Ponzi Schemes Exam Questions

Investment Fraud and Ponzi Schemes

• A Ponzi Scheme is an investment fraud that pays existing investors with funds from new investors, often promising high returns with little to no risk.
• The scheme organizers may not invest the money, and civil and criminal trials can result from the same act.

Legal and Ethical Considerations

• It is false to assume that if something is legal, it is also moral and ethical.
• Ethics is the study of doing what's right, not just what's not wrong.

Laws and the Judicial System

• Laws regulate business enterprises, human relationships, transfer, and control of property.
• Laws are similar around the world, striving for compatibility, and are surprisingly similar.
• Laws become predictable, adaptable, and fluid while being stable.
• Underdeveloped countries find it nearly impossible to do business without the rule of law to protect property rights.
• "Stare Decisis" means "Let the decision stand," which is important in common law.

Definition of Law

• Law is a set of rules of conduct coming from a controlling authority that has binding force and effect.

The American Judicial System

• The American judicial system does not follow the "Loser Pays" rule, where the loser in a civil case must pay the winner's lawyer fees.
• Instead, the American system follows the "American Rule," where each party pays their own lawyer fees, regardless of the outcome.

State and Federal Levels

• State courts handle disputes over state law, while federal courts handle disputes over federal law.
• State judges are elected, while federal judges are nominated by the President and confirmed by the Senate.
• Supreme Court Justices are nominated by the President and confirmed by the Senate, and are appointed for life.

Judges and Justices

• Judges preside over cases in a court of law, making legal decisions based on the law and evidence presented.
• Justices are specifically members of a supreme court, whether at the state or federal level, and participate in the interpretation and application of the law.

Court Levels

• District Courts: the first to hear cases, using juries, and expected to follow legal precedent set by higher courts (appeals/supreme).
• Appeals Courts: decide questions of law, not fact, and can order "remanding the case" for retrial if the district court trial was flawed.
• Supreme Court: the highest court in any jurisdiction, deciding what cases to hear, and creating binding precedent for all lower courts.