Accounts Payable Professionals: Two AP Fraud Cases That Expose Dangerous Internal Control Gaps

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AP News Update

NACHA fraud monitoring rule begins March 20, 2026. The first phase starts for ODFIs and large Originators, TPSPs, and TPSs, putting more focus on risk-based ACH fraud monitoring. For AP teams, vendor bank change controls and payment review processes matter even more now. Read the full APPG update → | Official NACHA summary →

Sunday, May 24, 2026

Two AP Fraud Cases That Expose Dangerous Internal Control Gaps

Years ago, we shared the story of an accounts payable clerk who was sentenced to 7 years in prison for embezzling $545,000 from a New Jersey auto dealership. It served as a stark reminder of how vulnerable an organization becomes when internal controls lapse.

Illustration of an accounts payable fraud investigation with internal control warning elements

To this day, the core risk factors remain exactly the same. Accounts payable professionals continue to find themselves on the front lines of defense against occupational fraud. Here are two recent high-profile federal cases that demonstrate why robust internal audit tracks and rigid segregation of duties are non-negotiable in any finance department:

Case #1: The $24 Million Casino AP Manager

An Accounts Payable Manager for Muscogee Nation Gaming Enterprises LLC in Oklahoma exploited top-tier AP authority to systematically siphon off more than $24 million. By altering company records and falsifying documents, the individual bypassed standard operational tracking. In October 2025, the former AP manager was sentenced to nearly 8 years in federal prison and ordered to pay millions in restitution to the former employer and the IRS.

Key Vulnerability: Lack of regular external transaction reconciliation and concentrated systemic oversight permissions.

Case #2: The Vendor Payment Manipulation

A former Accounts Payable Clerk for Décor Craft, Inc. in Rhode Island abused access to company bank codes intended for legitimate vendor wire transfers. Instead of paying suppliers, the employee rerouted partial or full balances into personal bank accounts to pay off personal creditors, manually altering the ledger to falsely show complete fulfillment. The former clerk was sentenced to 18 months in federal prison and ordered to pay over $302,000 in restitution.

Key Vulnerability: Allowing the same individual who initiates online bank wire transfers to also edit internal ledger records.

The Accounts Payable Takeaway

Whether it is a $300,000 small-business loss or a multi-million-dollar corporate exploit, the failure points are consistent: unmonitored ledger control and dual authorization gaps. To safeguard your organization, ensure that the employee inputting the invoice is never the individual releasing the wire or reconciling the end-of-month bank statement.

Editorial Note: This article was developed with the assistance of artificial intelligence and edited, reviewed, and approved by Robert Ruhno, Executive Director of the Accounts Payable Professionals Group (APPG).