CFE Financial Transaction and Fraud Schemes Flashcards
Testimony concerning firsthand observations is comes from what type of witness?
Lay witness
Main function of SEC Rule 10b-5
Prohibits false statements and the fraudulent activity in connection with the purchase or sale of any security.
In civil litigation cases, the plaintiff usually does what?
Offers evidence first.
Churning is what?
The excessive trading of a customer account to generate commission while disregarding the customer’s interests.
To commence an involuntary bankruptcy proceeding, there must be at least:
12 or more creditors at least 3 are needed to file
US Federal Rule of Evidence 702 requires judges to do what before allowing an expert witness to testify?
Will the expertise of the witness assist the jury in understanding the evidence?
An investigator can be held liable for a true statement made about a suspect when they?
Publicly disclose private facts.
A counterclaim made a defendant is against whom?
The original plaintiff in the action.
What is necessary to prove concealment of material facts?
D had knowledge of material fact that he failed to disclose.
D acted with intent to mislead the victim.
D failed to disclose a material fact that he had a duty to disclose.
To determine if a misrepresentation in an offer or sale of securities is material, an examiner should consider?
Whether a reasonable investor would wish to know the information to make an informed decision.
Does the Foreign Corrupt Practices Act prohibit all payments to foreign officials?
No, facilitating or grease payments are permitted, bribes are not.
CIP’s are?
Customer Identification Programs
An expert’s opinion at trial may only be based on evidence that ha already been entered into evidence?
False
Mediation Agreements are?
Enforceable as binding contracts
Evidence proven by inference or indirectly is?
Circumstantial evidence.
Defamation is?
An unprivileged publication of a false statement about a person that causes harm to that person’s reputation.
During pretrial discovery, the prosecution is not
Entitled to the D’s work product if D did not ask for the prosecution’s
Death of a taxpayer can be used as a defense to tax fraud allegations?
False
These agencies investigate and prosecute bankruptcy fraud
FBI investigates and USAO prosecutes
Tax evasion is
any fraudulent actions that a taxpayer commits to avoid reporting or paying taxes..
Tax avoidance is
legal means of lowering ones tax bill through legitimate means.
Tax Avoidance is legal
Money Service Business (MSB) examples
currency exchangers, check cashers, money transmitters
A witness can be impeached by introducing prior arrests/convictions?
Yes, but not DUI
Types of securities?
stocks, bonds, and CD’s
If an employee embezzles money, reports the illegal income their federal taxes and pays it back, what may they do on their tax return?
deduct the amount stolen and paid back as a loss incurred in a transaction entered into for profit.
A reason why an identity thief would not choose a business vs individual?
Businesses usually engage in less transactions than individuals
In a construction contract, the amount withheld from each draw by the contractor is referred to as?
Retainage or holdback
Vertical analysis is?
the expression of the relationship or percentage of component items to a specific base item on the income statement.
Horizontal analysis is?
A technique for analyzing the percentage change in the individual financial statement items from one year to the next.
Ratio analysis is?
A means of measuring the relationship between any two different financial statement amounts.
What happens when an employee records a fictitious refund of goods at the employee’s cash register?
The inventory is overstated.
Factoring groups do what from telemarking operations at a discount?
Buy credit card receipts
Employment identify theft is?
When someone impersonates another to get a job.
Failure to record corresponding revenues and expenses in the same accounting period may result in?
Making sales revenue from pure profit, inflating earnings. In the next period, earning would have fallen by the same amount.
Failing to record bad debt expenses for the period will result in fraudulently overstated accounts receivables?
True
Physical access controls refer to?
The process by which users are allowed to access physical objects, like builidngs
Logical access controls are?
tools used to control access to computer information systems.
Bid tailoring schemes do what?
A procurement employee, often in collusion with a contractor, drafts bid specifications in a way that give unfair advantage to a certain contractor.
Entries to the left side of an account are?
Debits.
Asset and expense accounts are increased with debit and decreased by credits.
