06 Sources of Information Flashcards

Question

A fraud examiner can request a business’s bank records even if the business is not legally obligated to comply. A. True B. False

Answer 1

A. True ## Footnote The simplest way to obtain relevant documents, such as bank records, is to request them. This usually works for fraud examiners representing large organizations that are important customers to the party with the information. Vendors and other customers of the company conducting the investigation might cooperate voluntarily if they have nothing to hide (or think that incriminating evidence cannot be found) and are anxious to maintain good relations with the company. A subject can consent to produce the records or execute a written consent for the fraud examiner to obtain such records from banks, credit agencies, or the taxing authority. If the business does not voluntarily provide the records, fraud examiners may pursue them through subpoenas and other legal processes.

Answer 2

D. Obtaining a past address of the subject should be the first step in trying to locate a subject using online records. ## Footnote To locate people using online records, fraud examiners should adhere to three principles. First, when searching for an individual, the fraud examiner should obtain a past address of the subject, and search activities should begin with that information. Second, the fraud examiner should consider the cost effectiveness of the search activity and avoid ordering online searches that yield unnecessary or impractical information. Third, the fraud examiner should know the most powerful and useful types of searches.

Answer 3

B. Pretexting with a financial institution ## Footnote Broadly defined, pretexting is the act of impersonating someone else or making false or misleading statements to obtain, sell, or buy information about a person or organization. Under the broad definition, pretexting for nonfraudulent purposes is not always illegal, but it should be used with caution. For example, if a fraud examiner is trying to find a witness or a suspect, he might call the person’s relative and pretend to be an old school friend who is requesting the individual’s phone number. This type of pretexting might be permissible. However, it is more often illegal to use pretexting to obtain certain types of information, such as financial records and phone history records. Several jurisdictions have prohibited pretexting against financial institutions, even if no fraudulent intent is present. In the context of financial institutions, pretexting is the act of obtaining or attempting to obtain customer information from financial institutions through these deceptive tactics. Some individuals used pretexting as a means to gather financial information about a subject. Pretexters would contact a financial institution and pretend to be the customer or someone else authorized to obtain financial information and basically trick the financial institution into providing information about the subject.

Answer 4

A. The information from social networking sites should be preserved so that it can be established as authentic if used in court. ## Footnote Generally, documentary evidence, including digital evidence, will not be admitted in a legal proceeding, or it will not be given much weight, unless it is established as authentic (i.e., the evidence is what it purports to be and is in the same condition as when it was seized). There are a number of techniques used to authenticate information from social media. Often, authenticity can be established through the testimony of a witness who verifies that the exhibit at issue accurately reflects what he observed on the site, and typically, the witness is the party who collected the evidence. Consequently, fraud examiners who collect evidence from social media often become a form of eyewitness, and for this reason, fraud examiners must capture, download, and preserve any useful information as soon as they discover it. They must memorialize each step of the collection process, creating a record of what they see at any point in the investigation.

Answer 5

A. The company’s business filings ## Footnote Nonpublic records—financial or otherwise—might be needed to prove fraud or to provide leads in a fraud examination. Nonpublic records include information about a person or business considered to be private and confidential. But unlike public records, nonpublic records are not available to the public, and because members of the public and, by extension, fraud examiners do not have an absolute right to see these personal records, obtaining access might be difficult or impossible. Individuals generally will not willingly give their private records to a fraud examiner, and often, the authority of institutions to disclose nonpublic records is restricted by law. Some of the most valuable types of personal records include: * Banking records * Tax records * Credit records of individuals * Phone records * Credit card account records * Personal health care records Basic business organization—whether for businesses with a single owner or large corporations—is generally governed under the laws of the country in which the entity is organized. Most jurisdictions require business entities to file various types of records that contain information that might be useful in a fraud examination, and generally, such filings are available to the public.

Answer 6

D. “Mortgage fraud” ## Footnote Users can employ advanced search operators (or Boolean operators) to gain more control over the search results. Advanced search operators are query words or symbols used in search engine queries to instruct search engines to perform special actions when executing a search. They help search engines better understand exactly what the user is looking for, and they improve a search and return relevant links faster. Placing quotation marks around a phrase will indicate to the search engine that it is to search only for pages that have the exact phrase. Thus, performing a search for “mortgage fraud” will yield pages containing that exact phrase. In Lance's case, this search would yield the best results. In some search engines, adding the minus sign before unwanted terms will produce results that do not contain the word following the “-.” So, a search for “mortgage -fraud” will return pages in which the word “mortgage” appears but will exclude pages that reference the word “fraud.” In some search engines, adding the word "OR" between two terms will yield sites in which either word appears. In some search engines, a user can insert an asterisk (*) as a placeholder for any unknown terms.

