A control fraud at a cybersecurity startup.
These are almost surprisingly rare, relative to the level of operational discipline, opportunity, and trust involved in the startup ecosystem, particularly at early stages.
forbes.com/sites/davidjea…
I honestly don't know how you don't figure out "Wait, sorry, that math doesn't work, and seriously what did you just say the story was with an account at Bank of America?!" in due diligence for a 9 figure round, but be that as it may, capitalism is pretty self-correcting there.
"Aren't employees even worse off than investors?"
I mean if an employee joins a company whose CEO would do this a) they're inevitably going to have an unfun time and b) in a sense they are inadvertent beneficiaries of the fraud, not victims, because guess where salary came from.
But that due diligence thing: when I sold Bingo Card Creator, which did *not* go for $175 million with $20M+ direct to my pocket, the due diligence caught a $29.95 refund which had been paid but not reflected as an adjustment against revenue and asked what the story was.
And the DD report to the buyer included an asterisk "There was an anomaly in the revenue ledger which management has provided an explanation for. The anomaly was not material."
Imagine an accountant walking away from an explosion putting on his mirror shades.
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