LAW

In what ways can jurors be dismissed?

(1) Judges Discretion - happens when a juror fails to meet the minimum qualifications or is otherwise unable to serve. (2) For Cause - involves a request that a prospective juror be dismissed because his predispositions make him unfit to serve as a juror. Each party may remove any number of prospective jurors for cause. (3) Peremptory Challenge - allows a litigant to remove someone from the jury panel for virtually any reason without comment or justification. Cannot be used in a way that is solely influenced by race, ethnicity, or gender.

What are some general rules of 4th Amendment privacy protections (Searches and Surveillance)?

(1)*Residence* - reasonable expectation of privacy. (2)*Business Premises* - employees have a reasonable expectation of privacy in their offices so long as it is not open to the public. Parts open to public not protected under 4th Amendment. (3)*Discarded trash and other items left outside of residence* - not protected under 4th Amendment. (4)*Information stored by 3rd parties* - people do not have a reasonable expectation of privacy in most information that they freely gave away to third parties. (5)*Contents of containers, packages, and clothes that are not transparent* - even when in public, people have a reasonable expectation of privacy in the contents of opaque containers, packages, and clothes. (6)*Mail sent through U.S. Postal Services* - protected by the 4th Amendment.

What is the U.S. Bank Secrecy Act and Reporting Forms?

*Bank Secrecy Act* went into effect in 1970, and was the first major piece of legislation at detecting and preventing money laundering. *Purpose* - to require certain reports or records where they have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings. Two Titles: 1. *Title I* - contains provisions requiring that financial institutions and securities brokers and dealers keep extensive records of the transactions and accounts of their customers. 2. *Title II* - requires banks, financial institutions (including casinos, securities brokers and dealers, currency exchangers, others) and in some cases individuals to report certain transactions to the government. *BSA Reporting Forms*: 1. Currency Transaction Report (CTR) 2. Current Reports by Non-Financial Businesses - IRS Form 8300 3. Reports of International Transportation of Currency or Monetary Instruments (>$10k in or out of the US). 4. Report of Foreign Bank and Financial Accounts (>$10k balance). 5. Suspicious Activity Reports (SARS)

What are some International Securities Regulatory Institutions?

*Basel Committee on Banking Supervision* - provides a forum for regular cooperation on banking supervisory matters. Its objective is to enhance understanding of key supervisory issues an improve the quality of banking supervision worldwide. *The International Organization of Securities Commission* - is an international organization comprised of securities commissioners and administrators responsible for securities regulation and administration of securities laws in their respective countries. *International Accounting Standards Board*

What is the U.S. Bankruptcy Code (Title 11, United States Code?

*Chapter 1 - General Provisions* *Chapter 3 - Case Administration *Chapter 5 - Creditors, Debtors, and the Estate* - deals with creditors claims, their priority, and their allowance. Also deals with duties of debtor, exemptions, dischargeablity of debts. *Chapter 7 - Liquidation of Debtors Assets* *Chapter 9 - Reorganization for Municipalities* *Chapter 11 - Reorganization* *Chapter 13 - Adjustment of Debts* *Chapter 15 - Cross Border Cases*

What is Evidence of Tax Fraud?

*Direct Evidence* - includes testimony that tends to prove or disprove a fact in issue directly, such as eye witness testimony or confession. 1. Unexplained bank deposits 2. Submission of false documents 3. False explanations for prior conduct 4. Participation in an illegal business 5. False claims of extra withholding exemptions *Circumstantial Evidence* - is evidence that tends to prove or disprove facts in issue indirectly, by inference. 1. Illicit Income - which can be proved by showing that the subjects assets or expenditures for a given period exceed that which can be accounted for from admitted sources of income. 2. Income in excess of deposits.

What is Invasion Of Privacy?

*Intrusion Upon Seclusion* - occurs when an individual intentionally intrudes into an area where another individual has a reasonable expectation of privacy and the intrusion would be high offensive or objectionable to a reasonable person. Questioning employees about activities not related to job performance might constitute an invasion of privacy. *Public Disclosure of Private Facts* - occurs when one party makes public statements about another party's private life that are not of public concern. *Intentional Infliction of Emotional Distress* - refers to any unprivileged conduct that is so outrageous and egregious that it exceeds all bounds usually tolerated by civilized society and that is intended to cause injury to another. *Defamation* - is an unprivileged publication of false statement about a person that causes harm to that person's reputation. The law of defamation actually consists of 2 civil wrongs: (1)*Libel* - is basically defamation that appears in written form (2)*Slander* - involves defamatory remarks that are only spoken. To recover for defamation, the plaintiff must prove all of the following elements: -The defendant made an untrue statement of fact. -The statement was communicated (published) to third parties. -The statement was made on an unprivileged occasion. -The statement damaged the subject's reputation.

What are Loan-Back Schemes & Back-to-Back Loan Schemes (Real Estate)?

*Loan Back Schemes* - money launders will deposit illicit funds in an overseas entity that they own, and then the entity loans the funds back to the launderers. The purpose of the loan is to make the money source appear legitimate and to conceal the parties' identities or the nature of the financial transactions associated with the loans. *Back-to-Back Loan Schemes* - a money launderer obtains a loan by presenting collateral, which originated from illicit funds, to a financial institution. Like the loan-back scheme, this technique gives the loaned money the appearance of a genuine loan.

What are the various styles of Options?

*Plain Vanilla Option* - most standard version of an option. Have simple expiration dates and strike prices and no additional features. *Exotic Option* - has more complex features than plain vanilla. *American Option* - may be exercised on any trading day on or before expiration. *European Option* - may only be exercised on expiration.

What is Rule 10b-5?

*Rule 10b-5* - a comprehensive anti-fraud provision that permits the SEC to set forth rules and regulations that prohibit manipulative or deceptive devices or contrivances via the mails or other means of interstate commerce. Act prohibits false statements and other fraudulent activity in connection with the purchase or sale o any security. SEC civil actions for securities fraud often are settled by *consent decrees* in which the party agrees to stop the offending practice without admitting or denying he engaged in it in the first place. Common claims under Rule 10b-5: *insider trading, scheme liability, disclosure violations, controlling person liability.* *Elements of a Rule 10b-5 Claim*: 1. Defendant made a *material* misstatement. 2. Alleged fraud was in connection with the purchase or sale of a security. 3. Defendant acted with scienter (meaning that the party charged with violation acted with a specific intent to defraud). 4. Plaintiff relied on the misrepresentation or omission. 5. Plaintiff suffered economic loss. In the United States, Rule 10b-5—which the SEC promulgated pursuant to Section 10 of the Exchange Act—prohibits false statements and other fraudulent activity in connection with the purchase or sale of any security. Rule 10b-5 is often referred to as the Act's anti-fraud provision. Specifically, Rule 10b-5 states that: "It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange, To employ any device, scheme, or artifice to defraud, To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security."

What are the Securities Act of 1933 & 1934?

