or F: The UK Bribery Act has a broader application than the U.S. Foreign Corrupt Practices Act (FCPA) because, unlike the FCPA, it makes commercial bribery a crime.

True