Deck 6: State-Corporate Crime, Crimes of Globalization, and Finance Crime

Question 1

According to a recent California Savings and Loan Commissioner:

A) "You can't own a bank and rob it at the same time."
B) "Banks rob more robbers than robbers rob banks."
C) "Owners of banks encourage bank robbery because they are so rich."
D) "The best way to rob a bank is to own one."

Answer 1

D

Question 2

Banks have been implicated in which of the following illegal acts?

A) Tax evasion
B) Money laundering
C) Predatory lending
D) All of the above

Answer 2

D

Question 3

Which of the following is a result of policy decisions of high-level officials of major financial institutions and government agencies who are attempting realize positive outcomes or avoid losses?

A) Occupational crime
B) Insider trading
C) Crimes of globalization
D) War crimes

Answer 3

C

Question 4

The practice of violating laws and regulations which, even in the deregulated 1980s, were prohibited for S & Ls, is referred to as:

A) unlawful risk-taking
B) defaulting
C) looting
D) covering up

Question 5

Which of the following has been charged with complicity in genocidal policies, exacerbating ethnic conflict, increasing economic inequality, and displacing indigenous people in developing countries?

A) World Bank
B) International Monetary Fund
C) World Trade Organization
D) United Nations

Question 6

State-corporate crime is characterized as a _____ form of white collar crime.

A) cognate
B) hybrid
C) marginal
D) minor

Question 7

The economic crisis of 2008 was caused by which of the following?

A) The sub-prime mortgage market collapse
B) Major investment banks destroyed by massive losses
C) Widespread deregulation throughout the market
D) All of the above

Question 8

Which of the following is not an argument for or against sweatshops discussed in the text?

A) People who profit from sweatshops are complicit in a form of crime similar to slavery
B) Sweatshops do more good than harm because they give children a paying job who otherwise would commit crimes and do drugs
C) Americans are often indifferent to the fate of children working in foreign sweatshops
D) Sweatshops do more good than harm because they provide desperately poor people with a better income.

Question 9

In 2003 and 2004, Freddie Mac and Fannie Mae-as the two government-sponsored mortgage giants are known-were investigated for which of the following?

A) Money laundering
B) Predatory lending
C) Violations of the bank secrecy act
D) Various forms of accounting fraud

Question 10

Which of the following global crimes was partially financed by the World Bank?

A) CIA involvement in Latin America
B) The Great Whale Dam Project in Quebec
C) The overthrowing of Chile's democratically elected president Salvador Allende
D) The Dam at Pak Moon in Thailand

Question 11

Which of the following would not be considered an example of state-corporate crime?

A) Deception and fraud committed by a corporation against a government agency
B) An endeavor such as Iran-Contra arms involving government personnel and private arms dealers
C) Environmental crimes committed in conjunction with U.S. nuclear weapons producers, with the knowledge of government personnel
D) Defense contract frauds resulting from a cooperative enterprise between military or political officials and private defense industry contractors

Question 12

Collective embezzlement is defined by Calavita & Pontell as:

A) embezzlement of S & Ls by organized crime mobs
B) crime by a corporation against a corporation
C) embezzlement of S & Ls by a large collective of low-level employees
D) crime by a corporation against a collective of employees

Question 13

Which of the following would not be among those sustaining significant monetary losses due to the failure of the S & L thrifts in the 1980s?

A) Investors in uninsured bonds
B) Insured depositors
C) Taxpayers
D) Future prospective borrowers

Question 14

Banks earn large but ethically questionable profits from all but which of the following activities?

A) Requiring excessive balances in escrow accounts
B) Diverting unclaimed customer checks and credits into the banks' own accounts
C) Requiring customers to pay for blank checks
D) Encouraging customers to overdraw their checking accounts

Question 15

Total S & L thrift failure losses due to criminal fraud and waste have been estimated at _____, and with interest payments over several decades, the cost of resolving the crisis may eventually exceed:

A) $25 million; $100 million
B) $250 billion; $1 trillion
C) $250 million; $1 billion
D) $2.5 billion; $10 billion

Question 16

Predatory lending includes all but which of the following practices?

A) Assessment of excessively high fees
B) Taking advantage of unsophisticated borrowers
C) Undercutting other lenders by offering no-fee loans
D) Assessment of excessively high interest rates

Question 17

The fatal explosion of the space shuttle Challenger in 1986 is attributed in the text to:

A) the vindictive actions of the disgruntled employees from a private company,
B) normal accident theory
C) the decisions of a state agency which wholly disregarded warnings from a private contractor
D) the mutual interests of a state agency and a private contractor in seeing a launch through despite adverse weather conditions

Question 18

The bailout program for the failed S & Ls, initiated in the early 1990s, resulted in which of the following?

A) The recovery of most of the lost money
B) The inability of the government to unload any of the failed S & L's assets
C) New opportunities for suspect profiting by developers, speculators and investors
D) The restoration of the failed thrifts to a uniformly profitable status

Question 19

Which of the following is not a problem with investment banks as they relate to finance crime?

