CFE Certified Fraud Examiner Fraud Law and Legal Elements 2 — Questions and Answers
Question 1: Under the Racketeer Influenced and Corrupt Organizations (RICO) Act, a 'pattern of racketeering activity' requires at least how many predicate acts within 10 years?
- One
- Two (Correct answer)
- Three
- Five
Correct answer: Two
RICO requires at least two predicate acts of racketeering activity within a 10-year period to establish a 'pattern.'
Question 2: Which legal concept allows prosecutors to charge co-conspirators with the crimes of their partners, even if they did not personally commit those crimes?
- Pinkerton liability (Correct answer)
- Accomplice liability
- Vicarious liability
- Strict liability
Correct answer: Pinkerton liability
Pinkerton liability holds each co-conspirator responsible for the foreseeable crimes committed by other members of the conspiracy in furtherance of the agreement.
Question 3: Which of the following best describes 'mens rea' in the context of fraud?
- The physical act of committing fraud
- The guilty mind or criminal intent required for fraud (Correct answer)
- The harm caused to the victim
- The financial gain obtained by the fraudster
Correct answer: The guilty mind or criminal intent required for fraud
Mens rea refers to the criminal intent or guilty mind that must be proven alongside the physical act (actus reus) to establish most fraud offenses.
Question 4: The statute of limitations for federal wire fraud under U.S. law is generally how many years?
- 3 years
- 5 years (Correct answer)
- 7 years
- 10 years
Correct answer: 5 years
The general federal statute of limitations for wire fraud is five years from the date the offense was committed, though financial institution fraud has a longer period.
Question 5: Which remedy allows a court to seize property that is the proceeds of fraud before a civil judgment is entered?
- Injunction
- Attachment (Correct answer)
- Replevin
- Subrogation
Correct answer: Attachment
Pre-judgment attachment allows a court to seize or freeze a defendant's property before a final civil judgment to preserve assets for potential recovery.
Question 6: Which law requires U.S. companies to maintain accurate books and records and have adequate internal controls, regardless of whether bribery occurs?
- Dodd-Frank Act
- Foreign Corrupt Practices Act (Correct answer)
- Bank Secrecy Act
- Sarbanes-Oxley Act Section 404
Correct answer: Foreign Corrupt Practices Act
The FCPA's accounting provisions require companies to keep accurate books and records and maintain a system of internal accounting controls, independently of its anti-bribery provisions.
CFE Certified Fraud Examiner Fraud Law and Legal Elements 2
Under the Racketeer Influenced and Corrupt Organizations (RICO) Act, a 'pattern of racketeering activity' requires at least how many predicate acts within 10 years?