Practice and Procedure

Question 1

If the evidence clearly shows that a suspect has committed a crime, it is permissible for a fraud examiner to testify that, in their opinion, the suspect is guilty because the evidence has established all the essential elements of the offense charged.

A. True
B. False

Answer 1

B. False

See pages 2.1122 in the Fraud Examiner’s Manual

Certain standards for fraud examiners are found in the ACFE Code of Professional Ethics. Specifically, fraud examiners are prohibited from expressing opinions as to the guilt or innocence of any person or party. This is not to say that the witness cannot testify to the badges, hallmarks, or characteristics of fraud found in the case. It also does not mean that the fraud examiner cannot testify that, based on the evidence, they believe that the accused might have committed the offense. But the ultimate guilt or innocence of any person or party is the sole responsibility of the fact finder. Typically, the fraud examiner will not be permitted to testify to the ultimate fact questions.

Question 2

In an adversarial system, the testimony of an expert witness will be admitted if the testimony is informative, at least to some extent, to any issue.

A. True
B. False

Answer 2

B. False

See pages 2.1113-2.1114 in the Fraud Examiner’s Manual

A trial judge will not admit an expert witness’s testimony unless the judge determines that the expert is a qualified practitioner and that the testimony being offered by the expert is relevant to the facts of the case and reliable. The qualification element addresses whether the individual is qualified to assist the trier of fact. Relevant testimony will assist the jury in understanding the evidence or determining a fact at issue. To be relevant, the proposed testimony must be sufficiently related to the facts of the case so that it will aid the jury in resolving a factual dispute. To be reliable, the testimony must be based on sufficient facts and data, and it must be the product of reliable methodology that has been reliably applied to the facts of the case.

Question 3

Blue is a defendant on trial for fraud in a common law jurisdiction. One of the key pieces of evidence in the trial is a handwritten letter written by Blue that indicates his intent to commit the fraud. Before the letter can be admitted into evidence, Blue’s authorship of the letter must be established. Which of the following statements about establishing the authenticity of the letter is CORRECT?

A. The letter’s authenticity can be established by having a witness testify that they saw Blue write the letter
B. The letter’s authenticity can be established by having the jury review the document and vote on its authenticity
C. Because the letter is self-authenticating, it does not need additional authentication to be admitted
D. None of the above

Answer 3

A. The letter’s authenticity can be established by having a witness testify that they saw Blue write the letter

See pages 2.1006, 2.1008 in the Fraud Examiner’s Manual

In common law systems using adversarial processes, exhibits—the tangible objects presented as evidence—are inadmissible unless they are relevant and established as authentic. Thus, to be admissible at trial, evidence, other than testimonial evidence, must be properly authenticated; that is, the party offering the item must produce some evidence (e.g., testimony from a person who has firsthand knowledge) to show it is, in fact, what the party says it is and that it is in the same condition as when it was seized. If an exhibit cannot be authenticated, it will not be admitted even if it is plainly relevant.

In general, authentication of a writing consists of establishing who authored the document. Depending on the document and situation, this is done in one of several ways: (1) the author testifies and claims authorship; (2) a witness testifies to seeing the author write the document; (3) with handwritten letters, a witness verifies the author’s penmanship; (4) with typed or machine-written documents, the witness verifies the author’s signature; or (5) a witness testifies that the contents of the document point decisively to the author. These and many other document issues might require the participation of a document expert.

Question 4

Which of the following parties decides the scope of the examinations and breadth of authority of a court-appointed expert witness in an inquisitorial court?

A. The parties to the litigation
B. A panel of the expert’s professional peers
C. The expert witness
D. The judge

Answer 4

D. The judge

See pages 2.1119 in the Fraud Examiner’s Manual

Inquisitorial courts typically appoint their own experts to evaluate technical matters. Expert witnesses in inquisitorial jurisdictions are subject to various examinations by the judge and the parties and might have to conduct their own examinations of witnesses. Usually, all the expert’s activities related to the case are controlled by the judge, who determines the scope of the expert’s testimony and analysis, the expert’s authority to access certain items of evidence, whom the expert can interview, and several other functions. Because some jurisdictions allow parties to submit testimony or evidence from their own experts in addition to the court-appointed expert, the latter might need to interview the parties’ experts. The expert should carefully follow the judge’s instructions, especially because the instructions are usually made available to the parties of the proceeding.

Question 5

Blake, a Certified Fraud Examiner (CFE), is testifying in court as a witness in an adversarial jurisdiction. During cross-examination, opposing counsel keeps getting extremely close to Blake, invading his body space. What should Blake do?

A. Get through the questioning without complaining or arguing.
B. Ask the judge to intervene.
C. Move toward opposing counsel, decreasing body space.
D. Attempt to move away from opposing counsel.

Answer 5

A. Get through the questioning without complaining or arguing.

See pages 2.1125 in the Fraud Examiner’s Manual

Opposing counsel might attempt to take psychological control of a witness by:

• Using physical presence to intimidate
• Making nonstop eye contact
• Challenging the witness’s space
• Asking questions at a fast pace to confuse the witness
• Not allowing the witness to explain or deviate from the exact question

It is not the witness’s job to argue with or challenge the person conducting questioning. The witness should simply try to get through the cross-examination in the most professional way possible. If the questioning party uses blatantly unfair practices, the judge or jury will take note, and such practices might hurt the opposing side’s case. In no circumstances should the witness argue. In adversarial proceedings, the counsel who called the witness is tasked with objecting to improper questioning, so the witness should continue answering questions until an objection is made and then follow the court’s directions. In inquisitorial proceedings, the judge should intervene if questioning is improper.

Question 6

In most inquisitorial jurisdictions, the judge has the sole discretion to raise objections regarding an expert witness’s biases.

A. True
B. False

Answer 6

B. False

See pages 2.1119, 2.1126 in the Fraud Examiner’s Manual

In inquisitorial jurisdictions, parties are usually allowed to raise limited objections to an expert witness if they believe the expert is biased. For example, the expert might have a relationship with one of the parties to the litigation. The parties are often allowed to question the expert’s analysis or methods used. While this process is less confrontational than in adversarial systems, a poor performance can lead to the court rejecting the expert’s testimony. The judge may also question the expert’s credibility and qualifications and ultimately decides how much consideration should be given to the expert’s testimony.

Question 7

Evidence that proves or disproves facts by inference is called direct evidence.

A. True
B. False

Answer 7

B. False

See pages 2.1002 in the Fraud Examiner’s Manual

There are two basic categories of admissible evidence: direct evidence and circumstantial evidence. Direct evidence is evidence that tends to prove or disprove a fact in issue directly, such as eyewitness testimony or a confession. Circumstantial evidence is evidence that tends to prove or disprove facts in issue indirectly, by inference.

Question 8

Black, a Certified Fraud Examiner (CFE) who lives and works in a common law legal system with a litigation privilege, discovers a potential fraud at the ABC Company while auditing ABC’s procedures. She immediately notifies ABC’s in-house counsel. As a result, Black’s work up until that point is protected by:

A. The CFE-client privilege
B. The investigator-client privilege
C. The employer-employee privilege
D. None of the above

Answer 8

D. None of the above

See pages 2.1032 in the Fraud Examiner’s Manual

Although the work undertaken by a fraud examiner may be protected by a litigation privilege, to receive protection, the work must be done in anticipation of litigation and at the attorney’s direction. Here, even if Black’s work was done at the attorney’s direction, her work was not prepared in anticipation of litigation because no litigation was planned. Therefore, the litigation privilege does not cover the documents because they came into existence before litigation was contemplated.

Question 9

The ACFE Code of Professional Ethics prohibits fraud examiners from expressing opinions regarding the guilt or innocence of any person or party. This means that a fraud examiner who serves as an expert witness may NOT answer questions about whether the defendant committed actions that are characteristic of fraud.

A. True
B. False

Answer 9

B. False

See pages 2.1122 in the Fraud Examiner’s Manual

Certain standards for fraud examiners are found in the ACFE Code of Professional Ethics. Specifically, fraud examiners are prohibited from expressing opinions as to the guilt or innocence of any person or party. This is not to say that the witness cannot testify to the badges, hallmarks, or characteristics of fraud found in the case. It also does not mean that the fraud examiner cannot testify that, based on the evidence, they believe that the accused might have committed the offense. But the ultimate guilt or innocence of any person or party is the sole responsibility of the fact finder. Typically, the fraud examiner will not be permitted to testify to the ultimate fact questions.

Question 10

In the context of an employee interview, all the following actions could result in liability for false imprisonment EXCEPT:

A. Standing in front of an exit to an interview room
B. Telling the interviewee that they may not leave the room
C. Telling the interviewee that they are required to answer questions
D. Locking the door to an interview room

Answer 10

C. Telling the interviewee that they are required to answer questions

See pages 2.730-2.731 in the Fraud Examiner’s Manual

False imprisonment is the unlawful restraint by one person of the physical liberty of another without consent or legal justification. A claim of false imprisonment might arise if an employee is detained in any way during a search or interview. Generally, an employer is entitled to question an employee at work about a violation of company policy without incurring liability if the employee submits to the questioning voluntarily—that is, not as a result of threats or force.

There are no precise rules as to when a false imprisonment occurs, but factors such as the length, nature, and manner of the interview might determine whether liability arises. Other factors used to determine if an individual has been falsely imprisoned include:

• Conducting an interview in a room that is small and confined in nature (e.g., small, windowless, not easily accessible)
• Conducting an interview in a room with severe lighting
• Requiring the employee’s presence or continued presence by any amount of physical force (e.g., holding the employee’s arm to escort them or pushing the employee into a chair)
• Using violent behavior of any kind during the interview, including yelling, pounding on desks, or kicking furniture or walls
• Using a physical barrier to restrain the employee (e.g., locking the interview room’s door or standing in front of an interview room’s exit)
• Making threats of immediate physical force to restrain the employee
• Conducting an interview in the presence of numerous people

Question 11

White, a Certified Fraud Examiner (CFE), believes that Blue, a fraud suspect, is guilty of embezzlement. White shares this theory with a supervisor. Blue later turns out to be innocent. Blue can sue and probably recover from White on a theory of defamation.

A. True
B. False

Answer 11

B. False

See pages 2.718-2.719 in the Fraud Examiner’s Manual

Generally, defamation refers to the unprivileged publication of false statements about a person that causes harm to that person’s reputation. To recover for defamation, the plaintiff must generally prove all the following elements:

• The defendant made an untrue statement of fact.
• The statement was communicated (published) to third parties.
• The statement was made on an unprivileged occasion.
• The statement damaged the subject’s reputation.

For a statement to qualify as defamatory, the occasion in which the statement is made must be an unprivileged one. If the statement is made on a privileged occasion, then no liability can attach to the speaker. Basically, the law recognizes that there are some circumstances in which the need to share information is so important that people will be allowed to make mistakes occasionally without having to worry about being sued for defamation. Statements that are made in these circumstances are said to be privileged.

Question 12

Abel, a fraud examiner, interviewed Beta, a fraud suspect. No other people were present at the interview. During the interview, Abel accused Beta of committing fraud. This accusation later turned out to be erroneous, and Beta sued Abel for damages. Under these facts, which of the following statements is CORRECT?

A. If Beta sued Abel for slander, Beta would not recover damages because Abel did not publish the accusation to a third party.
B. If Beta sued Abel for libel, Beta would not recover damages because Abel believed the accusation to be true.
C. If Beta sued Abel for defamation, Beta would recover damages because Abel made public statements about Beta’s private life on an unprivileged occasion.
D. If Beta sued Abel for defamation, Beta would recover damages because Abel made an untrue statement of fact on an unprivileged occasion.

Answer 12

A. If Beta sued Abel for slander, Beta would not recover damages because Abel did not publish the accusation to a third party.

See pages 2.718-2.719 in the Fraud Examiner’s Manual

Generally, defamation refers to the unprivileged publication of false statements about a person that causes harm to that person’s reputation.

To recover for defamation, the plaintiff must generally prove all the following elements:

• The defendant made an untrue statement of fact.
• The statement was communicated (published) to third parties.
• The statement was made on an unprivileged occasion.
• The statement damaged the subject’s reputation.

Even though Abel made an untrue statement, it was not communicated to a third party or parties. As a result, the statement does not meet the test of defamation. So, Abel did not commit slander, and Beta would not recover any damages.