Answer 7

B. False ## Footnote In the case of consumer (individual) credit records and personal data, a growing number of jurisdictions regulate both how such information is collected and stored, as well as who may access this information and for what purpose. In many cases, the consumer must be notified and must consent to the use of the report. In jurisdictions that regulate credit information and personal data, a fraud examiner will generally need a legally acceptable reason for accessing such information from third parties. However, simply suspecting an individual of fraud is generally not sufficient grounds for obtaining credit and personal data regarding the person from a reporting agency or data controller. The specific exceptions for allowing the processing and dissemination of credit and personal data vary, but some common circumstances include when: * The individual has given consent. * It is necessary for the extension of credit or to enter into a contract with the subject. * It is necessary to protect the subject’s vital interest. * It is necessary to comply with other legal requirements. * An employer is conducting a background check for hiring or other employment purposes (consent is still required in many jurisdictions). * It is necessary to serve the public interest.

Answer 8

A. Personal telephone records ## Footnote Generally, a person’s private phone lines, such as home phone and personal mobile devices, will be considered private. Therefore, to access the records for these lines, investigators will need consent from subjects, a warrant or subpoena, or another legal order.

Answer 9

B. Public records are valuable for obtaining background information on individuals. ## Footnote Public records are documents that a governmental agency is required to keep by law or that are necessary to discharge the duties imposed by law. Public records, which can be accessed by the public and are thus available to anyone who wishes to use them, can be helpful to fraud examiners for a number of reasons. They can supply invaluable background information on employees, suspects, and witnesses. They can also be used to corroborate or refute witness statements, help investigators track the flow of stolen money or other assets, and aid efforts to recover losses. Banking, health records, and consumer credit records are typically nonpublic information.

Answer 10

C. Both domestic and foreign securities exchanges, including those in jurisdictions where the company has minimal business presence ## Footnote While jurisdictions treat the concept of securities differently, governments or self-regulatory bodies generally set rules for the issuing and trading of certain types of securities. Among the most common and important rules are disclosure requirements for companies with publicly traded securities. These rules are designed to make sure that investors are reasonably informed about stock that they purchase. Fraud examiners should keep in mind that if a public company does not report to its domestic securities regulator, it might be registered with regulators of foreign securities exchanges. Even if the company has minimal or no presence in the foreign jurisdiction, it might be registered there to benefit from foreign investment. Therefore, searching multiple securities exchanges might be necessary for conducting a thorough securities records search.

Answer 11

B. Acme must register as a business entity in foreign jurisdictions in which it wishes to conduct business. ## Footnote Most jurisdictions require that foreign corporations (corporations which were incorporated in another jurisdiction) be registered with the domestic business organization agency if the foreign corporations transact business in that jurisdiction. For example, if a corporation that was chartered in Country A wishes to transact business in Country B, it must create a business organization filing in Country B.

Answer 12

D. All of the above ## Footnote Commercial filings are records that can help fraud examiners identify personal property that an individual or business has financed. Banks, finance companies, and other lenders will generate records or recorded filings of financial transactions conducted with individuals and businesses, such as purchases of household furniture, appliances, boats and yachts, automobiles, aircraft, and business equipment. To secure repayment, the financing party retains an interest in the debtor’s property. This interest is referred to as a security interest or a charge, depending on the jurisdiction. To document this interest, the creditors might create a commercial filing, which will be publicly searchable in some jurisdictions. In jurisdictions where commercial filings are not public record, access might be restricted to those who have a relationship with the debtor or creditor. These filings might help to identify: * Name(s) of the debtor or joint debtors * Current address of the debtor * Name of the financial lender or creditor * Type of collateral pledged as security * Date of filing and continuations

Answer 13

B. Tracing and recovering assets ## Footnote Public records are documents that a governmental agency is required to keep by law or that are necessary to discharge the duties imposed by law. Public records, which can be accessed by the public and are thus available to anyone who wishes to use them, can be helpful to fraud examiners for a number of reasons. They can supply invaluable background information on employees, suspects, and witnesses. They can also be used to corroborate or refute witness statements, help investigators track the flow of stolen money or other assets, and aid efforts to recover losses. Individual tax records and consumer credit records are typically nonpublic information.

