FraudWatch Bulletin

Hot Topics:

Why Small Business Are More Susceptible to Fraud

Small businesses often operate with limited resources, making them prime targets for fraud. With fewer staff and less formal oversight, duties like accounting, inventory management, and vendor payments are frequently handled by just one or two people—creating opportunities for internal fraud to go undetected. Additionally, many small businesses lack dedicated fraud prevention policies or advanced fraud detection systems, leaving them more vulnerable. Awareness, internal controls, and employee training are essential first steps in reducing the risk.

According to the Association of Certified Fraud Examiners (ACFE) 2024 Report to the Nations:

• Small businesses (fewer than 100 employees) experience a median loss of $150,000 per fraud case — the highest among all business sizes.

• They represent nearly 28% of all reported occupational fraud cases.

• In 42% of cases, a lack of internal controls was the primary enabling factor.

With fewer resources and less formal oversight, small businesses often have one person handling multiple financial roles — making it easier for fraud to occur undetected. Add to that a lack of fraud training and minimal use of fraud detection software, and it's clear why small enterprises are at greater risk.

In the News:

Former CFO/Controller Embezzles $300,000 from her Employer

A California based furniture manufacturer fell victim to a major financial fraud scheme allegedly orchestrated by the company’s former CFO. According to court documents, the employee diverted over $300,000 from the business accounts to support her lavish lifestyle which reportedly included purchasing luxury handbags, alcohol and a luxury SUV.

The fraud was uncovered in 2024 when the company owner, preparing to close the business due to declining sales, noticed significant discrepancies while attempting to shut down the company's bank account.

An investigation by the Laguna Beach Police Department traced the missing fund to the former employee resulting in her arrest on seven felony charges including grand theft.

The incident highlights the devastating impact internal fraud can have on small businesses, including financial collapse and closure. (Read More)

Fraud Flixs:

McMillions

A six-part documentary series chronicling the stranger-than-fiction story of an ex-cop turned security auditor who rigged McDonald’s Monopoly game during the 1990s and stole $24-million. (See Trailer)

Fraud Quiz:

Test your Knowledge

Which of the following is a red flag indicating potential corporate fraud?

1. An employee consistently arrives late to work

2. An employee regularly volunteers for additional tasks and responsibilities

3. An employee displays excessive personal spending beyond their salary

4. An employee participates in team building and company events

Want the answer? You’ll have to scroll for it!

Fraud Facts:

According the Association of Certified Fraud Examiners (ACFE) 2024 Report

The Final Word:

Fraud Quiz Answers

The answer is #3 - One often-overlooked indicator of financial stress—or even potential misconduct—is when employees consistently live beyond what their salary would reasonably support. Expensive cars, luxury vacations, or high-end purchases that don’t align with known compensation can signal deeper issues.

At MPR Group LLC, our Investigation and Anti-Fraud experts are here to help you spot the red flags before they become costly problems. From proactive risk assessments to discreet internal investigations, we empower your business to stay one step ahead of fraud—because prevention is always better than damage control.

Let us protect what you’ve worked so hard to build. To learn more about our services (Click here)