Section B.07.06
In the United States, anyone who induces another to commit an offense can be held guilty of:
Aiding and abetting. Section 2 of Title 18, U.S. Code, is the federal aiding and abetting statute, which provides that anyone who induces another to commit an offense or who aids in its commission may himself be charged and convicted of the underlying offense and subject to its penalties.
Which of the following is an element that must be established to prove fraud based on the concealment of material facts?
All of these answers are correct. An action for fraud may be based on the concealment of material facts, but only if the defendant had a duty in the circumstances to disclose. The essential elements of fraud based on failure to disclose material facts are: • The defendant had knowledge of a material fact. • The defendant had a duty to disclose the material fact. • The defendant failed to disclose the material fact. • The defendant acted with intent to mislead or deceive the victim(s).
Which of the following is a legal element that the government must show to prove a criminal conspiracy?
All of these answers are correct. 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: • The defendant entered an agreement with at least one other person to commit an illegal act. • The defendant knew the purpose of the agreement and intentionally joined in the agreement. • 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.
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?
All of these answers are correct. In general, mail fraud is the use of the mail to perpetrate a scheme to defraud a victim of money or property. The gist of the offense is the use of the mail, which includes the use of the U.S. postal system or private interstate commercial carriers (e.g., FedEx, UPS, and DHL) for the purpose of executing, or attempting to execute, a fraud scheme. Thus, where the mail is not used, no matter how large or serious the fraud, there is no federal jurisdiction under this statute. Yet, a mail fraud offense can occur even if the mailing itself does not contain false and fraudulent representations. Thus, routine mailings are sufficient to invoke the mail fraud statute even when they are innocent (nondeceptive) mailings. The mailing element is satisfied as long as the mailing helps advance the scheme in any significant way. For a scheme to violate the mail fraud statute, it is not necessary that the scheme succeed or that the victim suffer a loss.
Which of the following is considered obstruction of justice?
All of these answers are correct. Obstruction of justice occurs when an individual engages in an act designed to impede or obstruct the investigation or trial of other substantive offenses. Some common types of obstruction statutes are those that prohibit: • Influencing or injuring any officer of the court or juror by force, threats of force, intimidating communications, or corrupt influence • Influencing a juror through a writing • Stealing or altering records or processes by parties that are not privy to the records • Using force or threats of force to obstruct or interfere with a court order • Destroying documents related to a future proceeding • Tampering with a witness, victim, or an informant (e.g., killing or attempting to kill, using force or threats of force, intimidating, influencing with bribes or other corrupt means, misleading, or harassing the protected parties) • Influencing, obstructing, or impeding a government auditor in the performance of his official duties • Obstructing the examination of a financial institution
Which of the following is an element that must be proven to establish a perjury offense?
All of these answers are correct. Perjury is an intentional false statement given under oath on a material point at issue. The basic elements for the crime of perjury are as follows: • The defendant made a false statement. • The defendant made the false statement while under oath. • The false statement was material or relevant to the proceeding. • The defendant made the statement with knowledge of its falsity. Laws that criminalize perjury, however, do not require that the false statement be given in a court of law. Generally, the forum for a perjurious statement includes any court proceeding, depositions in connection with litigation, bail hearings, venue hearings, suppression hearings, and so on. Thus, an individual can commit perjury for false statements made somewhere other than a court of law. Also, for a statement to be perjurious, it must be material. Generally, a statement is material if it tends to influence, or is capable of influencing, the decision of the decision-making body to whom it is addressed.
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)?
All of these answers are correct. 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.
Which of the following is a legal element that must be shown to prove a claim for fraudulent misrepresentation of material facts?
All of these answers are correct. 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: • The defendant made a false statement (i.e., a misrepresentation of fact). • The false statement was material (i.e., the statement was sufficiently important or relevant to influence the making of a decision). • The defendant knew the representation was false. • The victim relied on the misrepresentation. • The victim suffered damages as a result of the misrepresentation.
Which of the following acts would constitute violations under the U.S. Foreign Corrupt Practices Act's (FCPA) anti-bribery provisions?
