Question 1

Dennis Kozlowski was the former CEO of Tyco who was charged with larceny,otherwise known as embezzlement.During his trial,Mr.Kozlowski offered testimony that all of his loans from the company that were not repaid were authorized loans that had been forgiven by the board of directors.The testimony about the board's approval:
A)shows a lack of mens rea on Kozlowski's part.
B)shows he did not have the actus reus of taking something that did not belong to him.
C)is irrelevant because the money belonged to the corporation.
D)both a and b

Accepted Answer

The testimony about the board's approval shows that Kozlowski did not have the intention to commit a wrong act (mens rea) and that he believed he had the right to use the company's money (actus reus). However, this testimony does not change the fact that the money belonged to the corporation, so choice C is incorrect.

Question 2

Which of the following laws require businesses to report cash transactions involving $10,000 or more?
A)Bank Secrecy Act
B)USA Patriot Act
C)Money Laundering Control Act
D)all of the above

Accepted Answer

All three laws (Bank Secrecy Act, USA Patriot Act, and Money Laundering Control Act) require businesses to report cash transactions involving $10,000 or more.

Question 3

The penalty for document destruction under Sarbanes-Oxley is:
A)five years.
B)ten years.
C)fifteen years.
D)twenty years.

Accepted Answer

The Sarbanes-Oxley Act imposes a penalty of up to twenty years for the destruction of documents to obstruct a federal investigation.

Question 4

Stewart Parnell,the former CEO of the now-bankrupt Peanut Corporation of America,was charged with falsifying food safety reports required by the FDA.The reports certified that his peanut base product was salmonella free.In some cases,the tests were not yet complete when the certification was done and in other cases the tests indicated the presence of salmonella.​
-The crime Mr.Parnell is charged with is shipping contaminated food.What would the federal government have to show in its case to establish the crime?
A)That Mr.Parnell did the actual shipping of the product.
B)That Mr.Parnell saw the actual product before it was shipped.
C)That Mr.Parnell knew that the product was contaminated before shipment occurred.
D)all of the above

Accepted Answer

To establish the crime of shipping contaminated food, the federal government would have to show that Mr. Parnell knew that the product was contaminated before shipment occurred. It is not necessary to show that he did the actual shipping or saw the actual product before it was shipped.

Question 5

Penalties for corporate officers under Sarbanes-Oxley include:
A)20 years for mail and wire fraud.
B)10 years for violation of fiduciary duties.
C)a maximum penalty of $5,000.
D)both a and b

Accepted Answer

Sarbanes-Oxley imposes penalties on corporate officers, including up to 20 years of imprisonment for mail and wire fraud and up to 10 years for violating fiduciary duties. The maximum penalty of $5,000 mentioned in choice C is not applicable in this context.

Question 6

Stewart Parnell,the former CEO of the now-bankrupt Peanut Corporation of America,was charged with falsifying food safety reports required by the FDA.The reports certified that his peanut base product was salmonella free.In some cases,the tests were not yet complete when the certification was done and in other cases the tests indicated the presence of salmonella.​
-Part of the case came from federal agents' examination of e-mails Mr.Parnell sent to his managers and employees.Which of the following is correct about the agents' access to those e-mails?
A)Because employees e-mails are not private, the agents did not need a warrant.
B)The agents would have been required to obtain a warrant.
C)Mr.Parnell could successfully object to the use of the e-mails because of his Fifth Amendment rights.
D)both b and c

Accepted Answer

The agents would have been required to obtain a warrant to access Mr. Parnell's emails, as the Fourth Amendment protects individuals from unreasonable searches and seizures. The fact that employees' emails may not be private does not negate the requirement for a warrant in this case. Mr. Parnell may object to the use of the emails on Fifth Amendment grounds, but it is not clear whether such an objection would be successful.

Question 7

Ann McMillan is a CPA with a public accounting firm.A client of Ann's has called to tell her that the SEC is investigating the company for possible misrepresentations in the company's financial reports.Ann is worried that she may have pushed the envelope in allowing some of the revenues of the client to be reported as they were.Ann shreds several sets of notes from her meetings with the client on revenue recognition.Ann
A)is probably guilty of obstruction of justice.
B)has done nothing wrong because the notes are privileged communication the SEC is not entitled to have.
C)has not committed obstruction of justice because the SEC has not contacted her.
D)none of the above

Accepted Answer

Ann's actions of shredding the notes relevant to the investigation indicate an attempt to destroy evidence, which could be seen as obstruction of justice. It does not matter if the SEC has contacted her or not, the act of destroying potential evidence is a criminal offense. The fact that the notes are privileged communication does not justify her actions.

