She Wrote Herself 234 Checks. The Company Lost $1.5 Million and Had to Close Its Doors.

This is a true story.

A bookkeeper in Oregon wrote 234 checks to herself over time. In total, she took $1.5 million from her company. She was caught and sent to prison for 24 years.

But the damage was already done.

The company had been in business for over 100 years. It was family owned. After the fraud came out, the business went bankrupt. 85 people lost their jobs.

How Did This Happen?

The bookkeeper did everything herself.

She wrote the checks. She recorded them in the books. She was also the one who checked the bank statements.

No one else looked at her work.

She was trusted completely, and that trust was the problem.

This is called poor segregation of duties. It means one person controls too much of the money process, from start to finish.

What Bad Segregation of Duties Looks Like

• One person writes checks, records them, and reconciles the bank account

• No one reviews the books but the bookkeeper

• Vendors get approved and paid by the same person

• No one checks bank statements except the bookkeeper

• The business owner trusts one person with everything and never asks questions

What Good Segregation of Duties Looks Like

• One person enters or pays bills, and a different person approves them

• A second person reviews and reconciles the bank account each month

• The business owner or another leader gets a monthly report to review

• No single person can start and finish a payment on their own

• Vendors are checked and approved before anyone pays them

Trust Your Team. But Add a Second Set of Eyes.

Good segregation of duties does not mean you do not trust your team. It means you protect your team and your business by adding a second set of eyes.

Fraud grows in the dark. A second person looking at the books shines a light on it.

Do You Have a Second Set of Eyes on Your Books?

If you are a nonprofit or a real estate investor and you do not have a second set of eyes on your books, that is a real risk.

A fractional or interim controller can step in and add that missing layer of review, without the cost of a full time hire.

If this sounds like your business, feel free to reach out. We would be glad to talk it through with you.