Non-Criminal Actions

The civil burden of proof, litigation holds, the lawsuit process, alternative dispute resolution and administrative and regulatory actions.

5 minutes 5 Questions

In the Certified Fraud Examiner (CFE) body of knowledge, specifically within the Law section, 'Non-Criminal Actions' refer to legal remedies available to fraud victims that fall outside the criminal justice system. While criminal prosecution is brought by the government to punish wrongdoers, non-cr…

Concepts covered
Regulatory and Licensing JurisdictionCivil Burden of ProofThe Civil Lawsuit ProcessAdministrative Actions, Suspension and DebarmentLitigation Holds and Evidence PreservationAlternative Dispute Resolution
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CFE - Non-Criminal Actions Example Questions

Test your knowledge of Non-Criminal Actions

Question 1

In a civil lawsuit seeking to recover fraud losses, the plaintiff generally has to prove its claims beyond a reasonable doubt to obtain a judgment.

Correct Answer: False

Beyond a reasonable doubt is the standard of proof in criminal prosecutions, not civil actions. In a civil action, the plaintiff generally has to prove its case by a preponderance of the evidence, also called the balance of probabilities. This means showing that its version of the facts is more likely than not to be true.

Question 2

A fraud examiner's findings show that a vendor manipulated complex cost-allocation formulas when billing a company. The supply contract requires binding arbitration of disputes. The company's legal counsel worries that a generalist decision-maker could misread the technical accounting evidence. Which step BEST addresses counsel's concern?

Correct Answer: Propose an arbitrator with forensic accounting expertise

A key advantage of arbitration is that the parties can select a decision-maker with subject-matter expertise, so proposing an arbitrator with forensic accounting expertise directly reduces the risk that technical cost-allocation evidence will be misunderstood.
Requesting a jury of accounting professionals fails because arbitration does not use juries, and litigants cannot choose jurors by profession anyway. Asking a court to appoint an accounting-savvy judge ignores the binding arbitration clause, and parties cannot select their judge. Having the fraud examiner serve as neutral arbitrator creates an obvious conflict of interest, since the examiner worked for one party and developed its evidence.
Key concept: party selection of expert arbitrators as an advantage of arbitration.

Question 3

An organization's duty to preserve relevant documents and electronic data for a civil lawsuit begins when the opposing party formally files its complaint with the court.

Correct Answer: False

The duty to preserve evidence arises earlier, as soon as the organization reasonably anticipates litigation, such as on receipt of a demand letter or discovery of facts likely to lead to a claim. At that point a litigation hold should suspend routine deletion and destruction of relevant records. Waiting until the complaint is filed risks the destruction of relevant evidence and sanctions for spoliation.

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