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Chapter 9: White-Collar And Organized Crime 1. In prosecuting white-collar crimes in federal court, the government is usually required to prove that the accused committed the prohibited act “with criminal negligence.” Answer: False 2. Many statutes defining white-collar crimes provide civil remedies designed to compensate those who have suffered financial losses as a result of a defendant’s activities. Answer: True 3. The English common law imposed criminal liability on a corporation but not on its members. Answer: False 4. White collar-crimes are generally strict liability offenses. Answer: False 5. To obtain a conviction for mail fraud, the federal government must prove the defendant’s specific intent to defraud another party by use of the U.S. mail or some other interstate commercial carrier. Answer: True 6. The Double Jeopardy Clause prohibits the government from prosecuting a defendant for a RICO charge where the defendant has been previously convicted of one or more of the predicate crimes. Answer: False 7. The federal RICO statute brings into federal criminal law an offense that was part of English common law. Answer: False 8. Intrastate violations of securities laws are generally prosecuted under state statutes that parallel federal securities laws. Answer: True 9. To convict a defendant for violating the False Statements Act, the federal government must prove that the defendant knowingly and willfully submitted to the government a false and material statement. Answer: True 10. Insider trading in violation of federal securities laws usually occurs when a person who operates “inside” a corporation has access to material non-public information and uses that information to trade in securities without first disclosing that information to the public. Answer: True 11. White-collar crimes are nonviolent offenses characterized by deception or abuse of trust. Answer: True 12. Organized crime in America was at its weakest during the Prohibition era. Answer: False 13. In prosecuting white-collar crimes in federal court, the government is usually required to prove that the accused committed the prohibited act “knowingly and willfully.” Answer: True 14. Today, corporations can be held criminally liable for the acts their agents commit within the scope of their authority. Answer: True 15. Price-fixing and bid rigging are among the most common violations of the federal antitrust laws. Answer: True 16. To prove a criminal violation of the Sherman Antitrust Act, the government must establish that two or more entities formed a combination or conspiracy that produces, or potentially produces, an unreasonable restraint of interstate in trade or commerce with intent to violate the law. Answer: True 17. Federal law currently does not prohibit theft of computer programs or computer fraud. Answer: False 18. The Internal Revenue Code criminalizes a number of offenses, but does not make it a crime to overstate the amount of deductions on one’s tax return. Answer: True 19. Federal law makes it a crime to use the U.S. mail in furtherance of any fraudulent scheme. Answer: True 20. A state crime can be used as a predicate act of the racketeering activity charged under RICO, but only after the offense has resulted in a conviction in a state court. Answer: False 21. Since 1978 nearly every state has enacted laws specifically defining computer crimes, often including such offense(s) as ___________. a. theft of computer services b. computer fraud c. computer trespass d. all of these Answer: D 22. The Sherman Antitrust Act makes it a crime to ___________. a. enter a contract or engage in any combination or conspiracy in restraint of trade b. “churn” a customer’s brokerage account c. be involved in trading securities as an “insider” d. commit any of these acts Answer: A 23. Which one of the following statements is INCORRECT? a. Organized crime figures often attempt to gain political influence through graft and corruption. b. Protection rackets and other forms of racketeering have become the methodology of organized crime as it has infiltrated many legitimate business operations. c. All offenses committed by organized crime syndicates are by definition white-collar crimes. d. Congress enacted the Organized Crime Control Act of 1970 under its power to regulate foreign and interstate commerce. Answer: C 24. The federal law often relied on to prosecute state and local officials for extortion “under color of official rights” is known as the ___________. a. Money Laundering Control Act of 1986 b. False Claims Act c. Smith Act d. Hobbs Act Answer: D 25. The process of disguising illegal income to make it appear legitimate is known as ___________. a. insider