Also, Beta cannot recover damages for libel because Abel’s accusation was not in written form. It does not matter whether Abel believed the accusation to be true.

Question 13

In adversarial jurisdictions, which of the following is generally NOT a purpose of opposing counsel during the cross-examination of a witness?

A. To obtain information about the witness’s testimony that was previously unknown to opposing counsel
B. To make the witness contradict former statements they made during the litigation process
C. To discredit the witness’s testimony itself
D. To diminish the importance of the witness’s testimony

Answer 13

A. To obtain information about the witness’s testimony that was previously unknown to opposing counsel

See pages 2.1122-2.1124 in the Fraud Examiner’s Manual

Cross-examination refers to the questioning of one side’s witness by the opposing side, and it is truly the highlight of the adversarial court system. Cross-examination, however, is uncommon in inquisitorial systems, although some civil law jurisdictions allow counsel for the parties to question witnesses in limited circumstances. Cross-examination is geared to allow opposing counsel or another questioning party either to clarify or make points at the witness’s expense. Questions during cross-examination might concern anything that might refute or embarrass the witness. During adversarial cross-examination, the witness’s credibility will constantly be scrutinized.

First, opposing counsel will seek to diminish the importance of the testimony presented by the witness. Second, opposing counsel will seek to have the witness testify in support of the opposing position by providing a series of assumptions. Third, opposing counsel will attack the witness’s report or expert opinion (as applicable) to show the inadequacies, thereby discrediting the opinion, the report, and the witness. The opposing counsel can attack or question anything that has been said or entered into court. This includes notes, working papers, affidavits, reports, and preliminary trial or discovery transcripts. Often, cross-examination creates an atmosphere of confrontation and contradiction.

Opposing counsel will generally not ask a question to which it does not already know the answer.

Question 14

While the parties in adversarial jurisdictions may sometimes choose expert witnesses, normally the court chooses them.

A. True
B. False

Answer 14

B. False

See pages 2.1119 in the Fraud Examiner’s Manual

Most expert witnesses in adversarial proceedings are chosen by the parties to the litigation (although adversarial courts may also appoint independent experts). In adversarial proceedings, the expert and the retaining party are “allies” in the sense that legal counsel will attempt to depict the expert’s testimony in the most compelling manner during direct examination and will try to correct any issues in the expert’s testimony that the opposing party raises. However, it is important that the expert never allow their opinion or best judgment to be supplanted by that of the retaining party.

Question 15

Under the ACFE Code of Professional Ethics, fraud examiners who testify as witnesses are prohibited from:

A. Testifying to opinions regarding the quality of other witnesses’ expert testimony
B. Testifying to opinions concerning the defendant’s innocence
C. Testifying that, according to the evidence, they believe the accused committed the offense
D. Testifying to opinions that the trier of fact cannot test empirically

Answer 15

B. Testifying to opinions concerning the defendant’s innocence

See pages 2.1122 in the Fraud Examiner’s Manual

Certain standards for fraud examiners are found in the ACFE Code of Professional Ethics. Specifically, fraud examiners are prohibited from expressing opinions as to the guilt or innocence of any person or party. This is not to say that the witness cannot testify to the badges, hallmarks, or characteristics of fraud found in the case. It also does not mean that the fraud examiner cannot testify that, based on the evidence, they believe that the accused might have committed the offense. But the ultimate guilt or innocence of any person or party is the sole responsibility of the fact finder. Typically, the fraud examiner will not be permitted to testify to the ultimate fact questions.

Question 16

Which of the following statements concerning expert witnesses in inquisitorial jurisdictions is MOST ACCURATE?

A. The court may appoint expert witnesses, but generally, the parties select the primary expert witnesses.
B. Usually, the parties select a pool of expert witnesses, and the jury votes on which expert is most qualified to testify.
C. Expert testimony is generally prohibited in inquisitorial jurisdictions.
D. Generally, the court is primarily responsible for appointing expert witnesses.

Answer 16

D. Generally, the court is primarily responsible for appointing expert witnesses.

See pages 2.1119 in the Fraud Examiner’s Manual

In most inquisitorial jurisdictions, the primary experts are appointed by the court. Experts are subject to various examinations and might have to conduct their own examinations of witnesses. Usually, all the expert’s activities related to the case are controlled by the judge, who determines the scope of the expert’s analysis, the expert’s authority to access certain items of evidence, whom the expert can interview, and several other functions. Because some jurisdictions allow parties to submit testimony or evidence from their own experts in addition to the court-appointed expert, the latter might need to interview the parties’ experts. The expert should carefully follow the judge’s instructions, especially because the instructions are usually made available to the parties of the proceeding.

Question 17

The primary reason for maintaining the chain of custody is to prevent opposing parties from accessing an item of evidence without a court order.

A. True
B. False

Answer 17

B. False

See pages 2.1025 in the Fraud Examiner’s Manual

The primary reason for maintaining the chain of custody on an item of evidence is to establish that the evidence has not been altered or changed. If evidence is subject to change over time or susceptible to alteration, the offering party might need to establish that the evidence has not been altered or changed from the time it was collected through its production in court. This is done by establishing a chain of custody. Thus, the chain of custody can be an important factor in establishing authenticity.

The chain of custody is both a process and a document that memorializes (1) who has had possession of an object and (2) what they have done with it.

Question 18

During a criminal trial involving allegations of corruption, the prosecution introduces a diagram illustrating the organizational structure of a company allegedly involved in the corruption. The diagram is an example of:

A. Demonstrative evidence
B. Real evidence
C. Direct evidence
D. Documentary evidence

Answer 18

A. Demonstrative evidence

See pages 2.1002 in the Fraud Examiner’s Manual

There are three basic forms of evidence: testimonial, real, and demonstrative. Testimonial evidence refers to the oral or written statements made by witnesses under oath. Real evidence refers to physical objects that played a part in the issues being litigated. Demonstrative evidence is a tangible item that illustrates some material proposition (e.g., a map, a chart, or a summary). Demonstrative evidence differs from real evidence in that demonstrative evidence was not part of the underlying event; it was created specifically for the trial. Its purpose is to provide a visual aid for the fact finder. Nonetheless, demonstrative evidence is evidence and can be considered by the fact finder in reaching a verdict.

Question 19

While conducting a fraud examination, Black, a Certified Fraud Examiner (CFE), obtained a document in Year 1. Since Black obtained the document, several individuals have had it in their possession. In Year 2, the document was introduced at trial. However, the document’s authenticity was questioned because there was no record of who had possession of it and what they did with it. The question concerning the document’s authenticity is based on a failure to maintain _____________.

A. The best form of the evidence
B. The chain of custody
C. The attorney’s evidence records
D. Who validated the evidence

Answer 19

B. The chain of custody

See pages 2.1025 in the Fraud Examiner’s Manual

If evidence is subject to change over time or susceptible to alteration, the offering party might need to establish that the evidence has not been altered or changed from the time it was collected through its production in court. This is done by establishing a chain of custody. Thus, the chain of custody can be an important factor in establishing authenticity.

The chain of custody is both a process and a document that memorializes (1) who has had possession of an object and (2) what they have done with it; it is simply a means of establishing that there has not been a material change or alteration to a piece of evidence.

Question 20

Which of the following is a basic exception for the requirement that a police officer must obtain a search warrant before conducting a search of a person, location, or vehicle for evidence of a crime?

A. Searches where there is “reasonable belief” in the suspect’s guilt
B. Searches where there is circumstantial proof that the suspect is guilty
C. Searches when a confession has been made
D. Searches conducted pursuant to a valid, voluntary consent

Answer 20

D. Searches conducted pursuant to a valid, voluntary consent

See pages 2.715 in the Fraud Examiner’s Manual

Even if a warrant is technically required, there are a number of recognized exceptions to the warrant requirement. Two key exceptions are consent searches and evidence in plain view.

Question 21

If employees have a duty to cooperate during an internal investigation as part of the employer-employee relationship, the duty exists if what is requested from them is reasonable.

A. True
B. False

Answer 21

A. True

See pages 2.701-2.702 in the Fraud Examiner’s Manual

In most jurisdictions, a duty to cooperate exists in every employer-employee relationship, but such duties vary between jurisdictions. Generally, the duty to cooperate extends to workplace investigations; therefore, employees have a duty to cooperate during an internal investigation if what is requested from them is reasonable.

Question 22

In most common law systems, a party can introduce relevant exhibits as evidence at trial even if the items are not established as authentic.

A. True
B. False

Answer 22

B. False

See pages 2.1006 in the Fraud Examiner’s Manual

In common law systems using adversarial processes, exhibits—the tangible objects presented as evidence—are inadmissible unless they are relevant and established as authentic. Thus, to be admissible at trial, evidence, other than testimonial evidence, must be properly authenticated; that is, the party offering the item must produce some evidence (e.g., testimony from a person who has firsthand knowledge) to show it is, in fact, what the party says it is and that it is in the same condition as when it was seized. If an exhibit cannot be authenticated, it will not be admitted even if it is plainly relevant.

Question 23

If, in a country with comprehensive whistleblower protection laws, an employee qualifies as a whistleblower for reporting unlawful conduct by their employer, then the employer cannot terminate the whistleblowing employee for any reason, including their engagement in an unrelated fraud.

A. True
B. False

Answer 23

B. False

See pages 2.704 in the Fraud Examiner’s Manual

Many jurisdictions have whistleblower laws designed to encourage individuals to bring forth complaints of wrongdoing by providing protections for those who report unlawful conduct. These laws shield employees who report their employers for misconduct by protecting them from any adverse employment action or retaliatory action from their employers.

Whistleblower laws do not, however, prevent individuals from being terminated for engaging in unrelated fraudulent behavior.

Question 24

In common law jurisdictions, the litigation privilege applies only to documents and things prepared in anticipation of litigation.

A. True
B. False

Answer 24

A. True

See pages 2.1032-2.1034 in the Fraud Examiner’s Manual

Many common law jurisdictions have a litigation privilege that protects materials prepared in anticipation of litigation. Thus, the litigation privilege applies only to documents and things prepared in anticipation of litigation.

This protection prevents the disclosure of communications made, and documents prepared, for the purpose of litigation. Also, the protection may extend to communications of, and documents created by, third-party agents (e.g., consultants or fraud examiners) in preparation for litigation.

The litigation privilege arises once litigation is reasonably anticipated. Accordingly, communication is only privileged under the litigation privilege if litigation was contemplated at the time the communication was created. Therefore, the privilege does not cover documents that came into existence before litigation was contemplated.

Question 25

The European Union’s (EU) General Data Protection Regulation (GDPR) generally requires an organization to notify all affected data subjects without undue delay if a data breach is likely to result in a high risk to their rights and freedoms.

A. True
B. False

Answer 25

A. True

See pages 2.727 in the Fraud Examiner’s Manual

The European Union’s (EU) General Data Protection Regulation (GDPR) generally requires an organization to notify all affected data subjects without undue delay if the data breach is likely to result in a high risk to their rights and freedoms.

Question 26

The purpose of the authentication requirement in most common law systems is to ensure that hearsay is not admitted into evidence.

A. True
B. False

Answer 26

B. False

See pages 2.1006 in the Fraud Examiner’s Manual

In common law systems using adversarial processes, exhibits—the tangible objects presented as evidence—are inadmissible unless they are relevant and established as authentic. The authentication requirement serves to ensure that evidence is what the party claims it is and that it is genuine, not a forgery.

Question 27

Which of the following is an element that must be present for communications between an attorney and the attorney’s client to be protected by a legal professional privilege?

A. Purpose of the communications was to seek or provide legal advice
B. Intent to keep the communications confidential
C. Communication between a legal advisor and a client
D. All of the above

Answer 27

D. All of the above

See pages 2.1029 in the Fraud Examiner’s Manual

Legal professional privileges protect the communications between professional legal advisors (e.g., solicitor, barrister, or attorney) and their clients. These privileges are designed to encourage open and honest communications between legal professionals and their clients, and they go by many names depending on the jurisdiction (e.g., attorney-client privilege, legal advice privilege, or solicitor-client privilege).

The requirements for the application of these privileges vary among jurisdictions, but generally, the following elements must be present for communications between an attorney and the attorney’s client to be protected by a legal professional privilege:

• A communication between a legal professional and a client
• The communication was made to seek or give legal advice
• The parties intended the communications to be confidential

To be protected under a legal professional privilege, it is typically not necessary that the communication take place after a lawsuit has been filed.