Answer 14

B. False ## Footnote In the case of consumer (individual) credit records and personal data, a growing number of jurisdictions regulate both how such information is collected and stored, as well as who may access this information and for what purpose. In many cases, the consumer must be notified and must consent to the use of the report. In jurisdictions that regulate credit information and personal data, a fraud examiner will generally need a legally acceptable reason for accessing such information from third parties. However, simply suspecting an individual of fraud is generally not sufficient grounds for obtaining credit and personal data regarding the person from a reporting agency or data controller. Some jurisdictions provide an exception to this rule when a party is conducting a background check for employment purposes, but since the suspect in this case is not an employee of the investigating party, the exception would not apply.

Answer 15

B. False ## Footnote Internal sources—those generated and kept within the subject organization—are often the only resource for certain types of documents, such as private business tax records or employee personnel files, unless the fraud examiner has the subject’s consent or a legal order to obtain those documents from other parties. Even so, a large amount of information and documentary evidence can also be gathered from external sources. External sources can be particularly crucial in helping investigators locate missing assets; locate witnesses and suspects; determine ownership in vendors, competitors, and other related parties; research the suspects’ assets and financial condition; and document the suspects' lifestyle and background information. All of this information will help an investigator build a case and will provide the basis for conducting interviews and obtaining confessions later in the investigation.

Answer 16

B. The jurisdiction’s health records agency ## Footnote Some local health records agencies maintain birth and death records. The content and availability of these records varies widely, but they might include the name of the individual, address, sex, age, race, birthplace, birth date, death place, date and time of death, government identification number, close family members, occupational information, medical certificate, and coroner’s certificate. If such records are not available locally, there might be a state/provincial or national health office that maintains them.

Answer 17

D. Boolean operators ## Footnote Boolean operators (or advanced search operators) are query words or symbols used in search engine queries to instruct search engines to perform special actions when executing a search. They help search engines better understand exactly what the user is looking for, and they improve a search and return relevant links faster. By using search operators, users can get more accurate search results and reduce the time it takes to find relevant sources.

Answer 18

D. All of the above ## Footnote The following items are basic types of public records that can commonly be accessed at the local level of government: * Building inspector records * Building permit records * Health and fire department records * Birth and death records * Public school records * Coroner’s register * Voter registration records * Utility records * Marriage records

Answer 19

B. False ## Footnote In the case of consumer (individual) credit records and personal data, a growing number of jurisdictions regulate both how such information is collected and stored, as well as who may access this information and for what purpose. In many cases, the consumer must be notified and must consent to the use of the report. In jurisdictions that regulate credit information and personal data, a fraud examiner will generally need a legally acceptable reason for accessing such information from third parties. However, simply suspecting an individual of fraud is generally not sufficient grounds for obtaining credit and personal data regarding the person from a reporting agency or data controller. The specific exceptions for allowing the processing and dissemination of credit and personal data vary, but some common circumstances include when: * The individual has given consent. * It is necessary for the extension of credit or to enter into a contract with the subject. * It is necessary to protect the subject’s vital interest. * It is necessary to comply with other legal requirements. * An employer is conducting a background check for hiring or other employment purposes (consent is still required in many jurisdictions). * It is necessary to serve the public interest.

Answer 20

B. False ## Footnote There are several ways to obtain nonpublic information. An organization may demand that a supplier, vendor, or agent turn over relevant documents as a condition of continued business. Taking this action is legal, in appropriate circumstances. Of course, management and counsel should be consulted before such demands are made, particularly if the other party has a contractual relationship with the demanding organization. An audit clause allows parties to a contract the right to access another party's books. Often, audit clauses are too narrow to provide useful information. However, if properly constructed, an audit clause can be a powerful method by which on-book information can be obtained.