*Securities Act of 1933* - Imposed a number of mandates. It created registration requirements with SEC. - Provides that it is unlawful to sell or offer to buy or sell a security unless a registration statement has been filed with the SEC. - Requires investors be given full and fair disclosure of material information concerning their investment or prospective investment. In this way, the sale of securities differs from other commercial transactions where *caveat emptor* - let the buyer beware rule. - Act also contains civil and administrative remedies, and civil remedies that might be brought by private plaintiffs. *Securities Act of 1934* - mainly deals with post-issuance trading. - Require registration of securities brokers and dealers. - Act created the SEC. *Reporting Requirements*: - Authorizes SEC to require periodic reporting of information by entities with securities that are publicly traded. A company must register its securities before listing than on a national security exchange. Companies with $10 million in assets whose securities are held by more than 500 owners must file annual and other periodic reports. *Solicitation Materials* - act governs the disclosure of materials used to solicit shareholders votes for corporate action that requires shareholders approval and the election of directors. This information, which is known as *proxy materials*, must be filed with SEC.

What is the difference between Tax Evasion & Tax Avoidance?

*Tax Evasion* - ILLEGAL - refers to any fraudulent actions that a taxpayer commits to avoid reporting or paying taxes. *Tax Avoidance* - LEGAL - refers to a legal means of lowering ones tax bill through legitimate deductions, credits, and shelters.

What is a Tax Haven & Secrecy Jurisdiction?

*Tax Havens* are countries that offer favorable tax treatment to investments. Tax havens might be legal or illegal depending on the nationality and the residence of the individual and the tax code of the country where the activity takes place. *Secrecy Jurisdiction* - is a country that has enacted laws that afford financial secrecy. Individuals try to avoid their tax responsibilities by hiding their assets abroad secrecy jurisdictions.

Who has Burden of Proof in U.S. Tax Fraud Cases?

*Taxpayer has a deficiency* - requires taxpayer to come forward with prima facie evidence to prove that IRS's determination was erroneous. Tax deficiency may be subject to *Civil or Criminal* penalties. *Civil or Criminal tax fraud* - government bears burden of proof. For corporations, trusts, partnerships with net worth > $7million are excluded, and must bear the burden of proof (rather than government). *Civil Violations* - IRS pursues. *Criminal Tax Prosecutions* - Department of Justice (Doj)

What are the U.S. Bankruptcy Crime Statues?

*Title 18, US Code, Section 151* - contains definition of the term debtor. *Title 18, US Code, Section 152* - serves as the primary statue for prosecuting bankruptcy fraud.Includes: 1. *Section 152(1) - Concealment of Property* 2.*Section 152(2) - False Oak or Account* 3.*Section 152(3) - False Declarations* 4.*Section 152(4) - False Claims* 5.*Section 152(5) - Fraudulent Receipt of Property* 6.*Section 152(6) - Extortion and Bribery* 7.*Section 152(7) - Fraudulent Transfer or Concealment* 8.*Section 152(8) - Fraudulent Destruction or Alteration of Documents* 9.*Section 152(9) - Fraudulent Withholding of Documents*

What is a Motion for Severance (Pretrial Motion)?

- Occurs in cases involving multiple defendants or claims that are tried in the same action. - Asks that one or more of the defendants or claims be tried separately.

What are Corporate Deferred Prosecution Agreements (The Criminal Justice System)?

- Typically occur when prosecutors file criminal charges against a company, but then agree not to prosecute the claims as long as the company successfully complies with the deferral agreement terms. - Focus on getting the business to reform its policies and reduce risk of illegal practices. - Used to help companies avoid indictment, trial, and conviction while providing prosecutors with another channel for disposing of a corporate case that punishes malfeasance and effects changes in a company's culture.

What are some exceptions to the Warrant requirement for searches?

- Workplace searches of government employees. - Searches performed incident to a lawful 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 "plan view". - Border, customers, or prison searches. Every U.S. government agency is considered a public employer, regardless of whether it is a local, state, or federal government agency. Public employers are not generally required to obtain a warrant when they conduct searches for investigations of workplace misconduct.

What are the types of Monetary Remedies or Damages?

1. *Compensatory damages* - awarded to compensate the plaintiff for a loss, injury, or harm. Goal is to put plaintiff in the position he would have been in, had the offense not occurred. 2. *Restitutionary damages* - do not compensate the plaintiff on the basis of measured loss, but instead take back any profits that a defendant made as a result of the offense and award them to the plaintiff. 3. *Punitive damages* - designed to punish the wrongdoer and deter similar conduct. 4. *Declaratory remedies* - are remedies in which the court states or declares the rights of the parties. For example, when a court interprets a will or contract or when court decides who owns personal property, its decisions are declaratory in nature. 5. *Equitable remedies* - remedies used when the legal remedy by itself would be inadequate compensation for the wrong suffered. One of the primary equitable remedies is the *injunction,* which is a court order by which a party is required to perform, or is restrained from performing, a specific act.

What are the types of Bankruptcy Schemes?

1. *Concealed Assets* 2. *The Planned Bustout* - basic approach is for an apparently legitimate business to order large quantities of goods on credit, and then dispose of those goods through legitimate or illegitimate channels. The perp then closes shop. 3. *Multiple Filings* - involves the same debtor filing for bankruptcy several times. Usually each petition is dismissed for failure to file the required statements or to appear for examination. False statements on petitions are common. 4. *Credit Card Bustout* 5. *Forged Filings*

what are the types of Tax Evasion Schemes?

1. *Income & Wealth Tax Evasion* 2. *Falsifying Tax Deductions* 3. *Tax Credit Schemes* 4. *Consumption Tax Schemes* - consumption taxes are those collected from the proceeds of the sale of goods or services. (a). *Sales tax* (b). *Value-added tax* - a system that imposes a tax on a single item at each point of the sale along the items path from manufacture, to wholesale, to retailer, to consumer; the tax is collected by the seller in the transaction and only the difference between price paid by the initial purchaser and the price paid by the subsequent purchaser is taxed. (c) *Excise tax* - a tax on a narrow class of goods or services (tobacco or gasoline), usually assessed one time at the manufacturer or wholesaler level. Fraudsters attempt to evade consumption taxes by: 1. Omitting transaction from tax records to evade consumption taxes. 2. Deflating the value of transaction. 3. Disguising transaction that should be subject to a consumption tax as tax free transaction. 4. *Missing trader schemes* - in which the culprit collects a value added tax, but rather than paying the tax to government, disappears with the proceeds. 5. Applying for a refund of value added tax that the subject of a co-conspirator in the transaction never paid to the government (called a *carousel scheme,* because the goods are often transferred among the co-conspirators several times). 6. Smuggling goods into a jurisdiction to avoid paying excise taxes.

What are the categories of Prepaid Items?

1. *Open Loop* - most versatile form of prepaid item, meaning the funds on these items can be used for any type of purchase where the seller accepts that type of payment (prepaid visa, mastercard). Mobile phone accounts that allow for withdrawal and transfer can be open loop. 2. *Close Loop* - are those where the user may only use the stored value to purchase items from the issuing organization or its affiliates. Closed loop items generally may NOT be redeemed for cash. 3. *Semi-Open Loop* - can be used to purchase goods and services wherever seller accept that form of payment. Semi-open loop generally may NOT be redeemed for cash.

What are the 3 stages of Money Laundering?

1. *Placement* - the launderer introduces his illegal profits into the financial system. Money laundering schemes are most often detected at this stage. 2. *Layering* - launderer can move funds around by using layers of financial transactions designed to confuse the audit trail. 3. *Integration* - money is integrated back into the economy in a way that makes it appear to be part of a legitimate business transaction.

What are some examples of Investment Contracts?

