principles of fraud examination€¦ · · 2016-05-02defense is under no obligation to produce...

© 2016 Association of Certified Fraud Examiners, Inc.

Law

The Criminal Justice System

© 2016 Association of Certified Fraud Examiners, Inc. 2 of 27

Arrest and Interrogation

Arrest occurs when a reasonable person would not

feel free to leave

Interrogation of Suspects

• 5th Amendment concerning self-incrimination

• Applies to compelled “testimonial statements”

• Applies to individuals, but NOT business entities

Miranda warnings

• Required if:

• (1) interrogated,

• (2) in custody, and

• (3) by government authorities


The Charging Process

Information • Charging document signed by prosecutor without GJ

involvement

• Misdemeanors by information for relatively small amounts

Indictment • Accusation in writing of a serious (felony) offense brought in

the name of government

• Signed by GJ foreman


The Charging Process

The Grand Jury • 16 to 23 people—meet secretly

• Nonadversarial proceeding—no judge or defense attorney

• Right to subpoena witnesses and records

• Target retains right against self-incrimination

Immunity • Protects suspect from potential criminal liability

• Solely at discretion of prosecution via court order

• Witness is in contempt of court if he refuses to testify

Arraignment • Plead guilty, not guilty, or nolo contendere


Prosecutorial Discretion & Plea Bargains

Discretion left to prosecuting authority to

charge defendant

• Consideration includes deterrence and strength of

case

Includes agreed-upon charges and

sentences


Corporate Deferred Prosecution Agreements

Agreement not to prosecute corporate entity

if company agrees to certain terms

Requirements include reforming corporate

governance and policies

Helps companies avoid indictment, trial,

and/or conviction

Proof Beyond a Reasonable Doubt


Pretrial Motions

For severance

To suppress evidence

To change venue

Note: separate from motions to dismiss


Pretrial Process

Discovery

• Disclosures to defendant

• Statements, prior record, documents/tangible objects,

reports, expert witness

• Brady material

• Prosecution must disclose evidence material to guilt or

punishment (exculpate)

• Disclosures by defendant

• Prosecution is entitled to defense evidence if discovery

request is made initially by the defendant


Jury Selection

Typically jury of 12 with 2 alternates • Called “petit jury”

Voir dire—asking questions of jury pool

(“venire”) to determine suitability

Challenges • Cause—unfit to fairly evaluate case

• Peremptory—remove someone without comment or justification

• May not exclude certain groups


Opening Statements

After jury selection and introductory remarks, prosecution begins with opening statement

Explains charges, outlines evidence, and tells jury it will ask for a verdict of guilty

Prosecution is not permitted to argue the case at this point


Presenting Evidence

Prosecution presents case first and has burden of

proving every element of the offense beyond a

reasonable doubt

Defense is under no obligation to produce any

evidence

If defendant elects to testify, he is subject to cross-

examination


Legal Defenses

Alibi

Entrapment

Mistake

Insanity

Necessity/Justification

Protection of property

Self-defense

Protection of others


Closing Arguments

Prosecution argues first and is held to a high

standard

May not misstate the evidence, express a

personal opinion as to the defendant’s guilt

or the credibility of witnesses, or otherwise

make prejudicial or inflammatory remarks

Defense focuses on attacking motives and

credibility of government witnesses


Sentencing

Following guilty verdict, sentence must be imposed without unnecessary delay

Pre-sentence report • Victim impact statement

• Types of sentences • Fines

• Incarceration

• Probation

• Parole


Appeal

Only convicted defendant can appeal; government cannot appeal an acquittal

Defendant is advised of his right to appeal at the sentencing hearing • Notice of appeal must be filed shortly thereafter

Generally, assignments made on objections only • Failure to object timely can waive any error claim

Generally, “harmless error” is okay


Sample Prep Question

1. Only the grand jury can decide to give a

potential witness immunity from criminal

prosecution.

A. True

B. False


Correct Answer: B

A decision to immunize a witness is solely within the discretion of the prosecution. If the application meets statutory requirements, the court must grant the order. Although it is legally permissible to prosecute an immunized witness on the basis of other testimony and evidence, as a matter of practice this is seldom done because of policy considerations and the difficulty of demonstrating—as the law requires—that the subsequent prosecution was not in any way based on the compelled testimony.



2. The _________ is the proceeding in which the indictment or information is read in open court and the defendant pleads to the charges.

A. Sentencing hearing

B. Arraignment

C. Summary judgment

D. Jury charge hearing


Correct Answer: B

The arraignment takes place in open court,

and consists of the reading of the charges in

the indictment or information. The defendant

may plead guilty, not guilty, or nolo

contendere.



3. Wilson, a CFE, is employed by Acme, Inc., a private

company. He wants to conduct an admission-seeking

interview of Robinson, a fraud suspect. Wilson must

advise Robinson of his Miranda warnings:

A. If Wilson accuses Robinson of a crime

B. If Robinson is a member of a labor union

C. Only if Robinson will be arrested following the

interview

D. Wilson is not required to advise Robinson of his

rights under Miranda


Correct Answer: D

Wilson is not required to give Robinson Miranda

warnings under any circumstances. Miranda

warnings are only required if the suspect is (1)

interrogated (2) while held in custody (3) by

government authorities. The warnings are not

required at all when a person is being

questioned by private parties; however, some

fraud examiners may choose to do so as a

matter of policy.



4. The pretrial process during which the court or the

attorneys for both parties interview a group of potential

jurors and determine whether they are impartial and

suitable to serve on the jury is called voir dire.

A. True

B. False


Correct Answer: A

Most criminal cases are tried by a jury of 12 with

at least two alternates. In the process of voir

dire, the parties or the court may ask questions

of prospective jurors to determine their suitability

or impartiality. There are three ways potential

jurors may be dismissed: by the judge’s

discretion, for cause, or through a peremptory

challenge.

© 2016 Association of Certified Fraud Examiners, Inc.

Law

Basic Principles of Evidence


Definition of Evidence

Anything perceivable by the five senses that is

invoked in the process of arguing a case; can

include documents, spoken recollections, data,

and physical objects

Anything that relates to the proving or

disproving of a fact that is of consequence to a

case


Basic Principles

Three Forms

• Testimonial—oral statements

• Real (physical objects)

• Demonstrative (exhibits prepared especially for

trial to illustrate a point, such as a chart or graph)

Direct versus Circumstantial Evidence

• Direct—testimony that proves or disproves a fact

in issue directly

• Circumstantial—tends to prove or disprove facts

in issue indirectly, by inference


Relevance

Evidence is relevant if it tends to make some

fact at issue more or less likely than it would be

without the evidence

• Relevancy depends on circumstances

• Evidence may be relative for one thing and not

another

• Evidence of other crimes may be admissible to prove motive, intent, etc.

Relevant evidence may be excluded if:

• Unduly prejudicial

• Confuses or misleads the jury

• Causes unnecessary delay, waste of time, or cumulative


Exhibits

Must be properly

authenticated—it is

what it purports to be

Writings

• Who authored it

Digital records

• Typically from custodian


Exhibits

The “Best-Evidence” Rule

• Original Writing Rule

• Reliable and Accurate

Chain of Custody

• Who had it?

• What did they do with it?


Impeachment

Calls credibility into question

Is influenced by bias or self-interest

Made prior inconsistent statements

Has been convicted of a felony or equivalent

crime

Has a reputation for untruthfulness


Attorney-Client Privilege

Client retained counsel to provide legal advice

Communicated on a confidential basis

Waiver occurs when client voluntarily

discloses the communication

• But generally doesn’t include consultants

• Therefore, consultants can communicate with

attorney & client and not violate privilege


Work-Product Doctrine

Protects many documents from discovery

that are prepared in anticipation of litigation

or for trial—includes consulting experts

Doctrine extends to information prepared by

the party or party’s attorneys, as well as

third-party consultants

Protection applies to documents & things

prepared “in anticipation”

• Normal investigation items typically not included



1. The U.S. attorney work-product doctrine

extends to not only information and

documents prepared by a party or the party’s

attorneys, but also by third-party consultants

and examiners hired by the attorneys.

A. True

B. False


Correct Answer: A

The protection offered by the U.S. attorney work-product

doctrine extends to not only information and documents

prepared by a party or the party’s attorneys, but also by

third-party consultants and examiners hired by the

attorneys. For instance, communications with and any

work or analysis done by an expert with whom the

attorney has consulted is protected as work product,

although that protection will be waived if the expert is

called to testify as an expert witness at trial.



2. The process of determining who had possession of physical evidence and what they have done with it is known as establishing the:

A. Basis for appeal

B. Foundation

C. Chain of custody

D. None of the above


Correct Answer: C

Chain of custody refers to (1) who has had

possession of an object and (2) what

they’ve done with it. It is simply a means of

establishing that there has not been a

material change or alteration to a piece of

evidence.



3. For a document to be admitted into evidence, it

must be properly ________; that is, the party

offering the document must produce some

evidence to show that it is, in fact, what the

party says it is.

A. Authenticated

B. Cross-examined

C. Tested

D. Diagrammed


Correct Answer: A

In the United States, exhibits are inadmissible unless they are relevant and established as authentic. Thus, to be admissible at trial, evidence, other than testimonial evidence, must be properly authenticated; that is, the party offering the item must produce some evidence to show it is, in fact, what the party says it is and to show it is in the same condition as when it was seized.

principles of fraud examination€¦ · · 2016-05-02defense is under no obligation to produce...

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