CFE Exam - Financial and Fraud Schemes Questions With Correct Solutions, Already Passed!!

Illegal gratuity - Items to reward a decision after the recipient made the decision. Like a bribe Extortion - getting money by threats Economic extortion - When employee demands money through threats Kickbacks - Improper undisclosed payments made to obtain favorable treatment Three ways to prove corrupt payments - 1. Turn an inside witness 2. Secretly infiltrate ongoing transactions 3. Identify and trace corrupt payments through audit trail Inventory shrinkage - Loss of inventory resulting from error or theft. T/F: Falsely increasing perpetual inventory would only worsen the inventory shrinkage problem - True. Without manipulating the perpetual, inventory is already overstated. Increasing it even more will create a larger difference to the sheet vs. floor Insurance Premium Fraud - Lying about certain information to insurer for a lower premium Insurance Agent Fraud - An agent would steal part of the insurance premium from the insured client. Probably by charging the client more than the insurer is asking for. Insurance Claimant Fraud - Misrepresenting the circumstance of an injury to get a higher claim.Organized Insurance Fraud - United efforts of a lawyer, capper, a doctor, and claimant. Used in worker's compensation fraud and medical fraud. Ditching - Getting rid of a car to collect on an insurance policy to settle an outstanding loan. Sliding - Including additional coverage in an insurance policy without the insured's knowledge. This creates higher premium. Past Posting - First there is an accident. Then the person buys insurance, then waits a little bit then claims on the accident. Insurance agent fraud - premium fraud - Agent collects on a premium but does not give to the insurer. Insurance agent fraud - fictitious payee fraud - Agent changes beneficiary on record to a fictitious person Insurance agent fraud - fictitious death claims - Agent obtains fake death certificate and requests death claim. The agent steals the payment Indemnity Bond - Reimburses holder for any loss to third-party beneficiaries when the insured fails to fulfill a specific undertaking for the third party's benefit. Malware - Way to steal personal and business information from computers Spyware - a type of malware that collects information about users without their knowledge Dumpster diving - The act of digging through trash receptacles to find information that can be useful in an attack. Five common targets for identity theft - 1. Children2. Seniors 3. Member of military 4. College student 5. Deceased Baiting Scheme - When someone leaves a malware-infected device like a usb in the public, baiting a person to find it and put in their computer. They would label it as "year-end report" or "free prize" Social engineering - Psychological manipulation of people to trick them into revealing important information Pretexting - Act of using an invented scenario to persuade a person to release information. Vishing - Voice phishing. Using calls to trick target to reveal information Pharming scheme - Internet users are auto-directed from a legit website to an imitation Synthetic identity theft - Entirely fake personal information or combination of some real and fake to create a new identity Identity theft - Fraud steals someone's information to gain something Nonperforming Loan - One that is not being repaid. Air Loan - Loan for nonexistent property Retainage - Amount of money withheld from each draw request until construction is finally complete.Daisy chain - When a bank buys, sells, and swaps its bad loans for bad loans of another bank in order to mask or hide bad loans. Property flopping - The forced sale of a property for less than it's worth, followed by resale of the property at its true value. Usually the person benefitting is the buyer in the first "flopped" sale, who can then sell for way higher for a profit.