A) They put people with little experience in charge of billion dollar accounts
B) They are ridden with conflicts of interest
C) Their own interests and profits come before their clients'
D) They are misleading investors

Question 20

The term "finance crime" is used in this text to refer to a(n):

A) crime associated with personal finance
B) large-scale illegality which occurs in the world of finance
C) illegality involving financing of loans
D) crime involving organized crime loansharks

Question 21

What were the "junk bonds" so closely associated with Michael Milken?

A) Bonds issued by smaller, less established companies, but paying a higher interest
B) Bonds issued by blue chip corporations, paying a very small interest
C) Bonds issued by corporations attempting to defend themselves from takeover bids
D) Bonds issued by bankrupt businesses

Question 22

Which of the following charges was Martha Stewart found guilty of in 2004?

A) Obstruction of justice
B) Insider trading
C) Tax evasion
D) Predatory pricing

Question 23

Which of the following is true with regard to corporate takeovers in the 1980s?

A) They were directly encouraged by an SEC ruling holding that commissions on stock transactions must be fixed, not negotiable
B) They were regarded as a very marginal new source of income on Wall Street
C) They created unusual opportunities for insider trading profits, as the value of a company's stock invariably rises when it becomes a takeover target
D) They led to collusive deals between company management and investors because company management was prohibited from any role in buying out their company

Question 24

Which of the following could the principal insider traders of the 1980s not be said to have in common?

A) They were all greedy
B) They all worked in concert with others
C) They all came from privileged and wealthy backgrounds
D) They all ended up pleading guilty to charges

Question 25

Which of the following is not cited as a factor in the major increase of insider trading enforcement actions during the 1980s?

A) The initial introduction of SEC regulations clearly prohibiting insider trading
B) The dramatic growth in the trading capacity of institutions and corporations in takeovers
C) The introduction of new types of securities
D) A broader variety of professionals and new information networks which became involved in securities trading.

Question 26

Which of the following is not among the alleged negative consequences of corporate takeovers?

A) Ordinary shareholders in taken over corporations always lose on the value of their shares
B) Raiders, insiders, and investment bankers make the biggest gains
C) Ordinary taxpayers must make up for tax revenue lost from interest payment deductions
D) Consumers end up paying significantly higher prices

Question 27

Which of the following was a principal factor in the government's ability to successfully prosecute a series of insider trading cases?

A) The government's use of computers
B) The willingness of insider traders, once caught, to provide information about others in return for some consideration
C) The information provided by low-level clerical personnel
D) The large amount of money involved in the insider trades

Question 28

The term "churning" refers to:

A) the practice of only recommending long-term investments
B) the practice of trading in client accounts without authorization to increase brokers' commissions
C) the practice of misappropriation and theft of clients' funds
D) the practice of trading stocks only once a year

Question 29

Ivan Boesky exemplified a class of investors engaged in buying up stock in companies which were take-over targets, sometimes on the basis of insider information, known as a:

A) longhaul investor
B) capital gains speculator
C) merger manipulator
D) risk arbitrageur

Question 30

State-corporate crime is made possible by the profound interdependence of states
and corporations in the modern world.

Question 31

Which of the following was a key element in Dennis Levine's insider trading scheme?

A) Keeping the size of his insider trading on stocks very small and inconspicuous
B) Working entirely alone, without confederates or co-conspirators
C) Executing his insider trades through an off-shore bank.
D) Living modestly and unostentatiously

Question 32

The 23,000 people who bought some $200 million of Lincoln Savings bonds from Charles Keating's outfit:

A) were highly sophisticated investors who expected to make huge profits
B) were clearly aware that Lincoln S & L was a fraudulent enterprise but were attracted by high interest rates
C) were misled into believing the bonds were guaranteed by the government or absolutely safe.
D) were among the benefactors of the S & L scams because the Lincoln bonds were government-insured.

Question 33

The I.G.Farben executives convicted of crimes against humanity after World
War II received relatively light sentences.

Question 34

Fraud that occurs in connection with the sale of stocks can be classified as which of the following?

A) Finance crime
B) Contrepreneurial crime
C) Finance crime and contrepreneurial crime
D) Insider trading

Question 35

Which of the following was true with regard to the criminal prosecution of S & L cases?

A) The government had the expertise to developed and successfully prosecute the cases within months
B) A great deal of federal money was allocated, from the outset, for these prosecutions
C) Most of those convicted in S & L cases were minor players
D) The lines of demarcation between outright fraud and bad business judgment were fairly easy to establish

Question 36

Which of the following can be said with regard to insider trading?

A) It is an odd, impure form of white collar crime
B) It is in all respects a modern offense
C) It has been prohibited by common law since ancient times
D) It should not be prohibited at all, according to some conservative economists

Question 37

By the U.S.Justice Departments own guidelines, the appropriate jail time for those convicted in S & L cases was:

A) a minimum of 25 years in a federal penitentiary
B) 5 years per offense or $100,000 "stolen"
C) more than that imposed for conventional bank robbery
D) less than that imposed for conventional bank robbery

Question 38

In January 2005, New York attorney general Eliot Spitzer reported that his office had uncovered evidence of systematic fraud and market manipulation in which of the
Following industries?

