OIC Financial Crimes & Fraud Investigation 2

Question 1

What is 'embezzlement'?

Accepted Answer

Misappropriation of assets by someone entrusted with them

Answer

Embezzlement is a form of financial fraud where a person who is entrusted with assets (such as an employee) misappropriates those assets for personal gain.

Question 2

What is 'check kiting'?

Accepted Answer

Floating checks between accounts to artificially inflate balances

Answer

Check kiting involves exploiting the float time between depositing a check and its clearance, moving funds between accounts to create the illusion of a balance that doesn't exist.

Question 3

In a Ponzi scheme, how are returns paid to earlier investors?

Accepted Answer

From funds collected from newer investors

Answer

In a Ponzi scheme, returns paid to earlier investors come directly from capital contributed by newer investors rather than from any genuine investment profit, making the scheme unsustainable.

Question 4

What distinguishes a Pyramid scheme from a Ponzi scheme?

Accepted Answer

In a Pyramid scheme, participants are required to actively recruit new members to earn returns

Answer

In a Pyramid scheme, participants earn money by recruiting new members, who then recruit others, whereas in a Ponzi scheme a central operator collects and redistributes funds without requiring participant recruitment.

Question 5

What is 'wire fraud' under federal law?

Accepted Answer

Using electronic communications to execute a fraudulent scheme

Answer

Under 18 U.S.C. § 1343, wire fraud is the use of interstate electronic communications—such as phone calls, emails, or wire transfers—to execute or further a scheme to defraud.

(OIC) Oregon Inspector Certification Practice Test

(OIC) Oregon Inspector Certification Practice Test

OIC Financial Crimes & Fraud Investigation 2