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Exam CFE - Financial Transactions and Fraud Schemes All Questions

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Exam CFE - Financial Transactions and Fraud Schemes topic 1 question 210 discussion

Which of the following situations describes a red flag that might be indicative of loan fraud?

  • A. A change order is submitted at the same time as a draw request.
  • B. A loan file contains missing documents that are later found in another file.
  • C. The number of change orders for a small project continues to increase.
  • D. There is low turnover in a real estate developer's personnel.
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Suggested Answer: B 🗳️

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_denw
1 week ago
Selected Answer: C
Frequent or excessive change orders, especially on a small project, can be a red flag of loan fraud. It may indicate attempts to: Inflate costs Draw more funds than needed Disguise improper or unauthorized use of loan proceeds
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