Fraud Flashcards
What is fraud?
Fraud is a false statement, representation, or disclosure intended to deceive.
What are the legal requirements for fraud?
Fraud requires a false statement, material fact, intent to deceive, justifiable reliance, and an injury or loss suffered by the victim.
What is a material fact in the context of fraud?
A material fact is a significant piece of information that induces a person to act.
What is the fraud triangle?
The fraud triangle consists of opportunity, rationalization, and pressure.
What does ‘opportunity’ refer to in the fraud triangle?
Opportunity refers to the ability to commit, conceal, and convert financial assets.
What is rationalization in the context of fraud?
Rationalization involves attitudes, justifications, and a lack of personal integrity.
What types of employee pressure can lead to fraud?
financial, lifestyle, emotional
What types of Industy pressure can lead to fraud?
financial, Industry conditions, or management characteristics
What are the fraud methods we discussed in class
- Blackmail, cramming, credit card fraud
- Cryptocurrency, friendly fraud, identity theft
- Impersonation, Nigerian Letter, Phishing
- Phreaking, pretexting, Ransomware & Scareware
- Salami Technique, Skimming, Smishing
- Structuring, Triangulation, Vishing
What is blackmail in the context of fraud?
Blackmail is a method of fraud involving threats to reveal information unless demands are met.
What is cramming in the scope of fraud?
Adding hidden fees to a sale
What is cryptocurrency fraud?
Cryptocurrency fraud involves schemes that exploit digital currencies, often leading to financial loss.
What is identity theft?
Identity theft is the unauthorized use of someone else’s personal information for fraud.
What is phishing?
Phishing is a method of fraud where attackers impersonate legitimate entities to steal sensitive information.
What is the salami technique in fraud?
The salami technique involves stealing small amounts of money from many accounts over time.
What is structuring in the context of fraud?
Structuring is a method used to evade detection by breaking up large amounts of money into smaller, less suspicious amounts.
What is triangulation?
Fraudster finds victim who wants a product, buys product with a stolen credit card from another vendor, and ships victim the product. The Fraudster gets money from the victim’s purchase.
Diann Cattani
- Method: embezzlement
- What happened: Her work card was charged for a personal vacation. Justified it. Kept using her work card
- Why was she caught: kept using her work card for personal purchases and stole $500,000
- What do we learn: anyone can commit fraud
What was the OneCoin scheme?
OneCoin was a Ponzi scheme that exemplified the warning ‘too good to be true.’
Fill in the blank: A justifiable reliance on a misrepresentation means the person _______.
relies on the misrepresentation to take an action.
True or False: All fraud cases are complicated and difficult to understand.
False.
OneCoin primarily committed fraud by …?
a. Convincing victims that profits are coming from sales where instead they are coming from new investors (i.e., a Ponzi scheme)
b. Using the Triangulation Technique
c. Overstating revenue and physical assets
d. Underreporting sales to avoid taxes
e. Keeping two sets of “books” to hide from lenders, investors, and auditors
a. Convincing victims that profits are coming from sales where instead they are coming from new investors (i.e., a Ponzi scheme)