Question 28

The key issue to consider when assessing the existence of a reasonable expectation of privacy is whether a reasonable person would expect the area or item to be free from intrusion.

A. True
B. False

Answer 28

A. True

ee pages 2.705 in the Fraud Examiner’s Manual

The key issue to consider when assessing the existence of a reasonable expectation of privacy is whether a reasonable person would expect the area or item to be free from intrusion. Employees tend to regard purses, briefcases, and other personal effects as personal items that they reasonably expect to be private. An employee does not need to have an ownership interest in, or legal custody over, the area or item to have a reasonable expectation of privacy in it. Thus, even if an employer owns the office where an employee works, the employee can still have a reasonable expectation of privacy in parts of the office.A. True

Question 29

A client hires an attorney in a jurisdiction that provides a legal professional privilege. If the attorney shares client communications that are confidential and subject to the legal professional privilege with an outside consultant hired to help provide legal advice to the attorney’s client, then the client will automatically lose any protection the legal professional privilege provided over the communications.

A. True
B. False

Answer 29

B. False

See pages 2.1029-2.1030 in the Fraud Examiner’s Manual

Legal professional privileges are not absolute; they are subject to waiver. Because these privileges only protect confidential communications, the protection they provide will be waived for communications disclosed to third parties who have little or nothing to do with the client’s pursuit of legal representation because such disclosures demonstrate a lack of confidentiality.

Generally, waiver occurs when the client, who holds the privilege, voluntarily discloses (or consents to or encourages someone else into disclosing) any significant part of the privileged communications. Although the client holds the privilege, the privilege can be waived by the client’s attorney or a third party—someone who is neither the attorney nor the client.

Although legal professional privileges only apply to confidential communications between a legal representative and the legal representative’s client, in most jurisdictions, the protection afforded by these privileges extends to communications with third-party consultants hired to help provide legal advice to the client (e.g., fraud examiners, accountants, bankers, or other experts). Thus, waiver does not occur when an attorney shares privileged information with an outside consultant hired in a role that concerns the client’s pursuit of legal representation and when the communication is made for the purpose of effectuating legal representation for the client.

Question 30

In common law jurisdictions with civil laws for defamation and invasion of privacy, under which cause of action can an investigator be held liable for a TRUE statement made about a suspect?

A. Defamation
B. Intrusion upon seclusion
C. Slander
D. Public disclosure of private facts

Answer 30

D. Public disclosure of private facts

See pages 2.721-2.722 in the Fraud Examiner’s Manual

Invasion of privacy laws concern a person’s right to keep their life private and free from intrusion, and in many common law countries, invasion of privacy is a civil wrong that can be addressed by a court through a lawsuit.

The two most common forms of invasion of privacy applicable to fraud examinations are intrusion into an individual’s private matters and publicity of private facts. The civil wrong regarding intrusion into an individual’s private matters (often referred to as intrusion upon seclusion) occurs when an individual intentionally intrudes into another individual’s private matters and the intrusion would be highly offensive or objectionable to a reasonable person.

Public disclosure of private facts occurs when one party makes public statements about another party’s private life that are not of public concern. Unlike the requirements to establish a claim for defamation, liability for the public-disclosure-of-private-facts cause of action can arise even if the statements at issue are true. The key to this cause of action is that the information must be private in nature and not a matter of public interest.

Question 31

Which of the following must a plaintiff show to recover for a claim of false imprisonment?

A. The defendant knew their conduct was illegal.
B. The defendant was a law enforcement officer.
C. The defendant restrained the plaintiff without consent or legal justification.
D. The defendant was not protected under the qualified business privilege.

Answer 31

C. The defendant restrained the plaintiff without consent or legal justification.

See pages 2.730-2.731 in the Fraud Examiner’s Manual

False imprisonment is the unlawful restraint by one person of the physical liberty of another without consent or legal justification. To recover for a claim of false imprisonment, the plaintiff generally must prove all the following elements:

• The defendant used words or actions intended to restrain the plaintiff.
• The defendant’s words or actions resulted in the restraint of the plaintiff without the plaintiff’s consent (i.e., against the plaintiff’s will) and without legal justification.
• The plaintiff was aware that they were being restrained.

A claim of false imprisonment might arise if an employee is detained in any way during a search or interview. Generally, an employer is entitled to question an employee at work about a violation of company policy without incurring liability if the employee submits to the questioning voluntarily—that is, not as a result of threats or force.

Question 32

Which of the following statements about the consent exception to the requirement that government agents must obtain a warrant before conducting a search for evidence of a crime is INCORRECT?

A. To be valid, an individual’s consent to a search by government agents must be voluntary.
B. Generally, government agents do not have to warn subjects that they have a right to refuse to consent to a search.
C. Even if obtained by bribery or force, consent to search constitutes a valid waiver of the person’s right to be free from unreasonable searches.
D. Government agents do not need a warrant to perform a search if a person with proper authority consents to the search.

Answer 32

C. Even if obtained by bribery or force, consent to search constitutes a valid waiver of the person’s right to be free from unreasonable searches.

See pages 2.716 in the Fraud Examiner’s Manual

Consent is a recognized exception to the requirement that government agents must obtain a warrant before they search a person, location, or vehicle for evidence of a crime. Individuals are always free to consent to searches. If a suspect consents to a search or seizure by police or a government agent, then the consent eliminates the need for a search warrant. That is, the consent to search serves to waive the person’s right to be free from government searches. Thus, the government does not need a warrant to perform a search if a person with proper authority consents to a search.

To be valid, an individual’s consent to a search or seizure must be voluntary. Consents to searches or seizures by government agents obtained by force, duress, or bribery are generally held to be involuntary and invalid; therefore, such consent does not constitute a valid waiver of the person’s right to be free from unreasonable searches. Jurisdictions are mixed, however, as to whether consents obtained by deceit constitute valid waiver.

Also, there is generally no requirement that government agents warn suspects that they have a right to refuse consent.

Question 33

During cross-examination of an expert witness, the questioning party often uses the “Is it not true?” and “Would you agree with me?” approach. This technique of cross-examination is used to:

A. Make the witness appear to be a sounding board by generally agreeing with the questioning party’s position.
B. Ease the witness into a feeling of false security.
C. Confuse the witness in the hope that they might contradict themselves.
D. Show that the witness’s bias prevents them from objectively considering an issue or situation.

Answer 33

A. Make the witness appear to be a sounding board by generally agreeing with the questioning party’s position.

See pages 2.1126, 2.1128 in the Fraud Examiner’s Manual

During cross-examination, the questioning party might employ various methods to discredit a witness or diminish the importance of the witness’s testimony. The sounding board cross-examination method uses the witness as a sounding board to reacquaint the judge or jury with the favorable aspects of the questioning party’s theory. This technique often uses the “Is it not true?” and “Would you agree with me?” approach. Constant, nonstop agreement is used to intimidate the witness. If the witness agrees with various questions raised by the questioning party, the judge or jury might interpret the agreement to mean that the witness generally concurs with the questioning party’s position.

Question 34

Waiver of a legal professional privilege occurs when a client shares privileged information with an outside party who has nothing to do with the client’s pursuit of legal representation.

A. True
B. False

Answer 34

A. True

See pages 2.1029-2.1030 in the Fraud Examiner’s Manual

Legal professional privileges are not absolute; they are subject to waiver. Because these privileges only protect confidential communications, the protection they provide will be waived for communications disclosed to third parties who have little or nothing to do with the client’s pursuit of legal representation because such disclosures demonstrate a lack of confidentiality.

Generally, waiver occurs when the client, who holds the privilege, voluntarily discloses (or consents to or encourages someone else into disclosing) any significant part of the privileged communications. Although the client holds the privilege, the privilege can be waived by the client’s attorney or a third party—someone who is neither the attorney nor the client.

Question 35

Which of the following BEST describes the purpose of expert testimony in judicial proceedings?

A. To provide evidence based on personal knowledge and perceptions of the events at issue
B. To assist in proving and establishing one essential circumstance among many others
C. To assist the trier of fact to understand the evidence or determine the fact in issue
D. None of the above

Answer 35

C. To assist the trier of fact to understand the evidence or determine the fact in issue

See pages 2.1105 in the Fraud Examiner’s Manual

Experts can serve one of two roles in the trial process: testifying expert or consulting expert. Testifying expert witnesses give technical testimony when specialized knowledge is needed to help the fact finder understand evidence or determine a fact in issue.

Question 36

Abel is an auditor who works for XYZ, a private company. Abel suspects that Beta, an employee for XYZ, has embezzled money from XYZ. Abel plans to conduct an internal investigation into the missing funds, and during the investigation, Abel plans to interview Beta. Based on these facts, which of the following is the MOST ACCURATE statement?

A. XYZ cannot fire Beta for refusing to participate in the interview because of whistleblower protections.
B. Beta has the right to have an attorney present at any interview conducted by Abel.
C. Beta likely has a duty to cooperate with the investigation as part of the employer-employee relationship.
D. Before interviewing Beta, Abel must inform Beta of the right to remain silent.

Answer 36

C. Beta likely has a duty to cooperate with the investigation as part of the employer-employee relationship.

See pages 2.701-2.702 in the Fraud Examiner’s Manual

In most jurisdictions, a duty to cooperate exists in every employer-employee relationship, but such duties vary between jurisdictions. Generally, the duty to cooperate extends to workplace investigations; therefore, employees have a duty to cooperate during an internal investigation if what is requested from them is reasonable.

Question 37

Michael, a fraud suspect, confesses to a fraud. During Michael’s trial for the fraud, the government introduces the confession as evidence of Michael’s intent to commit the fraudulent act for which he is charged. What kind of evidence is Michael’s confession?

A. Testimonial
B. Circumstantial
C. Character
D. Direct

Answer 37

D. Direct

See pages 2.1002 in the Fraud Examiner’s Manual

There are two basic categories of admissible evidence: direct evidence and circumstantial evidence. Direct evidence is evidence that tends to prove or disprove a fact in issue directly, such as eyewitness testimony or a confession. Circumstantial evidence is evidence that tends to prove or disprove facts in issue indirectly, by inference.

Question 38

Lyn is an employee who works in a jurisdiction that prohibits unreasonable workplace searches and surveillance in areas or items where employees have a reasonable expectation of privacy. In which of the following items is Lyn LEAST LIKELY to have a reasonable expectation of privacy?

A. A personal planner kept in the employee’s desk drawer
B. A company-issued desktop or laptop computer
C. A purse that is stored in the employee’s cubicle
D. An employee-owned tablet brought to the office from home

Answer 38

B. A company-issued desktop or laptop computer

See pages 2.705 in the Fraud Examiner’s Manual

Different countries often have very different approaches to the issue of workplace privacy. In some jurisdictions, privacy laws generally prohibit unreasonable workplace searches and surveillance in areas where employees have a reasonable expectation of privacy. Depending on the circumstances, an employee might have a reasonable expectation of privacy in a desk drawer, a file cabinet, a locker, or even an entire office. Reasonable expectations of privacy can also attach to communications, such as data stored on hard drives and other electronic communications like phone calls, emails, and text messages.

The key issue to consider when assessing the existence of a reasonable expectation of privacy is whether a reasonable person would expect the area or item to be free from intrusion. Employees tend to regard purses, briefcases, and other personal effects as personal items that they reasonably expect to be private. An employee does not need to have an ownership interest in, or legal custody over, the area or item to have a reasonable expectation of privacy in it. Thus, even if an employer owns the office where an employee works, the employee can still have a reasonable expectation of privacy in parts of the office.

Another important factor is the amount of control an individual exercises over an area or item. If an employee has exclusive control over an area or item, this tends to show that the employee has a reasonable expectation of privacy in it.

In this case, the employee is more likely to have a reasonable expectation of privacy in their tablet, purse, and personal planner because the employee owns and exercises exclusive control over these items. Without a company policy to the contrary, a reasonable person would not expect their employer to search or monitor personal items brought from home and stored in an area that is generally free from intrusion. An employee would be less likely to have a reasonable expectation of privacy in a company-issued computer to which the employee does not retain exclusive control.

Question 39

The hard drive of a compromised computer system was given to Brad, a forensic examiner, for analysis. If Brad cannot verify who gave him the computer’s hard drive for analysis, then:

A. The hard drive must be imaged.
B. The chain of custody is broken.
C. The best-evidence rule is invoked.
D. The hard drive must be rehashed.