All of these are correct. Each of the above acts would constitute a violation under the FCPA. For individuals and businesses within its jurisdiction, the FCPA prohibits the payment or offer of anything of value to a foreign official for the purpose of obtaining or retaining business. Promises to pay are considered items of value. Furthermore, foreign companies are within the reach of the FCPA if they have registered securities or are otherwise required to file under the U.S. Securities and Exchange Act of 1934. Here, the German company would be subject to the FCPA because it is publicly traded on the New York Stock Exchange (NYSE), which requires registration with the U.S. Securities and Exchange Commission (SEC). The anti-bribery provisions of the FCPA make it unlawful to bribe a foreign official for business purposes. Only regulated parties, such as issuers, domestic concerns, and foreign nationals or businesses, are subject to FCPA jurisdiction. An issuer is a corporation that has issued securities that have been registered in the United States or that is required to file periodic reports with the SEC. A domestic concern is any citizen, national, or resident of the United States, or any business entity that has its principal place of business in the United States or that is organized under the laws of a state, territory, possession, or commonwealth of the United States. Moreover, the FCPA applies extraterritorially to U.S. citizens working for foreign subsidiaries of domestic companies. A foreign national or business is subject to the FCPA if it takes any act in furtherance of a corrupt payment within U.S. territory. Additionally, the agents, subsidiaries, or other third-party representatives who act on behalf of an issuer, a domestic concern, or a foreign national or business are liable under the same conditions as the issuer, domestic concern, or foreign national or business. The FCPA's anti-bribery provisions extend only to corrupt payments made to foreign officials. The FCPA does not, however, prohibit all payments to foreign officials; it contains an explicit exception for certain types of payments, known as facilitating payments, or grease payments, made to expedite or secure performance of a routine governmental action by a foreign official, political party, or party official that relates to the performance of that party's ordinary and routine functions.
The U.S. federal wire fraud statute makes it a crime to use telephone, radio, or television communications to perpetrate a scheme to defraud a victim of money or property.
True. 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.
Which of the following U.S. laws prohibits deceptive and fraudulent practices commonly used in email?
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.
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. For a false statement to violate 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.
Which of the following is the federal U.S. statute that criminalizes the theft of commercial trade secrets to obtain an economic advantage?
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.
Which of the following offenses occurs when a person steals property for which he has legal custody or possession?
Embezzlement. Embezzlement is the wrongful appropriation of money or property by a person to whom it has been lawfully entrusted. Embezzlement involves a breach of trust, although it is not necessary to show a fiduciary relationship—a relationship of confidence, trust, or good faith—between the parties.
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. An illegal gratuity charge doesn't require proof that the gratuity was given for the purpose of influencing an official act. That is, an illegal gratuity charge only requires that the gratuity be given for, or because of, an official act.
To prove a defendant is guilty of accepting an illegal gratuity, the prosecution must show that the defendant was influenced by the acceptance of the improper payment.
False. An illegal gratuity charge doesn't require proof that the gratuity was given for the purpose of influencing an official act. That is, an illegal gratuity charge only requires that the gratuity be given for, or because of, an official act.
Anderson, a lawyer, is in possession of funds that belong to his client, Mullins. Anderson subsequently misappropriates those funds with the intent to defraud Mullins. Under these facts, Anderson has committed larceny.
False. Anderson has committed embezzlement, not larceny. Larceny is defined as the wrongful taking of money or property of another with the intent to convert or to deprive the owner of its possession or use. Embezzlement is the wrongful appropriation of money or property by a person to whom it has been lawfully entrusted (or to whom lawful possession was given). Unlike in embezzlement, in larceny, the defendant never has lawful possession of the property, but may have mere custody of it. Thus, because Anderson was in possession, not just custody, of the funds before he misappropriated them, he committed embezzlement
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. Both the UK Bribery Act and the U.S. Foreign Corrupt Practices Act (FCPA) make it a crime to offer foreign public officials bribes or to accept bribes from them in connection with international business transactions, and their prohibitions on bribing foreign government officials are broadly comparable. Thus, like the FCPA, the Bribery Act seeks to punish corruption on a global level, but the Bribery Act has an even broader application than the FCPA. One way in which the Bribery Act has a broader application than the FCPA is that it makes commercial bribery—bribes paid to people working in the private sector—a crime, whereas the FCPA only prohibits bribes involving foreign government officials.
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. 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: • The defendant entered an agreement with at least one other person to commit an illegal act. • The defendant knew the purpose of the agreement and intentionally joined in the agreement. • 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.
