🛠️ Internal Theft in Construction

 

Real-World Lessons from Embezzlement Cases That Didn’t Need to Happen..

One of the hardest conversations I ever had as a forensic construction accountant was with a contractor who’d just found out their trusted office manager/bookkeeper had stolen over $300,000.

The signs were there. But like many small construction businesses, there were no controls—just trust.
Unfortunately, trust without oversight is an open invitation to embezzlement.

𝐍𝐨 𝐜𝐨𝐧𝐭𝐫𝐚𝐜𝐭𝐨𝐫 𝐰𝐚𝐧𝐭𝐬 𝐭𝐨 𝐛𝐞𝐥𝐢𝐞𝐯𝐞 𝐭𝐡𝐞𝐢𝐫 𝐭𝐞𝐚𝐦 𝐢𝐬 𝐬𝐭𝐞𝐚𝐥𝐢𝐧𝐠 𝐟𝐫𝐨𝐦 𝐭𝐡𝐞𝐦. 𝐁𝐮𝐭 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐢𝐧𝐝𝐮𝐬𝐭𝐫𝐲, 𝐥𝐨𝐲𝐚𝐥𝐭𝐲 𝐝𝐨𝐞𝐬𝐧’𝐭 𝐚𝐥𝐰𝐚𝐲𝐬 𝐞𝐪𝐮𝐚𝐥 𝐡𝐨𝐧𝐞𝐬𝐭𝐲.

𝐘𝐨𝐮 𝐝𝐨𝐧’𝐭 𝐧𝐞𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐩𝐚𝐫𝐚𝐧𝐨𝐢𝐝—𝐣𝐮𝐬𝐭 𝐩𝐫𝐨𝐚𝐜𝐭𝐢𝐯𝐞. 𝐓𝐡𝐞 𝐞𝐚𝐫𝐥𝐢𝐞𝐫 𝐲𝐨𝐮 𝐜𝐚𝐭𝐜𝐡 𝐢𝐭, 𝐭𝐡𝐞 𝐞𝐚𝐬𝐢𝐞𝐫 𝐢𝐭 𝐢𝐬 𝐭𝐨 𝐜𝐨𝐧𝐭𝐚𝐢𝐧.

🧨 Common Embezzlement Scenarios in Construction

1. 𝐕𝐞𝐧𝐝𝐨𝐫 𝐅𝐫𝐚𝐮𝐝 - Fake vendors are set up in QuickBooks, and the thief cuts checks to themselves under a different name.
✅ What to watch for: New vendors with no W-9, vague invoice descriptions, or P.O. boxes for addresses.

2. 𝐏𝐚𝐲𝐫𝐨𝐥𝐥 𝐆𝐡𝐨𝐬𝐭𝐢𝐧𝐠 - Extra employees are added to the payroll—and “paid”—but never show up on the job site.
✅ What to watch for: Weekly payroll spikes without explanation or jobs that are consistently overstaffed.

3. 𝐏𝐞𝐫𝐬𝐨𝐧𝐚𝐥 𝐏𝐮𝐫𝐜𝐡𝐚𝐬𝐞𝐬 𝐃𝐢𝐬𝐠𝐮𝐢𝐬𝐞𝐝 𝐌𝐚𝐭𝐞𝐫𝐢𝐚𝐥𝐬 𝐏𝐮𝐫𝐜𝐡𝐚𝐬𝐞𝐬 - Bookkeeper orders "tools or materials" on company accounts and turns out to be personal expenses.
✅ What to watch for: Excess orders, no delivery receipts, or duplicate purchases across jobs.

4. 𝐃𝐢𝐯𝐞𝐫𝐭𝐞𝐝 𝐂𝐮𝐬𝐭𝐨𝐦𝐞𝐫 𝐏𝐚𝐲𝐦𝐞𝐧𝐭𝐬 - An employee collects checks but never deposits them—especially in businesses without digital payments or oversight.
✅ What to watch for: Missing deposits, altered bank reconciliations, or customers calling about "past due" notices you never sent.

🔐 𝐏𝐫𝐞𝐯𝐞𝐧𝐭𝐢𝐨𝐧 𝐢𝐬 𝐂𝐡𝐞𝐚𝐩𝐞𝐫 𝐓𝐡𝐚𝐧 𝐈𝐧𝐯𝐞𝐬𝐭𝐢𝐠𝐚𝐭𝐢𝐨𝐧
The real cost of embezzlement isn’t just the stolen money—it’s the erosion of trust, the time spent unraveling the mess, and the ripple effects on your team and clients.

Most importantly: get eyes on the books regularly. An outsourced accountant or third-party review can catch what you miss.

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