ACFE CFE - Law (Certified Fraud Examiner - Law) Practice Test 63

Question 620

Shareholders in a disputed acquisition seek two different kinds of court assistance. (1) They request a judicial determination of which entity owns contested shares, without presently seeking a monetary award; what form of declaratory remedy fits? (2) They also fear defendants will transfer traceable proceeds offshore before the court can decide the merits and ask for temporary protection; which provisional remedy might be considered? Choose TWO.

  1. Declaratory relief
  2. Injunction against disclosure
  3. Property-specific restitution
  4. Interim asset restraint
  5. Binding arbitration

Explanation

Correct Answers

A:

Declaratory judgments can resolve a concrete legal uncertainty about rights while leaving coercive relief for another stage if necessary; it specifically answers numbered situation 1.

D:

A narrowly justified, authorized freeze may protect future recovery but cannot be assumed available in every ordinary damages action; it specifically answers numbered situation 2.

Incorrect Answers

B:

Equitable relief may prevent imminent or continuing misuse when irreparable harm and other required criteria are shown; the separate questions call for declaratory relief and interim asset restraint, while no prompt asks for this additional rule.

C:

A proprietary remedy can follow identifiable assets under governing tracing and priority rules rather than simply create a general debt; the separate questions call for declaratory relief and interim asset restraint, while no prompt asks for this additional rule.

E:

A valid arbitration agreement can channel disputes to an arbitrator whose award is enforceable subject to limited court review; the separate questions call for declaratory relief and interim asset restraint, while no prompt asks for this additional rule.

Question 621

A commercial arbitration contract expressly assigns questions about the arbitration clause's applicability to the arbitrator. A party nevertheless asks a court to decide arbitrability. Which clause should the court analyze?

  1. A clause setting interest on late invoices
  2. A forum-selection clause directing where court motions must be heard
  3. A clear and unmistakable delegation of arbitrability
  4. A confidentiality clause governing disclosure of arbitral material

Explanation

Correct Answer

C:

Under U.S. arbitration principles, a valid clear delegation may assign certain gateway arbitrability questions to an arbitrator, subject to enforceability challenges directed to that delegation.

Incorrect Answers

A:

Payment interest determines finance charges, not who decides a dispute about the arbitration agreement's scope.

B:

Court venue provisions may channel judicial filings but do not automatically delegate gateway arbitrability to the arbitrator; a distinct enforceable delegation is needed.

D:

Confidentiality regulates information handling, not necessarily the decision-maker's authority over whether a particular dispute falls within the arbitration clause.

Question 622

During settlement talks assisted by a neutral, a participant assumes everything said in mediation will be privileged against production in every court and country. Which legal issue requires specific review?

  1. The absolute ban on negotiating without counsel
  2. An attorney-client privilege that automatically covers every mediation participant
  3. Automatic binding effect for each proposal made by the neutral
  4. Scope and exceptions of applicable mediation confidentiality and privilege rules

Explanation

Correct Answer

D:

Mediation confidentiality depends on governing statutes, rules, agreements and exceptions; it should not be promised as an unconditional worldwide evidentiary privilege.

Incorrect Answers

A:

Whether representation is required varies; participation without counsel is not categorically prohibited in every mediation.

B:

Attorney-client protection depends on confidential communications for legal advice, not merely attendance at a session with a mediator or unrelated third party.

C:

A mediator facilitates agreement but ordinarily does not impose a decision; enforceability of an actual settlement depends on applicable contract and procedural rules.

Question 623

A neutral offers an evaluation of likely court outcomes to help parties settle but does not impose a ruling. Which method fits?

  1. Mediation
  2. Binding arbitration
  3. Direct negotiation
  4. Neutral evaluation
  5. Judgment collection

Explanation

Correct Answer

D:

Early neutral assessment can inform negotiation while retaining the parties' freedom to accept or reject a settlement.

