Keeping Pace With 21st Century Fraud

Just over a decade ago, the accounting profession was awash with headlines about corporate fraud. In its summer 2013 Insight article, “The 21st Century’s Top 10 Frauds,” the Illinois CPA Society (ICPAS) gave an overview on the popular fraud cases at that time, including WorldCom, Waste Management, Enron, Tyco, and Freddie Mac, among others. These scandals, all stemming from C-suite impropriety, prompted sweeping reforms in corporate governance and financial reporting.

Today, fraud looms large, in part because regulatory reform doesn’t address the root cause of fraud—greed.

“Greed is always going to be greed,” says Brad Sargent, CPA/CFF/ABV, CFE, CFS, CIRA, CCA, CRFAC, FABFA, founder and managing member of The Sargent Consulting Group LLC. “However, the good news is that in prosperous economic times, the rationale to step over the line is often eliminated. If people feel that wealth is being shared, they’re less likely to cross that line.”

Sargent explains that widening wealth disparity intensifies the motivation for individuals to commit fraud, and in today’s environment, it appears the stage is perfectly set for a surge in unethical activity.

According to the Association of Certified Fraud Examiners’ (ACFE) “Occupational Fraud 2024: Report to the Nations,” organizations collectively lost $3.1 billion to fraud between January 2022 and September 2023. Additionally, ACFE reported that the percentage of estimated revenue lost to fraud during both years also remained steady at 5%. However, the difference is scale. In 2012, just over one-fifth of cases resulted in losses exceeding $1 million, whereas by 2024, the average loss per case surged to $1.7 million.

The Evolution of Fraud

Since ICPAS last reported on specific fraud cases in 2013, a couple shifts have contributed to a changing fraud landscape. For starters, the COVID-19 pandemic has changed the way fraud is committed. While pandemic lockdowns prevented fraudsters from being able to easily work together to commit fraud, the economic pressures of the pandemic, combined with the opportunity of remote work and emptier offices, have further fueled the problem and created new avenues for committing fraud—for instance, fraudulent activities through the Employee Retention Credit (ERC), a tax credit designed to help businesses retain employees on the payroll during the pandemic.

The ongoing evolution of technology has also introduced new challenges and widening opportunities for accounting fraud. For example, cryptocurrency, with its decentralized nature and alias-based transactions, has created a new avenue for fraudsters to exploit. The lack of standardized accounting practices for digital assets, coupled with the rapid evolution of blockchain technology and the proliferation of decentralized finance (DeFi) platforms have introduced complex financial structures that are challenging both auditors and regulators, further expanding the scope for fraudulent activities.

“Technology has significantly transformed the landscape of fraud detection and commitment,” says Timothy J. Voncina, CPA, CFF, CGMA, CMA, CFE, a principal with Baker Tilly’s forensic, litigation, and valuation services practice. “While tools like cloud accounting, blockchain, and artificial intelligence (AI) offer robust mechanisms for enhancing transparency and security, they also present new challenges.”

Nitin Bhojraj, CPA, DBA, CFE, teaches accounting and fraud prevention and detection at DePaul University. He says the key difference between fraud cases today versus historical cases is how quickly and cheaply accounting fraud can be carried out with today’s technologies.

“Instead of waiting weeks for a few individuals to respond to thousands of mailed solicitations, a modern fraudster can now send thousands of texts and have their few potential victims identified in a matter of seconds,” Bhojraj stresses.

Today’s Top Fraud Cases

Despite the pandemic and technological advancements within the past decade, the underlying motivation for fraud has remained constant over the years, allowing it to persist.

“What surprises me most about fraud related to cryptocurrencies, digital assets, etc., is that the overall archetype of these cases is the exact same as any other fraud from the past few hundred years,” Bhojraj explains. “Fraudsters look for vulnerable individuals, build trust, convince victims to give money without question, and prevent victims from discussing the matter with friends, family, or authorities. This occurred with The Charitable Corporation in the 1700s, is occurring with cryptocurrency scammers today, and will likely occur hundreds of years from now.”

Some fraud cases making headlines in recent years are proving this to be the case. Here are eight recent fraud cases that highlight the current landscape.

1. FTX

Perhaps the most notorious fraud case in recent years is FTX. The cryptocurrency exchange gained traction through strategic marketing, building credibility by partnering with high-profile figures like Tom Brady and Steph Curry, and offering a user-friendly trading platform for attracting both retail and institutional traders. All the while, FTX was improperly diverting billions of dollars in customer deposits to Alameda Research, a trading firm also owned by FTX’s CEO, Sam Bankman-Fried. Leveraging cryptocurrency, FTX was able to move and mismanage customer deposits without immediate detection. By tying the valuation of both FTX and Alameda to its proprietary cryptocurrency, FTT, the two entities were able to artificially inflate their balance sheets, creating the illusion of growth and financial stability.