Answer 39

B. The chain of custody is broken.

See pages 2.1025 in the Fraud Examiner’s Manual

If evidence is subject to change over time or susceptible to alteration, the offering party might need to establish that the evidence has not been altered or changed from the time it was collected through its production in court. This is done by establishing a chain of custody. Thus, the chain of custody can be an important factor in establishing authenticity.

The chain of custody is both a process and a document that memorializes (1) who has had possession of an object and (2) what they have done with it; it is simply a means of establishing that there has not been a material change or alteration to a piece of evidence.

Question 40

Which of the following statements concerning expert witnesses in most inquisitorial jurisdictions is FALSE?

A. The judge makes the final determination of whether an expert is qualified.
B. Experts are often allowed to serve as expert witnesses in multiple cases.
C. An expert who is certified in a specific field is always qualified to testify as an expert witness.
D. Expert witnesses are often selected from a list maintained by courts, chambers of commerce, or other organizations.

Answer 40

C. An expert who is certified in a specific field is always qualified to testify as an expert witness.

See pages 2.1114 in the Fraud Examiner’s Manual

The primary experts in inquisitorial jurisdictions are usually appointed and presented by the judge rather than the parties. Like in adversarial jurisdictions, the judge makes the final determination of whether an expert is qualified. However, most inquisitorial jurisdictions have more standardized qualification requirements.

Many jurisdictions (through the courts, chambers of commerce, or other organizations) maintain lists of experts in certain fields from which the courts may choose for a particular case. These experts are generally qualified if they meet national standards, such as being certified in a specific field (e.g., an accounting certification); however, the judge will take the issues involved in the case into consideration and make the final decision. Some jurisdictions allow judges to look outside of the lists for experts. Due to the maintenance of expert lists and the relatively low perceived bias of experts in inquisitorial jurisdictions, it is acceptable for expert witnesses to offer their services in court more often than in adversarial jurisdictions.

Question 41

If a person consents to a search by a government officer, but the consent is obtained by force, duress, or bribery, then the consent will NOT constitute a valid waiver of the person’s right to be free from unreasonable searches.

A. True
B. False

Answer 41

A. True

See pages 2.716 in the Fraud Examiner’s Manual

Consent is a recognized exception to the requirement that government agents must obtain a warrant before they search a person, location, or vehicle for evidence of a crime. Individuals are always free to consent to searches. If a suspect consents to a search or seizure by police or a government agent, then the consent eliminates the need for a search warrant. That is, the consent to search waives the person’s right to be free from government searches. Thus, the government does not need a warrant to perform a search if a person with proper authority consents to a search.

To be valid, an individual’s consent to a search or seizure must be voluntary. Consents to searches or seizures by government agents obtained by force, duress, or bribery are generally held to be involuntary and invalid; therefore, such consent does not constitute a valid waiver of the person’s right to be free from unreasonable searches. Jurisdictions are mixed, however, as to whether consents obtained by deceit constitute valid waiver.

Also, there is generally no requirement that government agents warn suspects that they have a right to refuse consent.

Question 42

Which of the following statements regarding the General Data Protection Regulation (GDPR) is MOST ACCURATE?

A. An organization must always delete a data subject’s personal information upon that individual’s request.
B. An organization must immediately notify all data subjects affected by a data breach, regardless of the breach’s severity.
C. An organization is not required to confirm or deny its possession of a data subject’s personal data, even upon request.
D. An organization must have a documented lawful basis for collecting or processing personal data.

Answer 42

D. An organization must have a documented lawful basis for collecting or processing personal data.

See pages 2.725-2.727 in the Fraud Examiner’s Manual

The General Data Protection Regulation (GDPR) requires organizations to have a lawful basis for collecting or processing personal data. There are multiple lawful bases identified in the GDPR, such as the consent of the data subject, a legitimate interest of the organization, compliance with a legal obligation, the performance of a contract, or the performance of a task carried out in the public interest. The GDPR requires the lawful basis for the processing of personal data to be documented in a commonly used electronic format. The documentation should include the name of the specific lawful basis (e.g., consent, legitimate interest, contract, legal obligation, public interest), along with an explanation and supporting facts. The safest course of action is to rely on multiple lawful bases when possible.

Upon a data subject’s request, an organization must confirm or deny that it possesses the data subject’s personal data. The organization must also provide the data subject with a free copy of the personal data and any other specified information, such as the purpose of the data collection or the length of time that the information will be stored.

Under some circumstances, organizations can be compelled to delete personal data upon request. For example, a data subject may request the erasure of personal data if the data are no longer necessary in relation to the purpose for which they were collected, the data subject withdraws consent, the data were unlawfully collected or processed, or the data subject was a child when the data were collected. Organizations must respond to such requests without undue delay.

In the event of a data breach, the GDPR generally requires an organization to notify all affected data subjects without undue delay if the breach is likely to result in a high risk to their rights and freedoms. However, the organization is not required to notify data subjects if the breach only involved encrypted or otherwise unintelligible data or if the organization took actions after the breach that substantially minimized the risk to data subjects.

Question 43

Blue, a Certified Fraud Examiner (CFE), conducted an investigation of Brown, a fraud suspect. Brown became so upset at being investigated that he sued Blue for the common law civil wrong of intentional infliction of emotional distress. For Brown to prevail, he must show that:

A. Brown suffered severe distress due to Blue’s conduct
B. Blue acted intentionally or recklessly
C. Blue engaged in extreme and outrageous conduct
D. All of the above

Answer 43

D. All of the above

See pages 2.732 in the Fraud Examiner’s Manual

To recover for intentional infliction of emotional distress, the plaintiff must prove all the following elements:

• The defendant engaged in extreme and outrageous conduct.
• The defendant acted intentionally or recklessly (i.e., the defendant intended for their conduct to cause severe emotional distress, or they acted recklessly with regard to whether their actions would cause severe emotional distress).
• The victim suffered emotional or mental distress as a result of the defendant’s conduct.

Question 44

To determine whether authorization (e.g., a search warrant) by a judicial officer or other sanctioned official is required to conduct a search in a jurisdiction with laws granting people the right to be free from unreasonable search and seizure by authorities, it is necessary to first determine whether _____________ is/are involved in the search.

A. Criminal activity
B. Investigative suspicions
C. Government authorities
D. Probable cause

Answer 44

C. Government authorities

See pages 2.714-2.715 in the Fraud Examiner’s Manual

Most countries have laws that provide the public with the right to be free from unreasonable search and seizure by government authorities, and though interpretation may vary, this right sometimes requires that the government obtain authorization (e.g., a search warrant) by a judicial officer or other authorized person before it conducts a search.

A search warrant is a court order that grants government authorities the right to search a premises or property for information pertinent to a case. The requirements for search warrants or other similar authorization, however, do not apply to private parties acting on their own accord because the right to be free from unreasonable searches and seizures does not protect against actions by such parties. Instead, it protects individuals from actions by government authorities. Thus, to determine whether a search warrant or similar authorization is required for a search to be conducted in an investigation, it is necessary to first determine whether government authorities are involved in the search.

Question 45

Which of the following statements regarding the qualifications of expert witnesses in most adversarial jurisdictions is INCORRECT?

A. Special training, experience, and formal education can all contribute to an expert’s eligibility.
B. A candidate’s licenses, certifications, awards, and honors are factors that may be considered.
C. The judge makes the final determination of whether an expert is qualified to testify.
D. There is a standard educational requirement for expert testimony that applies to all candidates.

Answer 45

D. There is a standard educational requirement for expert testimony that applies to all candidates.

See pages 2.1112-2.1113 in the Fraud Examiner’s Manual

Before admitting expert testimony, the judge must determine that the expert is a qualified practitioner. This element addresses whether the individual is qualified to assist the trier of fact.

The process of evaluating whether an expert is qualified mainly centers on the candidate’s formal education and work experience—whether that includes thirty years in law enforcement or ten years in a large accounting firm. But there is no standard educational requirement for expert testimony; a witness with no formal education may be qualified based on either special training or experience. Some other factors that may be considered include the candidate’s:

• Awards and honors
• Licensing or certification
• Technical training
• Published books and journal articles
• Positions in professional associations, societies, and organizations

Question 46

Black, a Certified Fraud Examiner (CFE), interviews Green, a fraud suspect. No one else is present at the interview. During the interview, Black accuses Green of committing fraud. Later, it turns out that Green is innocent. Green can sue and recover damages from Black on a claim of defamation if Green can show that Black knowingly made the false statement on an unprivileged occasion and that the statement caused economic harm.

A. True
B. False

Answer 46

B. False

See pages 2.718-2.719 in the Fraud Examiner’s Manual

Though innocent, Green will generally not be able to recover under a defamation theory because Black’s statement was not published to a third party. Generally, defamation refers to the unprivileged publication of false statements about a person that causes harm to that person’s reputation. To recover for defamation, the plaintiff must generally prove all the following elements:

• The defendant made an untrue statement of fact.
• The statement was communicated (published) to third parties.
• The statement was made on an unprivileged occasion.
• The statement damaged the subject’s reputation.

Question 47

Which of the following types of questions is an expert witness MOST LIKELY to be asked during direct examination in an adversarial jurisdiction?

A. A two-part question
B. A hostile question
C. A narrative question
D. A leading question

Answer 47

C. A narrative question

See pages 2.1118, 2.1120-2.1121 in the Fraud Examiner’s Manual

Direct examination is the initial questioning of a witness by the party that called the witness (in adversarial jurisdictions) or by the judge (in inquisitorial jurisdictions). Most of the time, direct examination is a nonconfrontational questioning aimed at exposing the facts and issues of the case. Direct examinations in adversarial jurisdictions are conducted by the attorney who retained the expert. Because experts are hired for their opinions, they are not subject to the usual restrictions about statements of judgment very often.

Expert witnesses present their findings in various ways, such as narrative questions, hypotheticals, specialized materials, and special exhibits. Experts are commonly asked to answer narrative questions, which are broad, open-ended questions that allow experts to state their opinions in their own words with minimal prompting. Fraud cases can require complex summarizing for the facts to make any sense. Average jurors and some judges have never considered how someone could manipulate store inventories to increase the company’s stock price and then make a profit on the phony surge. The expert witness in cases dealing with such issues will often begin testimony by recounting the narrative background of a case, the tests and experiments that were performed during the investigation, and a summary of the findings based on the witness’s professional expertise.

Compound (two-part) and hostile questions do not generally occur in the direct examination process. Additionally, leading questions are generally not allowed during direct examination (e.g., “The results were negative, weren’t they?”).

Question 48

Namita, a Certified Fraud Examiner (CFE), works for Electric Avenue Manufacturing, a private company that operates in a jurisdiction with civil laws for defamation, invasion of privacy, and conflict of interest. Namita searched the purse of Harriet, one of Electric Avenue’s employees. If Harriet had a reasonable expectation of privacy in the purse and Namita conducted the search without a legitimate interest or authority, under which of the following claims would Harriet MOST LIKELY be able to recover damages against Namita?

A. Conflict of interest
B. Slander
C. Libel
D. Intrusion into Harriet’s private matters

Answer 48

D. Intrusion into Harriet’s private matters

See pages 2.721 in the Fraud Examiner’s Manual

The civil wrong regarding intrusion into an individual’s private matters (often referred to as intrusion upon seclusion) occurs when an individual intentionally intrudes into another individual’s private matters and the intrusion would be highly offensive or objectionable to a reasonable person.

The three elements of this civil wrong include:

1. An intentional intrusion
2. Into an area where an individual has a reasonable expectation of privacy
3. The intrusion would be highly offensive or objectionable to a reasonable person

Here, if Namita searches Harriet’s purse without legitimate interest or authority, then Harriet may be able to recover from Namita for intrusion into her private matters.

Question 49

The fact that an item of evidence is relevant does not automatically mean that it will be admitted in adversarial trials. Evidence might be relevant but still excluded for other reasons. Which of the following is one of those reasons?

A. Unduly prejudicial
B. Misleading
C. Waste of time
D. All of the above

Answer 49

D. All of the above

See pages 2.1004 in the Fraud Examiner’s Manual

In common law systems using adversarial processes, the fact that an item of evidence is relevant does not automatically mean that it will be admitted. Relevant evidence might be excluded if it is unduly prejudicial, threatens to confuse or mislead the jury, threatens to cause unnecessary delay or a waste of time, or is merely cumulative.