To establish the crime of embezzlement, the government must prove that there was a fiduciary relationship between the perpetrator and the victim resulting from the perpetrator's lawful possession of the property when it was stolen/misappropriated.
False. Embezzlement is the wrongful appropriation of money or property by a person to whom it has been lawfully entrusted (or to whom lawful possession was given). Embezzlement involves a breach of trust, although it is not necessary to show a fiduciary relationship—a relationship of confidence, trust, or good faith—between the parties.
Theft is any intentional or deliberate act to deprive another of property or money by guile, deception, or other unfair means.
False. Fraud includes any intentional or deliberate act to deprive another of property or money by guile, deception, or other unfair means.
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. In general, mail fraud is the use of the mail to perpetrate a scheme to defraud a victim of money or property. The gist of the offense is the use of the mail, which includes the use of the U.S. postal system or private interstate commercial carriers (e.g., FedEx, UPS, and DHL) for the purpose of executing, or attempting to execute, a fraud scheme. Thus, where the mail is not used, no matter how large or serious the fraud, there is no federal jurisdiction under this statute. Yet, a mail fraud offense can occur even if the mailing itself does not contain false and fraudulent representations. Thus, routine mailings are sufficient to invoke the mail fraud statute even when they are innocent (nondeceptive) mailings. The mailing element is satisfied as long as the mailing helps advance the scheme in any significant way. For a scheme to violate the mail fraud statute, it is not necessary that the scheme succeed or that the victim suffer a loss.
To convict a defendant under Title 18, U.S. Code, Section 1341 for committing mail fraud, the victim must suffer a loss.
False. In general, mail fraud is the use of the mail to perpetrate a scheme to defraud a victim of money or property. The gist of the offense is the use of the mail, which includes the use of the U.S. postal system or private interstate commercial carriers (e.g., FedEx, UPS, and DHL) for the purpose of executing, or attempting to execute, a fraud scheme. Thus, where the mail is not used, no matter how large or serious the fraud, there is no federal jurisdiction under this statute. Yet, a mail fraud offense can occur even if the mailing itself does not contain false and fraudulent representations. Thus, routine mailings are sufficient to invoke the mail fraud statute even when they are innocent (nondeceptive) mailings. The mailing element is satisfied as long as the mailing helps advance the scheme in any significant way. For a scheme to violate the mail fraud statute, it is not necessary that the scheme succeed or that the victim suffer a loss.
In the United States, all federal criminal laws are the products of statutes and the common law.
False. In the United States, all federal criminal laws are the product of statutes.
In the United States, the federal government prosecutes all white-collar crimes, such as embezzlement, larceny, and false pretenses.
False. In the United States, the prosecution of most white-collar crimes, such as embezzlement, larceny, and false pretenses, is left to the states. But some white-collar crimes are litigated at the federal level.
To be guilty of larceny, the perpetrator must have lawful possession of the cash or property that he steals.
False. Larceny is defined as the wrongful taking of money or property of another with the intent to convert or to deprive the owner of its possession and use. In larceny, unlike embezzlement, the defendant never has lawful possession of the property, although he might have custody of the property. The elements of larceny typically include: • Unlawfully taking or carrying away • Money or property of another • Without the consent of the owner • With the intent to permanently deprive the owner of its use or possession
Officers and directors of a corporation have a fiduciary duty to act solely in the best interest of non-shareholder constituencies.
False. People in a position of trust or fiduciary relationship—such as officers, directors, high-level employees of a corporation or business, and agents and brokers—owe certain duties to their principals or employers, and any action that runs afoul of such fiduciary duties constitutes a breach. The principal fiduciary duties are loyalty and care. 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. Employees/agents who owe a duty of loyalty must act solely in the best interest of their principal and may not seek to advance their personal interests to the detriment of their principal. 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. In general, officers and directors do not owe fiduciary duties to other constituencies, such as creditors, whose rights are purely contractual.
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. Perjury is an intentional false statement given under oath on a material point at issue. The basic elements for the crime of perjury are as follows: • The defendant made a false statement. • The defendant made the false statement while under oath. • The false statement was material or relevant to the proceeding. • The defendant made the statement with knowledge of its falsity. Laws that criminalize perjury, however, do not require that the false statement be given in a court of law or that the false statement influence a jury's decision. Generally, the forum for a perjurious statement includes any court proceeding, depositions in connection with litigation, bail hearings, venue hearings, suppression hearings, and so on. Thus, an individual can commit perjury for false statements made somewhere other than a court of law.