Incorrect Answers

A:

Mediation supports bargaining but does not normally produce a binding merits determination unless the parties reach agreement; those prerequisites should not be confused with Neutral evaluation.

B:

A valid arbitration agreement can channel disputes to an arbitrator whose award is enforceable subject to limited court review; neutral evaluation addresses the distinct legal requirement stated in the facts.

C:

Parties can resolve claims by consent without third-party adjudication, subject to enforceability and any mandatory approval rules; neutral evaluation raises a different threshold from this alternative.

E:

A successful judgment may still require asset tracing, garnishment, execution or cross-border recognition to produce actual recovery; that concept must be distinguished from Neutral evaluation here.

Question 624

Two companies agree to resolve a dispute directly through exchange of proposals and signed releases. Which settlement method is used?

  1. Neutral evaluation
  2. Mediation
  3. Binding arbitration
  4. Direct negotiation
  5. Judgment collection

Explanation

Correct Answer

D:

Parties can resolve claims by consent without third-party adjudication, subject to enforceability and any mandatory approval rules.

Incorrect Answers

A:

Early neutral assessment can inform negotiation while retaining the parties' freedom to accept or reject a settlement; the circumstances point to Direct negotiation rather than that separate test.

B:

Mediation supports bargaining but does not normally produce a binding merits determination unless the parties reach agreement; direct negotiation is the issue raised by the described conduct.

C:

A valid arbitration agreement can channel disputes to an arbitrator whose award is enforceable subject to limited court review; the inquiry instead concerns Direct negotiation, with its own elements.

E:

A successful judgment may still require asset tracing, garnishment, execution or cross-border recognition to produce actual recovery; the relevant step in this scenario is Direct negotiation.

Question 625

A civil judgment orders payment but the defendant has no funds in the forum. Which enforcement problem follows?

  1. Judgment collection
  2. Professional regulatory sanction
  3. Foreign-judgment recognition
  4. Garnishment or attachment
  5. Fraudulent-transfer avoidance
  6. Workplace discipline

Explanation

Correct Answer

A:

A successful judgment may still require asset tracing, garnishment, execution or cross-border recognition to produce actual recovery.

Incorrect Answers

B:

A professional regulator may impose license discipline through authorized administrative procedures and proof requirements; here the operative distinction is Judgment collection.

C:

Cross-border recovery usually requires a mechanism in the asset jurisdiction to recognize or enforce the judgment, subject to local defenses; those prerequisites should not be confused with Judgment collection.

D:

Attachment and garnishment use legal process to reach specified property or debts to satisfy judgment, with exemption and notice protections; judgment collection addresses the distinct legal requirement stated in the facts.

E:

Certain transfers made with intent to hinder creditors or for insufficient value may be challenged under applicable debtor-creditor law; judgment collection raises a different threshold from this alternative.

F:

Employment consequences follow contracts, labor law and internal procedures rather than requiring criminal conviction; that concept must be distinguished from Judgment collection here.

Question 626

A court orders a bank to freeze funds belonging to a judgment debtor under lawful enforcement procedures. Which postjudgment measure is used?

  1. Judgment collection
  2. Garnishment or attachment
  3. Foreign-judgment recognition
  4. Fraudulent-transfer avoidance

Explanation

Correct Answer

B:

Attachment and garnishment use legal process to reach specified property or debts to satisfy judgment, with exemption and notice protections.

Incorrect Answers

A:

A successful judgment may still require asset tracing, garnishment, execution or cross-border recognition to produce actual recovery; that concept must be distinguished from Garnishment or attachment here.

C:

Cross-border recovery usually requires a mechanism in the asset jurisdiction to recognize or enforce the judgment, subject to local defenses; the circumstances point to Garnishment or attachment rather than that separate test.

D:

Certain transfers made with intent to hinder creditors or for insufficient value may be challenged under applicable debtor-creditor law; garnishment or attachment is the issue raised by the described conduct.