1. *Ponzi Schemes* - illegal business practice in which new investors money is used to make payments on earlier investors. 2. *Illegal Pyramid Schemes* - scheme where participant is promised a payment for each additional buyer or participant he recruits. Members make money NOT by earning a commission, but by recruiting new people. 3. *Prime-Bank Notes Schemes* - involved the issuance and purported trading of so-called prime bank notes or other high yield investment opportunities. Investors are often told that they can obtain returns exceeding several hundred percent per year when their funds are placed in an offshore trading program. 4. *Viaticals* - option allows the insured to receive up to 80% of the death benefit or face value of the policy within the last year of the insured's projected life.

What are the types of Securities Fraud Schemes?

1. *Professional Misconduct* 2. *Churning (Excessive Trading)* - is the excessive trading of a customer account to generate commissions while disregarding customers interests. 3. *Unsuitable Recommendations* - (e.q., recommending high risk options to a senior citizen with limited assets). 4.*Selling Away* - when an investment professional trades, or solicits the trade of, securities not held or offered by the brokerage firm with which he is affiliated. 5. *Failure to Supervise* - broker-dealer firms must establish and maintain a system to supervise the activities of registered representatives. 6. *Failure to Report Client Complaints*- investment and advisory firms are required to report client reports to the SEC. 7. *Parking* - practice of selling a security to one party with an understanding that the seller will repurchase the security later at a agreed upon price. This scheme allows circumvention of ownership reporting requirements and net capital rules. 8.*Operating Without a License or Registration* 9. *Excessive Markups* 10. *Misuse or Misappropriation of Customers Securities* 11. *Unauthorized Trading* 12. *Systematically Trading Accounts Against Each Other* - occurs when someone with trading authority simultaneously establishes opposite market positions in two separate investment pools that he controls. 13. *Block Order Schemes* - is an order placed for the sale or purchase of a significant number of securities. Often, a block order occurs when several different accounts are combined on the same order. 14. *Market Manipulation* - is a type of securities fraud consisting of a series of transactions designed to artificially raise or lower price or to give the appearance of trading activity for the purpose of inducing others to buy or sell. 15. *Insider Trading*

What are some techniques for using Insurance Policies to Launder Funds?

1. *Redemption* - person can redeem some insurance policies, such as life insurance, before the event that triggers the insurance occurs. 2. *Prepayment* - make advance payments on insurance premiums in order to store the illegal funds by increasing the value of the insured product. 3. *Cancelled Policies* - allow the launderer to cancel the policy and have the unused premiums returned. This technique can be used to temporarily store illicit assets and confuse the money trail by having the cancellation paid out to a different account.

What are the types of Traditional Securities?

1. *Stock* 2. *Bond* 3. *Certificate of Deposit* 4. *Futures and Options* - are essentially methods of managing price risk, often called *hedging*.

What are some Money Laundering Methods?

1. *Using a Front Business to Launder Funds* - either by overstating revenues and expenses or by depositing, but not recording, revenue. Favorite business for hiding or laundering money: 1. Bars, restaurants, and nightclubs 2. Vending machine operations 3. Wholesale distribution businesses 4. Real estate industry

What are the key differences between Criminal vs. Civil Actions for Fraud in the United States?

1. *Who files the suit*: Criminal - prosecutor / Civil - any party 2. *Who has burden of proof*: Criminal - gov't / Civil - plaintiff 3. *Standard of evidence*: Criminal - beyond a reasonable doubt / Civil - preponderance of the evidence (typically a lower standard than in criminal cases). 4. *Outcome*: Criminal - jail, fine, restitution, probation / Civil - award of civil remedies.

What are the hallmarks of effective corporate compliance program?

1. Commitment from senior management and clearly articulated policy against corruption. 2. Code of conduct and compliance policies and procedures. 3. Oversight, autonomy, and resources. 4. Risk assessment. 5. Training and continuing advise. 6. Incentives and disciplinary measures. 7. Third party due diligence and payments. 8. Confidential reporting and internal investigation. 9. Continuous improvement.

What are the different types of law?

1. Constitutional Law 2. Statutory Law 3. Common Law 4. Administrative Law 5. International Law

What are some Ineffective Defenses Against Tax Fraud?

1. Death of taxpayer 2. Bankruptcy 3. Amended or delinquent return

What is required for filing an Involuntary Bankruptcy proceeding?

1. Debts must not be subject to a bona fide dispute and must be non contingent. 2. Creditors must be owed at least $15,775 more than the value of the lien or collateral. 3. If 12 or more creditors - then 3 creditors are needed to file. 4. If fewer than 12 creditors, only 1 creditor is needed to file.

What are the elements of Securities Fraud Violations?

1. Defendant made a material misstatement or omission. 2. Misstatement or omission was in connection with purchase or sale of a security. 3. Defendant acted with a specific intent to defraud. 4. Victim relied on the misrepresentation or omission. 5. Victim suffered economic loss.

What are the rules for Taxation of Illegal Income in the U.S.?

1. Income from illegal activities --> must be reported and taxed just like legitimate income. 2. If criminal pays taxes on his illegal gains even though he is under a duty to repay them, the tax payer get a tax deduction for the repayment. 3. Deductions are not, however, allowed for any interest paid.

What are the Common Defenses to Allegations of Tax Fraud?

1. No deficiency 2. Lack of willfulness 3. Avoidance, not evasion 4. Objectively reasonable position 5. Mental illness 6. Reliance on an attorney or accountant 7. Ignorance of the law 8. Innocent spouse 9. Claim of Right Doctrine

What are Non-Dischargeable Debts (Chapter 7)?

1. Taxes 2. Debts incurred by fraud, embezzlement, and larceny. 3. Luxury goods (over $500 within 90 days) 4. Cash advances ($750 within 70 days) 5. Unscheduled debts - not listed on schedule 6. Domestic support obligations 7. Property settlements arising from divorce or separation 8. Certain liabilities - arising from willful or malicious injury 9. Fines and penalties 10. Student loans

What is the U.S. Foreign Corrupt Practices Act?

1. The FCPA makes it illegal for US companies or individuals acting anywhere in the world, to offer or pay anything of value to foreign officials for the purpose of obtaining or retaining business. 2. Applies to foreign companies that have securities registered in the US or file reports for the Securities and Exchange Commission and to persons and companies that take any act that promotes a corrupt payment while in the United States. 3. The FCPA has two major parts: a). 1st criminalizes the bribery of a foreign public official. b). 2nd pertains to accounting procedures requiring publically traded companies to keep accurate books and records and adopt internal controls to prevent diversion of assets or improper use of corporate funds. The FCPA allows for payments known as *facilitating payments, or grease payments*, made to expedite or secure performance of a routine governmental action. The *DOJ* is responsible for all criminal enforcement of the FCPA. Civil enforcement of the anti-bribery provisions of the FCPA is shared by the *SEC and the Doj*.

What are the elements that must be met for an Investment Contract?

1. There is an investment of money or other asset. 2. The investment is a common enterprise (means the success of the investor is dependent on the efforts and success of those seeking the investment of third parties). 3. The investment was made with expectation of making a profit. 4. The profits are to come solely from the efforts of people other than the investor.

What are 5th Amendment guidelines for Employee Interviews?

5th Amendment - protects a person from being forced by the government to give information that could be used to convict him of a criminal offense, and it prevents the government from punishing employees for his silence. 5th Amendment generally does not apply to private employees, unless there is evidence that the private company essentially acts as a agent to the government, then the private companies actions would be treated as actions of the government itself.

What are 6th Amendment guidelines for Employee Interviews?

