FBI FBI Financial Crimes and Money Laundering 2

Question 1

What is the defining characteristic of a Ponzi scheme?

Accepted Answer

Paying returns to earlier investors using capital from newer investors rather than actual profits

Answer

A Ponzi scheme pays earlier investors using funds contributed by new investors, creating the illusion of legitimate investment returns while generating no actual profit from investment activity.

Question 2

How does a 'pump and dump' securities fraud scheme operate?

Accepted Answer

Inflating a stock's price through false promotional statements, then selling shares at the peak before the price collapses

Answer

In a pump and dump scheme, fraudsters artificially inflate (pump) a stock's price using misleading promotions, then sell (dump) their own shares at the peak, causing the price to collapse and leaving other investors with significant losses.

Question 3

How does the FBI distinguish 'mortgage fraud for profit' from 'mortgage fraud for housing'?

Accepted Answer

Industry insiders conspiring to steal equity or obtain fraudulent loans versus borrowers misrepresenting information to qualify for a loan

Answer

Mortgage fraud for profit involves industry insiders such as appraisers, agents, and lenders conspiring to fraudulently obtain loan proceeds, while mortgage fraud for housing involves borrowers misrepresenting income or assets to qualify for a mortgage they otherwise couldn't obtain.

Question 4

What is 'wire fraud' under 18 U.S.C. § 1343, and what must prosecutors prove?

Accepted Answer

A scheme to defraud using interstate wire communications such as phone, internet, or television

Answer

Wire fraud requires proof of a scheme to defraud and the use of interstate wire communications (phone calls, emails, internet, radio, or TV) in furtherance of that scheme; the wire communication need not be the fraudulent act itself.

Question 5

What is a 'bust-out' fraud scheme?

Accepted Answer

Establishing credit, maximizing credit lines through purchases or cash advances, then defaulting without payment

Answer

A bust-out scheme involves establishing or hijacking credit accounts, deliberately running up maximum credit limits through merchandise purchases or cash advances, then defaulting on all payments while converting the obtained assets to cash.

FBI Special Agent Test Practice Test

FBI Special Agent Test Practice Test

FBI FBI Financial Crimes and Money Laundering 2