A) Long-distance calling
B) Food processing
C) Automobile
D) Insurance

Question 39

The five U.S.Senators, among them John McCain, who intervened with federal regulators on behalf of Keating and Lincoln S & L:

A) admitted that they accepted cash bribes from Keating
B) were recipients of large campaign contributions from Keating
C) had past or pending direct business ties with Keating
D) had no contact or dealings with Keating but were personally opposed to federal regulatory activities

Question 40

Short-term trading, done in connection with fraudulent conduct in the mutual fund and hedge funds industries, is also known by which of the following terms?

A) "Leveling the market"
B) "Chasing time"
C) "Beating the clock"
D) "Market timing"

Question 41

The federal bailout of the S & Ls in the early 1990s ensured that no corrupt
special deals could be made.

Question 42

The low figure estimate for thrift failure losses due to criminal fraud and waste is
in the range of $250 million.

Question 43

Crimes of globalization are typically the consequence of policy decisions by high-level officials who are attempting to realize positive outcomes.

Question 44

The World Bank, set up to aid developing nations, has criticized other
international financial institutions for their complicity in crimes of globalization.

Question 45

Making high-risk loans was attractive to S & Ls in the 1980s because they
increased short-term profits and bonuses.

Question 46

The dam at Pak Moon in Thailand is cited in the text as a case of global crime in
which the World Bank was involved.

Question 47

According to the text, banks have unethically and illegally deprived customers of
far more money than bank robbers and embezzlers have stolen from banks.

Question 48

Only German corporations assisted the German Nazi government in their genocidal efforts.

Question 49

According to the text, bank regulators have often been closely allied with bank
directors and have promoted banking interests rather than the protection of bank
customers.

Question 50

New regulatory accounting practices established in the 1980s discouraged S & Ls
from taking risks.

Question 51

Private security firms operating in Iraq have been characterized as committing theft on a grand scale.

Question 52

The roles of the international financial institutions have been increasingly questioned because the privileged in developing countries have been the principal beneficiaries not the poor.

Question 53

Historically, banks have enjoyed an almost uniformly positive image.

Question 54

The complicity of rich countries in the persistent global poverty in poor countries is referred to as "systematic crime."

Question 55

People in developing countries may be especially vulnerable to globalized forms
of white collar crime.

Question 56

State-corporate crime occurs only at the international level.

Question 57

The Challenger explosion cannot be considered an example of state-corporate
crime.

Question 58

Predatory lending and money laundering are the only significant finance crimes
discussed in the text.

Question 59

The looting of the S & Ls was carried out by a new breed of promoter and
swindler who took over deregulated thrifts, while traditional thrift executives were not
implicated.

Question 60

For many decades, the Savings and Loans were a popular depository for small
savers.

Question 61

In a world of electronic trading connections and twenty-four hour markets, it is
now possible to provide all potential investors with truly equal access to material
information.

Question 62

The Insider Trading Sanctions Act, the Insider Trading and Securities Fraud Enforcement Act and the Regulation Fair Disclosure rule were all passed in an effort to prevent insider trading.

Question 63

The insider trading cases of the 1980s led to monumental fines but no prison
sentences.

Question 64

The BCCI bank was founded as the first multinational Third World bank.

Question 65

Many of the S & L fraudsters were assisted by highly paid accountants, lawyers
and appraisers.

Question 66

Once the S & L frauds were revealed, it was possible to prosecute them swiftly
and harshly.

Question 67

Employees of a corporation that has been taken over benefit from greater job
security and opportunities, although ordinary investors may lose money.

Question 68

Even conservative economists adopt the view that insider trading is illegitimate
and should be prohibited.

Question 69

According to the text insider trading is a quintessential form of white collar crime.

Question 70

The massive looting of the S & Ls was not undertaken for direct personal benefit,
but rather to finance illegal enterprises.

Question 71

Violation of trust may be a principal attribute of all white collar crime, but it virtually defines insider trading.

Question 72

Due to the availability of high-priced legal talent, neither Charles Keating nor any
of the other high-level S & L fraudsters received prison terms.

Question 73

Only a relatively few harsh prison sentences were imposed on S & L fraudsters.

Question 74

Insider trading is characterized by unusually clear statutory definitions of the
offense.

Question 75

The major rationale for prohibiting insider trading is that it creates a
fundamentally unfair market.

Question 76

The victims of the BCCI fraud were disproportionately located in Third World
countries.

Question 77

The loss of confidence in the integrity of the market is a cost of insider trading.

Question 78

Defendants in the insider trading cases pursued by the SEC and the U.S.
Department of Justice in the 1980s were often allowed to settle if they would
admit guilt.

Question 79

Common law always prohibited corporate insiders from trading on the basis of their privileged information.

Question 80

The complex and highly developed international regulatory system relating to
banking was the one constraint on the development of BCCI.