Liabilities, owner equity and revenue accounts are increased with credits and decreased by debits.
A fraudster looking to conceal inventory shrinkage would do what?
Falsely decrease the perpetual inventory to match the lower physical inventory count.
Assets are generally presented on the balance sheet in what order?
In order of liquidity.
Lapping is?
Crediting one account by taking money from another to hide skimming.
SPI is?
Safeguarding Proprietary Information
Quick Ratio (a/k/a acid test ratio)
(cash + marketable securities + receivables) / current liabilities
compare quick assets over current liabilities
Using a stolen credit card number to purchase goods is?
An account take over.
Nonconforming goods or services fraud is (a/k/a product substitution or failure to meet contract specifications)?
Attempts by contractors to deliver goods or services that the procuring entity that do not conform to the contract specs.
ID Theft Baiting is?
Tricking victims into inserting malware infected data storage into their computers.
The statement of cash flow activities contains the following:
cash flows from operating activities
cash flows from investing activities
cash flows from financing activities
Large amounts over overdue accounts receivable on the books is red flag of a fictitious revenue scheme?
True
Most shell companies schemes involve the purchase of fictitious?
Services
Corruption definition
The wrongful use of influence to procure benefit for the actor or other person, contrary to the the duty or rights of others.
Competitive bidding mechanisms (4 stages)
Presolicitation, solicitation, bid evaluation and award, post award and administration phases.
A company’s income statement shows?
How much profit (or loss) earned over a particular period of time.
Unbundling (healthcare fraud) occurs when:
A provider charges a comprehensive code as well as one or more component codes.
SMiShing is
A hybrid of phishing and short message service (SMS) that tries to dupe the victim into providing sensitive data
Rock phisher does what?
Uses botnets to send massive amounts of phishing emails that contain a message from a financial institution and fraud URL.
Debits increase:
asset and expense accounts
Asset turnvoer ratio is
net sales / average total assets and used to determine the efficiency with which assets resources are used.
The state of change ion owner’s equity acts as the connecting link between which two financial statements?
Income statement and balance sheet
Pharming is?
An attach in which a user is fooled into entering sensitive data into a malicious website that imitate s legitimate one
4 main types of reimbursement schemes
mischaracterized expenses
overstated expenses
fictitious expenses
Multiple reimbursements
The underlying assumption that a business will continue indefinitely is?
Going concern.
DRG is?
Diagnostic related groupings.
DRG Creep occurs when?
Medical staff manipulate diagnostic codes to increase reimbursement.
Debt to equity ratio is?
Total liabilities by total equity.
What information security goal should e-commerce systems endeavor to meet for its users and asset holders?
Non-repudiation (parties cannot deny transaction - done through digital signatures, time stamps, etc).
An FBAR (report of foreign bank and financial accounts) must be filed if?
the aggregate balance of all foreign financial accounts owned or controlled by a citizen is over $10K
Frivolous tax return?
A return that is incorrect on its face value or does not contain enough info to determine the tax liability.
Wire fraud requires an interstate or foreign
communication
A mistake is not a legal defense that may properly be used in a US criminal case?
False
Under the General Data Protection Regulation, an organization must inform data subjects what?
That they can withdraw their consent for the collection of data at any time.
The stage of money laundering schemes where it is most often detected?
Placement
CFE may not testify as to the?
guilt or innocence of someone
An arrest occurs in the US when?
A reasonable person does not feel they are free to leave.
To prove a claim of fraudulent misrepresentation of material facts, the defendant must have done?
Made a false statement
The false statement was material
The def. knew the misrepresentation was false
In an inquisitorial judicial process, who drives the evidence gather portion of the proceedings (fact finding)?
the judge
Mail fraud does not need to contain?
false or fraudulent representations
Work product doctrine only applies to?
Documents and things prepared in anticipation of litigation or for trial.
What must be proven to establish a perjury offense?
Def. made a false statement.
Def. made the statement while under oath.
The false statement was material or relevant to the proceedings.
Def. made the statement with knowledge of its falsity.
