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Difficulty: MediumFraud and False Statements (18 U.S.C. 1033 and 1034)

An executive officer at a multi-state property insurer intentionally submits materially false financial documents to regulatory authorities to conceal the company's deteriorating surplus. While this act is subject to criminal imprisonment under federal law governing insurance fraud in interstate commerce, the U.S. Attorney General may also pursue civil actions. What is the maximum civil penalty that can be assessed against this executive per violation?

  1. A civil penalty of up to $50,000 for each violation, or the amount of compensation received for the prohibited conduct, whichever is greater.Answer
  2. B
    A strict liability fine equal to three times the amount of the concealed financial losses.
  3. C
    A mandatory penalty of $10,000 per false document, payable directly to the state insurance guaranty association.
  4. D
    Revocation of the executive's producer license nationwide with no direct monetary civil penalty allowed under federal law.

Answer

A civil penalty of up to $50,000 for each violation, or the amount of compensation received for the prohibited conduct, whichever is greater.
Under 18 U.S.C. 1034, the U.S. Attorney General may bring a civil action against anyone engaging in conduct prohibited by 18 U.S.C. 1033 (such as submitting materially false financial statements). Upon proof, the individual is subject to a civil penalty of up to $50,000 per violation, or the amount of compensation they received for the conduct, whichever is greater.

Step-by-Step Solution

1
Identify the applicable federal statutes governing the prohibited conduct described in the scenario.
Making materially false financial entries in the business of insurance affecting interstate commerce is a violation of 18 U.S.C. 1033.
Determining the correct law is required to identify the corresponding penalties.
2
Identify the corresponding section that dictates civil enforcement for this conduct.
18 U.S.C. 1034 provides the civil penalties for acts that violate Section 1033.
The question specifically asks for the civil penalty pursued by the U.S. Attorney General, distinct from criminal imprisonment.
3
Recall the specific maximum monetary penalty allowed under Section 1034.
The statute allows for a civil penalty of not more than $50,000 for each violation, or the amount of compensation the person received or offered for the prohibited conduct, whichever is greater.
This confirms the statutory limit required to answer the question accurately.

Key Concept

Civil Penalties under 18 U.S.C. 1034
Estimated Time:1m 0s
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Topics

Fraud and False Statements (18 U.S.C. 1033 and 1034)

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