Deck 8: Crime in the Economic System

Question 1

What are crimes in the economic system usually classified as?

A) investment fraud
B) computer crimes
C) economic crimes
D) market manipulation

Answer 1

A

Question 2

When an offender convinced people to invest in gold that did not actually exist, what type of investment fraud was committed?

A) front running
B) Ponzi scheme
C) commodities fraud
D) securities fraud

Answer 2

C

Question 3

When officials pump up the prices of stocks by sharing false information online and then subsequently sell their own stocks at a higher price, what crime have they committed?

A) insider trading
B) futures trading fraud
C) front running
D) market manipulation

Answer 3

D

Question 4

Which type of crime is believed to be pervasive in the natural energy industry?

A) market manipulation
B) insider trading
C) securities fraud
D) futures trading fund

Question 5

Imagine you are taking a test in a class where one classmate was able to access the test questions ahead of time through a friend. What type of crime in the economic system is this analogy most similar to?

A) manipulation
B) insider trading
C) broker fraud
D) futures trading fund

Question 6

What type of crime do prearranged trading and bucketing fall under?

A) market manipulation
B) insider trading
C) broker fraud
D) futures trading fund

Question 7

If an offender convinces an investor to invest on the promise that funds are backed by the Federal Reserve when in fact there is no backing for these funds, what type of crime has been committed?

A) high-yield investment schemes
B) bucketing
C) advanced fee fraud
D) securities fraud

Question 8

Which type of scam or fraud involves paying investors from future investors' payments?

A) bucketing
B) advanced fee fraud
C) Ponzi scheme
D) front running

Question 9

Which of the following is a red flag warning of a Ponzi scheme?

A) Complicated statements are sent to investors regularly.
B) Unusually high returns occur from time to time.
C) Investors receive high returns consistently.
D) Trading strategies are disclosed to investors.

Question 10

An offender working with a network of conspirators to commit crimes is an example of what pattern typical in investment fraud?

A) white-collar gangs
B) diminished effectiveness of stock market
C) negative consequences
D) high press attention

Question 11

Market manipulation by energy companies is restricted under which statute?

A) Energy Exchange Act
B) Energy Independence and Security Act of 2007
C) Energy Regulation Act of 2005
D) Oil and Energy Policy Act of 2007

Question 12

How does banking fraud differ from investment fraud?

A) Individuals engage in fraudulent behaviors to take money from a bank.
B) Bank offenders conspire to commit fraud against their large corporate clients.
C) Banking offenses include committing a broad range of investment fraud.
D) Executives in the banking industry commit mostly securities fraud.

Question 13

What do pyramid and Ponzi schemes have in common?

A) Investors must recruit other people to participate in order to make money.
B) People who organize the schemes rarely communicate with investors.
C) Investors receive information on investment strategies which builds trust in the schemes.
D) Payments made to investors come from new participants in the schemes.

Question 14

Which type of fraud occurs when individuals purchase a home they don't plan to live in and then deed the home over to another person who plans to live there?

A) flipping
B) straw buyer fraud
C) qualification's fraud
D) reverse mortgage fraud

Question 15

Which type of mortgage fraud involves investors convincing financially distressed homeowners to "hire" them to buy the home?

A) real estate agent fraud
B) equity skimming
C) foreclosure rescue scams
D) reverse mortgage fraud

Question 16

What type of fraud do builders commit?

A) They fraudulently report higher costs for building materials to increase the selling price of the home.
B) Promised extra features to the home are not included when the home is completed by the builder, increasing their profit on the home.
C) They offer excessive incentives to buyers that are not reported to the lender to increase their profit.
D) They use lower quality building materials to decrease costs of building the home and increase their profit.

Question 17

In 2014 the U.S. Department of Education offered what conclusion about student loan fraud between 2009 and 2012?

A) Loan fraud initiated by higher education institutions increased dramatically.
B) An estimated $187 million was lost to student aid fraud rings.
C) The number of fraudulent applications by students decreased.
D) Student aid fraud rings began to operate.

Question 18

What separates illegal flipping and legitimate fixing and reselling of houses?

A) Foreclosed homes are appraised at a low price and resold at a higher price.
B) The actual costs to renovate a home are inflated to increase the home's selling price.
C) An individual home is bought and resold multiple times at inflated prices.
D) Renovated homes are resold with few changes.

Question 19

Fraudulent home improvement scams fall under what category of fraud?

A) builder initiated schemes
B) real estate agent fraud
C) straw buyer fraud
D) reverse mortgage fraud

Question 20

When appraisers intentionally do not conduct a thorough determination of a home's value, they are committing what type of fraud?

A) inflated appraisal
B) windshield appraisal
C) conspiracy appraisal
D) deflated appraisal

Question 21

When does a short sale of a foreclosed home become mortgage fraud?

A) When an agent convinces a bank to sell the home at a loss and uses a co-conspirator to buy the house at a significantly higher price.
B) When the owner of the home cannot carry the mortgage and asks the bank to allow the owner to sell it at a loss to a new buyer who pays a higher price.
C) When a seller sells the home to another bank before the lender can foreclose.
D) When the buyer refuses to pay the mortgage and sells the house at a lower price than the original mortgage.

Question 22

What is a common pattern shared by mortgage and investment offenders?

A) An offender is involved with a network of participants to commit fraud.
B) The offense is against other parts of the economic system.
C) Both types of fraud are committed over a short period of time.
D) There are few consequences when an offender is caught.

Question 23

Which of the following is a warning sign for mortgage fraud?

A) low appraisals
B) increased commissions for brokers
C) using different appraisers
D) rundown homes

Question 24

An agent who fails to pay off a homeowner's original mortgage at closing by keeping the money instead of sending the funds to the lending institution is committing what type of fraud?

A) equity skimming
B) foreclosure rescue fraud
C) reverse mortgage fraud
D) straw buyer fraud

Question 25

Chunking and churning are types of mortgage fraud that involve what type of real estate activity?

A) renovating a home and reselling it
B) buying and selling multiple homes
C) home improvement
D) closing on a home

Question 26

Social networking sites, like Facebook, relate to and offer five different opportunities for white-collar crime.

Question 27

Crimes in the economic system are generally classified as investment fraud and banking fraud.

Question 28

The Commodity Exchange Act calls upon the Federal Trade Commission to treat market manipulations by petroleum and oil company insiders as false and deceptive business practices that could be subjected to fines of up to one million dollars

Question 29

Students became targets for student aid fraud as the demand for a college education increases.

Question 30

In a Ponzi scheme, the victim rarely interacts with the creator of the scheme.

Question 31

Vandalism is a consequence of mortgage fraud usually faced by businesses forced to shut down.

Question 32

Exclusively using one appraiser can be a warning sign of mortgage fraud.

Question 33

For straw buying schemes to be successful, appraisers must provide inflated appraisals.

Question 34

Misrepresenting pre-loan counseling can be a type of reverse mortgage fraud.

Question 35

Student loan fraud is often committed by students themselves by taking out college loans knowing that they don't plan to attend.

Question 36

Describe the difference between market manipulation and insider trading.

Question 37

List and define one type of futures trading fraud.

Question 38

List one of the two factors that enabled Bernie Madoff to continue running his Ponzi scheme for more than 17 years.

Question 39

Define "white-collar gangs."

Question 40

List three types of fraudulent activities that occur under reverse mortgage fraud.

Question 41

Define and discuss three types of investment fraud.

Question 42

Discuss the differences between a Ponzi and pyramid scheme.

Question 43

Describe the two types of builder-initiated fraud.