ACFE Law 3 — Questions and Answers
Question 1: Under the False Claims Act, the qui tam provision allows:
- The government to sue contractors without prior notice
- Private citizens to file lawsuits on behalf of the government and share in any recovery (Correct answer)
- Whistleblowers to receive immunity from criminal prosecution
- Judges to impose treble damages without a jury trial
Correct answer: Private citizens to file lawsuits on behalf of the government and share in any recovery
The qui tam provision of the False Claims Act permits private individuals (relators) to file suit on behalf of the government and receive 15–30% of any monetary recovery.
Question 2: Which element is NOT required to establish wire fraud under 18 U.S.C. § 1343?
- A scheme to defraud
- Use of interstate wire communications
- Obtaining money or property by means of false pretenses
- Proof that a victim actually suffered financial loss (Correct answer)
Correct answer: Proof that a victim actually suffered financial loss
Wire fraud does not require proof of actual loss; the statute is violated when the defendant uses wire communications in furtherance of a scheme to defraud, regardless of whether the scheme succeeds.
Question 3: An attorney-client privilege can be overcome under the crime-fraud exception when:
- The client is accused of a serious felony
- The client sought the attorney's assistance to commit or plan a future crime or fraud (Correct answer)
- The attorney has personal knowledge of the client's past crimes
- The communication occurred in a group setting with third parties present
Correct answer: The client sought the attorney's assistance to commit or plan a future crime or fraud
The crime-fraud exception strips attorney-client privilege when the client consulted the attorney to facilitate an ongoing or future crime or fraud.
Question 4: Under the USA PATRIOT Act, financial institutions are required to implement Customer Identification Programs (CIP) to verify:
- The source of all wire transfers exceeding $3,000
- The identity of customers opening new accounts (Correct answer)
- The creditworthiness of loan applicants
- The beneficial owners of all corporate accounts
Correct answer: The identity of customers opening new accounts
CIP requirements under the USA PATRIOT Act mandate that financial institutions collect and verify identifying information from customers opening new accounts.
Question 5: The Racketeer Influenced and Corrupt Organizations (RICO) Act requires proof of a 'pattern of racketeering activity,' which generally means:
- At least one predicate act within the past five years
- At least two predicate acts within ten years (Correct answer)
- Three or more predicate acts forming a continuous enterprise
- Five predicate acts committed by the same person
Correct answer: At least two predicate acts within ten years
RICO requires a pattern of racketeering activity, which courts have interpreted as at least two related predicate acts occurring within ten years of each other.
Question 6: In the context of evidence law, the best evidence rule requires that:
- Only expert witnesses may testify about complex financial transactions
- The original document must be produced to prove the contents of a writing (Correct answer)
- Physical evidence must be preserved in its original condition
- Electronic evidence must be certified by a forensic expert
Correct answer: The original document must be produced to prove the contents of a writing
The best evidence rule (Federal Rule of Evidence 1002) requires that an original document be produced when its contents are at issue, unless an exception applies.
Question 7: Under the Dodd-Frank Act, SEC whistleblowers who provide original information leading to enforcement actions resulting in sanctions over $1 million may receive:
- 5–10% of sanctions collected
- 10–30% of sanctions collected (Correct answer)
- 25–50% of sanctions collected
- A fixed award of $100,000
Correct answer: 10–30% of sanctions collected
The Dodd-Frank Act provides eligible whistleblowers 10–30% of monetary sanctions collected in SEC enforcement actions exceeding $1 million.
ACFE Law 3
Under the False Claims Act, the qui tam provision allows: