Corporate Fraud and Internal Control Workbook: A Framework for Prevention

Chapter Eleven

Legal Issues Surrounding Fraud

ANSWERS: FILL IN THE BLANKS

1. precedence, customs

2. Common law, judicial judgments

3. adversarial exchange

4. legislation, inquisitors

5. constitutions

6. quality

7. Direct

8. tangible objects

9. Documentary

10. Demonstrative

11. documentary

12. documentary, ability

13. inadmissible

14. victim restitution

15. proceeds, substitute, equivalent value

16. contract, secured, unsecured

17. electronically

18. audit trail

19. freezing order

20. third-party disclosure orders, innocently

21. actual, potential, incriminating documents

22. transferred, transmuted, money, property

23. Piercing the veil

24. reduce costs

25. nonemployee

26. employee deception

SOLUTIONS: SHORT-ANSWER QUESTION

1. Define the difference between actual and punitive damages.

• Actual damage usually involves the amount of direct loss that can be shown in court
• Punitive damages usually are assessed by the court based on other issues than provable cash losses and may, in some cases, be considerably higher than the amount of money directly attributable to the fraud itself. Loss of customer confidence or even embarrassment may be taken into consideration.

2. In some cases companies may knowingly seek to evade labor legislation by classifying workers as independent contractors ...