trading b. money laundering c. structuring d. bankruptcy fraud Answer: B 26. The U.S. ___________ alone is authorized to enforce the criminal sanctions of the Sherman Antitrust Act. a. Justice Department b. Supreme Court c. Secretary of Commerce d. None of these Answer: A 27. Which one of the following statements is INCORRECT? a. Congress enacted the Federal Wire Fraud statute under its authority to regulate interstate commerce. b. Although the government may employ a variety of federal criminal statutes to prosecute those who commit tax fraud, most prosecutions are based on the Internal Revenue Code. c. A state crime can be used as a predicate act of the racketeering activity charged under RICO, but only after the offense has resulted in a conviction in a state court. d. In RICO, Congress has defined “enterprise” broadly to include “any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.” Answer: C 28. In prosecuting white-collar crimes in federal court, the government is usually required to prove that the accused committed the prohibited act “___________.” a. with malice aforethought b. with culpable negligence c. with reckless abandon d. knowingly and willfully Answer: D 29. Making a false statement to obtain government benefits or in connection with performing work for the federal government is an offense under the ___________. a. Hobbs Act b. False Statements Act c. Sherman Antitrust Act d. None of these Answer: B 30. Although the government may employ a variety of federal criminal statutes to prosecute those who commit tax fraud, most prosecutions are based on the ___________. a. Hobbs Act b. Sherman Antitrust Act c. False Statements Act d. Internal Revenue Code Answer: D 31. Which one of the following statements concerning the federal RICO law is incorrect? a. RICO does not criminalize a person for being a racketeer—it criminalizes the person’s conduct of an enterprise through a pattern of racketeering. b. A violation of a state criminal law cannot be used as a predicate act under RICO if the statute of limitations has run out on the prosecution of the state offense. c. RICO has become a basis for prosecuting white-collar criminals as well as a weapon for prosecution of organized crime. d. Unlike other criminal statutes, which are narrowly construed, RICO is intended to be liberally construed to effectuate its intended purpose. Answer: B 32. Most white-collar crimes prosecuted in federal court are violations of statutes enacted under Article I, Section 8 of the U.S. Constitution, which grants Congress power to regulate ________. a. interstate and foreign commerce b. postal matters c. bankruptcy and tax matters d. all of these Answer: D 33. To convict a person of tax perjury, the government must prove that the defendant ________. a. filed a return containing a written declaration made under penalty of perjury b. acted willfully c. did not believe that the return was true and correct as to every material matter d. all of these Answer: D 34. A person who uses interstate radio or television facilities to promote a fraudulent scheme to obtain money or property would likely be subject to federal prosecution under the __________. a. False Statements Act b. Computer Abuse Amendments Act c. Wire Fraud Statute d. Securities and Exchange Act Answer: C 35. To convict a defendant under the Money Laundering Control Act of 1986, the prosecution must establish that the defendant ___________. a. had actual knowledge of or was guilty of willful blindness to the criminal acts alleged b. should have known that the acts alleged by the government were criminal c. participated in an illegal activity while knowing the law made it an offense d. had been warned that the defendant’s business associates were under surveillance by FBI who suspected they might be laundering money illegally in foreign banks Answer: A 36. Federal statutes require financial institutions to file Currency Transaction Reports with the Secretary of the Treasury for cash transactions in excess of ___________. a. $1,000 b. $5,000 c. $10,000 d. $100,000 Answer: C 37. As well as criminal penalties, the federal RICO law provides for ________ used in criminal enterprises. a. transfer of assets b. forfeiture of property c. analysis of computers d. none of these Answer: B 38. Conduct involving identity theft or fraud may in some instances be a violation of federal acts that proscribe ___________. a. credit card and computer fraud b. wire, radio and television fraud c. mail fraud d. all of these Answer: D 39. Knowingly trafficking in counterfeit labels affixed or designed to be affixed to a copy of computer programs, motion pictures, or other audiovisual works is called ___________ and is punishable by fine or imprisonment under federal