Even though frauds against the government hurt society in general, only the government is allowed to bring legal actions against the parties who commit such frauds.
False. Private citizens may file actions against parties that defraud the government. A qui tam suit is one 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. In the United States, most qui tam actions are brought under the False Claims Act, 31 U.S.C. § 3729 et seq. This statute provides, in part, that anyone who commits the following acts is liable to the government for three times the amount of damages it sustains, plus a civil penalty of $5,000 to $10,000 per false claim: • Knowingly presents or causes to be presented a false or fraudulent claim for payment or approval • Knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim • Conspires to defraud the government by getting a false or fraudulent claim allowed or paid • Has possession, custody, or control of property or money used, or to be used, by the government and knowingly delivers less than all of that property or money • Makes or delivers a document certifying receipt of property to be used by the government without completely knowing that the information on the receipt is true • Knowingly buys public property, or receives public property as a pledge of an obligation or debt, from a government employee or officer who cannot lawfully sell or pledge property • Knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the government
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. 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.
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. The FCPA has two principal components: the anti-bribery provisions and the accounting provisions. In short, the anti-bribery provisions make it unlawful to bribe foreign government officials to obtain or retain business, and the accounting provisions require 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.
In the United States, false statements made to the government can only be prosecuted under the Criminal False Claims Act (18 U.S.C. § 287).
False. The U.S. Code contains a number of related provisions that punish false claims and statements, orally or in writing, made to various federal agencies and departments. The false claim and statement statutes of greatest importance to the fraud examiner include: • False Statements (18 U.S.C. § 1001) • Criminal False Claims Act (18 U.S.C. § 287) • Civil False Claims Act (31 U.S.C. § 3729 et seq.) • Possession of False Papers to Defraud the United States (18 U.S.C. § 1002) • Demands Against the United States (18 U.S.C. § 1003) • Loan and Credit Applications Generally; Renewals and Discounts; Crop Insurance (18 U.S.C. § 1014) • Conspiracy to Defraud Federal Government with False Claims (18 U.S.C. § 286) • Program Fraud Civil Remedies (31 U.S.C. §§ 3801-3812) • Civil Monetary Penalty Law (42 U.S.C. § 1320a-7a)
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).
False. The anti-bribery provisions of the FCPA make it unlawful to bribe a foreign official for business purposes. Only regulated parties, such as issuers, domestic concerns, and foreign nationals or businesses, are subject to FCPA jurisdiction. An issuer is a corporation that has issued securities that have been registered in the United States or that is required to file periodic reports with the Securities and Exchange Commission (SEC). A domestic concern is any citizen, national, or resident of the United States, or any business entity that has its principal place of business in the United States or that is organized under the laws of a state, territory, possession, or commonwealth of the United States. Moreover, the FCPA applies extraterritorially to U.S. citizens working for foreign subsidiaries of domestic companies. A foreign national or business is subject to the FCPA if it takes any act in furtherance of a corrupt payment within U.S. territory. Additionally, the agents, subsidiaries, or other third-party representatives who act on behalf of an issuer, a domestic concern, or a foreign national or business are liable under the same conditions as the issuer, domestic concern, or foreign national or business. The FCPA's anti-bribery provisions extend only to corrupt payments made to foreign officials. Although the UK private company is attempting to influence a foreign official, the UK company did not violate the FCPA because it is not subject to FCPA jurisdiction. The UK company does not have its principal place of business in the United States, and it is not organized under the laws of the United States. Also, the UK company is a private company, so it is not an issuer. Moreover, the UK company did not take any act in furtherance of a corrupt payment within U.S. territory; the $60,000 transfer was made to a Chinese public official. Therefore, the $60,000 transfer does not violate the FCPA.
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. While the FCPA prohibits bribes to foreign officials for business purposes, it does not prohibit all payments to foreign officials. It contains an explicit exception for certain types of payments, known as facilitating payments, or grease payments, made to expedite or secure performance of a routine governmental action by a foreign official, political party, or party official that relates to the performance of that party's ordinary and routine functions. For example, the payment of a foreign corporation fee that is statutorily required in a country in order to do business in that country would fall under this exemption and would not be considered a violation of the FCPA.
