Business Fraud Cases: Examples and How to Prevent It

Business fraud cases, especially small business fraud cases, may not always be front-page news or dominate media headlines, but the effects of fraud can be devastating. From embezzlement to phishing attacks, fraud can cripple operations, ruin reputations, and result in huge financial losses. That is why it is essential for business owners, big or small, to stay informed about current fraud trends and examples of fraud in real life. Understanding how fraud evolves helps organisations strengthen their fraud risk management systems, update policies, and deploy smarter tools to detect and prevent fraud threats.

What is Business Fraud?

Business fraud refers to intentional acts of deception carried out to gain an unfair or unlawful advantage. This can involve employees, suppliers, customers, or external fraudsters. An example of fraud in business that is quite common is the Business Email Compromise Scam, when scammers pretend to be a legitimate member of a business and trick employees into sending money or sharing sensitive information. 

Types of Business Frauds

Common types of business fraud include:

• Payroll fraud
• Invoice fraud
• Cyber fraud/phishing scams
• Financial statement fraud
• Identity theft and impersonation
• Procurement fraud

These are common types of frauds in business that companies must learn to detect early.

Real Life Examples of Business Frauds: Recent Business Fraud Cases

Learning from examples of fraud in real life helps reinforce the importance of preventive measures. Real-world business fraud scenarios demonstrate how creative and opportunistic fraudsters can be. Some notorious white collar scams examples have involved fabricated vendors, falsified books, and stolen identities.

Here are some recent business fraud cases that demonstrate developing tactics and vulnerabilities that companies need to be aware of to strengthen their fraud risk management systems.  

1. Wire Transfer Scam at Orion  (2024)

In August 2024, Orion, a chemical manufacturing firm, confirmed that it lost $60 million in a business email compromise scam (BEC). 

A whooping sum for a simple fraud modus operandi, right?

This is why it is essential to rethink every click and every tap, so you do not fall victim to cyber criminals. In this business fraud case, Orion revealed that an executive officer, who was not named, was the target and was tricked into wiring money to an illegal account. No further details were revealed, and no additional company data was compromised, but it was a huge financial loss and a stain on Orion’s public reputation. 

This incident is a textbook example of fraud in business, showcasing how even top executives can be manipulated.

Related: Wire Transfer Scams: 5 Tips to Avoid it.

2. Patrick Garret Ghost Vendor Scheme (2023)

An employee, Patrick Garret, at a local company in Indiana, United States, who was responsible for A/P and A/R ( Accounts payable and Accounts receivable), devised and executed a direct bill and fake invoice scheme to steal $87,192.26 from his employer. This is one of many disturbing accounting fraud cases involving falsified financial data to misappropriate funds.

Garrett made over 62 unauthorized purchases for personal use from Amazon and other retailers, billing them to his employer without permission. These fraudulent purchases included a car, five gas-powered motorcycles, three electric scooters, an Apple iPad Pro, an Apple iMac Pro desktop, an Apple MacBook Pro laptop, and two drones. To cover his tracks, Garrett entered false or altered details into the company’s accounting system.

Garrett also submitted fake invoices for services he claimed were rendered by Garrett Ventures, a company he founded in 2018 and where he acted as Chief Financial Officer. In reality, Garrett Ventures never provided any services to his employer.

3. Ashtar-Zadeh Brothers’ Online Resale Fraud (2024)

This complex scam highlights white collar scams examples, where fraudsters used trial programs and fake customer data for profit.  In a unique scheme involving e-commerce platforms, Nick Ashtar-Zadeh, 23, from Dracut, Massachusetts, was sentenced in 2024 for defrauding a Texas-based cosmetics company. Alongside his brother, Nika Ashtar-Zadeh, Nick ran Amazon and eBay stores from 2019 to 2021 that offered the cosmetics company’s products at competitive prices.

However, rather than buying or sourcing the products legitimately, the brothers fraudulently enrolled their customers in the company’s 30-day trial program using their names and addresses without their knowledge or consent. They provided payment methods that covered only the initial $19.95 trial fee, which later failed when additional charges were attempted after the trial period ended.

This allowed the brothers to resell the products and profit from the price gap while leaving the company to absorb hundreds of thousands of dollars in losses. Nick was sentenced to six months in prison, two years of supervised release, and ordered to pay over $180,000 in restitution. His brother Nika, who also pleaded guilty, is scheduled for sentencing in May 2025. This scam could have been prevented with a live detection test or biometric authentication. Such schemes reflect how modern financial fraud cases are evolving.

Business fraud can take different formats, and it is not limited to one method, from insider embezzlement and cyber scams to complex online resale deception. This is why businesses must remain proactive, implementing robust internal controls, educating employees, and investing in up-to-date fraud detection systems. Businesses of all kinds must take fraud prevention and detection seriously, even in industries where regulations may be less stringent, like the cosmetics and entertainment industries. Less stringent regulations do not exempt companies from fraudulent attacks; in fact, they only make such companies more vulnerable. 