6th Amendment - affords subjects in criminal investigations the right to counsel. It DOES NOT apply if there is no state action (a private employer can interview an employee without the presence of the employee's attorney).

What is a conflict of interest?

A conflict of interest occurs when an employee or agent—someone who is authorized to act on behalf of a principal—has an undisclosed personal or economic interest in a matter that could influence his professional role. Conflicts of interest do not necessarily constitute legal violations, as long as they are properly disclosed. Thus, for a conflict of interest claim to be actionable, the conflict must be undisclosed.

What is a Fidelity Bond?

A form of insurance protection that covers the insured entity for losses caused by the dishonest or fraudulent acts of its employees.

What is a Motion For Summary Judgement (U.S. Civil Case)?

A motion for summary judgment asks a judge to decide the case, without a trial, based on the evidence contained in the complaint and answer. A motion for summary judgment will be granted if the court determines that the pleadings and proof clearly demonstrate that there is no genuine issue of material fact involved in the proceedings and that the moving party is entitled to judgment as a matter of law. Either side in a lawsuit can file a motion for summary judgment. The motion is granted unless it can be shown that some of the facts as presented are in dispute.

What are Over The Counter Options?

A security that does not trade on a major exchange is said to trader OTC. OTC trading is conducted electronically, through direct contact with a market maker, or through communication among professional buyers and sellers. OTC options are not centrally cleared or standardized. OTC options can be plain vanilla or exotic.

What are *Qui Tam Suits*?

A suit in which a private individual sues on behalf of the government to recover damages for criminal or fraudulent actions committed against the government. It is a *civil*, not a criminal, suit. Any person can file as long as claim has direct and independent knowledge of the fraud and such knowledge was not obtained from a "public disclosure."

What is the Homestead Exemption?

Allows filers to exempt the value of their homes from creditors for property worth more than $125k. The debtor must own that property for 1,215 days before filing and must have lived in the state for 730 days prior to filing.

What is a Chapter 11 Bankruptcy?

Allows the debtor to reorganize its financial affairs and continue its business. If the court is provided sufficient probable cause regarding the debtors financial affairs, it may appoint a trustee or examiner.

What are Self-Regulatory Organizations?

An SRO is a nongovernmental entity that exercises some level of regulatory authority over the operations, standards of practice, and business conduct of an industry or profession.

What is the Egmont Group?

An informal international network of financial intelligence units (FIUs), which are national centers that collect information on suspicious or unusual financial activity, designed to fight money laundering by encouraging global cooperation and mutual exchange of information.

What is the Financial Action Task Force on Money Laundering?

An intergovernmental body established to develop and promote standards and policies to combat money laundering and terrorist financing at both the national and international levels. The FATF's Recommendations: 1. Use risk based approach when setting anti-money laundering policies. 2. Create policies that increase cooperation and coordination with other countries. 3. Specifically criminalize money laundering and terrorist financing. 4. Enable authorities to trace, freeze, and confiscate assets suspected in laundering and terrorist financing. 5. Require financial institutions to: a. Keep certain records and establish anti-money laundering policies. b. Avoid correspondent banking with shell companies. c. Continuously monitor wire transfers.

What is the Office of Foreign Assets Controls (OFAC)?

An office within the U.S. Department of the Treasury charged with *administering and enforcing U.S. sanction policies against targeted foreign organizations and individuals that sponsor terrorism and international narcotics traffickers*. Maintains a list of individuals, governmental entities, companies, merchant vessels around that world that are known or suspected to engage in illegal activities. Persons or entities on the list, known as *Specially Designated Nationals and Blocked Persons (SDNs)*, include foreign agents, front organizations, terrorist, and terrorist organizations, and drug traffickers.

What is the Discovery Stage (The Civil Justice System)?

Any party may take discovery regarding any matter, not privileged, that is relevant to the subject matter of the action, or that might lead to admissible evidence. Thus, even information that is not admissible at trial can be obtained through discovery. Principal means of discovery include: (1) Prediscovery disclosures (2) Pretrial conferences (required) (3) Oral depositions (*subpoena duces tecum* - a legal order for the witness to produce the documents for reference during the deposition). (4) Written interrogatories - questions are submitted in writing to an opposing party in a suit. Cannot be given to any witness or potential witness who is not a party to the lawsuit. (5) Requests for production - must specify the documents or the type of information being sought to be valid. (6) Requests for admissions (7) Request for physical or mental examinations (8) Requests for inspection of property

What is the Civil Law Systems?

Apply laws from an accepted set of codified principles or compiled statues. Individual cases are then decided in accordance with these basic tenets. Under a civil law system, the judge or judicial administrators are bound only by the code and not by previous decisions of other courts. Civil law and common law systems may exist within the same country. Civil law is the body of law that provides remedies for violations of private rights, and a civil action is a legal action that does not result in a criminal fine or incarceration.

What are Narrative Questions?

Are broad, open-ended questions that allow experts to present their opinions in their own words with minimal prompting.

What are Investment Companies?

Are entities, including mutual funds, through which investors pool their funds to invest in, hold, or trade securities. The Investment Company Act divides investment companies into 3 categories: 1. *Face amount certification companies* - any company engaged in issued fixed income debenture type securities. 2. *Unit investment trusts* - companies organized under a trust indenture, contract of agency, or those similar in nature, which do not have a BOD and issue only redeemable securities. 3. *Management companies* - those that don't fit into the other two classifications. *Open-end companies* are commonly referred to as mutual funds, and the net asset value of a share is calculated based on the market value of the funds portfolio divided by the number of shares outstanding. SEC does NOT have power to take criminal action. SEC investigations that disclose potentially criminal violations are usually referred to the FBI.

What are Options?

Are like futures contracts, but unlike futures, options do not impose obligations on the buyer and seller to make or take physical delivery of the commodity. Option contract confers a right, not an obligation - the option buyer to take delivery of the underlying asset and imposes obligation on the option seller. If option is not exercised - it expires unexercised. If a commodity is held to expiration, the investor who has the long position takes delivery of the commodity, and the investor with short position makes delivery. The object of the option contract (what the option is written on) is called the *underlying.* Options are a zero sum transaction, meaning one investor must suffer a loss for another investor to gain. *Call Option* - is the right, but not the obligation to purchase the underlying security at the strike (exercise) price by the options expiration date. *Put Option* - is the right, but not the obligation, to sell the underlying security at the strike (exercise) price by the options expiration date. A call option is *in the money* when the price of the security exceeds its strike price. A put option is *in the money* when the price of the security is less than its strike price. Options are *at the money* when the price of the underlying security is about the same as the strike price. All other options are *out of the money.*

What are Alternative Remittance Systems to Launder Funds?

Are methods of transferring funds from a party at one location to another party (whether domestic or foreign) without the use of formal banking institutions. These systems are characterized by the lack of direct physical or digital transfer of currency form the sender to the receiver. In a typical system, the payer transfers funds to a local broker who has connection to another broker in the region where the payee is located. The second broker then distributes funds to the payee. Relative anonymity and lack of paper trail makes this method attractive to money launderers.

What is fraud?

Black's Law Dictionary defines *fraud* as a knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment.

What is the Sarbanes Oxley Act of 2002 (SOX)?