Question 50

Shaina, a Certified Fraud Examiner (CFE), interviews Brock, a fraud suspect. Shaina, Brock, and Brock’s supervisor are present in the interview during which Shaina accuses Brock of cheating on his spouse with a coworker. Later, Brock, angry that Shaina revealed the unflattering (but true) information about the affair to his supervisor, files a claim of defamation against Shaina. Brock’s claim is likely to succeed.

A. True
B. False

Answer 50

B. False

See pages 2.718-2.719 in the Fraud Examiner’s Manual

Generally, defamation refers to the unprivileged publication of false statements about a person that causes harm to that person’s reputation. To recover for defamation, the plaintiff must generally prove all the following elements:

• The defendant made an untrue statement of fact.
• The statement was communicated (published) to third parties.
• The statement was made on an unprivileged occasion.
• The statement damaged the subject’s reputation.

To be defamatory, a statement must be a statement of fact (not opinion) and be untrue. Thus, truth is an absolute defense to defamation.

Here, Shaina’s statement that Brock was cheating on his spouse with a coworker was true, so the statement was not defamatory. Accordingly, Brock’s suit for defamation will not succeed.

Question 51

Which of the following statements concerning the examinations of expert witnesses in most inquisitorial jurisdictions is accurate?

A. Only the parties may question the credibility of a court-appointed expert witness.
B. Only the judge may question the credibility of a court-appointed expert witness.
C. Both the judge and the parties may question the credibility of a court-appointed expert witness.
D. Neither the judge nor the parties may question the credibility of a court-appointed expert witness.

Answer 51

C. Both the judge and the parties may question the credibility of a court-appointed expert witness.

See pages 2.1125-2.1126 in the Fraud Examiner’s Manual

Since the primary expert or experts are obtained by the court itself, they are generally seen as inherently less biased than experts in adversarial proceedings. Additionally, the selection of the expert is an extension of the court’s authority and discretion. Therefore, for a party’s legal counsel to attack the expert’s credibility in an adversarial way would be strategically unwise in most circumstances.

However, parties are usually allowed to raise limited objections to an expert witness if they believe the expert is biased. For example, the expert might have a relationship with one of the parties to the litigation. The parties are often allowed to question the expert’s analysis or methods used. While this process is less confrontational, a poor performance can lead to the court rejecting the expert’s testimony. The judge may also question the expert’s credibility and qualifications and ultimately decides how much consideration should be given to the expert’s testimony.

Question 52

Smith, a Certified Fraud Examiner (CFE), works for ABC Company, a private company. One day, a manager at ABC asks Smith to search the personal belongings of Green, an employee of ABC Company, for evidence of securities fraud. Smith seizes and searches Green’s personal tablet computer. Assuming that these facts occur in a jurisdiction in which the public has the constitutional right to be free from unreasonable search and seizure by government authorities, which of the following is the MOST ACCURATE statement regarding Green’s rights?

A. The search did not violate Green’s right to be free from unreasonable search and seizure by government authorities because such rights do not apply to searches in the workplace.
B. Green’s right to be free from unreasonable search and seizure by government authorities was likely violated because private companies can be considered government authorities.
C. The search did not violate Green’s right to be free from unreasonable search and seizure by government authorities because ABC Company is not a government authority.
D. Green’s right to be free from unreasonable search and seizure by government authorities was violated because Smith was required to obtain a search warrant before conducting the search.

Answer 52

C. The search did not violate Green’s right to be free from unreasonable search and seizure by government authorities because ABC Company is not a government authority.

See pages 2.714-2.715 in the Fraud Examiner’s Manual

Most countries have laws that provide the public with the right to be free from unreasonable search and seizure by government authorities, and though interpretation may vary, this right sometimes requires that the government obtain authorization (e.g., a search warrant) by a judicial officer or other authorized person before it conducts a search.

A search warrant is a court order that grants government authorities the right to search a premises or property for information pertinent to a case. The requirements for search warrants or other similar authorization, however, do not apply to private parties acting on their own accord because the right to be free from unreasonable searches and seizures does not protect against actions by such parties. Instead, it protects individuals from actions by government authorities. Thus, to determine whether a search warrant or similar authorization is required for a search to be conducted in an investigation, it is necessary to first determine whether government authorities are involved in the search.

The right to be free from unreasonable search and seizure by government authorities can apply to searches in the workplace. However, in this case, the law against unreasonable search and seizure by government authorities did not apply because the search was conducted by a private party without any involvement by government authorities.

Note that the search in this case might violate other laws, such as privacy laws, depending on the jurisdiction.

Question 53

During cross-examination in adversarial proceedings, it is a general rule for opposing counsel to cross-examine a witness only if it would benefit the case.

A. True
B. False

Answer 53

A. True

See pages 2.1124 in the Fraud Examiner’s Manual

It is critical to never underestimate the expertise of the opposing counsel in adversarial proceedings. Often, opposing counsel will be underplaying its understanding of the issues to ease the witness into a sense of security. This can lead the witness into a difficult situation. Opposing counsel’s general rule is to cross-examine only if it would benefit the case. Generally, in asking questions of the witness, opposing counsel will ask short questions in plain words or leading questions. Opposing counsel usually knows the answers to the questions it poses.

Question 54

Maria, a fraud examiner employed by the Jones Corporation, is asked to testify at trial concerning firsthand observations that she made while investigating an embezzlement case. Maria can BEST be described as a:

A. Lay witness
B. Observational witness
C. Expert witness
D. Confirming witness

Answer 54

A. Lay witness

See pages 2.1101 in the Fraud Examiner’s Manual

There are two basic kinds of testimony. The first is lay testimony (sometimes called factual testimony), where witnesses testify about what they have experienced firsthand and their factual observations. The second kind is expert testimony, where a person who, by reason of education, training, skill, or experience, is qualified to render an expert opinion regarding certain pertinent issues. A lay witness (or fact witness) is anyone who provides nonexpert testimony. Note, however, that an expert witness might also provide lay testimony.

Typically, a fraud examiner who worked on a case will be capable of providing lay testimony based on observations made during the investigation. When a trial involves issues that are complex or unfamiliar to most people, as is common in incidents of fraud, expert testimony is appropriate to help the fact finder understand these issues.

Question 55

Which of the following is NOT one of the three options by which organizations can legitimize cross-border transfers of personal information?

A. Obtain a warrant that grants permission to transfer the data.
B. Establish a contract between the entities that are exchanging the information.
C. Rely on adequacy decisions (if transmitting from the European Union).
D. Get the consent of the data subject.

Answer 55

A. Obtain a warrant that grants permission to transfer the data.

See pages 2.729-2.730 in the Fraud Examiner’s Manual

Many countries have adopted legal restrictions on international data transfers, but there are discrepancies in the implementation and application of such protections among the different countries. Given the wide range of legislation and practices regarding cross-border transfer laws and restrictions, fraud examiners working in other countries must become familiar with laws governing privacy and adapt their procedures according to local rules.

Nevertheless, there are three options by which organizations can legitimize cross-border transfers of personal information:

• Obtain the consent of the data subject.
• Establish a contract between the entities that are exchanging the information (i.e., between the transmitting entity and the receiving entity).
• If transmitting from the European Union (EU) to non-EU countries, rely on adequacy decisions by the European Commission (EC). That is, limit the transfer of data to countries that offer an adequate level of protection, as determined by the EC.

Question 56

Which of the following is a common law invasion of privacy civil wrong that occurs when an individual intentionally encroaches into an area where another individual has a reasonable expectation of privacy and the encroachment would be highly offensive or objectionable to a reasonable person?

A. Public disclosure of private facts
B. Infliction of emotional distress
C. Slander
D. Intrusion into an individual’s private matters

Answer 56

D. Intrusion into an individual’s private matters

See pages 2.721 in the Fraud Examiner’s Manual

The civil wrong regarding intrusion into an individual’s private matters (often referred to as intrusion upon seclusion) occurs when an individual intentionally intrudes into another individual’s private matters and the intrusion would be highly offensive or objectionable to a reasonable person.

The three elements of this civil wrong include:

1. An intentional intrusion
2. Into an area where an individual has a reasonable expectation of privacy
3. The intrusion would be highly offensive or objectionable to a reasonable person

Question 57

Expert witnesses may NOT express opinions or draw conclusions in their testimony during a legal proceeding.

A. True
B. False

Answer 57

B. False

See pages 2.1103, 2.1105 in the Fraud Examiner’s Manual

Testifying expert witnesses give opinion testimony when specialized knowledge is needed to help the fact finder understand evidence or determine a fact in issue. Unlike fact (or lay) witnesses, who generally can only testify about things they have personally observed, expert witnesses usually may express opinions or draw conclusions in their testimony.

Question 58

In common law jurisdictions, the litigation privilege protects documents and materials prepared by an attorney, but this protection does not extend to documents and materials prepared by third parties.

A. True
B. False

Answer 58

B. False

See pages 2.1032, 2.1034 in the Fraud Examiner’s Manual

Many common law jurisdictions have a litigation privilege that protects materials prepared in anticipation of litigation. Thus, the litigation privilege applies only to documents and things prepared in anticipation of litigation.

This protection prevents the disclosure of communications made, and documents prepared, for the purpose of litigation. Consequently, the protection may extend to communications of, and documents created by, third-party agents (e.g., consultants or fraud examiners) in preparation for litigation.

Question 59

Because the Certified Fraud Examiner (CFE) credential denotes proven expertise in fraud prevention, detection, and deterrence, CFEs are automatically qualified to give testimony as to their opinion about fraud-related issues involved in a case.

A. True
B. False

Answer 59

B. False

See pages 2.1112-2.1114 in the Fraud Examiner’s Manual

Before admitting expert testimony, the judge must make sure the person is qualified. In adversarial jurisdictions, the evaluation process mainly centers around the candidate’s formal education and work experience—whether that includes thirty years in law enforcement or ten years in a large accounting firm. Credentials also include the candidate’s awards and honors; licensing or certification; technical training; published books and journal articles; and positions in professional associations, societies, and organizations. The important thing to remember is that a person can be qualified as an expert based on either special training or experience. Although professional designations are considered in evaluating credentials as an expert witness, the determination of whether someone is an “expert” is made on a case-by-case basis. Therefore, a professional designation does not automatically qualify someone as an expert for purposes of testifying in court.

Inquisitorial jurisdictions tend to have more standardized requirements for expert witnesses, such as nationalized qualifications or certifications. Even so, the Certified Fraud Examiner (CFE) designation alone will not meet these standards, and judges may still make a discretionary determination regarding the expert’s qualifications.

Question 60

All the following are basic options by which organizations can legitimize cross-border transfers of personal information EXCEPT:

A. Obtain approval from a Certified Information Privacy Professional (CIPP).
B. Rely on adequacy decisions (if transmitting from the European Union).
C. Obtain the consent of the data subject.
D. Establish a contract between the entities that are exchanging the information.

Answer 60

A. Obtain approval from a Certified Information Privacy Professional (CIPP).

See pages 2.729-2.730 in the Fraud Examiner’s Manual

Many countries have adopted legal restrictions on international data transfers, but there are discrepancies in the implementation and application of such protections among the different countries. Given the wide range of legislation and practices regarding cross-border transfer laws and restrictions, fraud examiners working in other countries must become familiar with laws governing privacy and adapt their procedures according to local rules.

Nevertheless, there are three options by which organizations can legitimize cross-border transfers of personal information:

• Obtain the consent of the data subject.
• Establish a contract between the entities that are exchanging the information (i.e., between the transmitting entity and the receiving entity).
• If transmitting from the European Union (EU) to non-EU countries, rely on adequacy decisions by the European Commission (EC). That is, limit the transfer of data to countries that offer an adequate level of protection, as determined by the EC.

Question 61

If an employer is investigating an employee who is a member of a union, then the union contract might contain certain clauses that restrict the employer’s investigatory procedures.

A. True
B. False

Answer 61

A. True

See pages 2.703 in the Fraud Examiner’s Manual

Employees may have contractual rights that are enforceable against their employers and that might limit the employers’ ability to compel full cooperation in a fraud examination. Employers and employees may enter into contracts that govern the employment relationship, and if the employer violates the contract, then the employee can sue for breach of contract. Often, employee contractual rights at issue during investigations arise from a union contract, a collective bargaining agreement, or an employment contract. For example, if the employee is a member of a union, then the union contract or collective bargaining agreement might contain certain restrictions on the employer’s investigatory procedures.