Recent Small Business Fraud Cases

Recent small business frauds cases are increasing due to lack of robust systems. These small business fraud cases prove that no enterprise is too small to be targeted: Small businesses often lack robust fraud controls, making them easier targets. Some recent examples include:

1. Bank Imposter Scam Drains $50,000 from Small Business Owner (2024)

In 2024, Hyeon-Jin Kwon, a small business owner in Timonium, Maryland, lost over $50,000 in a sophisticated bank imposter scam. After her wallet was stolen during a client meeting, someone used her cards for small purchases. Days later, Kwon received a call from a person posing as a Bank of America rep, warning of a fraudulent wire transfer. A reminder that financial fraud cases can affect anyone.

Trusting the caller, who had some of her details, Kwon clicked a link and unknowingly gave the scammer access to her account. Nearly her entire checking account balance was transferred to another bank. While Chase Bank froze some of the funds, over $13,000 was withdrawn before action could be taken. Kwon recovered part of the loss through insurance but still lost a sum of $3,500.

2. Maine Woman Scammed Out of $23K by Fake Bank Rep (2024)

In 2024, a 65-year-old woman from Maine fell victim to a sophisticated scam when a caller, identifying himself as "Justin Turner" from Bank of America, contacted her. The caller claimed that her account had been compromised and urgently instructed her to transfer funds to a "safe" account to protect her money. Trusting the caller, she followed the instructions and transferred $23,000, only to later realize it was a fraudulent scheme.

This incident shows the importance of verifying unsolicited calls, especially those requesting sensitive financial actions. Experts advise that if you receive such a call, hang up immediately and contact your bank directly using the number on the back of your card or through official channels. This is one of many examples of fraud in real life impacting small operations.

This is one of many examples of fraud in real life impacting small operations.

3.  Fresh Cakes Employee Diverts ₦1.1M Through Fake Bank Account (2024)

At a Lagos-based bakery, Fresh Cakes, an employee orchestrated a fraud scheme by creating a fake bank account and diverting customer payments into it. The employee stole a total of ₦1.1 million before the fraud was discovered, again showing how small business fraud cases occur even in informal sectors.

Lessons from Recent Accounting Scandals

Recent accounting scandals provide valuable insights into how fraud is hidden in plain sight:

Some accounting scandals involve manipulating balance sheets and hiding liabilities, a core tactic in many accounting fraud cases.

From Enron to Wirecard, the biggest scams in the world often involve cooked books and collusion at the highest levels.

These business fraud cases reflect that no organisation is immune. Businesses must learn from such recent accounting scandals to ensure transparency and internal controls.

How To Protect Your Business From Fraud 

While no system can be 100% fraud-proof, you can significantly reduce the risk by taking proactive steps, which include: 

1. Establish Clear Fraud Policies

Develop and communicate anti-fraud policies to employees, suppliers, and stakeholders. Ensure there are clear protocols for reporting suspicious activity.

2. Conduct Regular Audits

Perform internal and external audits regularly to detect discrepancies or irregularities. Audit payroll, inventory, and invoices at intervals to deter fraudulent activity.  This helps spot and prevent accounting fraud cases.

3. Train Your Staff

Educate employees on common fraud schemes such as phishing, social engineering, and invoice fraud. Awareness is your first line of defense. It is also important to equip them with the necessary skills to avoid falling prey to scams. 

4. Implement Strong Cybersecurity Measures

Ensure that multi-factor authentication, secure payment gateways, encrypted communications, and anti-malware solutions are in place to protect your business's digital infrastructure. 

5. Use Fraud Detection Software

Utilize fraud detection and financial monitoring software tools that are powered by AI and machine learning to identify anomalies and flag suspicious behavior. Many sophisticated fraud patterns may be overlooked by the human eye or observation; however, with AI-powered tools, the slightest changes can be detected. 

6. Vet Employees and Vendors Thoroughly

Know Your Employee (KYE) is also as important as KYC. Conduct background checks and due diligence before onboarding staff or suppliers. Conducting KYE screening reduces the risk of insider threats or fraudulent partners and helps prevent white collar scams examples.

Related: 5 Ways to Spot Small Business Fraud

Bottom Line 

Business fraud patterns are become advanced and sophisticated, day by day. Staying vigilant is a must. Whether you’re a large corporation or a small business, understanding fraud risks, knowing the examples of frauds in business, studying recent financial fraud cases and staying ahead of trends will help protect your assets, people, and brand. Review recent cases, learn from others’ mistakes, and build a fraud-resilient culture, because prevention is always better than a cure.

Whether you're fighting small business fraud cases, reviewing accounting scandals, or studying the biggest scams in the world, the key is vigilance. With Youverify, you can stay ahead of evolving fraud trends and new vulnerabilities, screen customers and employees, monitor transactions, and report business fraud all in one place. Request a demo to learn more.