FTX’s downfall occurred when a competing cryptocurrency exchange announced it would liquidate its holdings of FTT, which caused a run of customer withdrawals. It soon became clear that FTX lacked sufficient reserves to meet customer demands, exposing an $8 billion shortfall. By November 2023, Bankman-Fried was convicted of fraud and conspiracy charges and sentenced to 25 years in prison.

2. Gotbit, ZM Quant, and CLS Global

Another popular cryptocurrency case involved three companies—Gotbit, ZM Quant, and CLS Global—and 15 people. These groups were charged with engaging in widespread fraud and market manipulation that accounted for the seizure of $25 million worth of cryptocurrency.

According to an October 2024 Reuters article, the companies engaged in sham trades to artificially inflate the trading volume and market value of various cryptocurrency tokens before selling them off, leaving innocent investors “holding the bag.”

“This is a case where a new-age technology, cryptocurrency, meets an old school fraud, in this case a ‘pump and dump’ scheme, which is as old as the stock markets,” Joshua Levy, acting United States attorney, told reporters.

3. Anton and James Peraire-Bueno

Another cryptocurrency fraud that gained national headlines involved two brothers, both graduates of Massachusetts Institute of Technology. In 2024, Anton and James Peraire-Bueno were charged with wire fraud and money laundering after stealing $25 million of the cryptocurrency, ether, in a matter of 12 seconds.

The U.S. Department of Justice (DOJ) highlighted this as the first case of its kind, emphasizing the brothers’ sophisticated understanding of the Ethereum system’s transaction validation process (the technology platform behind the ether cryptocurrency). Their scheme involved intercepting and altering pending private transactions to siphon off the funds. When approached by Ethereum representatives, the brothers refused to return the stolen funds and instead attempted to launder them.

4. Andean Medjedovic

DeFi is a relatively new blockchain-based set of financial services gaining popularity and acceptance. While DeFi can offer certain benefits to investors, it does come with risks. For instance, there have been cases where scammers program a cryptocurrency’s smart contract to “pull the rug out” from under investors.

In February 2025, a Canadian man—Andean Medjedovic—was charged with exploiting vulnerabilities in two DeFi protocols to fraudulently obtain $65 million from investors. According to a U.S. DOJ press release, from 2021-2023, Medjedovic allegedly borrowed hundreds of millions of dollars in digital tokens, which he used to engage in deceptive trading that he knew would cause the protocols’ smart contracts to falsely calculate key variables.

5. Arup

The rise of AI has completely changed the game for fraudulent activity. Deepfakes, for example, use AI-generated fake videos, audio, and/or images to deceive individuals and organizations into thinking they’re interacting with a trusted source.

A recent, damaging example of this type of fraud involved the British engineering company, Arup. During a video conference call, fraudsters used deepfake technology to impersonate Arup’s chief financial officer and other senior management and dupe an employee into sending $25 million to the unidentified perpetrators. The staff member made a total of 15 transfers to five Hong Kong-based bank accounts before eventually discovering it was a scam upon following up with the company’s headquarters.

6. Credit Reset

As previously stated, COVID has brought on fraud cases related to the ERC, and in January 2025, the U.S. DOJ indicted seven individuals in the largest ERC fraud case to date.

The defendants, who operated the scheme at a purported credit repair business known as Credit Reset, submitted 8,000 refund claims for ERC and Sick and Family Leave Credits, totaling more than $600 million. According to prosecutors, the defendants exploited these programs by submitting fraudulent claims on behalf of ineligible businesses, inflating employee numbers, and misrepresenting wages. In total, they successfully secured over $44 million in government funds through this scheme, which they then spent on various luxury goods, including jewelry, electronics, designer clothing, and automobiles.

7. Feeding Our Future

Beyond the ERC, another prominent COVID-related fraud involved the not-for-profit (NFP) organization Feeding Our Future. NFPs are often susceptible to financial wrongdoing, mostly because of their limited resources, including tighter budgets, fewer staff, and higher reliance on trust—meaning, they’re more likely to go under the radar. The March 2025 case against Aimee Bock, founder of Feeding Our Future, is a good example of this. Bock and others defrauded a U.S. government-funded child nutrition program of $250 million. Bock and other defendants involved in the case lied about the number of meals and children they served to get reimbursed by the government—some conspirators admitted to submitting thousands of fake names of children they were supposedly feeding. They spent allocated funds on fancy vacations and travel, luxury vehicles, and real estate.

8. Volkswagen

Largely driven by the demand for sustainable products and practices, deceptive greenwashing tactics have also been on the rise in recent years. Though many corporate companies have been guilty of these practices, Volkswagen has had the largest greenwashing fine to date, according to a March 2024 article in The Week. In 2015, the company was caught rigging two of its diesel engines to make them appear to release fewer emissions. In reality, the engines were releasing 40 times the nitrogen oxide permitted by the Environmental Protection Agency. Volkswagen incurred costs of approximately $30 billion, including a $2.8 billion criminal penalty from the U.S. government, and six employees faced criminal charges.

