Fraud Examination, 4E
Chapter 18:
Legal Follow-Up
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Learning Objectives
 Identify important aspects
of the court system.
 Understand the civil
litigation process.
 Understand the criminal
litigation process.
 Describe the nature of an
expert witness.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Court System
State Courts
 Can handle nearly every type of case.
Governed by:
 The U.S. Constitution
 The state’s constitution
 The state’s laws
Generally handle most fraud cases.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Court System
State Courts—Lower-level trial courts
Handle trials for:
 Misdemeanors (small crimes)
 Preliminaries (pretrial issues)
 Below some dollar amount ($10,000)
 Some types include…
 Housing courts
 Small claims courts
 Probate courts
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Court System
State Courts—Higher-level trial courts
Handle trials for/having:
 Above the lower level dollar amount ($10,000)
 More serious crimes than those handles in the lowerlevel trial courts
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Court System
State Courts—Appellate Courts
Plaintiffs or defendants who are not satisfied with
the outcomes of lower or higher trial courts can
appeal court decisions to appellate or reviewing
courts.
Have low- and high-level appellate courts.
Decision made at the high-level appellate courts
are final.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Organization of State Courts
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Court System
 Federal Courts
 Handle cases the U.S.
Constitution or federal laws
give authority.
 Handle court cases that
involve federal laws or
include several states.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Court System
Federal Courts
The federal courts are established to enforce
federal laws and statutes.
 Types of federal courts include:
 Bankruptcy courts
 Tax courts
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Court System
Federal Courts
 Most fraud cases involving federal laws or statutes
(such as mail fraud, violations of the RICO Act,
banking, and securities regulations) are tried in Federal
Courts.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Organization of Federal
Courts
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Civil and Criminal Fraud
Trials
 Individuals who commit
fraud can be prosecuted
criminally, civilly, or both.
 Many times, a defrauded
company will not pursue a
case in criminal or civil
court in order to avoid
additional expenses and
negative public exposure.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Civil and Criminal Fraud
Trials
Criminal vs. Civil Law
 Criminal Law:
 Involves laws that deal with offenses of a public nature
and are generally considered to be offenses against
society as a whole.
 Civil Law:
 Body of law that provides remedies for violations of
private right.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Civil Litigation Process
 Most fraud cases follow
four stages:
 Investigation and pleadings
 Discovery
 Motion practice and
negotiation
 Trial and appeal.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Civil Litigation Process
Investigation and Pleadings
Initial Pleading/Complaint:
 Explains the alleged violation of the law and the
monetary expenses or damages sought in the case.
Motion:
 An objection to the plaintiff’s complaint that the points
out defect of the case and asks for a specific remedy.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Civil Litigation Process
Remedy:
May include dismissal of all or part of the original
complaint.
Answer:
The response to the complaint that denies or
admits various allegations.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Civil Litigation Process
 Discovery
 The legal process by which each party’s attorneys try to
gain information about the other side’s case before the
trial begins.
 Includes:
 Production Requests , Interrogatories, Requests for Admission,
Subpoenas, Depositions, Motion Practice and Negotiation
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Criminal Litigation
Process
Seven steps:
 Filing criminal charges
 Arresting and charging the defendant
 Preliminary hearings
 Arraignment
 Discovery
 Pretrial motions
 Trial and appeal
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Criminal Litigation
Process
Filing Criminal Charges
 The victim of the fraud contacts the district attorney for
the county in which the fraud was perpetrated.
 The district attorney coordinates with the local police in
the preparation of an arrest warrant or summons.
 If the case involves a federal crime, notice is also sent
to the U.S. Attorney’s Office.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Criminal Litigation
Process
Arresting and Charging the Defendant
Fourth Amendment:
 Requires that probable cause exist before a defendant
is arrested or searched.
Fifth Amendment
 Requires an indictment of a grand jury before a
defendant is held for a capital crime (one where the
death penalty or other certain punishments are
possible).
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Criminal Litigation
Process
Fifth Amendment (cont.)
 Precludes a person from being tried twice for the same
crime.
 Gives the defendant the right to refuse to incriminate
him- or herself.
 Requires the state to apply due process of law.
 Forbids the state from taking a private party’s property
without compensation.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Criminal Litigation
Process
 Preliminary Hearings
 Purpose is to determine
whether “probable cause”
exists to charge the
defendant with a crime—not
to establish his or her guilt
or innocence.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Criminal Litigation
Process
Arraignment
 The charges against the defendant are read.
 The defendant may plead guilty, not guilty, or nolo
contendere.
 A trial is held and bail is set if the defendant pleads not
guilty.
 Sentencing follows when the defendant pleads guilty or
nolo contendere.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Criminal Litigation
Process
Pretrial Motions
 Two motions that are frequently made include:
 A request that the charges be dismissed as a matter of
law.
 A request to suppress certain evidence because it was
illegally obtained.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Nature of an Expert
Witness
 An expert witness is an
individual who has unique
experience, education, or
training regarding a
subject and can offer
opinions about it.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.