Changed the laws of corporate governance and the rules and regulations under which accounting firms must operate. Most significant changes: -*Requirement for senior financial officers to certify SEC filings* (CEO, CFO). 1. They have personally reviewed the report. 2. Report does not contain any material misstatement of omission. 3. Financial information is presented fairly in all material respects. 4. They are responsible for designing, maintaining, and evaluating the company's internal controls (they have evaluated the controls within 90 days prior to their quarterly or annual report). . 5. They have disclosed to auditors and audit committee any material weakness in controls and any fraud (whether material or not) that involves management or those with role in company's internal controls. 6. They have indicated whether there have been significant changes in company's internal controls since the filing of the last report -*Standards for audit committee independence* -*Enhanced financial disclosure requirements* 1. Off-balance sheet transactions must be disclosed. 2. Pro forma reports - financial statements that predict the performance of a business or specific transaction. 3. Prohibition of personal loans to executives 4. Restrictions on insider trading 5. Codes of ethics for senior financial officers - must be disclosed in their annual report whether they have adopted a code or if not, they must explain their reasoning. -*Protections for corporate whistle blowers* -*Liability and enhanced penalties for white-collar crime* -*Extended statue of limitations for federal securities fraud* - extends the state of limitations to the earlier of two years after the discovery of facts constituting fraud or five years after such violation.

What is the Statue of Limitations for Tax Fraud?

Civil Actions - no statue of limitations for actions relating to tax fraud (including false returns, failure to file returns, and tax evasion). Criminal Charges - IRS has 3 years to audit a tax return, but if its investigation reveals that a taxpayer concealed 25% or more of its income, then it has 6 years to seek prosecution.

Who has the burden of proof in a U.S. Civil Case?

Civil plaintiffs must proves their case only by the *preponderance of the evidence*, meaning that there must only be slightly more evidence in favor than against. Some civil fraud cases require a party to prove its claim under the *clear and convincing evidence* standard, which means the fact finder must find that the claim is substantially more likely to be true than untrue.

What is Common Law?

Consists of the usages and customs of a society as interpreted by the judiciary; it is often referred to as *judge made* law.

What is a Conspiracy?

Conspiracy refers to a situation in which two or more people agree to commit an illegal act. The essential elements that must be shown to prove a conspiracy are as follows: 1. The defendant entered into an agreement with at least one other person to commit an illegal act. 2. The defendant knew the purpose of the agreement and intentionally joined in the agreement. 3. At least one of the conspirators knowingly committed at least one overt act in furtherance of the conspiracy. Under the first element, the government must prove that the defendant reached an agreement or understanding to commit an illegal act with at least one other person. The conspirators must agree about the precise illegal act. Under the second element, the government must establish that the defendant knew of the conspiracy's existence and its objective. The government, however, does not have to establish that the defendant knew all the details or objectives of the conspiracy, and it does not have to prove that the defendant knew the identity of all the participants in the conspiracy. Finally, the purpose of the conspiracy need not be accomplished for a violation to occur, but at least one of the co-conspirators must have carried out at least one overt act in furtherance of the conspiracy. The overt act need not be criminal and could be as innocuous as making a phone call or writing a letter.

What is a Custodial Setting (employee interviews)?

Custodial Setting - refers to questions initiated by government agents after a person had been taken into custody, or otherwise deprived of his freedom or action in any significant way. Both private and public employers might interview employees in noncustodial setting WITHOUT giving Miranda warnings.

What is the UK Bribery Act?

Exercises broad jurisdiction over all individuals and corporate entities for acts of corruption when any part of the offense occurs in the UK. Similar to FCPA, but UK Bribery Act goes further by making *commercial bribery* - bribes paid to people paid in private sector - a crime.

What is a Chief Restructuring Officer?

Following or in anticipation of a bankruptcy filing, many large company may hire a CRO. The CRO often leads the team in taking control of an organizations financial situation and guiding the business organization. Reports directly to the Org. BOD.

What are the specific elements of proof required to establish a misrepresentation claim?

Fraudulent misrepresentation of material facts is most often thought of when the term fraud is used. The specific elements of proof required to establish a misrepresentation claim vary somewhat according to where the fraud occurred and whether the case is brought as a criminal or civil action, but the elements normally include: 1. The defendant made a false statement (i.e., a misrepresentation of fact). 2. The false statement was material (i.e., the statement was sufficiently important or relevant to influence the making of a decision). 3. The defendant knew the representation was false. 4. The victim relied on the misrepresentation. 5. The victim suffered damages as a result of the misrepresentation.

What is an Examiner?

If a trustee is not appointed in Chapter 11, court may appoint an *examiner* to investigate certain allegations of fraud and misconduct. If appointed, sole responsibility is to investigate and report the results to the court and parties in interest asap. Has the power to subpoena records and depose witnesses, *but* DOES NOT have power to fun businesses, make business decisions, or propose plans of reorganization.

What is an Illegal Gratuity?

Illegal gratuities are items of value given to reward a decision, often after the recipient has made the decision. Illegal gratuities are similar to official bribery schemes, and most illegal gratuity laws outlaw gratuities in the public sector. In general, the elements of an illegal gratuity are: -A thing of value -Given, offered, 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 that public official

What is Impeachment?

Impeachment is the practice of bringing out matters that attack a witness's credibility. There are numerous ways an attorney might impeach a witness, but the most common ways include efforts to show that the witness: - Is influenced by bias or self-interest - Has an impaired ability to observe - Made prior inconsistent statements - Has been convicted of a felony or equivalent crime - Has a reputation for untruthfulness-

Where do federal criminal laws come from?

In the United States, all federal criminal laws are the product of statutes.

What is the Pre-Discovery Phase?

In the pretrial discovery phase of U.S. criminal litigation, if the defendant requests disclosure of the prosecution's documents and tangible objects, reports of examinations and tests, and its expert witnesses, then the prosecution is correspondingly entitled to disclosure of these items from the defense. The prosecution is not, of course, entitled to disclosure of the defendant's work product, nor is it entitled to statements made by prospective witnesses to the defendant or his attorneys.

What is Civil Wrong of Intrusion Upon Seclusion?

Intrusion upon seclusion occurs when an individual intentionally intrudes into an area where another individual has a reasonable expectation of privacy and the intrusion would be highly offensive or objectionable to a reasonable person.

What is the Office of the United States Trustee?

Is a DOJ agency that is responsible for administering bankruptcy cases; appointing Chapter 11 committees; overseeing and monitoring trustees; reviewing employment and fee applications; and appearing in court on matters of interest to the estate and creditors. *Staff attorneys* - review pleadings and represent the UST on these matters. *Bankruptcy analysts* - analyze and review operating reports and other relevant financial information and, in general, oversee the debtors case to ensure compliance with the Bankruptcy Code and to protect the assets of the estate. *Special investigative units* - investigate criminal complaints in bankruptcy cases.

What is a Daubert Challenge?

Is a motion raised, either before or during trial, to exclude an expert witness from presenting evidence. This motion is used to exclude the testimony of an expert who lacks expertise or uses questionable methods.

What is a Diversity Case (The Civil Justice System)?

Is a suit involving parties from different states and involving more than $75,000 in controversy.

What is the Common Law Judicial System?

Is a system of legal principles developed by judges through decisions made in court. It is often referred to as *judge-made* law. Decisions that establish particular legal principles are called *precedent*. Under the doctrine of *stare decisis*, lower courts are bound to follow the precedents of higher courts until or unless the rule of law established is overturned by a higher court or legislature. The body of judicial opinions is sometimes referred to as *case law*.

