Last week Tai Lopez was accused of running a Ponzi Scheme.
If you’re not familiar who Tai Lopez is, consider yourself blessed.
Tai Lopez became known as the guy who ran a YouTube ad with his sports cars, but then pivoted to bookshelves in his garage to say he valued “knowledge” more than the nice things.
All while renting mansions and luxury toys to sell his course on acquiring “knowledge.”
Now he and his partner are now facing SEC charges for allegedly running a $112 million Ponzi scheme. They bought distressed retail brands like RadioShack and Pier 1 Imports, raised money from investors, promised big returns… but the businesses never turned a profit. Instead, they allegedly used new investor money to pay old investors while siphoning millions for themselves.
Looking back, the signs were obvious:
- Big promises, no financials. All sizzle, no steak. Investors were told about “huge potential” without detailed proof.
- Wrong credentials. A COO with no relevant experience. Family members in key roles with inflated resumes.
- High-pressure tactics. Urgency and exclusivity instead of patient explanation.
I did a YouTube video on it late last week to point out these signs.
From the outside, it feels absurd anyone fell for it. The red flags were everywhere.
But here’s the thing: it’s easy to spot fraud when it’s splashed across headlines or wrapped in neon lights. It’s much harder when it’s right under your nose.
And that’s the real danger for small and medium business owners.
I spoke about this last year when I wrote about my friend, Gabe Trevizo, who was stolen from by a close family friend. His long-time admin inflated payroll to the tune of thousands of dollars and faked a car accident and hospitalization to run off.
In SMBs, fraud thrives not because owners are stupid, but because they’re human. They:
- Trust people they’ve worked with for years.
- Get distracted with growth, customers, or a much-needed vacation.
- Give broad system access because “it’s faster that way.”
- Allow one person to handle everything from deposits to reconciliations.
As Gabe put it: “Heavy is the head that wears the crown. Ultimately, I had to look in the mirror. It was my responsibility.”
So, how do we avoid being a victim? While we can’t eliminate the possibility, we can make it more difficult. Today, we’re going to talk about the three “c’s” to prevent fraud.
THE 3 C’S OF FRAUD PREVENTION
Fraud prevention is about making your business the hardest target on the block. Employees and outsiders alike tend to go for the easy opportunities. Remove those, and you protect not just yourself, but your team.
Here’s how.
CULTURE
Fraud prevention starts with what people see as “normal” in your business. If integrity is celebrated, reinforced, and non-negotiable, it raises the bar for everyone.
Practical steps:
- Tell integrity stories. Highlight when someone did the right thing, even at a cost.
- Be consistent. If you say “integrity matters” but look the other way on little cheats, people learn that values are optional.
- Create a real reporting channel. An “open door” isn’t enough. Give employees an anonymous form, hotline, or HR process that feels safe.
- Reward curiosity. If someone flags an odd transaction, treat it as a win, not a nuisance.
Do This This Week: Add a 2-minute “integrity moment” to your next meeting. Share a story or example that reinforces honesty as the default.
CONTROLS
Culture sets the tone, but controls create the guardrails. Most fraud happens not because someone masterminds it, but because they stumble into an opportunity and can’t resist.
I’m a firm believer that we’re all capable of much worse than we think. We never know what the future brings and if we think we’re infallible, it’s that moment that we’re actually not.
So, we need to setup systems in the business. Some things to consider:
Banking & Payments
- Set dual approvals for payments over a certain threshold (e.g., $5k).
- Use view-only access for staff who need visibility but not authority.
- Set up bank alerts for unusual activity.
Payroll
- Don’t let the same person handle payroll setup and approvals.
- Review gross-to-net change reports every pay run.
- Spot-check timesheets against job schedules or project calendars.
Vendors & Accounts Payable
- Require independent approval for all new vendors.
- Three-way match for inventory purchases: purchase order, invoice, receipt.
- For checks over $5k, require two signatures.
Expense Cards & Reimbursements
- No shared cards. Everyone gets their own with category limits.
- Sweep monthly for outlier merchants or large transactions.
- Require receipts and documentation, no exceptions. Missing receipts require a form and explanation. Too many forgotten one and privileges are taken away and you have to request reimbursement instead.
IT Access
- Every employee has a unique login.
- Use “least privilege” access and give only what’s needed, nothing more.
- Terminate access within 24 hours of an employee leaving.
Do This This Week: Pick two weak spots (e.g., payroll approvals or vendor setup) and add one extra layer of review or approval.
CADENCE
The last thing you want is to catch fraud because you’re out of cash or some big dramatic event. Unfortunately, it seems that’s often the case. We want to discover it on purpose. Regular reviews not only help you catch it, but they signal to the team you’re on top of it.
Here’s a simple cadence for SMBs:
- Weekly: Review your 13-week cash forecast vs. actual. Look for unexpected payees or timing differences.
- Monthly: Pull a random set of transactions (AP, payroll, expense cards) and verify documentation. Review new vendors and bank account changes.
- Quarterly: Run a surprise audit or review focused on one area (say payroll, AP, or inventory) and look at everything in that area.
- Annually: If a full audit isn’t practical, hire an external accountant for agreed-upon procedures.
Do This This Week: Block 60 minutes on your calendar this month for a “fraud check” and pick a set of transactions and review yourself.
YOU’RE NEVER FRAUD-PROOF
Here’s the truth: no business can make itself 100% fraud-proof.
But you can make it really, really difficult for anyone to try. Culture, Controls, and Cadence create an environment where opportunities are scarce and scrutiny is constant.
And one last note: make sure you carry the right insurance. Even with strong defenses, fraud can happen. Insurance ensures it won’t cripple your business.
At the end of the day, the goal isn’t perfection. It’s to reduce the number of opportunities available to limit your exposure risk.
Build the culture. Tighten the controls. Keep the cadence. And sleep better at night knowing you’ve done your job as the owner.
