Position of Trust
What do you do when someone you trusted defrauds your company?
In July 2026, a controller in the Eastern District of Michigan pleaded guilty to embezzling from his employer. According to court records, he abused his position of trust by creating fictitious vendors, causing checks to be issued to those fake businesses, and depositing the funds into bank accounts he controlled. The scheme resulted in more than $1.1 million in losses to the company.
Public court filings indicate that a Ford F-150 purchased with proceeds from the scheme was seized, although it is not clear how the remainder of the stolen funds were spent.
Cases like this are an important reminder that fraud prevention depends on strong internal controls—not simply trust in employees.
Here are three practices that can help reduce the risk of this type of fraud:
Segregate key financial duties. No single employee should control the entire payment process. The person who approves new vendors should be different from the person who approves invoices or processes payments. Separating responsibilities makes it much more difficult for one individual to create and conceal a fraudulent scheme.
Develop a budget and monitor it regularly. Budgets are not just planning tools—they are also fraud detection tools. If expenses in a particular category begin to exceed expectations, investigate the reason. Significant unexplained variances may reveal operational issues, accounting errors, or, in some cases, fraudulent activity.
Be aware of changes in an employee's lifestyle—but use caution. A dramatic improvement in an employee's apparent financial situation without an obvious explanation can be a potential warning sign. However, lifestyle alone is never proof of misconduct. Employees may have legitimate reasons for increased wealth, such as a spouse's income, an inheritance, investments, or other personal circumstances. Instead, treat lifestyle changes as one factor that may warrant closer attention only when combined with other indicators of possible fraud.
No internal control system can eliminate fraud entirely, but thoughtful oversight, segregation of duties, and regular financial review can significantly reduce the opportunity for someone to exploit a position of trust.