What is Front Running - Dual Trading?

Is a type of insider trading. Although it will usually will not cause a direct loss to the customer, front running violates the rules of many exchanges. *Front running* involves the use of privileged knowledge of a customers order to buy or sell a large amount of commodity, option, or security, that because of its size, is likely to move the market.

What are Futures Contracts?

Is an agreement between buyer and seller to make delivery (i.e. sell) or to take delivery of a given quantity and quality of a commodity at a specified price and on a specified future date. A *commodity* is anything that can be turned to commercial advantage. Goods commonly sold on the commodities market include such items as soybeans, wheat, corn, pork bellies, rice, gold, and silver. In a commodities market, the basic instrument of exchange is the futures contract. Futures contracts are standardized and contain specifications of size, delivery months, commodity grade, location. *Price and quantity* are the only things negotiated by the counter parties to a trade. Futures contracts are either *physically delivered or cash settled.*

What is Perjury?

Is an intentional false statement given under oath on a material point at issue. Stmt can be made in court, depositions in connection with litigation, bail hearings, venue hearings, suppression hearings. --> a person can commit perjury made somewhere other than a court of law.

What is Chapter 13 - Adjustment of Debt?

Is another alternative to liquidation that allows debtor pay off debts over time in accordance with court approved plan. This is primarily for individuals. A court will not grant Chapter 13 if debtor received discharge under Chapters 7, 11, or 12 withing previous 4 years, or a discharge under Chapter 13 in the previous 2 years. Also, a court may not grant Chapter 13 discharge unless debtor has completed an education course in personal financial management.

What is Spoliation of Evidence?

Is broadly defined as the act of destroying evidence or making it otherwise unavailable. Spoliation sanctions can arise from intentional acts and negligent acts

What is Testimonial Evidence?

Is evidence presented in the form of statement made during a legal proceeding, such as a trial, an administrative hearing, or a deposition.

What is Trade-Based Money Laundering?

Is generally the most complex of the money laundering methods. It encompasses a variety of schemes that use international trade to disguise the transfer of illicit funds.

What is an Off-Setting Contract?

Is one in which a purchase (sale) of futures contracts is liquidated through the sale (purchase) of an equal number of futures contracts with the same delivery month, thus closing out the position.

What is Constitutional Law?

Is the body of law established by a sovereignty's constitution, and it deals with the fundamental principles by which a government exercises its authority. The constitution is the supreme law of the land. *4th Amendment*: guarantees the right of all citizens to be free from unreasonable searches and seizures. *5th Amendment*: guarantees subjects of a criminal investigation the right to refuse to answer questions or to provide certain personal information that might be incriminating. *6th Amendment*: the right to counsel, the right to cross examine the witness against them, and the right to a speedy trial. *Canadian Constitutional Law* - similar to US, but guarantees the right against self incrimination, during both at the investigative stage and at the trial stage of criminal cases.

What is Training On Margin?

Is the initial amount of money that is invested by both buyers and sellers of a futures contract to ensure performance on the terms of the contract. A margin in futures is not a down payment, as in securities, but rather a *performance bond.* *Initial Margin* - is the amount of money per contract that must be present in the account when the position is initiated (to buy securities on margin, an investor must deposit enough assets with a broker to meet initial margin requirement for that purchase). *Maintenance (variation) Margin*- is the minimum amount of money per contract that must be maintained in the account while the position is open.

What is a Jurisdiction?

Is the power of a court to hear and decide a given case; it refers to the subject matter or persons over which lawful authority may be exercised by a court.

What is Bulk Cash Smuggling?

Is the smuggling of cash out of the country where it was earned for deposit in foreign jurisdictions with lax financial institutions or to fund criminal enterprises. In typical operations, smugglers hide cash in vehicles, luggage, express packages, commercial shipments, private aircraft, or private boats.

What is Embezzlement?

Is the wrongful appropriation of money or property by a person to whom it has been lawfully entrusted. A *larcenist* takes something from its rightful owner without ever having had legal custody of the item stolen. The *embezzler* takes something in which ha has lawful possession.

What is Statutory Law?

Is written law created by legislature or other governing authority, and it includes statues and codes passed by the local, regional, or national legislatures.

What is the Fair Credit Reporting Act?

It governs the rights of consumers to their credit reports and the obligations of credit reporting agencies and the business that provide information to them. *Consumer Reporting Agency* - interpreted broadly as anyone who sells information about people (e.q., a private investigator or an online public records service, inspection bureaus, companies that sell information to insurance companies and assist in performing background checks).

What is a Chapter 7 Bankruptcy?

It is the liquidation of the debtors assets and is the most common type of bankruptcy. - Taxes, fines, alimony, child support, and certain student loans generally cannot be discharged. - Cannot receive discharge if person received a prior discharge within 8 years of the new filing.

What is the *business judgement rule*?

It protects corporate officers and directors from liability from judgements that were made in good faith and appeared to be prudent on the then-known circumstances.

What are Kalkines Warning?

Kalkines warnings are a form of immunity that precludes prosecution against the employee for statements derived from the compelled testimony. If an employee refuses to answer questions after receiving a proper Kalkines warning, the public company may take disciplinary actions, including dismissal. The right against self incrimination only applies in matters involving the risk of criminal prosecution. Thus an employee (public or private) can be fired for refusing to answer a question when the answer will only lead to an administrative punishment or civil suit, but not to criminal conviction. Regardless of the setting, a public employer cannot compel its employees to choose between their constitutional rights and their jobs outside the Kalkines warning.

What is Substantive and Procedural Law?

Law can be categorized as substantive or procedural law. *Substantive Law* - defines the type of conduct permissible and the penalties for violation; it is composed of the basic laws of rights and duties. When people say an act is "against the law," there are referring to substantive law. a). *Public Law* - governs the relationships between individuals and the state. b). *Private Law* - used to resolve disputes between private parties (real property, contracts, civil wrongs, wills and estates, business organization law). *Procedural Law* - defines the rules by which individual cases are decided; it sets out the rules of the legal system, including the procedures to be followed in hearing a grievance. Procedural law might include deadlines, filing requirements, steps to follow in bringing a claim, rules of evidence and so on. Substance law sets the terms of a dispute; procedural law dictates how a legal dispute is handled.

What is the Investment Advisor Act of 1940?

Mandates registration and regulation of investment advisers. Applies to most individuals who provide fee-based investment advice. It does NOT apply to those who do not receive compensation or who publish financial advice in a newspaper or magazine.

What is the *duty of Care*?

Means that people in a fiduciary relationship must act with such care as an ordinarily prudent person would employ in similar positions.

What is Mediation vs. Arbitration?

Mediation - process whereby an impartial third person assists the parties in reaching a resolution of the dispute. The mediator does not decide who should win, but instead works with the parties to reach a mutually agreeable settlement. Arbitration - the process whereby a dispute is submitted to an impartial third person who then decides the outcome of the case. The arbitrator acts as a judge or jury by deciding the case on its merts.

What is the State Courts System?

Most states use a three or four tier system. 1. *Lower-level trial courts* - try misdemeanors and preliminaries for felony cases, as well as civil disputes below a certain dollar amount (e.g. $10k or less). 2. *Higher-level trial courts* (aka superior courts) - try felony cases and civil disputes above certain dollar amount (e.g. $10k or more). 3. *Appellate courts - review trial court decisions. While appellate courts may review cases of law and mixed issues of fact and law, they do not try cases and are not responsible for discovering facts. 4. *Superior appellate courts, or supreme courts* - review lower appellate court decisions.