law. a. theft of trade secrets b. trademark counterfeiting c. bootlegging d. embezzlement Answer: C 40. Courts have ruled that the ___________ lause of the United States Constitution does not prohibit the government from prosecuting a defendant for a RICO charge where the defendant has been previously prosecuted for one of the predicate crimes. a. Double Jeopardy b. Equal Protection c. Self-Incrimination d. Privileges and Immunities Answer: A 41. After repealing the Eighteenth Amendment in 1933, organized crime syndicates expanded their criminal enterprises into _______. a. espionage b. narcotics c. theft of intellectual property d. all of these Answer: B 42. In addition to questions of statutory interpretation and legislative intent, defendants charged with RICO violations have asserted as defenses ___________. a. selective prosecution b. double jeopardy c. entrapment d. all of these Answer: D 43. The USA PATRIOT Act was designed to deter and punish terrorist acts in the U.S. and around the world and includes provisions ___________. a. creating new categories of offenses proscribing computer hacking b. criminalizing trafficking in passwords with the intent to defraud c. creating the crime of domestic terrorism d. all of these Answer: D 44. The necessity for the development of statutes to combat organized crime stemmed from the fact that ___________. a. common law and existing statutory offenses did not address ongoing criminal activities b. the principal activities of organized crime were not criminal offenses c. wrongful conduct by white-collar defendants was subject only to civil penalties d. none of these Answer: A 45. In some jurisdictions a corporation cannot be held criminally liable for crimes against persons unless the offense is based on the corporation’s _________ rather than on specific intent. a. actual malice b. negligence c. willful misconduct d. strict liability Answer: B 46. Trademark disputes are generally resolved in civil courts, but federal law does provide criminal penalties for trademark ___________. Answer: counterfeiting 47. The ___________ Act makes it a crime to enter any contract or engage in any combination or conspiracy in restraint of trade. Answer: Sherman Antitrust 48. Federal statutes prohibit a person from “____________” a transaction with one or more institutions to evade the requirement that cash transactions in excess of $10,000 be reported to the government. Answer: structuring 49. The term ___________ comprises patents, copyrights, trademarks, and trade secrets. Answer: intellectual property 50. ___________ crime involves offenses committed by groups who conduct their business through illegal enterprises. Answer: Organized 51. “__________” is the term applied to stock transactions in a customer’s account simply to generate commissions for the broker without regard to the customer’s investment objectives. Answer: Churning 52. Originally most prosecutions under the _______ Act were based on extortion by public officials by force, violence, or fear. Now prosecutors frequently rely on the act to prosecute state and local officials based on extortion “under color of official rights.” Answer: Hobbs 53. To prove ___________ the government must prove: (1) the defendant presented a claim seeking reimbursement from the government for medical services or goods; (2) that the claim was false or fraudulent; and (3) the accused knew of the claim’s falsity. Answer: Medicare fraud; Medicaid fraud 54. The theft or misappropriation of personal identifying information and documents commonly referred to as ___________. Answer: identity theft 55. A ___________ affords legal protection to authors of original works, which now include musical, artistic, and architectural works as well as videos, computer software, and databases. Answer: copyright 56. By the time __________ was repealed in 1933, organized crime had become involved in many phases of the economy, often pursuing its interests through illegal activities. Answer: Prohibition 57. Organized crime figures, sometimes called ___________. frequently conduct their business through illegal enterprises. Answer: racketeers 58. White-collar crimes often are prosecuted based on federal statutes enacted by Congress under its constitutional authority to regulate interstate and foreign __________. Answer: commerce 59. In 2006, the United States ratified the ___________ a treaty designed to harmonize national laws and strengthen international cooperation in with respect to computer crime. Answer: Convention on Cybercrime 60. A ___________ is a distinctive word, phrase, or graphic symbol used to distinguish a product. Answer: trademark 61. The crime of ___________ involves disguising illegal income to make it appear