Answer 21

C. In most countries, reliable court records are best obtained from the court in which the case was heard or filed. ## Footnote A great deal of litigation occurs each year, and many people might be subject to judicial action, voluntarily or not. Court records are a common direct and indirect source of information for fraud examinations. Many jurisdictions allow fraud examiners to search court records, and there are also a variety of services that compile and search such records. To perform court records searches, fraud examiners need to be familiar with the structure of the jurisdiction’s court system. Many jurisdictions implement a tiered court structure, where minor offenses and causes of action (e.g., small claims) are held in one set of courts, and more serious offenses or issues are held in another set. Similarly, a jurisdiction might have courts that are divided based on local/municipal, state/provincial, and central/federal levels of government. Court records are typically maintained by a clerk or administrative office of the court that heard the case. However, there might be an agency that maintains records from multiple court levels. Therefore, to conduct a thorough search of court records, fraud examiners might need to search at multiple court levels. It is rare for there to be a central public database that maintains all court records at every level of a jurisdiction, and there are no parties that maintain a comprehensive database of court records on a global basis (despite what some records merchants might claim).

Answer 22

B. False ## Footnote To perform court records searches, fraud examiners need to be familiar with the structure of a jurisdiction’s court system. Most jurisdictions implement a tiered court structure, where minor offenses and causes of action (e.g., small claims) are held in one set of courts, and more serious offenses or issues are held in another set. Similarly, a jurisdiction might have courts that are divided based on local/municipal, state/provincial, and central/federal levels of government. Court records are typically maintained by a clerk or administrative office of the court that heard the case. However, there might be an agency that maintains records from multiple court levels. Therefore, to conduct a thorough search of court records, fraud examiners might need to search at multiple court levels. It is rare for there to be a central public database that maintains all court records at every level of a jurisdiction, and there are no parties that maintain a comprehensive database of court records on a global basis (despite what some records merchants might claim).

Answer 23

D. intitle:"money laundering" ## Footnote Users can employ advanced search operators (or Boolean operators) to gain more control over the search results. Advanced search operators are query words or symbols used in search engine queries to instruct search engines to perform special actions when executing a search. They help search engines better understand exactly what the user is looking for, and they improve a search and return relevant links faster. The intitle:term search operator restricts results to those containing all the search terms specified in the title. So, entering [intitle:money laundering] in a search engine will return only documents that contain the words money and laundering in the title. Since Bill is searching specifically for articles on money laundering, this would be his best choice. Placing quotation marks around a phrase will indicate to the search engine that it is to search only for pages that have the exact phrase. Thus, performing a search for “money laundering” will yield pages containing that exact phrase. In Bill's case, this search would also yield good results. The site:URL search operator will return pages in which the URL contains any specified keyword(s). In some search engines, using the inanchor:term search operator returns pages that contain the specified terms in the link anchors of Web pages. In some search engines, the filetype: search operator will return items of a particular file type that match the keyword.

Answer 24

A. Personal property that is subject to a security interest or a charge ## Footnote Commercial filings are records that can help fraud examiners identify personal property that an individual or business has financed. Banks, finance companies, and other lenders will generate records or recorded filings of financial transactions conducted with individuals and businesses, such as purchases of household furniture, appliances, boats and yachts, automobiles, aircraft, and business equipment (but not real estate; these records are only for personal property). To secure repayment, the financing party retains an interest in the debtor’s property. This interest is referred to as a security interest or a charge, depending on the jurisdiction. To document this interest, the creditors might create a commercial filing, which will be publicly searchable in some jurisdictions. In jurisdictions where commercial filings are not public record, access might be restricted to those who have a relationship with the debtor or creditor. These filings might help to identify: * Name(s) of the debtor or joint debtors * Current address of the debtor * Name of the financial lender or creditor * Type of collateral pledged as security * Date of filing and continuations

Answer 25

C. Income tax records ## Footnote Some of the searches useful in developing background information for employment purposes are listed below (where permitted by law): * Credit header searches are useful in confirming address and national identification number information. * Civil court records can be searched to determine if candidates are or have been involved in legal actions. * Criminal court records may be used to uncover past criminal problems. * Fraud examiners can search tax court liens to determine if candidates have been sued by tax authorities. * Aircraft mechanics, airmen, medical licenses, and other licenses are available to ensure that basic job requirements are met in the appropriate circumstance. * Consumer credit reports may be used for employee selection, retention, and promotion. * Bankruptcy filings, tax liens, and judgments may be used to identify adverse financial matters that can serve as potential motivators for fraud, defamation, and embezzlement. * Where a prospective or current employee drives a personally owned vehicle or an employer-owned vehicle, such activity might expose the employer to liability for damages; therefore, driving records must be checked in such circumstances. * A candidate’s prior education and employment can be verified by conducting education and employment verification searches. In most jurisdictions, income tax records are not public records and cannot be accessed for pre-employment purposes.

06 Sources of Information Flashcards

(49 cards)