What is *uttering a forged instrument*?

Occurs when an individual, with intent to defraud, offers as a genuine a forged instrument. Uttering a forged instrument expands the forgery offense by including the offering or passing of a forged document as genuine.

What is Special Due Diligence for Foreign Accounts (Patriot Act)?

Patriot Act requires financial institutions to establish due diligence policies, procedures, and controls that are reasonably designed to detect and report instances of money laundering through certain accounts held by non-US citizens or their representatives. Two types of foreign accounts: *Private Banking Account* - an account that (1)requires a minimum aggregate deposit of funds or other assets of at least $1 million (2)is established on behalf of one or more individuals who have a direct or beneficial ownership in the account, and (3)is assigned or administered by a financial institution officer, employee, or agent acting as a liaison between institution and the accounts owner. *Correspondent Account* - an account established to receive deposits from or make payments on behalf of a foreign financial institution, or handle other financial transactions related to such an institution.

Searches Incident to Arrest?

Police officers may, without a warrant, conduct a limited search incident to a lawful arrest. Such searches must be limited to the arrestee's body and the area within immediate control. Officers makes an arrest in home - officers are allowed to make a "protective sweep" of adjoining rooms on the property (basically means a quick walk-through of the room to detect any apparent dangers, and does not mean officers can rummage through drawers of adjoining rooms, search the cabinets, etc).

What are some Post Discovery Procedures in U.S. Civil Justice System?

Post-judgment discovery procedures include: (1)*Judgment debtor examinations*: If a judgment creditor obtains an order for examination of a judgment debtor, the order will require that the judgment debtor appear in court and answer questions under oath about his financial assets. (2)*Post-judgment requests for documents or things to be produced*: A judgment creditor can serve the debtor with a production request requiring the debtor to bring certain documents with him to the debtor examination if the documents are material and important to the creditor's collection efforts. (3)*Post-judgment interrogatories*: Post-judgment interrogatories are written questions about the debtor's assets that he must answer in writing. (4)*Post-judgment depositions*: A post-judgment deposition is sworn testimony given by a debtor upon questioning about his assets, liabilities, sources of income, and so on.

What is a Trustee?

Private, individual professionals (usually attorneys) who serve in Chapter 7 cases. Might also be considered for Chapter 11 cases where operation of the debtors business is considered appropriate. Duties include administering and liquidating assets, paying creditors, and litigating matters where necessary. 1. Trustee investigates allegations of fraud and misconduct. 2. Has power to gather financial info. 3. Takes the debtors place and has all of the debtors ownerships 4. Should have access to accountants work papers, tax returns, info. from law enforcement.

What is Probable Cause?

Probable cause has been defined as those facts and circumstances sufficient to cause a person of reasonable caution to believe that a crime has been committed and that the accused committed it.

What is the Employee Protection from Polygraph Examinations?

Prohibits the use of polygraphs by most private employers, unless the employer is engaged in an ongoing investigation involving economic loss or injury to the employer in the employer's business and has a reasonable suspicion that the employee is involved in the incident. Employers *CANNOT* use polygraphs to screen applicants for employment and they cannot discharge an employee for refusing to take a polygraph exam. This Act *DOES NOT* protect government employees.

What is Litigation Hold Procedures?

Provides a process whereby an organization issues a litigation hold communication that notifies employees to suspend the destruction of potentially relevant records when the duty to preserve relevant information arises. The duty to preserve data begins when a lawsuit is "reasonably anticipated" and ends when a judgement has been rendered and appeals exhausted.

What are Hedge Funds?

Refer to a private pooled investment vehicles managed by advisers who generally have a very large financial interest in the funds based on a management fee that includes a percentage of the funds performance. Hedge funds pool investors money and invest it in financial instruments with the goal of earning a positive return.

What are Money Services Businesses?

Refer to non-depository financial service providers that transmit or convert money and operate in one or more of the following capacities: 1. Currency exchangers 2. Check cashers 3. Issuers, sellers, or redeemers of travelers checks, money orders, or stored value. 4. Money transmitters 5. Prepaid access providers or sellers.

What are Adversarial and Inquisitorial Processes?

Refer to the approach that courts take to discover evidence in a case. *Adversarial Processes* - are those in which the parties to a proceeding drive the discovery process (the search for evidence). The parties to the litigation gather and present the evidence to the court. Defendants are given the presumption of innocence, which puts the burden of proof on the government to prove criminal accusations. *Inquisitorial Processes* - refer to a fact-finding approach that places the primary responsibility of discovering evidence on the presiding judge. The main goal is to find the truth. *Difference* - defendants in criminal inquisitorial proceedings may be called to testify (whereas in adversarial systems, the defendant may testify, but does not have to do so). Civil law jurisdictions almost always favor an inquisitorial process, while common law systems typically feature an adversarial system.

What is Securities Fraud?

Refers to deceptive practices in the purchase, sale of securities.

What is a Venue?

Refers to the geographical area covered by the court; it is the physical location where the lawsuit is to be tried.

What is the Investment Company Act of 1940?

Regulates companies whose own securities are offered to the investing public. Investment companies are required to register with SEC, which also regulates their activities.

What is Relevant Evidence?

Relevant Evidence - is defined as evidence "having any tendency to make the existence of any fact that is of consequence to determination of the action more probable or less probable than it would be without the evidence." Evidence is relevant if it tends to make some fact at issue more or less likely than it would be without the evidence.

What is the IOSCO Fraud Report?

Report identifies seven separate areas that have figured prominently in many high profile financial scandals: 1. Corporate governance 2. Auditors and audit standards 3. Issuer disclosure requirements 4. Bond market regulation and transparency 5. The role and obligations of market intermediaries 6. The use of complex corporate structures and specific purpose entities 7. The role of private sector information analysts

What is the *duty of Loyalty*?

Requires that the employee/agent act solely in the best interest of the employer/principal, free of any self-dealing, conflicts of interest, or other abuse of the principal for personal advantage.

What is Section 1001 (False Claims and Statements)?

Section 1001 prohibits a person from lying to or concealing material information from a federal official. A statement is false for the purposes of Section 1001 if it was known to be untrue when it was made, and it is fraudulent if it was known to be untrue and was made with the intent to deceive a government agency. For a violation to occur, the agency need not actually have been deceived, nor must it have in fact relied upon the false statement. Also, to establish a violation, the government does not have to show that it suffered a loss. The statement must have been capable, however, of influencing the agency involved. The elements of a typical Section 1001 violation are set forth below: The defendant willfully made a false statement (or used a false document). The false statement was material (i.e., sufficiently important or relevant to influence the making of a decision). The statement concerned a matter within the jurisdiction of any agency of the United States. The defendant knew the statement was false, acted in deliberate ignorance of the claim's truth, or acted in reckless disregard of the claim's truth or falsity.

What is the Best-Evidence Rule?

Sometimes testimony may be excluded in common law systems because of the best-evidence rule, which prohibits a party from orally testifying about the contents of a document without producing the document itself or proving to the judge that there is a valid reason for being unable to do so. This rule, however, only applies when an original or copy is being used to prove the contents of a writing, and it does not demand that a party produce the very best evidence to prove a fact in dispute. Also known as the original-writing rule, the best-evidence rule provides that when a witness testifies about the contents of a document, at least a fair copy of the original must be available for inspection. If there is no original, a copy of the proven authentic document will do, but the court must be assured that the copies are reliable and accurate. If the document is lost—no original, no copies—the judge will have to be convinced that there is good reason to forgo the exhibit and admit the testimony.