Regulators Adapt to Keep Pace

As fraud schemes like these persist over time, experts say regulatory measures must adapt to keep pace.

“Regulators are constantly reacting to new instances of fraud in the marketplace,” notes Steve Jordan, partner of assurance at Aprio. Jordan points out several instances where auditing boards have responded to fraud by implementing measures to improve transparency and strengthen financial reporting.

In the wake of the Enron scandal, for example, the Financial Accounting Standards Board (FASB) introduced rules requiring the consolidation of various interest entities to prevent companies from hiding information “off the books.” More recently, FASB established a principles-based revenue standard (ASC 606) to provide a consistent framework for recognizing revenue across industries.

Similarly, the AICPA Auditing Standards Board modernized auditing standards to address evolving risks, such as introducing the Statement on Auditing Standards No. 145, which enhances guidance for identifying and assessing material misstatements, improving auditors’ abilities to detect fraud in a complex, technology-driven environment.

Another regulatory reform effort was the Sarbanes-Oxley Act of 2002, which aimed to enhance corporate transparency, accountability, and investor protection while also introducing robust whistleblower protections to encourage the reporting of fraud. Additionally, the U.S. Securities and Exchange Commission was granted significantly greater authority to investigate and enforce actions against bad corporate fraudsters.

Of course, with the new U.S. Department of Government Efficiency working to reduce bureaucratic inefficiencies, the Trump administration has already proposed winding down the Consumer Financial Protection Bureau, reduced headcount at the IRS, and terminated at least a dozen inspectors general, including those from the Department of Treasury and the U.S. Agency for International Development, with plans to remove or reduce more regulatory institutions in the future. Therefore, the future of regulatory oversight on fraud remains unclear. Though, based on these recent actions, we can assume that less oversight can be expected.

Detection and Prevention Strategies

Although strong regulatory measures help reduce fraud, Jordan stresses it shouldn’t stop there: “Fraudsters will always try to find a way to stay ahead of regulators by adopting new methods of committing fraud. The quicker regulators can identify and react to actual known fraud schemes with preventative and punitive responses, the quicker the risk of these known instances of fraud being committed can be reduced.”

This is where technology helps. Despite technology’s role in enabling fraudsters to become more innovative in committing fraud, it’s also improved the ability of companies to detect and prevent fraud.

“Organizations are using AI to develop better fraud prevention and detection systems that can analyze large volumes of data and identify any risky or unusual transactions in a matter of seconds,” Jordan says. “By leveraging AI to expose significant patterns or irregularities, and combining that with real-time monitoring, companies are evolving their fraud-prevention strategies and are better equipped to reduce the risk of fraud destroying their company.”

Voncina notes that continuous professional education on current trends and expanded fraud detection will be essential to detecting and preventing fraud: “As fraud tactics evolve with the introduction and use of AI and electronic media, auditors, regulators, and businesses must stay proactive. Regular training and staying updated on technology improvements will be key to addressing emerging threats.”

Floyd D. Perkins, CPA, JD, LLM, an attorney with Polales Horton & Leonardi LLP, who was also chief at the Illinois Attorney General’s Charitable Trust Bureau for 14 years, says today’s frauds can often be detected by qualified and informed auditors, whose very presence and expertise can act as a deterrent.

“New technologies, such as cloud accounting, blockchain, and AI, require trained auditors who know them and can trace electronic assets and records of funds through the systems,” Perkins explains. “An auditor performing a routine audit is traditionally not skilled at looking for these types of frauds—it now requires an auditor who’s knowledgeable in the underlying technology as well as in the client’s accounting and auditing systems.”

Sargent adds that when it comes to fraud, regulators are always playing catch up. The perpetrators are always up front because they’re figuring out the ways to exploit gaps and vulnerabilities in systems before authorities can even identify them. Regulators and legislators, on the other hand, are often in an inherently slower reactive position. By the time preventative measures have been put into place, fraudsters have already moved on to the next loophole or technological frontier.

This ongoing game of cat and mouse highlights the critical need for continuous improvement in fraud detection, prevention, and enforcement. It also underscores the importance of collaboration between auditors, regulators, and legislators to anticipate emerging threats and adapt more proactively. As fraudsters continue to innovate, the challenge remains not just to catch up but to develop systems and strategies that keep pace with the evolving fraud landscape.

Related Content:

• Are You Evolving With the Evolution of Fraud? As fraudulent activities become more sophisticated, organizations must be vigilant of the latest threats.
• Vulnerable Targets: How Not-for-Profits Can Prevent Money Laundering and Fraud: With fewer resources and oversight, not-for-profits can be more susceptible to financial wrongdoing. Here, three experts discuss how accounting and finance teams can prevent these attacks.