Chapter One

Nature of Fraud

THROUGHOUT HISTORY, THE DEVELOPMENT OF NEGOTIABLE instruments, from cowrie shells to plastic cards, has led to the creation of a set of rules and conventions for trade and the promotion of smooth and orderly commercial interactions among individuals and countries. The breaking of these rules and conventions helps white-collar criminals make a living—in some cases a fortune—while evading discovery. In many countries, the courts and judicial system do not afford economic crimes the priority of crimes involving violence.


Refer to Chapter 1 in Corporate Fraud and Internal Control: A Framework for Prevention.

1. Fraud itself is a ___________ concept existing within the criminal laws of virtually every civilized country.
2. In most countries, fraud may be deemed to occur when these individual elements exist: An ___________ representation about a ___________ fact or event is ___________ made by an individual or organization.
3. For fraud to exist, such representation ___________ be believed by the person or organization whom the representation was made.
4. For fraud to exist, the victim ___________ suffer the possibility of ___________ or ___________ as a result of the misrepresentation.
5. Under South African law, ___________ proprietary prejudice is not necessarily required for fraud.
6. Under Arkansas law, occupational fraud ...

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