The ABC Company, a U.S. company, transferred $40,000 to a Japanese public official to influence the award of lucrative overseas contracts. Which of the following laws did the ABC Company most likely violate?
Foreign Corrupt Practices Act (FCPA) The FCPA makes it illegal for U.S. companies or individuals acting anywhere in the world to, directly or indirectly, offer or pay anything of value to foreign officials for the purpose of obtaining or retaining business.
____________ is any intentional or deliberate act to deprive another of property or money by guile, deception, or other unfair means.
Fraud. Fraud includes any intentional or deliberate act to deprive another of property or money by guile, deception, or other unfair means.
A __________ is a tax return that is incorrect on its face or one that does not contain enough information to determine the tax liability.
Frivolous tax return. In the United States, taxpayers who file frivolous tax returns—returns that are incorrect on their face or that do not contain enough information to make tax liability determinations—or act on frivolous positions may be subject to civil penalties.
For a conflict of interest claim to be actionable against an agent, the agent must have:
Had an undisclosed interest in a matter that could influence his professional role. 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.
Which of the following statements about the UK Bribery Act is not correct?
If an organization's anti-corruption program complies with the Foreign Corrupt Practices Act (FCPA), it will be sufficient for the purpose of complying with the UK Bribery Act. Both the UK Bribery Act and the U.S. Foreign Corrupt Practices Act (FCPA) make it a crime to offer foreign public officials bribes or to accept bribes from them in connection with international business transactions, and their prohibitions on bribing foreign government officials are broadly comparable. Thus, like the FCPA, the Bribery Act seeks to punish corruption on a global level, but the Bribery Act has an even broader application than the FCPA. One way in which the Bribery Act has a broader application than the FCPA is that it makes commercial bribery—bribes paid to people working in the private sector—a crime, whereas the FCPA only prohibits bribes involving foreign government officials. Consequently, even if an organization's anti-corruption program is sufficiently robust for the purpose of complying with the FCPA, it might not be sufficient for the purpose of complying with the UK Bribery Act. Therefore, it is important for international organizations to be aware of the differences between the FCPA and the Bribery Act. Another way that the UK Bribery Act differs from the FCPA concerns facilitating payments. The FCPA does not prohibit all payments to foreign officials; it contains an explicit exception for facilitating payments made to expedite or secure performance of a routine governmental action. The Bribery Act, however, makes no such exception. The 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. Furthermore, liability exists for acts committed outside the UK by individuals and entities with a close connection to the UK, including: • British citizens, overseas citizens, overseas territories' citizens, and any person declared a British subject under the 1981 British Nationality Act • Individuals who normally reside in the UK • An entity incorporated under the law of any part of the UK More specifically, foreign companies that have offices in the UK, employ UK citizens, or provide any services to a UK organization are responsible for complying with the UK Bribery Act. A listing on the London Stock Exchange will not, in itself, subject a company to the Act.
Which of the following is considered obstruction of justice?
Influencing a witness with bribes. Some common types of obstruction statutes are those that prohibit: • Influencing or injuring any officer of the court or juror by force, threats of force, intimidating communications, or corrupt influence • Influencing a juror through a writing • Stealing or altering records or processes by parties that are not privy to the records • Using force or threats of force to obstruct or interfere with a court order • Destroying documents related to a future proceeding • Tampering with a witness, victim, or an informant (e.g., killing or attempting to kill, using force or threats of force, intimidating, influencing with bribes or other corrupt means, misleading, or harassing the protected parties) • Influencing, obstructing, or impeding a government auditor in the performance of his official duties • Obstructing the examination of a financial institution Contempt of court is the offense of showing disrespect or disobedience to a court and its officers (among other things, such as refusing to obey a judge's order).
A wire communication does not violate the U.S. federal wire fraud statute unless it traveled via _________________ commerce in furtherance of the scheme.
Interstate or international. The U.S. wire fraud statute requires an interstate or foreign communication for a violation. Thus, a wire communication does not violate the federal wire fraud statute unless it traveled via interstate or international (foreign) commerce in furtherance of the scheme.
