ACFE CFE - Law (Certified Fraud Examiner - Law) Practice Test 69

Question 680

A professional licensing board suspends a license immediately based on an urgent, well-supported public-safety concern without a pre-suspension hearing. Which procedural safeguard should be examined next?

  1. Automatic revocation of unrelated licenses and memberships
  2. Public disclosure of personal medical records as a substitute for a fair hearing
  3. Prompt and meaningful post-deprivation review where emergency action is permitted
  4. Treating emergency temporary suspension as permanent revocation

Explanation

Correct Answer

C:

In authorized emergencies, some systems permit temporary suspension before a full hearing but require timely subsequent process appropriate to the deprivation.

Incorrect Answers

A:

Professional oversight bodies have separate authority and procedures; emergency action by one board cannot ordinarily cancel all credentials granted by other organizations.

B:

Privacy-sensitive material must be handled under governing law, and publishing it would not provide the licensee prompt notice and an opportunity to contest the emergency order.

D:

An urgent interim restriction can be justified without a conventional predeprivation hearing in some regimes, but permanent deprivation usually requires appropriate adjudication and review.

Question 681

A corporation seeks relief against an officer for diverting a corporate opportunity without informed approval. Which company-law doctrine fits?

  1. Corporate opportunity duty
  2. Existence of fiduciary relationship
  3. Restitution of diverted assets
  4. Informed decision-making duty
  5. Res judicata in civil action

Explanation

Correct Answer

A:

A fiduciary may breach loyalty by improperly appropriating an opportunity belonging to the corporation, subject to governing disclosure and consent rules.

Incorrect Answers

B:

A fiduciary duty must arise from law or a qualifying relationship and is not imposed simply because one party trusted another commercially; the relevant step in this scenario is Corporate opportunity duty.

C:

Repayment can reduce outstanding loss but does not automatically erase earlier unauthorized use or all possible fiduciary and civil remedies; here the operative distinction is Corporate opportunity duty.

D:

Care principles examine the process used in decisions; the business-judgment presumption does not automatically excuse uninformed conduct; those prerequisites should not be confused with Corporate opportunity duty.

E:

Claim preclusion can prevent repeat litigation over claims merged in or barred by a qualifying final judgment between bound parties; corporate opportunity duty addresses the distinct legal requirement stated in the facts.

Question 682

A director approved an imprudent investment after refusing to review available risk data. Which duty is tested?

  1. Informed decision-making duty
  2. Existence of fiduciary relationship
  3. Restitution of diverted assets
  4. Corporate opportunity duty

Explanation

Correct Answer

A:

Care principles examine the process used in decisions; the business-judgment presumption does not automatically excuse uninformed conduct.

Incorrect Answers

B:

A fiduciary duty must arise from law or a qualifying relationship and is not imposed simply because one party trusted another commercially; informed decision-making duty raises a different threshold from this alternative.

C:

Repayment can reduce outstanding loss but does not automatically erase earlier unauthorized use or all possible fiduciary and civil remedies; that concept must be distinguished from Informed decision-making duty here.

D:

A fiduciary may breach loyalty by improperly appropriating an opportunity belonging to the corporation, subject to governing disclosure and consent rules; the circumstances point to Informed decision-making duty rather than that separate test.

Question 683

A manager uses corporate funds to pay personal expenses and returns them when discovered. Which civil claim may remain?

  1. Existence of fiduciary relationship
  2. Restitution of diverted assets
  3. Corporate opportunity duty
  4. Res judicata in civil action
  5. Informed decision-making duty

Explanation

Correct Answer

B:

Repayment can reduce outstanding loss but does not automatically erase earlier unauthorized use or all possible fiduciary and civil remedies.

Incorrect Answers

A:

A fiduciary duty must arise from law or a qualifying relationship and is not imposed simply because one party trusted another commercially; the inquiry instead concerns Restitution of diverted assets, with its own elements.

C:

A fiduciary may breach loyalty by improperly appropriating an opportunity belonging to the corporation, subject to governing disclosure and consent rules; the relevant step in this scenario is Restitution of diverted assets.

D:

Claim preclusion can prevent repeat litigation over claims merged in or barred by a qualifying final judgment between bound parties; here the operative distinction is Restitution of diverted assets.

E:

Care principles examine the process used in decisions; the business-judgment presumption does not automatically excuse uninformed conduct; those prerequisites should not be confused with Restitution of diverted assets.

Question 684

A company claims an adviser owes fiduciary duties, but the relationship was an arm's-length sale. Which legal threshold matters?

  1. Restitution of diverted assets
  2. Informed decision-making duty
  3. Corporate opportunity duty
  4. Existence of fiduciary relationship

Explanation

Correct Answer

D:

A fiduciary duty must arise from law or a qualifying relationship and is not imposed simply because one party trusted another commercially.

Incorrect Answers

A:

Repayment can reduce outstanding loss but does not automatically erase earlier unauthorized use or all possible fiduciary and civil remedies; existence of fiduciary relationship addresses the distinct legal requirement stated in the facts.

B:

Care principles examine the process used in decisions; the business-judgment presumption does not automatically excuse uninformed conduct; existence of fiduciary relationship raises a different threshold from this alternative.

C:

A fiduciary may breach loyalty by improperly appropriating an opportunity belonging to the corporation, subject to governing disclosure and consent rules; that concept must be distinguished from Existence of fiduciary relationship here.

Question 685

A U.S. federal defendant fails to assert a compulsory counterclaim arising from the same transaction when answering a first lawsuit. It later brings that claim separately against the former opposing party. Which civil rule can restrict the second filing?