What are the different types of Evidence?

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). Demonstrative evidence differs from real evidence in that demonstrative evidence was not part of the underlying event; it was created specifically for the trial. Its purpose is to provide a visual aid for the fact finder.

What is the CAN-SPAM Act?

The CAN-SPAM Act, or the Controlling the Assault of Non-Solicited Pornography and Marketing Act, attempts to reduce the amount of unsolicited commercial email, also known as spam, by establishing national standards for sending email solicitations. To reduce the amount of spam, the CAN-SPAM Act provides several provisions that apply to individuals or companies sending spam. More specifically, the Act prohibits several deceptive and/or fraudulent practices commonly used in spam, including the prohibition of using deceptive subject lines, using deceptive header information, and requiring sender identification.

What is the Electronic Communications Privacy Act of 1986 (ECPA)?

The ECPA restricts employers' right to monitor or search employees' electronic communications (phone calls, email, internet use, etc). Both public and private companies are subject to the ECPA. ECPA is divided into 3 parts: (1) The Wiretap Act - governs the interception of electronic communications. (2) The Stored Communications Act - covers access to stored communications and records. (3) The Pen Register Act - regulated pen registers and trap and trace devices. - If a message is stored on an email or voice mail system that the company provides, then the employer can access those messages as it sees fit without violating the ECPA.

What is the Economic Espionage Act?

The Economic Espionage Act of 1996 outlaws two types of trade secret misappropriation: economic espionage and theft of commercial trade secrets. Section 1831 criminalizes economic espionage, which refers to the theft of a trade secret to benefit a foreign government, instrumentality, or agent. Section 1832 criminalizes the theft of commercial trade secrets, which refers to the theft of commercial trade secrets to obtain an economic advantage.

What is the National Labors Relations Act?

The National Labor Relations Act - prohibits any form of interrogation by employers that interferes with the rights of the employee to organize, bargain, or otherwise engage in concerted activities for the purpose of bargaining or other mutual aid or protection.

What is the U.S. Uniform Securities Act of 2002?

The U.S. Uniform Securities Act of 2002 provides that, unless certain exemptions apply, a security cannot be sold or offered for sale until all of the following requirements are satisfied: There is a registration in place to cover the security. The securities professional is registered. There is full and fair disclosure of all material information.

What is Attorney - Client Privilege?

The U.S. attorney-client privilege is not absolute; it is subject to waiver. Because the attorney-client privilege does not protect communications disclosed to outside parties, the privilege will be waived if confidential communications are disclosed to a third party whose role has little to do with the client's pursuit of legal representation. Generally, waiver occurs when the client, who holds the privilege, voluntarily discloses any significant part of the privileged communications. Although the client holds the privilege, the privilege can also be waived by the client's attorney or a third party (someone who is neither the attorney nor the client).

What is the Federal Courts System?

The federal system uses a three tier model. 1. *U.S. Districts Courts* - conducts trials on criminal charges and civil complaints under federal law. 2. *Court of Appeals* - including the Court of Military Appeals - review trial court decisions. 3. The *U.S. Supreme Court* - reviews lower court decisions.

What is the jury size in a U.S. Civil Case?

The juries in civil cases need not consist of 12 people; many civil cases are heard by 6 jurors. The parties to a civil action may stipulate that the jury's verdict need not be unanimous.

What is Service of Process (The Civil Justice System)?

The process of the plaintiff serving the complaint, together with a summons, on the defendant.

What is Mail Fraud?

The use of the mail to perpetrate a scheme to defraud a victim of money or property. The mailing itself does not need to contain the false and fraudulent representations; the mailing element is satisfied as long as the mailing help advance the scheme in any significant way. It is not necessary that the fraudulent scheme succeed or the victim suffer a loss.

What is Wire Fraud?

The use of wire communications to perpetrate a scheme to defraud a victim of money or property. The wire fraud statue is often used in tandem with the mail fraud statue in federal prosecutions, but unlike mail fraud, the wire fraud statue requires an interstate or foreign communication for a violation. The U.S. wire fraud statute makes it a crime to defraud a victim of money or property by means of wire or other electronic communications (e.g., computer, telephone, radio, or television) in foreign or interstate commerce.

What are Typing Services or Petition Mills?

These schemes involve companies that file bankruptcy petitions on behalf of others. Typically target low income and unsuspecting clients. To obtain cooperation, they might promise to erase the persons poor credit record or offer some other fake financial service. Often, the filing entity has held itself out to be a renters rights group and has not told the client how it will accomplish what it has promise. And in some cases, the debtor is not even aware of the filing of the bankruptcy's effect on the debtor's credit rating.

What are the elements of an offense under the bribery of public officials statute, Title 18, U.S. Code, Section 201(b)?

To establish a Section 201(b) violation, the government must prove all of the following elements: 1. The defendant gave or received something of value. 2. The recipient was (or was selected to be) a public official. 3. The defendant acted with corrupt intent. 4. The defendant's scheme was designed to influence the performance of an official act.

What are the requirements from Financial Institutions required by the Patriot Act?

U.S. financial institutions should adopt anti-money laundering (AML) program that includes the following elements: 1. The development of internal policies, procedures, and controls to prevent money laundering. 2. The designation of a money laundering compliance officer. 3. Ongoing training program for awareness of money laundering. 4. Independent audit function to test the program. Section 326 of the USA PATRIOT Act expands the Bank Secrecy Act by requiring U.S. financial institutions to implement *Customer Identification Programs (CIPs)*. These CIPs are to be incorporated into financial institutions' money laundering programs, and at a minimum, they must include reasonable procedures for: • 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 information • Consulting lists of known or suspected terrorists or terrorist organizations to determine if the person seeking to open the account appears on any such list

What is The Exclusionary Rules?

Under the exclusionary rules, which is in effect in all federal and state courts, evidence seized in violation of the 4th Amendment will be suppressed - that is, it becomes inadmissible. - The Exclusionary Rule - only applies in criminal cases and does not apply in civil proceedings. - The 4th Amendment applies to government employees; therefore, a public employer cannot use illegally seized evidence to discipline an employee. Evidence illegally obtained by private employer may be admitted to court, but employer may be exposing itself to litigation. - Evidence that has been suppressed under exclusionary rule might still be admissible in civil trial or an administrative proceeding such as employee disciplinary hearing. - Primary goal of the exclusionary rule is to deter police misconduct.

What is a Upjohn warnings?

Upjohn warnings - are designed to ensure that an attorney-client relationship is not established between the attorney and the employee being interviewed. Counsel should inform employee that counsel represents the company, not employee and the purpose of the interview is to obtain information to provide legal advice to the company.

What is Voir Dire?

Voir Dire - is the jury selection process.

What is the Reasonableness Standard?

Workplace searches by government employers are subject to the reasonableness standard in two circumstance: (1) For non-investigatory, work related purposes, which are wholly unrelated to illegal conduct (such as retrieving a file from someones desk). (2) For investigations of work-related misconduct. Two-part test to determine if a workplace search is reasonable: (1) Search must be justified at its inception. (2)Search must be conducted in a way that is reasonably related in scope to the circumstances that justified the interference in the first place.