Question 627

A debtor sells a valuable warehouse to an insider for far below market value while concealing the sale from creditors. In assessing a potentially voidable transfer, what evidentiary category helps prove actual intent?

  1. Treating the court reporter's credentials as proof of fraudulent-transfer intent
  2. Recognized badges of fraud considered together with all circumstances
  3. Reliance only on a formal transfer contract to disprove actual intent
  4. A rule that every sale below appraised value is automatically criminal

Explanation

Correct Answer

B:

Insider status, concealment and inadequate consideration can be badges supporting an inference of intent to hinder creditors; no single indicator is automatically conclusive.

Incorrect Answers

A:

A record's proper transcription may prove what parties said but does not determine whether a debtor intended to hinder creditors when transferring assets to an insider.

C:

An accurately executed contract establishes a transfer's terms but does not neutralize circumstantial evidence of concealment, insider dealing and inadequate consideration.

D:

An undervalue transfer may be voidable under legal tests but does not alone establish a completed criminal offense.

Question 628

A creditor wants to enforce a U.S. court award against an account abroad. Which separate procedure must be considered?

  1. Fraudulent-transfer avoidance
  2. Garnishment or attachment
  3. Foreign-judgment recognition
  4. Judgment collection

Explanation

Correct Answer

C:

Cross-border recovery usually requires a mechanism in the asset jurisdiction to recognize or enforce the judgment, subject to local defenses.

Incorrect Answers

A:

Certain transfers made with intent to hinder creditors or for insufficient value may be challenged under applicable debtor-creditor law; foreign-judgment recognition raises a different threshold from this alternative.

B:

Attachment and garnishment use legal process to reach specified property or debts to satisfy judgment, with exemption and notice protections; that concept must be distinguished from Foreign-judgment recognition here.

D:

A successful judgment may still require asset tracing, garnishment, execution or cross-border recognition to produce actual recovery; the circumstances point to Foreign-judgment recognition rather than that separate test.

Question 629

An employer seeks to terminate a worker for proven internal policy violations without a criminal court finding. Which path applies?

  1. Professional regulatory sanction
  2. Workplace discipline
  3. Debarment
  4. Regulatory remedial order

Explanation

Correct Answer

B:

Employment consequences follow contracts, labor law and internal procedures rather than requiring criminal conviction.

Incorrect Answers

A:

A professional regulator may impose license discipline through authorized administrative procedures and proof requirements; the inquiry instead concerns Workplace discipline, with its own elements.

C:

Debarment can exclude a contractor from future procurements under administrative standards and procedures, distinct from damages for a past contract; the relevant step in this scenario is Workplace discipline.

D:

Supervisory agencies may impose binding corrective actions under regulatory authority without proving a criminal fraud offense; here the operative distinction is Workplace discipline.

Question 630

A government-aid fraud case could produce two noncriminal sanctions affecting different actors. (1) Following a disciplinary process, a professional licensing board considers penalizing the accountant who approved false grant certifications; which professional oversight action is this? (2) A procurement agency seeks to exclude the contractor that used those certifications from eligibility for future government awards; which procurement-specific sanction could apply? Choose TWO.

  1. Workplace discipline
  2. Regulatory remedial order
  3. Debarment
  4. Professional regulatory sanction

Explanation

Correct Answers

C:

Debarment can exclude a contractor from future procurements under administrative standards and procedures, distinct from damages for a past contract; it specifically answers numbered situation 2.

D:

A professional regulator may impose license discipline through authorized administrative procedures and proof requirements; it specifically answers numbered situation 1.

Incorrect Answers

A:

Employment consequences follow contracts, labor law and internal procedures rather than requiring criminal conviction; the separate questions call for professional regulatory sanction and debarment, while no prompt asks for this additional rule.

B:

Supervisory agencies may impose binding corrective actions under regulatory authority without proving a criminal fraud offense; the separate questions call for professional regulatory sanction and debarment, while no prompt asks for this additional rule.

Certified Fraud Examiner - Law (CFE - Law) Practice Tests