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:
Mail fraud, but not wire fraud. To constitute an offense under the U.S. mail fraud statute, it is not necessary that the predicate mailing travel in interstate commerce; any use of the U.S. postal system or a private interstate commercial carrier (e.g., FedEx, UPS, and DHL) provides sufficient grounds for federal jurisdiction. The U.S. wire fraud statute, unlike the mail fraud statute, requires an interstate or foreign communication for a violation.
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?
Mail fraud. In general, mail fraud is the use of the mail to perpetrate a scheme to defraud a victim of money or property. The gist of the offense is the use of the mail, which includes the use of the U.S. postal system or private interstate commercial carriers (e.g., FedEx, UPS, and DHL) for the purpose of executing, or attempting to execute, a fraud scheme. Thus, where the mail is not used, no matter how large or serious the fraud, there is no federal jurisdiction under this statute. Yet, a mail fraud offense can occur even if the mailing itself does not contain false and fraudulent representations. Thus, routine mailings are sufficient to invoke the mail fraud statute even when they are innocent (nondeceptive) mailings. The mailing element is satisfied as long as the mailing helps advance the scheme in any significant way.
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?
Making a false return. Spencer most likely committed the crime of making a false return. This offense occurs when a taxpayer uses false or misleading information on his tax return. The elements of this crime include all of the following: • The defendant made and subscribed a return, statement, or other document that was false with regard to a material matter. • The document contained a written declaration that it was made under the penalties of perjury. • The defendant did not believe the document was true and correct as to every material matter. • The defendant falsely subscribed to the document willfully, with the specific intent to violate the law.
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?
Michael and Pearl Company may be liable for making false statements to the government, but not for conspiracy to defraud the government. While Michael and the Pearl Company may be held liable for making false statements to the government, they would not be liable for a conspiracy charge. A corporation cannot conspire with one of its own employees to commit an offense because the employee and employer are viewed legally as one. A corporation, however, can conspire with other business entities or third parties to commit conspiracy.
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?
Not realistically possible of being sustained on its merits. Unless there is a reasonable cause for an understatement and the preparer acted in good faith, a penalty will be assessed against any preparer who knew or reasonably should have known that a position taken on a return was: • Not realistically possible of being sustained on its merits • Not disclosed under Title 26, U.S.C., § 6662(d)(2)(B)(ii) • A frivolous position
Delta, a fraud suspect, has been charged with committing a federal crime. Before her trial, she contacted witnesses against her and tried to get them to change their stories by threatening them. Based on her actions, the government would most likely bring additional charges against Delta for:
Obstruction of justice Delta could probably be charged with obstruction of justice. Obstruction of justice occurs when an individual engages in an act designed to impede or obstruct the investigation or trial of other substantive offenses. Some common types of obstruction statutes are those that prohibit: • Influencing or injuring any officer of the court or juror by force, threats of force, intimidating communications, or corrupt influence • Influencing a juror through a writing • Stealing or altering records or processes by parties that are not privy to the records • Using force or threats of force to obstruct or interfere with a court order • Destroying documents related to a future proceeding • Tampering with a witness, victim, or an informant (e.g., killing or attempting to kill, using force or threats of force, intimidating, influencing with bribes or other corrupt means, misleading, or harassing the protected parties) • Influencing, obstructing, or impeding a government auditor in the performance of his official duties • Obstructing the examination of a financial institution Contempt of court is the offense of showing disrespect or disobedience to a court and its officers (among other things, such as refusing to obey a judge's order).
Which of the following is the most accurate statement about the U.S. Truth in Negotiations Act (TINA)?
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. Congress enacted the Truth in Negotiations Act (TINA) to protect the U.S. government from unscrupulous contractors that inflate costs by falsifying their cost proposals with inaccurate, incomplete, or noncurrent cost and pricing data. TINA is designed to provide for full and fair disclosure by contractors when negotiating with the government. TINA applies to government purchases involving negotiations between the government and a contracting entity. Under TINA, government contractors must submit cost or pricing data before negotiations, and they must certify that the information is current, accurate, and complete as of the date the agreement on price occurred.
Which of the following is an element that must be established to prove fraud based on the concealment of material facts?