Question 62

In jurisdictions that provide a legal professional privilege, such as the attorney-client privilege, an attorney’s client can waive any protection the privilege provides over confidential communications if the client discloses the privileged information to unrelated third parties who have no need to know the information.

A. True
B. False

Answer 62

A. True

See pages 2.1029-2.1030 in the Fraud Examiner’s Manual

Legal professional privileges are not absolute; they are subject to waiver. Because these privileges only protect confidential communications, the protection they provide will be waived for communications disclosed to third parties who have little or nothing to do with the client’s pursuit of legal representation because such disclosures demonstrate a lack of confidentiality.

Generally, waiver occurs when the client, who holds the privilege, voluntarily discloses (or consents to or encourages someone else into disclosing) any significant part of the privileged communications. Although the client holds the privilege, the privilege can be waived by the client’s attorney or a third party—someone who is neither the attorney nor the client.

Question 63

In systems using adversarial processes, an attorney may impeach an opposing party’s witness by showing that the witness:

A. Made prior inconsistent statements
B. Is influenced by bias or self-interest
C. Has a reputation for untruthfulness
D. All of the above

Answer 63

D. All of the above

See pages 2.1027 in the Fraud Examiner’s Manual

Impeachment is the practice of questioning a witness’s knowledge or credibility. In adversarial processes, the adverse party is usually entitled to offer evidence to impeach the testimony or credibility of a witness during cross-examination. However, because cross-examination is absent from inquisitorial processes, impeachment is not an issue for civil law systems using inquisitorial processes.

There are numerous ways an attorney might impeach a witness, but the most common ways include efforts to show that the witness:

• Is influenced by bias or self-interest
• Has an impaired ability to observe
• Made prior inconsistent statements
• Has been convicted of a felony or equivalent crime
• Has a reputation for untruthfulness

Question 64

Which of the following would be an example of a narrative question that an attorney might ask an expert witness during direct examination in an adversarial jurisdiction?

A. “Weren’t there three inaccuracies on the financial statement?”
B. “Could you please describe the steps you took during your examination?”
C. “At what point did you begin to suspect that the subject was lying?”
D. “You couldn’t find any direct evidence implicating the suspect, could you?”

Answer 64

B. “Could you please describe the steps you took during your examination?”

See pages 2.1118, 2.1120-2.1121, 2.1124 in the Fraud Examiner’s Manual

Direct examination is the initial questioning of a witness by the party that called the witness (in adversarial jurisdictions) or by the judge (in inquisitorial jurisdictions). Most of the time, direct examination is a nonconfrontational questioning aimed at exposing the facts and issues of the case. During direct examination in adversarial jurisdictions, expert witnesses present their findings in various ways, such as narrative questions, hypotheticals, specialized materials, and special exhibits. Experts are commonly asked to answer narrative questions, which are broad, open-ended questions that allow experts to state their opinions in their own words with minimal prompting. Fraud cases can require complex summarizing for the facts to make any sense. Average jurors and some judges have never considered how someone could manipulate store inventories to increase the company’s stock price and then make a profit on the phony surge. The expert witness in cases dealing with such issues will often begin testimony by recounting the narrative background of a case, the tests and experiments that were performed during the investigation, and a summary of the findings based on the witness’s professional expertise.

For example, during a direct examination, the judge or counsel for the party presenting the expert witness might ask open questions, such as, “Could you please tell us about the background of this case?” or “What procedures did you perform in your examination?”

In contrast, a cross-examining attorney needs to control the flow of testimony and would not likely ask an expert witness a narrative question. Instead, cross-examining attorneys often attempt to ask leading questions, where the answer is suggested in the question. They might also ask questions that would call for the expert to go beyond the proper scope of the testimony.

Question 65

Which of the following is an acceptable way of authenticating digital records in most common law systems?

A. Accompanying the evidence with a written certification by the custodian of records
B. Providing evidence of distinctive characteristics of the records
C. Having a witness who has personal knowledge of the records offer testimony
D. All of the above

Answer 65

D. All of the above

See pages 2.1006, 2.1010 in the Fraud Examiner’s Manual

In common law systems using adversarial processes, exhibits—the tangible objects presented as evidence—are inadmissible unless they are relevant and established as authentic. Thus, to be admissible at trial, evidence, other than testimonial evidence, must be properly authenticated; that is, the party offering the item must produce some evidence (e.g., testimony from a person who has firsthand knowledge) to show it is, in fact, what the party says it is and that it is in the same condition as when it was seized. If an exhibit cannot be authenticated, it will not be admitted even if it is plainly relevant.

The most likely methods of authenticating digital records are:

Testimony from a witness who has personal knowledge (e.g., an authenticating witness attests to the process by which the digital records are created, acquired, maintained, and preserved)
Circumstantial evidence of distinctive characteristics (e.g., a person’s business habit is consistent with the document)
Certified copies of business records (e.g., digital records are accompanied by a custodian’s written certification)

Question 66

Bertha is the lead suspect in an ongoing civil investigation in a common law jurisdiction that will likely result in litigation. Before any litigation occurs, Bertha loses original documents that are key to the investigation. Which of the following statements is CORRECT?

A. Bertha violated her duty to preserve relevant information only if the opposing party loses its case because she lost the documents
B. Bertha likely violated her duty to preserve relevant information because she lost evidence valuable to anticipated litigation
C. Bertha did not violate her duty to preserve relevant information because no litigation was pending when she lost the documents
D. None of the above

Answer 66

B. Bertha likely violated her duty to preserve relevant information because she lost evidence valuable to anticipated litigation

See pages 2.702-2.703 in the Fraud Examiner’s Manual

Common law jurisdictions, in which litigants are usually obligated to disclose relevant information to the opposing side, impose a duty on litigants to take affirmative steps to preserve relevant evidence, and this duty might arise prior to the commencement of litigation. For litigation occurring in common law courts, the duty to preserve relevant evidence typically arises when litigation is reasonably anticipated or contemplated. When an organization is involved in litigation, this duty to preserve applies to the organization’s management and extends to employees likely to have relevant information. A violation of the duty to preserve occurs when information that is relevant to anticipated or existing litigation is lost, destroyed, or otherwise made unavailable.

Violating the duty to preserve relevant information can result in several adverse sanctions for the offending party, and such sanctions can arise from both intentional acts and accidental acts through negligence. The adverse consequences can include, but are not limited to, monetary penalties, the drawing of adverse inferences of fact, and criminal penalties. The theory behind such consequences is that the individual who makes evidence unavailable following the probable initiation of a lawsuit is aware of its detrimental effect upon a case.

Examples of situations that could result in sanctions for failing to preserve evidence include intentionally or accidentally:

• Erasing computer files (e.g., documents, images, or databases) relevant to anticipated or existing litigation
• Losing or destroying physical evidence relevant to anticipated or existing litigation
• Losing, destroying, or altering documents or records relevant to anticipated or existing litigation
• Failing to suspend routine destruction of electronic data relevant to anticipated or existing litigation

Question 67

Which of the following is an element that a plaintiff generally must prove to recover damages for a claim alleging the common law civil wrong for intentional infliction of emotional distress?

A. The plaintiff suffered distress that occurred for at least two years
B. The defendant engaged in extreme and outrageous conduct
C. The plaintiff was employed by the defendant
D. All of the above

Answer 67

B. The defendant engaged in extreme and outrageous conduct

See pages 2.732 in the Fraud Examiner’s Manual

To recover for intentional infliction of emotional distress, the plaintiff must prove all the following elements:

• The defendant engaged in extreme and outrageous conduct.
• The defendant acted intentionally or recklessly (i.e., the defendant intended for their conduct to cause severe emotional distress, or they acted recklessly with regard to whether their actions would cause severe emotional distress).
• The victim suffered emotional or mental distress as a result of the defendant’s conduct.

Question 68

Which of the following would be an example of direct evidence?

A. In an embezzlement trial, witness testimony about a suspicious situation in which the defendant was involved
B. In a misappropriation trial, eyewitness testimony of someone saying that they saw the defendant steal items from the inventory of the defendant’s employer
C. In an embezzlement trial, expert testimony regarding the defendant’s mental functioning and drug addiction
D. In a misappropriation trial, testimony that the defendant deposited $2,000 into their account and that, on the same day, $2,000 was stolen from the defendant’s employer

Answer 68

B. In a misappropriation trial, eyewitness testimony of someone saying that they saw the defendant steal items from the inventory of the defendant’s employer

See pages 2.1002 in the Fraud Examiner’s Manual

Direct evidence is evidence that tends to prove or disprove a fact in issue directly, such as eyewitness testimony or a confession. The testimony of someone who saw the defendant committing the crime would be considered direct evidence in a misappropriation trial. Alternatively, witness testimony about a suspicious situation in which the defendant was involved would be considered circumstantial evidence, as would testimony that a defendant deposited $2,000 into their account on the same day that $2,000 was stolen. Circumstantial evidence is evidence that tends to prove or disprove facts in issue indirectly, by inference.

Question 69

Which of the following is the cross-examination technique that entails getting the expert witness to admit a great amount of time being spent on a specific matter, and then selecting an area to highlight in which the witness has not done much work?

A. Sounding board
B. Sidelining
C. Myopic vision
D. None of the above

Answer 69

C. Myopic vision

See pages 2.1126 in the Fraud Examiner’s Manual

During cross-examination, the questioning party might employ various methods to discredit a witness or diminish the importance of a witness’s testimony. Myopic vision, a tactic primarily used against expert witnesses, entails getting the expert witness to admit excessive time being spent on a specific matter, and then selecting an area to highlight in which the witness is unsure or has not done much work. This area might not be central to the issues in the case or the conclusions reached. Then, the questioning party will make a large issue of it and suggest that the witness’s vision is myopic in that the work was limited in extent or scope and, as such, substandard.

Question 70

Which of the following is NOT a legal element that a plaintiff must prove to recover for defamation?

A. The statement was communicated (published) to third parties.
B. The defendant made an untrue statement of fact.
C. The statement damaged the subject’s reputation.
D. The statement was printed and distributed.

Answer 70

D. The statement was printed and distributed.

See pages 2.719 in the Fraud Examiner’s Manual

To recover for defamation, the plaintiff must generally prove all the following elements:

• The defendant made an untrue statement of fact.
• The statement was communicated (published) to third parties.
• The statement was made on an unprivileged occasion.
• The statement damaged the subject’s reputation.

Question 71

An employee is more likely to have a reasonable expectation of privacy in an item or area if they have exclusive control over it.

A. True
B. False

Answer 71

A. True

See pages 2.705 in the Fraud Examiner’s Manual

Different countries often have very different approaches to the issue of workplace privacy. In some jurisdictions, privacy laws generally prohibit unreasonable workplace searches and surveillance in areas where employees have a reasonable expectation of privacy. Depending on the circumstances, an employee might have a reasonable expectation of privacy in a desk drawer, a file cabinet, a locker, or even an entire office. Reasonable expectations of privacy can also attach to communications, such as data stored on hard drives and other electronic communications like phone calls, emails, and text messages.

The key issue to consider when assessing the existence of a reasonable expectation of privacy is whether a reasonable person would expect the area or item to be free from intrusion. Employees tend to regard purses, briefcases, and other personal effects as personal items that they reasonably expect to be private. An employee does not need to have an ownership interest in, or legal custody over, the area or item to have a reasonable expectation of privacy in it. Thus, even if an employer owns the office where an employee works, the employee can still have a reasonable expectation of privacy in parts of the office.

Another important factor is the amount of control an individual exercises over an area or item. If an employee has exclusive control over an area or item, this tends to show that the employee has a reasonable expectation of privacy in it.

Question 72

Which of the following is the civil wrong that occurs when one party makes public statements about another party’s private life that are not of public concern?

A. Injury to an individual’s reputation
B. Intrusion into an individual’s private matters
C. Public disclosure of private facts
D. None of the above

Answer 72

C. Public disclosure of private facts

See pages 2.722 in the Fraud Examiner’s Manual

Public disclosure of private facts occurs when one party makes public statements about another party’s private life that are not of public concern. For instance, disclosing information obtained in an interview conducted as part of a fraud investigation to individuals not involved in the investigation might constitute public disclosure of private facts.

Question 73

Which of the following statements about an employee monitoring program is MOST ACCURATE?