legitimate. Answer: money laundering 62. The ___________ Act prohibits knowingly and willfully making a false statement that is material to a matter within the jurisdiction of any department or agency of the United States. Answer: False Statements 63. The federal ________ law provides for forfeiture of property used in criminal enterprises and permits the government to bring civil actions against such enterprises. Answer: RICO 64. A __________ is a federal government grant of the right to exclude others from producing or using a discovery or invention. Answer: patent 65. A variety of federal and state statutes criminalize conduct involving misrepresentations, omissions, ___________, and other aspects of fraud in securities dealing. Answer: insider trading Prudence Prim, a famous television game show host, is at a party surrounded by Hollywood elites. An executive from a major motion picture company, one which has publicly traded stock, gives her a tip about an upcoming merger with another major motion picture company. This merger will likely increase the value of stock in each company. Prim contacts her broker in New York and completes the purchase of shares in both companies via a U.S. Mail “Express Mail” package. About a year later, the Securities and Exchange Commission launches an inquiry into all purchases of stock in these companies. Upon hearing this, Prim sells her shares of stock, and wires the profits to an offshore account in the hope of concealing the money. 66. Which of these is NOT a crime that Prudence has committed? a. insider trading b. money laundering c. churning d. wire fraud Answer: C 67. By sending her stock transaction to a broker via the U.S. mail, Prudence has: a. violated the federal mail fraud statute. b. engaged in money laundering. c. committed the crime of structuring. d. committed the crime of identity theft. Answer: A 68. If Prudence has not declared her stock profits on her income tax return, then she has: a. engaged in money laundering b. committed the crime of structuring c. committed the crime of tax fraud d. has not committed a crime Answer: C 69. Let’s say that instead of wiring her profits overseas, Prudence uses the profits to pay off her debts to the Unlucky Lady casino in Las Vegas. She is aware of the fact that paying her $100,000 debt at one time will trigger an automatic report to the IRS. So, she decides to instead make a series of $9,000 payments instead. This could be construed as: a. structuring b. churning c. identity theft d. insider trading Answer: A 70. The Supreme Court’s decision in Schmuck v. United States is most relevant to what aspect of Prudence’s behavior? a. use of the United States mail b. se of a wire transfer c. insider trading d. whether she paid taxes Answer: A Lexicon McCoy runs a brokerage firm in New York City. He amasses a fortune by paying investors alleged “profits” gleaned solely from money provided by other investors who think that McCoy is actually placing that money into legitimate stocks. For certain clients, McCoy does in fact invest in stocks, but he constantly buys and sells those stocks simply for the purpose of charging his clients a commission. Lexicon also trains a group of ten employees to implement his schemes on a wider scale. When he fears that police may be investigating his operation, he opens an offshore bank account using the social security number of an unsuspecting client. He hides $1,000,000 in that account. NARREND 71. By shifting money from one investor to another, Lexicon has generated a classic example of: a. tax fraud b. churning c. insider trading d. a Ponzi scheme Answer: D 72. By constantly buying and selling his clients’ stocks for no reason other than to generate commissions for himself,, Lexicon has engaged in: a. structuring b. churning c. a Ponzi scheme d. insider trading Answer: B 73. Which of the following is a crime that Lexicon has NOT committed? a. money laundering b. identity theft c. churning d. structuring Answer: D 74. Lexicon’s activity most closely resembles that of what figure? a. Martha Stewart b. Bernie Madoff c. The defendant in Schmuck v. United States d. The defendant in Ratzlaf v. United States Answer: B 75. Within the last ten years, Lexicon has ordered an employee to commit a murder and has also ordered an employee to kidnap a potential witness. Both crimes were designed to conceal evidence of his organization’s illegal financial activity. Based on this information, federal authorities would be most likely to use which of the following to arrest him: a. the federal mail fraud statute b. federal identity theft laws c. RICO d. federal wire fraud laws Answer: C Test Bank for Criminal Law and Procedure John M. Scheb 9781285070117, 9781285690292, 9781285546131