  1. The Fifth Amendment as a blanket excuse for omitting compulsory civil counterclaims
  2. Automatic double-jeopardy protection for civil defendants
  3. The federal ban on any counterclaim involving fraud
  4. The compulsory-counterclaim rule and its preclusive effects

Explanation

Correct Answer

D:

Rule 13(a) generally requires certain mature transactionally related counterclaims in the first action, subject to exceptions; later assertion may be barred under applicable preclusion principles.

Incorrect Answers

A:

Privileges protect against specified compelled self-incrimination but do not automatically nullify civil pleading obligations or the possible preclusive effects of Rule 13(a).

B:

Double jeopardy governs successive criminal prosecutions or punishments, not ordinary civil pleading omissions.

C:

Fraud-based counterclaims may be permissible when pleaded under relevant substantive and procedural requirements.

Question 686

A second defendant, who was not a party in an earlier lawsuit, seeks to prevent a fraud claimant from relitigating a factual issue previously decided against that claimant. Which additional limit is especially important?

  1. Forbidding every civil claim involving a new defendant
  2. Fairness and procedural prerequisites for nonmutual issue preclusion
  3. Reclassifying issue preclusion as a criminal acquittal of the plaintiff
  4. Treating a collateral comment from a prior ruling as a binding decision

Explanation

Correct Answer

B:

Nonmutual issue preclusion may be considered only if the issue was actually and necessarily decided and applying it is fair under governing law; party identity and opportunity to litigate matter.

Incorrect Answers

A:

Changing parties may affect preclusion analysis but does not categorically end civil causes of action; the fairness and full-litigation conditions must be assessed.

C:

Preclusion concerns reuse of factual or legal determinations in civil litigation; an acquittal is a criminal disposition and answers a very different legal question.

D:

An incidental observation that was not actually litigated and essential to the earlier judgment ordinarily lacks the prerequisites needed for issue-preclusion effect.

Question 687

A contract includes a valid limitation-of-liability term covering negligence but not intentional fraud. Which question determines its reach?

  1. Accord and release
  2. Collateral estoppel in civil action
  3. Contractual limitation interpretation
  4. Res judicata in civil action

Explanation

Correct Answer

C:

The enforceable scope of a liability limitation depends on its language, governing law and public-policy restrictions on excluding intentional wrongdoing.

Incorrect Answers

A:

A valid agreement resolving identified claims can preclude later civil demands within its scope, subject to fraud, duress or other validity challenges; the circumstances point to Contractual limitation interpretation rather than that separate test.

B:

Issue preclusion may bar reargument of an actually litigated and essential issue when applicable mutuality and fairness conditions are met; contractual limitation interpretation is the issue raised by the described conduct.

D:

Claim preclusion can prevent repeat litigation over claims merged in or barred by a qualifying final judgment between bound parties; the inquiry instead concerns Contractual limitation interpretation, with its own elements.

Question 688

A claimant sues for a remedy barred by an enforceable contractual release covering the identical allegations. Which defense applies?

  1. Accord and release
  2. Res judicata in civil action
  3. Contractual limitation interpretation
  4. Collateral estoppel in civil action

Explanation

Correct Answer

A:

A valid agreement resolving identified claims can preclude later civil demands within its scope, subject to fraud, duress or other validity challenges.

Incorrect Answers

B:

Claim preclusion can prevent repeat litigation over claims merged in or barred by a qualifying final judgment between bound parties; here the operative distinction is Accord and release.

C:

The enforceable scope of a liability limitation depends on its language, governing law and public-policy restrictions on excluding intentional wrongdoing; those prerequisites should not be confused with Accord and release.

D:

Issue preclusion may bar reargument of an actually litigated and essential issue when applicable mutuality and fairness conditions are met; accord and release addresses the distinct legal requirement stated in the facts.

Question 689

A bank cashier testifies only about payments she personally processed. What kind of witness is she?

  1. Fact witness
  2. Technical subject-matter witness
  3. Usurpation of legal conclusion
  4. Expert witness

Explanation

Correct Answer

A:

A fact witness describes firsthand observations and admissible factual knowledge rather than providing specialized opinions merely through personal involvement.

Incorrect Answers

B:

A knowledgeable witness may explain operational facts or procedures within admissible testimony boundaries without automatically being retained as a litigation expert; that concept must be distinguished from Fact witness here.

C:

Witnesses should present reliable facts and permissible opinions rather than deciding the accused's legal guilt, a function assigned to the tribunal; the circumstances point to Fact witness rather than that separate test.

D:

Expert testimony applies qualifying specialized knowledge through reliable methods to assist the finder of fact, subject to qualification and evidence standards; fact witness is the issue raised by the described conduct.

Question 690

A forensic accountant explains a complex loss model using specialized training. What role is the accountant taking?

  1. Fact witness
  2. Usurpation of legal conclusion
  3. Expert witness
  4. Technical subject-matter witness

Explanation

Correct Answer

C:

Expert testimony applies qualifying specialized knowledge through reliable methods to assist the finder of fact, subject to qualification and evidence standards.

Incorrect Answers

A:

A fact witness describes firsthand observations and admissible factual knowledge rather than providing specialized opinions merely through personal involvement; the relevant step in this scenario is Expert witness.

B:

Witnesses should present reliable facts and permissible opinions rather than deciding the accused's legal guilt, a function assigned to the tribunal; here the operative distinction is Expert witness.

D:

A knowledgeable witness may explain operational facts or procedures within admissible testimony boundaries without automatically being retained as a litigation expert; those prerequisites should not be confused with Expert witness.

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