A. Employers are always required to give employees notice and obtain their consent before implementing an employee monitoring program.
B. Most countries require employers to give employees notice before implementing an employee monitoring program.
C. Employers are always required to obtain employee consent before implementing an employee monitoring program.
D. Most countries permit employers to implement a covert employee monitoring program without first notifying their employees.

Answer 73

B. Most countries require employers to give employees notice before implementing an employee monitoring program.

See pages 2.707 in the Fraud Examiner’s Manual

Nearly every country prohibits covert employee monitoring unless a specific criminal activity has been identified. Therefore, nearly every employer is required to notify its employees before implementing an employee monitoring program. The notice should be clear, comprehensive, and made in writing.

While employees must consent to employee monitoring in some countries, this requirement does not apply to most jurisdictions.

Question 74

Relevant evidence is evidence that tends to make some fact that is in dispute more or less likely than it would be without the evidence.

A. True
B. False

Answer 74

A. True

See pages 2.1003 in the Fraud Examiner’s Manual

The admissibility of evidence depends on the discretion of the presiding judge, but a basic requirement of admissibility in both common and civil law systems is that evidence must be relevant. Simply stated, evidence is relevant if it tends to make some fact that is in dispute more or less likely than it would be without the evidence.

Question 75

In jurisdictions that recognize the civil wrongs constituting invasion of privacy, the civil wrong regarding intrusion into an individual’s private matters occurs when one party makes public statements about another party’s private life that are not of public concern.

A. True
B. False

Answer 75

B. False

See pages 2.721-2.722 in the Fraud Examiner’s Manual

Public disclosure of private facts occurs when one party makes public statements about another party’s private life that are not of public concern.

The civil wrong regarding intrusion into an individual’s private matters (often referred to as intrusion upon seclusion) occurs when an individual intentionally intrudes into another individual’s private matters and the intrusion would be highly offensive or objectionable to a reasonable person.

Question 76

Which of the following could result in sanctions for violating the common law duty to preserve evidence relevant to anticipated litigation?

A. Accidentally erasing a digital image relevant to a lawsuit
B. Accidentally shredding documents relevant to a lawsuit
C. Failing to suspend routine destruction of electronic data relevant to a lawsuit
D. All of the above

Answer 76

D. All of the above

See pages 2.702-2.703 in the Fraud Examiner’s Manual

Common law jurisdictions, in which litigants are usually obligated to disclose relevant information to the opposing side, impose a duty on litigants to take affirmative steps to preserve relevant evidence, and this duty might arise prior to the commencement of litigation. For litigation occurring in common law courts, the duty to preserve relevant evidence typically arises when litigation is reasonably anticipated or contemplated. When an organization is involved in litigation, this duty to preserve applies to the organization’s management and extends to employees likely to have relevant information. A violation of the duty to preserve occurs when information that is relevant to anticipated or existing litigation is lost, destroyed, or otherwise made unavailable.

Violating the duty to preserve relevant information can result in several adverse sanctions for the offending party, and such sanctions can arise from both intentional acts and accidental acts through negligence. The adverse consequences can include, but are not limited to, monetary penalties, the drawing of adverse inferences of fact, and criminal penalties. The theory behind such consequences is that the individual who makes evidence unavailable following the probable initiation of a lawsuit is aware of its detrimental effect upon a case.

Examples of situations that could result in sanctions for failing to preserve evidence include intentionally or accidentally:

• Erasing computer files (e.g., documents, images, or databases) relevant to anticipated or existing litigation
• Losing or destroying physical evidence relevant to anticipated or existing litigation
• Losing, destroying, or altering documents or records relevant to anticipated or existing litigation
• Failing to suspend routine destruction of electronic data relevant to anticipated or existing litigation

Question 77

To recover for a claim of false imprisonment, a plaintiff must show that the defendant knew they had no legal right to restrain the plaintiff’s physical liberty.

A. True
B. False

Answer 77

B. False

See pages 2.730-2.731 in the Fraud Examiner’s Manual

False imprisonment is the unlawful restraint by one person of the physical liberty of another without consent or legal justification. To recover for a claim of false imprisonment, the plaintiff generally must prove all the following elements:

• The defendant used words or actions intended to restrain the plaintiff.
• The defendant’s words or actions resulted in the restraint of the plaintiff without the plaintiff’s consent (i.e., against the plaintiff’s will) and without legal justification.
• The plaintiff was aware that they were being restrained.

A claim of false imprisonment might arise if an employee is detained in any way during a search or interview. Generally, an employer is entitled to question an employee at work about a violation of company policy without incurring liability if the employee submits to the questioning voluntarily—that is, not as a result of threats or force.

Question 78

At a trial in an adversarial jurisdiction, an attorney calls an expert witness to the stand and asks, “Could you please tell us about the history of this case?” This question is MOST LIKELY being presented as part of direct examination of the expert witness.

A. True
B. False

Answer 78

A. True

See pages 2.1118, 2.1120-2.1121, 2.1124 in the Fraud Examiner’s Manual

Direct examination is the initial questioning of a witness by the party that called the witness (in adversarial jurisdictions) or by the judge (in inquisitorial jurisdictions). Most of the time, direct examination is a nonconfrontational questioning aimed at exposing the facts and issues of the case. During direct examination in adversarial jurisdictions, expert witnesses present their findings in various ways, such as narrative questions, hypotheticals, specialized materials, and special exhibits. Experts are commonly asked to answer narrative questions, which are broad, open-ended questions that allow experts to state their opinions in their own words with minimal prompting. Fraud cases can require complex summarizing for the facts to make any sense. Average jurors and some judges have never considered how someone could manipulate store inventories to increase the company’s stock price and then make a profit on the phony surge. The expert witness in cases dealing with such issues will often begin testimony by recounting the narrative background of a case, the tests and experiments that were performed during the investigation, and a summary of the findings based on the witness’s professional expertise.

For example, during a direct examination, the judge or counsel for the party presenting the expert witness might ask open questions, such as, “Could you please tell us about the background of this case?” or “What procedures did you perform in your examination?”

In contrast, a cross-examining attorney needs to control the flow of testimony and would not likely ask an expert witness a narrative question.

Question 79

In a legal context, testimonial evidence refers to the oral or written statements made by witnesses under oath.

A. True
B. False

Answer 79

A. True

See pages 2.1002 in the Fraud Examiner’s Manual

There are three basic forms of evidence: testimonial, real, and demonstrative. Testimonial evidence refers to the oral or written statements made by witnesses under oath. Real evidence refers to physical objects that played a part in the issues being litigated. Demonstrative evidence is a tangible item that illustrates some material proposition (e.g., a map, a chart, or a summary).

Question 80

Which of the following BEST describes the differences between the appointment of expert witnesses in most adversarial and inquisitorial jurisdictions?

A. Experts in inquisitorial jurisdictions are primarily appointed and presented by the court, whereas the parties usually select and present experts in adversarial jurisdictions.
B. Experts are usually selected and appointed by the court in adversarial jurisdictions, but the parties primarily select experts in inquisitorial jurisdictions.
C. Expert witnesses are allowed to be appointed in adversarial jurisdictions but not in inquisitorial jurisdictions.
D. The court has the power to appoint expert witnesses in inquisitorial jurisdictions but not in adversarial jurisdictions.

Answer 80

A. Experts in inquisitorial jurisdictions are primarily appointed and presented by the court, whereas the parties usually select and present experts in adversarial jurisdictions.

See pages 2.1119 in the Fraud Examiner’s Manual

Most expert witnesses in adversarial proceedings are chosen by the parties to the litigation (although adversarial courts may also appoint independent experts). In adversarial proceedings, the expert and the retaining party are “allies” in the sense that legal counsel will attempt to depict the expert’s testimony in the most compelling manner during direct examination and will try to correct any issues in the expert’s testimony that the opposing party raises. However, it is important that the expert never allow their opinion or best judgment to be supplanted by that of the retaining party.

In most inquisitorial jurisdictions, the primary experts are obtained by the court. Expert witnesses in inquisitorial jurisdictions are subject to various examinations and might have to conduct their own examinations of witnesses. Usually, all the expert’s activities related to the case are controlled by the judge, who determines the scope of the expert’s analysis, the expert’s authority to access certain items of evidence, whom the expert can interview, and several other functions. Because some jurisdictions allow parties to submit testimony or evidence from their own experts in addition to the court-appointed expert, the latter might need to interview the parties’ experts. The expert should carefully follow the judge’s instructions, especially because the instructions are usually made available to the parties of the proceeding.

Question 81

A report by a Certified Fraud Examiner (CFE) states that $11,354.56 was withdrawn without authorization from the plaintiff’s business account on December 3, and on December 6 of the same year, $11,354.56 was deposited into an account owned by the defendant. During a criminal trial for theft against the defendant, the government introduces this information as evidence of the defendant’s guilt. What kind of evidence is the information contained in this report?

A. Indirect evidence
B. Circumstantial evidence
C. Inferential evidence
D. None of the above

Answer 81

B. Circumstantial evidence

See pages 2.1002 in the Fraud Examiner’s Manual

There are two basic categories of admissible evidence: direct evidence and circumstantial evidence. Direct evidence is evidence that tends to prove or disprove a fact in issue directly, such as eyewitness testimony or a confession. Circumstantial evidence is evidence that tends to prove or disprove facts in issue indirectly, by inference.

Question 82

Under the European Union’s (EU) General Data Protection Regulation (GDPR), organizations are NOT required to obtain the consent of data subjects before collecting or processing their personal information.

A. True
B. False

Answer 82

B. False

See pages 2.725 in the Fraud Examiner’s Manual

Under the General Data Protection Regulation (GDPR), organizations must obtain the consent of data subjects before collecting or processing their personal data. Data subjects must give their consent via a statement or clear affirmative action. In addition, data subjects must be informed that they can withdraw their consent at any time, and withdrawal of their consent must be as easy as providing consent.

Question 83

All the following may restrict the way in which employers can conduct interviews EXCEPT:

A. The common law
B. Laws protecting labor rights
C. Employment contracts
D. Equity and trust law

Answer 83

D. Equity and trust law

See pages 2.733 in the Fraud Examiner’s Manual

Interviews, and especially interviews of suspects, can expose the organizational powers administering the interview and the individual conducting the interview to certain legal risks. Thus, before engaging in an interview, the fraud examiner must understand the ramifications of their actions, which requires an understanding of certain legal issues and how they limit or affect the ways in which an interview may be conducted.

Of particular significance is the fact that most jurisdictions have restrictions concerning the ways in which employers can conduct interviews. Such restrictions might originate from employment contracts, collective labor laws, laws protecting labor rights, the common law, laws protecting fundamental rights, other applicable statutes, and so on.

Question 84

Which of the following can affect the rights that employees may have during an internal investigation?

A. The existence of a union contract
B. The existence of an employment contract
C. The existence of a collective bargaining agreement
D. All of the above

Answer 84

D. All of the above

See pages 2.703 in the Fraud Examiner’s Manual

Employees may have contractual rights that are enforceable against their employers and that might limit the employers’ ability to compel full cooperation in a fraud examination. Employers and employees may enter into contracts that govern the employment relationship, and if the employer violates the contract, then the employee can sue for breach of contract. Often, employee contractual rights at issue during investigations arise from a union contract, a collective bargaining agreement, or an employment contract. For example, if the employee is a member of a union, then the union contract or collective bargaining agreement might contain certain restrictions on the employer’s investigatory procedures.

Question 85

In most common law jurisdictions, for a document to be admitted into evidence, it must be properly __________; that is, the party offering the document must produce some evidence to show it is, in fact, what the party says it is.

A. Certified
B. Authenticated
C. Marked
D. Validated

Answer 85

B. Authenticated

See pages 2.1006 in the Fraud Examiner’s Manual

In common law systems using adversarial processes, exhibits—the tangible objects presented as evidence—are inadmissible unless they are relevant and established as authentic. Thus, to be admissible at trial, evidence, other than testimonial evidence, must be properly authenticated; that is, the party offering the item must produce some evidence (e.g., testimony from a person who has firsthand knowledge) to show it is, in fact, what the party says it is and that it is in the same condition as when it was seized. If an exhibit cannot be authenticated, the evidence will not be admitted even if it is plainly relevant.