The defendant acted with intent to mislead or deceive the victim(s). An action for fraud may be based on the concealment of material facts, but only if the defendant had a duty in the circumstances to disclose. The essential elements of fraud based on failure to disclose material facts are: • The defendant had knowledge of a material fact. • The defendant had a duty to disclose the material fact. • The defendant failed to disclose the material fact. • The defendant acted with intent to mislead or deceive the victim(s). It is not necessary to prove that the defendant knew for certain that the victim would be harmed. It is only necessary to prove that he intended to mislead or deceive the victim.
Under Title 18, U.S. Code, Section 1001 (false statements), a statement is false if:
The defendant knew the statement was untrue when he made it. 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.
Which of the following is a legal element that must be shown to prove a claim for fraudulent misrepresentation of material facts?
The defendant made a false statement (i.e., a misrepresentation of a fact). 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: • The defendant made a false statement (i.e., a misrepresentation of fact). • The false statement was material (i.e., the statement was sufficiently important or relevant to influence the making of a decision). • The defendant knew the representation was false. • The victim relied on the misrepresentation. • The victim suffered damages as a result of the misrepresentation.
All the following are elements required to prove that a defendant violated the U.S. federal wire fraud statute except:
The defendant used, or caused the use of, the mail in furtherance of the scheme. The U.S. federal wire fraud statute makes it a crime to use wire communications to perpetrate a scheme to defraud a victim of money or property. To prove wire fraud, the government must establish the following elements: • The defendant undertook a scheme to defraud a victim of money or property. • The defendant knowingly participated in the fraud with the specific intent to defraud the victim. • The defendant used wire communications that traveled via interstate or international commerce in furtherance of the scheme.
Which of the following most accurately describes the legal elements that must be shown to prove a claim for commercial bribery?
The defendant, while acting with corrupt intent and without the victim's knowledge or consent, gave or received something of value that was intended to influence the recipient's action in a business decision. Commercial bribery refers to the corruption of a private individual to gain a commercial or business advantage. That is, in commercial bribery schemes, something of value is offered to influence a business decision rather than an official act. The elements of commercial bribery vary by jurisdiction, but typically include: • The defendant gave or received a thing of value. • The defendant acted with corrupt intent. • The defendant's scheme was designed to influence the recipient's action in a business decision. • The defendant acted without the victim's knowledge or consent.
Which of the following most accurately describes the legal elements that must be shown to prove a claim for official bribery?
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. Official bribery refers to the corruption of a public official with intent to influence an official act of government. Illegal payments to public officials can be prosecuted as official bribery, and they can give rise to stiff penalties. The elements of official bribery vary by jurisdiction, but generally include: • The defendant gave or received (offered or solicited) a thing of value. • The recipient was (or was selected to be) a public official. • The defendant acted with corrupt intent. • The defendant's scheme was designed to influence an official act or duty of the recipient.
Which of the following is not a legal element that must be shown to prove a claim for official bribery?
The government suffered damages as a result. Official bribery refers to the corruption of a public official to influence an official act of government. Illegal payments to public officials can be prosecuted as official bribery, and they can give rise to stiff penalties. The elements of official bribery vary by jurisdiction, but generally include: • The defendant gave or received (offered or solicited) a thing of value. • The recipient was (or was selected to be) a public official. • The defendant acted with corrupt intent. • The defendant's scheme was designed to influence an official act or duty of the recipient.
Which of the following is not a legal element that must be shown to prove a claim for commercial bribery?
The principal suffered damages as a result of the bribe. Commercial bribery refers to the corruption of a private individual to gain a commercial or business advantage. That is, in commercial bribery schemes, something of value is offered to influence a business decision rather than an official act. The elements of commercial bribery vary by jurisdiction, but typically include: • The defendant gave or received a thing of value. • The defendant acted with corrupt intent. • The defendant's scheme was designed to influence the recipient's action in a business decision. • The defendant acted without the victim's knowledge or consent.
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)?
The recipient performed a favorable action on behalf of the defendant. To establish a Section 201(b) violation, the government must prove all of the following elements: • The defendant gave or received something of value. • The recipient was (or was selected to be) a public official. • The defendant acted with corrupt intent. • The defendant's scheme was designed to influence the performance of an official act.
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?
The statement can be actionable even if the government did not suffer a loss in reliance on it. 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. Moreover, for a false statement to violate 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. 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.
