Federal Statutory Liability Flashcards
What is the full form of RICO? What are the 4 elements of RICO? Purpose of RICO?
Racketeer Influenced Corrupt Organizations Act.
To establish a violation of RICO, one must prove that the person had active involvement in the conduct of an enterprise that was involved in racketeering activity
[Violation of Section 1962 (c) Four elements - conduct, of an enterprise, through a pattern of, racketeering activity]
To eliminate crime infiltration into legitimate business
What are the features of RICO?
1) Federal Law
2) Rico has both civil and criminal provisions for on going criminal organization. primarily focused on racketeering Leaders of syndicates will be convicted of racketeering activities that they made others to do even if they did not do it themselves.
3) When a RICO claim is based on the basis of securities fraud (only), the case does not hold water unless the defendant is convicted of a securities fraud.
4) Mail fraud and Wire Fraud are both RICO Predicate act
What is considered a Wire Fraud?
Electronic transmission of invoices essential or a fraudulent scheme is wire fraud (Telephone, telegraph, email, wires, mail)
What are the features of the Foreign Corrupt Practices Act (FCPA)? —-Post watergate scandals by UScompanies bribing foreign officials
FCPA applies to all SEC registered companies whether or not they have operations abroad.
FCPA prohibits bribery of international government officials in return for a contract (including officials of a government owned companies)
Accounting for covering up above transactions by using phony entries is also violation of the accounting provisions of the FCPA. Accounting provisions of FCPA only apply to SEC registered companies
FCPA requires robust internal controls, lack of which is a violation of the FCPA.
requires transparency of accounting under the Securities Exchange Act 1934 and prevents bribery of foreign officials
What are the factors to determine a”pattern of racketeering activity”?
Section 1962(c) - relationship and continuity
What provisions did SOX introduce in the post ENRON saga? What are the Acts punishable under SOX.
Create PCAOB. Restricted non audit-services. Strengthen criminal penalties for securities fraud. Required the rotation of the Engagement partner, Review partner andd few other key partners (not of the WHOLE firm)
Destruction of audit records before 7 years, corrupt tampering of records , destruction of documents being investigated in a federal matter
What is the focus on Internal accounting controls ?
Asset protection/accountability