Question 86

Blake, a Certified Fraud Examiner (CFE), testifies during a criminal trial that $25,000 was withdrawn without authorization from the plaintiff’s business account, and one week later, $20,000 was deposited into an account owned by the defendant. In the criminal trial of the defendant for theft, Blake’s testimony would be considered:

A. Direct evidence
B. Demonstrative evidence
C. Circumstantial evidence
D. Real evidence

Answer 86

C. Circumstantial evidence

See pages 2.1002 in the Fraud Examiner’s Manual

There are two basic categories of admissible evidence: direct evidence and circumstantial evidence. Direct evidence is evidence that tends to prove or disprove a fact in issue directly, such as eyewitness testimony or a confession. Circumstantial evidence is evidence that tends to prove or disprove facts in issue indirectly, by inference.

Question 87

Sanctions for violating the common law duty to preserve information relevant to anticipated or existing litigation can only arise from intentional acts, NOT from negligent acts.

A. True
B. False

Answer 87

B. False

See pages 2.702-2.703 in the Fraud Examiner’s Manual

Common law jurisdictions, in which litigants are usually obligated to disclose relevant information to the opposing side, impose a duty on litigants to take affirmative steps to preserve relevant evidence, and this duty might arise prior to the commencement of litigation. For litigation occurring in common law courts, the duty to preserve relevant evidence typically arises when litigation is reasonably anticipated or contemplated. When an organization is involved in litigation, this duty to preserve applies to the organization’s management and extends to employees likely to have relevant information. A violation of the duty to preserve occurs when information that is relevant to anticipated or existing litigation is lost, destroyed, or otherwise made unavailable.

Violating the duty to preserve relevant information can result in several adverse sanctions for the offending party, and such sanctions can arise from both intentional acts and accidental acts through negligence. The adverse consequences can include, but are not limited to, monetary penalties, the drawing of adverse inferences of fact, and criminal penalties. The theory behind such consequences is that the individual who makes evidence unavailable following the probable initiation of a lawsuit is aware of its detrimental effect upon a case.

Examples of situations that could result in sanctions for failing to preserve evidence include intentionally or accidentally:

• Erasing computer files (e.g., documents, images, or databases) relevant to anticipated or existing litigation
• Losing or destroying physical evidence relevant to anticipated or existing litigation
• Losing, destroying, or altering documents or records relevant to anticipated or existing litigation
• Failing to suspend routine destruction of electronic data relevant to anticipated or existing litigation

Question 88

Bailey, a Certified Fraud Examiner (CFE) in an adversarial jurisdiction, is being cross-examined in court regarding his expert opinion relating to a fraud matter. Darwin, a defense attorney, asks Bailey a question that is phrased in an overly and unnecessarily complex manner. Which of the following is the BEST way for Bailey to respond?

A. Request that the question be rephrased.
B. Ask the judge for a recess.
C. Avoid answering the question by talking about something else.
D. Object to the question’s phrasing.

Answer 88

A. Request that the question be rephrased.

See pages 2.1124 in the Fraud Examiner’s Manual

Generally, witnesses should never give away or volunteer free information during cross-examination in adversarial proceedings. When providing an answer during cross-examination, it might be difficult to avoid getting trapped in various assumptions, what-if scenarios, and generalities presented by counsel. Opposing counsel might also pose very complex questions to convolute the witness’s responses. If this occurs, then the witness should ask for the question to be rephrased in smaller components.

Question 89

In systems using adversarial processes, counsel may be able to impeach an opposing party’s witness by showing that the witness has an impaired ability to observe.

A. True
B. False

Answer 89

A. True

See pages 2.1027 in the Fraud Examiner’s Manual

Impeachment is the practice of questioning a witness’s knowledge or credibility. In adversarial processes, the adverse party is usually entitled to offer evidence to impeach the testimony or credibility of a witness during cross-examination. However, because cross-examination is absent from inquisitorial processes, impeachment is not an issue for civil law systems using inquisitorial processes.

There are numerous ways an attorney might impeach a witness, but the most common ways include efforts to show that the witness:

• Is influenced by bias or self-interest
• Has an impaired ability to observe
• Made prior inconsistent statements
• Has been convicted of a felony or equivalent crime
• Has a reputation for untruthfulness

Question 90

Nearly every country prohibits ________ employee monitoring unless a specific criminal activity has been identified.

A. Ongoing
B. Remote
C. Digital
D. Covert

Answer 90

D. Covert

See pages 2.707 in the Fraud Examiner’s Manual

Nearly every country prohibits covert employee monitoring unless a specific criminal activity has been identified. Therefore, nearly every employer is required to notify its employees before implementing an employee monitoring program. The notice should be clear, comprehensive, and made in writing.

Question 91

Formal education is the main requirement for a witness to be qualified to testify as an expert in an adversarial jurisdiction.

A. True
B. False

Answer 91

B. False

See pages 2.1112-2.1113 in the Fraud Examiner’s Manual

Before admitting expert testimony, the judge must determine that the expert is a qualified practitioner. This element addresses whether the individual is qualified to assist the trier of fact.

The process of evaluating whether an expert is qualified mainly centers on the candidate’s formal education and work experience—whether that includes thirty years in law enforcement or ten years in a large accounting firm. But there is no standard educational requirement for expert testimony; a witness with no formal education may be qualified based on either special training or experience. Some other factors that may be considered include the candidate’s:

• Awards and honors
• Licensing or certification
• Technical training
• Published books and journal articles
• Positions in professional associations, societies, and organizations

Question 92

Which of the following scenarios would potentially result in the waiver of a client’s legal professional privilege over confidential communications with the client’s legal representative?

A. The client’s legal representative shares privileged communications with an unrelated third party who has no need to know the information
B. The client intentionally shares privileged communications with an unrelated third party who has no need to know the information
C. The client inadvertently forwards an email with privileged information to unrelated third parties who have no need to know the information
D. All of the above

Answer 92

D. All of the above

See pages 2.1029-2.1030 in the Fraud Examiner’s Manual

Legal professional privileges are not absolute; they are subject to waiver. Because these privileges only protect confidential communications, the protection they provide will be waived for communications disclosed to third parties who have little or nothing to do with the client’s pursuit of legal representation because such disclosures demonstrate a lack of confidentiality.

Generally, waiver occurs when the client, who holds the privilege, voluntarily discloses (or consents to or encourages someone else into disclosing) any significant part of the privileged communications. Although the client holds the privilege, the privilege can be waived by the client’s attorney or a third party—someone who is neither the attorney nor the client.

Additionally, privilege might be lost if the client, the attorney, or a third party carelessly or inadvertently discloses confidential communications to an outside party. That is, even inadvertent disclosure can result in a waiver of privilege.

Question 93

In adversarial judicial jurisdictions, which of the following determinations is NOT a question that must typically be asked when determining whether an expert may testify before the jury?

A. Is the testimony reliable?
B. Is the person biased?
C. Is the person qualified as an expert?
D. Is the testimony relevant to the facts of the case?

Answer 93

B. Is the person biased?

See pages 2.1112 in the Fraud Examiner’s Manual

Generally, before allowing an expert to testify before a jury in an adversarial jurisdiction, a judge will make three determinations:

• Is the person qualified as an expert witness?
• Will the expertise of the witness assist the jury in understanding the evidence or determining a fact at issue? In other words, is the proposed testimony relevant to the facts of the case?
• Is the testimony reliable?

Bias is a relevant issue. However, in adversarial systems, witness bias is readily addressable by the parties’ legal representatives rather than being predetermined by the judge.

Question 94

Most inquisitorial judicial jurisdictions have more standardized requirements for expert witnesses than adversarial jurisdictions, such as the use of national standards to qualify experts.

A. True
B. False

Answer 94

A. True

See pages 2.1112, 2.1114 in the Fraud Examiner’s Manual

The primary experts in inquisitorial jurisdictions are usually appointed and presented by the judge rather than the parties. Like in adversarial jurisdictions, the judge makes the final determination of whether an expert is qualified. However, most inquisitorial jurisdictions have more standardized qualification requirements.

Many jurisdictions (through the courts, chambers of commerce, or other organizations) maintain lists of experts in certain fields from which the courts may choose for a particular case. These experts are generally qualified if they meet national standards, such as being certified in a specific field (e.g., an accounting certification); however, the judge will take the issues involved in the case into consideration and make the final decision.

In adversarial jurisdictions, the process of evaluating whether an expert is qualified mainly centers on the candidate’s formal education and work experience—whether that includes thirty years in law enforcement or ten years in a large accounting firm. But there is no standard educational requirement for expert testimony; a witness with no formal education may be qualified based on either special training or experience.

Question 95

In most inquisitorial jurisdictions, it is the judge who ultimately decides how much consideration should be given to an expert’s testimony.

A. True
B. False

Answer 95

A. True

See pages 2.1119 in the Fraud Examiner’s Manual

Inquisitorial courts typically appoint their own experts to evaluate technical matters. Expert witnesses in inquisitorial jurisdictions are subject to various examinations by the judge and the parties and might have to conduct their own examinations of witnesses. Usually, all the expert’s activities related to the case are controlled by the judge, who determines the scope of the expert’s testimony and analysis, the expert’s authority to access certain items of evidence, whom the expert can interview, and several other functions. The judge may also question the expert’s credibility and qualifications and ultimately decides how much consideration should be given to the expert’s testimony.

Question 96

Which of the following is the MOST ACCURATE description of the civil wrong of public disclosure of private facts?

A. An individual intentionally intrudes into an area where another individual has a reasonable expectation of privacy.
B. An individual makes an unprivileged oral publication of a false statement about a person that causes harm to that person’s reputation.
C. An individual makes an unprivileged publication of a false statement in writing about a person that causes harm to that person’s reputation.
D. One party makes public statements about another party’s private life that are not of public concern.

Answer 96

D. One party makes public statements about another party’s private life that are not of public concern.

See pages 2.721-2.722 in the Fraud Examiner’s Manual

Invasion of privacy laws concern a person’s right to keep their life private and free from intrusion, and in many common law countries, invasion of privacy is a civil wrong that can be addressed by a court through a lawsuit.

The two most common forms of invasion of privacy applicable to fraud examinations are intrusion into an individual’s private matters and publicity of private facts. The civil wrong regarding intrusion into an individual’s private matters (often referred to as intrusion upon seclusion) occurs when an individual intentionally intrudes into another individual’s private matters and the intrusion would be highly offensive or objectionable to a reasonable person.

Public disclosure of private facts occurs when one party makes public statements about another party’s private life that are not of public concern. Unlike the requirements to establish a claim for defamation, liability for the public-disclosure-of-private-facts cause of action can arise even if the statements at issue are true. The key to this cause of action is that the information must be private in nature and not a matter of public interest.

Question 97

A photograph can be either demonstrative evidence or real evidence.

A. True
B. False

Answer 97

A. True

See pages 2.1002 in the Fraud Examiner’s Manual

There are three basic forms of evidence: testimonial, real, and demonstrative. A photograph can be either demonstrative evidence or real evidence. Real evidence describes physical objects that played a part in the issues being litigated. The term includes both documentary evidence—such as canceled checks, invoices, ledgers, and letters—and other types of physical evidence. Demonstrative evidence is a tangible item that illustrates some material proposition (e.g., a map, a chart, or a summary).

Accordingly, a photograph can be real evidence if it was part of the underlying event, or it can be demonstrative evidence if it was created specifically for the trial.

Question 98

In most inquisitorial jurisdictions, only the judge may question an expert witness’s analysis or methods used.

A. True
B. False

Answer 98

B. False

See pages 2.1119, 2.1126 in the Fraud Examiner’s Manual

question the expert’s analysis or methods used. While this process is less confrontational than in adversarial systems, a poor performance can lead to the court rejecting the expert’s testimony. The judge may also question the expert’s credibility and qualifications and ultimately decides how much consideration should be given to the expert’s testimony.

Question 99

Harris is retained to provide an opinion involving specialized knowledge in the accounting field for a trial. Which of the following BEST describes his role?

A. Consulting expert
B. Fact witness
C. Informal expert
D. Expert witness

Answer 99

D. Expert witness

See pages 2.1103, 2.1105 in the Fraud Examiner’s Manual

Harris is providing expert testimony at trial, making him an expert witness. Testifying expert witnesses give opinion testimony when specialized knowledge is needed to help the fact finder understand evidence or determine a fact in issue. Unlike fact (or lay) witnesses, expert witnesses usually may express opinions or draw conclusions in their testimony.