Law Related to Fraud Flashcards
What is required to prove criminal violation under RICO
The Racketeer Influenced and Corrupt Organizations (RICO) prohibits the investment of ill-gotten gains in another enterprise, using coercive or deceptive acts to acquire an interest in an enterprise, and conducting business through such acts.
Section 1962(c) is the most commonly used RICO provision. It makes it an offense for any person associated with an "enterprise" that is engaged in interstate commerce to participate in the affairs of such an enterprise through a "pattern of racketeering activity." The elements of a Section 1962(c) offense are: • The defendant was employed by or associated with an "enterprise," which includes any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact, although not a legal entity. • The enterprise was engaged in or affected interstate or foreign commerce. • The defendant conducted the affairs of the enterprise through a "pattern of racketeering activity," that is, two or more illegal acts enumerated in the statute, such as mail and wire fraud or ITSP violations.
The defendant violates the final element if he has some involvement in the management or operation of the enterprise and in the commission of two or more “racketeering offenses” through the enterprise. The term racketeering activity includes a broad assortment of state and federal crimes, such as bribery, extortion, bankruptcy fraud, mail fraud, bank fraud, and securities fraud. These crimes are known as predicate offenses.
Fraud definition
Fraud includes any intentional or deliberate act to deprive another of property or money by guile, deception, or other unfair means
Fiduciary relationship of management to a corporation/business:
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 imposed by law to their principals or employers. 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. Officers and directors of a corporation have a fiduciary duty to act solely in the best interest of the corporation.
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.
Government requirement to prove conspiracy:
Conspiracy refers to an agreement in which two or more people agree to commit an illegal act, and criminal conspiracy statutes punish such agreements. 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.
The government must also 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.
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 are the elements of an official bribery offense?
The elements of an official bribery offense under Section 201(b) of Title 18, U.S. Code, are as follows: • Giving or receiving • Anything of value • With intent to corruptly influence • An official act
False claims and statements requirement:
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 knowingly and willfully (or with reckless disregard for truth or falsity)
• Made a false statement (or used a false document)
• That was material
• Regarding a matter within the jurisdiction of any agency of the United States
• With knowledge of its falsity
Who usually prosecutes white-collar crimes?
In the United States, the prosecution of most white-collar crimes, such as embezzlement, larceny, and false pretenses, is left to the states.
Foreign Corrupt Practices Act (FCPA) has two major parts
The 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 accounting procedures, requiring publicly traded companies to keep accurate books and records and adopt internal controls to prevent diversion of assets or other improper use of corporate funds.
Can a company and an employee jointly be charged for conspiracy?
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 may, however, conspire with other business entities or third parties in violation of the statute.
False Statement defined (based on US code section 1001)
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.
Commercial bribery is
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.
False statements can be prosecuted by the federal agencies through various departments.
Chapter 47 of Title 18, U.S. Code, contains a number of related provisions that punish false or fraudulent statements, orally or in writing, made to various federal agencies and departments.
The false statement statutes of greatest importance to the fraud examiner include:
• False, Fictitious, or Fraudulent Claims (Title 18, U.S. Code, Section 287)
• False Statements (Title 18, U.S. Code, Section 1001)
• Conspiracy to Defraud the Government with Respect to Claims (Title 18, U.S. Code, Section 286)
• The Major Fraud Act (Title 18, U.S. Code, Section 1031)
• Obstruction of Federal Audit (Title 18, U.S. Code, Section 1516)
Larceny vs embezzlement
Larceny is defined as the unlawful taking of money or property of another with the intent to convert or to deprive the owner.
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.
What is wire Fraud
The 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.