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. The U.S. FCPA has two principal components: 1. the anti-bribery provisions; and 2. the accounting provisions. In short, the anti-bribery provisions make it unlawful to bribe foreign government officials to obtain or retain business, and the accounting provisions require 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.
For a conflict of interest claim to be actionable, the conflict must be undisclosed.
True 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.
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. A qui tam suit is one 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. In the United States, most qui tam actions are brought under the False Claims Act, 31 U.S.C. § 3729 et seq. This statute provides, in part, that anyone who commits the following acts is liable to the government for three times the amount of damages it sustains, plus a civil penalty of $5,000 to $10,000 per false claim: • Knowingly presents or causes to be presented a false or fraudulent claim for payment or approval • Knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim • Conspires to defraud the government by getting a false or fraudulent claim allowed or paid • Has possession, custody, or control of property or money used, or to be used, by the government and knowingly delivers less than all of that property or money • Makes or delivers a document certifying receipt of property to be used by the government without completely knowing that the information on the receipt is true • Knowingly buys public property, or receives public property as a pledge of an obligation or debt, from a government employee or officer who cannot lawfully sell or pledge property • Knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the government
The UK Bribery Act has broader application than the U.S. Foreign Corrupt Practices Act (FCPA) because, unlike the FCPA, it makes commercial bribery a crime.
True. Both the UK Bribery Act and the U.S. Foreign Corrupt Practices Act (FCPA) make it a crime to offer foreign public officials bribes or to accept bribes from them in connection with international business transactions, and their prohibitions on bribing foreign government officials are broadly comparable. Thus, like the FCPA, the Bribery Act seeks to punish corruption on a global level, but the Bribery Act has an even broader application than the FCPA. One way in which the Bribery Act has a broader application than the FCPA is that it makes commercial bribery—bribes paid to people working in the private sector—a crime, whereas the FCPA only prohibits bribes involving foreign government officials.
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. 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. The major difference between an official bribe and an illegal gratuity is that an illegal gratuity charge doesn't require proof that the gratuity was given for the purpose of influencing an official act. That is, an illegal gratuity charge only requires that the gratuity be given for, or because of, an official act. 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 such public official Under these facts, there is no evidence that Zantigo gave the laptop to Moore to influence his decision, since the gift occurred after the decision was made. The government would be more likely to bring illegal gratuity charges against Moore, charging that the gift was for, or because of, Moore's official act.
Richard, a computer programmer, works in an office environment with cubicles. While on his way back from the restroom, Richard notices that Alice, one of his coworkers, left her purse unattended on her desk. Richard steals $50 from Alice's purse. Richard committed larceny.
True. Larceny is defined as the wrongful taking of money or property of another with the intent to convert or to deprive the owner of its possession and use. Richard picked up the money with the intent to permanently deprive Alice of it. So, Richard committed larceny.
Prosecution under the criminal fraud statutes in the U.S. Code, which is a consolidation and codification of the general and permanent federal laws of the United States, requires a federal jurisdictional basis.
True. Prosecution under the criminal fraud statutes in the U.S. Code, which is a consolidation and codification of the general and permanent federal laws of the United States, requires a federal jurisdictional basis, such as an effect on interstate commerce, transactions involving the federal government, or mail uses. The U.S. Code contains both civil and criminal laws.
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?
Violating the duty of loyalty. People in a position of trust or fiduciary relationship—such as officers, directors, high-level employees of a corporation or business, and agents and brokers—owe certain duties to their principals or employers, and any action that runs afoul of such fiduciary duties constitutes a breach. The principal fiduciary duties are loyalty and care. 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. Thus, as part of his duty of loyalty, Paul is obligated to act solely in the best interest of his principal, free of any conflicts of interest. But here, Paul is engaged in an undisclosed conflict of interest by being on the boards of both companies at the same time.
The major distinction between larceny and embezzlement lies in the issue of:
Whether the thief had been legally entrusted with the stolen items. Larceny differs from embezzlement, and the difference centers on who has legal custody over the stolen articles. A larcenist takes something from its rightful owner without ever having had legal custody of the item stolen. The embezzler, conversely, takes something in which he has lawful possession. Thus, the major distinction between larceny and embezzlement lies in the issue of whether the thief had been lawfully entrusted with the stolen articles.