Question 8

Bernie Ebbers,the former CEO of WorldCom,on trial for securities fraud and other crimes,offered as his defense that he did not know what his officers were doing.
A)Ebbers' defense is a valid one because there is no intent.
B)Ebbers' defense is a valid one because there is no actus reus.
C)Ebbers can be held liable for the actions of employees.
D)both a and b

Accepted Answer

The defense that a CEO does not know what their officers are doing is not a valid defense as CEOs can be held liable for the actions of their employees under the principle of respondeat superior. This principle holds that an employer can be held responsible for the actions of their employees if those actions are done within the scope of their employment. Therefore, Ebbers can be held liable for the actions of his employees, regardless of whether he knew what they were doing or not.

Question 9

Officer Muldoon is on foot patrol in Tempe,Arizona when he looks inside a garage (the garage door is open)and sees a statute that he knows is a rare art work that was stolen the night before from a building downtown.Officer Muldoon:
A)cannot use the sighting as a basis for a warrant.
B)cannot enter the premises to recover the statute.
C)is not permitted to look inside the garage from the street even when the door is open.
D)none of the above

Accepted Answer

Seeing the stolen statue in plain view from a public vantage point provides probable cause, allowing Officer Muldoon to pursue a warrant or potentially enter the premises under exigent circumstances to recover the stolen property.

Question 10

Jason Ormand was arrested on suspicion of sexual assault.The arresting officers did not give Jason his Miranda warnings.Jason confesses to the assault.The DNA evidence taken from the victim shows with 99% certainty that Jason was her attacker.
A)Because of the violation of Jason's rights in the officers' failure to give the Miranda warnings, the case must be dismissed.
B)The case can still proceed with the DNA evidence.
C)The case can proceed but only with the victim's testimony.
D)none of the above

Accepted Answer

While the arresting officers should have given Jason his Miranda warnings, the DNA evidence provides strong evidence of his guilt. The confession may not be admissible in court, but there is still enough evidence to proceed with the case.

Question 11

Glen Albanese was arrested after federal authorities conducted an investigation that indicated the funds that he had raised for relief efforts for Hurricane Katrina victims had been used to purchase landscaping for his home,acquire a Labradoodle pedigree dog,and buy tickets to DisneyWorld and Six Flags.Mr.Albanese had raised funds for his charity by advertising that the funds raised would be used to rebuild homes and provide scholarships for the children of victims.Instead,he met individuals who sold him the dog and furnished the landscaping in odd locations and paid them in cash in envelopes.Which of the following crimes would be applicable for the federal authorities to charge?
A)Criminal fraud
B)Embezzlement
C)A violation of SOX
D)a and b only
E)all of the above

Accepted Answer

Glen Albanese's actions constitute criminal fraud because he misrepresented the purpose of the funds to the donors, and embezzlement because he misappropriated those funds for personal use. SOX (Sarbanes-Oxley Act) primarily deals with fraudulent accounting practices in publicly traded companies, which does not directly apply to this scenario.

Question 12

Which is the new crime created by Sarbanes-Oxley?
A)mail fraud
B)obstruction of justice
C)certification of false financial statements
D)both a and b

Accepted Answer

The new crime created by Sarbanes-Oxley is certification of false financial statements, which refers to the act of certifying or signing off on financial statements that are intentionally false or misleading. While mail fraud and obstruction of justice were already existing crimes, Sarbanes-Oxley made it illegal for executives to knowingly sign off on false financial statements, with penalties including significant fines and jail time.

Question 13

Stewart Parnell,the former CEO of the now-bankrupt Peanut Corporation of America,was charged with falsifying food safety reports required by the FDA.The reports certified that his peanut base product was salmonella free.In some cases,the tests were not yet complete when the certification was done and in other cases the tests indicated the presence of salmonella.​
-Mr.Parnell and others formerly with the company had their charges issued through a grand jury.Which of the following would have been issued?
A)indictment
B)information
C)subpoena
D)warrant

Accepted Answer

An indictment is a formal charge issued by a grand jury, typically for a serious crime. In this case, Stewart Parnell and others were formally charged with falsifying food safety reports, which would warrant an indictment. The other options (information, subpoena, warrant) are not applicable to this situation.

Question 14

According to Arizona v.Gant,police officers:
A)may not search a vehicle when the owner is present.
B)may search a vehicle with the driver's permission or with a warrant.
C)may search a vehicle only with a warrant.
D)may no longer search vehicles because it is an invasion of privacy.

Accepted Answer

The ruling in Arizona v. Gant states that police officers may search a vehicle with the driver's permission or with a warrant. However, they cannot search a vehicle solely due to the fact that the driver has been arrested and is within proximity of the vehicle. The search must be justified by specific circumstances related to the arrest or evidence of the crime being investigated.

Question 15

Stewart Parnell,the former CEO of the now-bankrupt Peanut Corporation of America,was charged with falsifying food safety reports required by the FDA.The reports certified that his peanut base product was salmonella free.In some cases,the tests were not yet complete when the certification was done and in other cases the tests indicated the presence of salmonella.​
-Who else would be criminally responsible for the shipment of contaminated product?
A)board members
B)managers who shipped the product knowing it was contaminated
C)clerks who paid the shipping expenses
D)shippers who handled the goods

Accepted Answer

Managers who shipped the product knowing it was contaminated would also be criminally responsible for the shipment of contaminated product. Board members may have a level of responsibility for oversight, but it would depend on the specifics of their involvement. The clerks who paid the shipping expenses and the shippers who handled the goods may not have had knowledge of the contamination and would likely not be held criminally responsible.

Question 16

Stewart Parnell,the former CEO of the now-bankrupt Peanut Corporation of America,was charged with falsifying food safety reports required by the FDA.The reports certified that his peanut base product was salmonella free.In some cases,the tests were not yet complete when the certification was done and in other cases the tests indicated the presence of salmonella.​
-Mr.Parnell entered a not guilty plea to the charges.Which of the following would have been the forum for entering that plea?
A)grand jury
B)preliminary hearing
C)arraignment
D)initial appearance

Accepted Answer

The arraignment is the forum for entering a plea of guilty or not guilty to criminal charges. At the arraignment, the defendant is informed of the charges against him or her and asked to enter a plea.

Question 17

The "Know They Customer" program:
A)is a federal program directed at commercial bribery prevention.
B)is a federal program related to detecting money laundering.
C)is an unconstitutional federal program.
D)both a and c

Accepted Answer

The "Know Your Customer" program is a federal program aimed at identifying and detecting potential cases of money laundering by understanding the financial transactions and profile of the customers. Choice A is incorrect as it incorrectly states that the program is directed at commercial bribery prevention. Choice C is incorrect as there is no evidence that the program is unconstitutional. Choice D is also incorrect as option A is incorrect.

Question 18

Which of the following will reduce a corporation's sentence under the U.S.Sentencing Guidelines?
A)having a code of ethics
B)having ethics training
C)having ethics hotline
D)All of these can reduce a corporation's sentence.

Accepted Answer

All of these options can potentially reduce a corporation's sentence under the U.S. Sentencing Guidelines. Having a code of ethics can demonstrate a commitment to ethical behavior and promote a positive corporate culture, while ethics training can further educate employees on ethical standards and how to comply with regulations. An ethics hotline can also encourage reporting of misconduct, allowing the corporation to investigate and prevent future violations.

Question 19

What is usually the basis of RICO civil suits?
A)criminal fraud or wire fraud
B)prostitution
C)gambling
D)illegal drug sales or transportation

Accepted Answer

RICO civil suits are often based on allegations of criminal fraud or wire fraud, as these activities can be part of a pattern of racketeering activity defined under the Racketeer Influenced and Corrupt Organizations Act.

Question 20

Under Sarbanes-Oxley,auditors must retain their work papers:
A)for one year.
B)for three years.
C)for five years.
D)until they no longer represent a client.

Accepted Answer

Under Sarbanes-Oxley, auditors must retain their work papers for a minimum of five years after the end of the fiscal period in which the audit was conducted. This is to ensure that there is documentation available for any potential investigations or audits.

Quiz 8: Business Crime

Which of the following laws require businesses to report cash transactions involving $10,000 or more?

The penalty for document destruction under Sarbanes-Oxley is:

Penalties for corporate officers under Sarbanes-Oxley include:

Bernie Ebbers,the former CEO of WorldCom,on trial for securities fraud and other crimes,offered as his defense that he did not know what his officers were doing.

Officer Muldoon is on foot patrol in Tempe,Arizona when he looks inside a garage (the garage door is open) and sees a statute that he knows is a rare art work that was stolen the night before from a building downtown.Officer Muldoon:

Jason Ormand was arrested on suspicion of sexual assault.The arresting officers did not give Jason his Miranda warnings.Jason confesses to the assault.The DNA evidence taken from the victim shows with 99% certainty that Jason was her attacker.

Which is the new crime created by Sarbanes-Oxley?

According to Arizona v.Gant,police officers:

The "Know They Customer" program:

Which of the following will reduce a corporation's sentence under the U.S.Sentencing Guidelines?

What is usually the basis of RICO civil suits?

Under Sarbanes-Oxley,auditors must retain their work papers: