Caleb Newquist

Hidden in Plain Sight: How Yale Missed a $40 Million Procurement Fraud

Earmark Team · May 21, 2025 ·

For years, Yale University School of Medicine administrator Jamie Petrone lived a lifestyle far beyond what her job title suggested. She drove a Mercedes-Benz G550, a Range Rover Autobiography edition, and other luxury cars. She owned three houses in Connecticut and another in Georgia. Her social media accounts showed off her wealth for everyone to see. Yet it took nearly a decade before anyone at the prestigious Ivy League school asked how she could afford it.

The shocking truth: Jamie was orchestrating a massive fraud from inside Yale. She secretly ordered thousands of tablet computers—mostly Microsoft Surface Pros—and shipped them to an out-of-state business. That business paid her personally through her own company’s bank account. By the time an anonymous tip finally exposed the scheme in 2021, Yale had lost more than $40 million.

As told in an episode of Oh My Fraud, this case represents one of the most significant procurement fraud schemes ever perpetrated against an academic institution.

A Trusted Employee Exploits the System

Jamie joined the Yale School of Medicine’s Department of Emergency Medicine in 2008 and rose to become Director of Finance and Administration by 2019. With years of experience, she knew Yale’s procurement procedures inside and out, giving her the perfect roadmap to commit fraud.

In 2020, Jamie’s supervisors questioned why her department’s budget showed a big spike in computer purchases. She claimed the department was updating equipment and collaborating on a new project with Yale New Haven Health. No one pressed her further.

The $10,000 Threshold Trick

One simple rule made Jamie’s fraud possible: She could approve any purchase under $10,000 without extra oversight. Rather than submitting big orders for 50 or 100 tablets at once, she broke them into smaller requests—each one kept below the $10,000 limit. With no second approval required, her orders sailed through accounting.

According to the FBI, Jamie placed thousands of these small orders. In one case, she directed a coworker to purchase 100 Surface Pro tablets in 13 separate purchase orders. Twelve orders were for 8 tablets each, totaling about $9,100 each, and one order was for 4 tablets at $4,551. By splitting them up, she avoided the automated controls meant to detect high-value purchases.

Jamie then claimed the tablets were for department research or other official projects. Instead, she shipped them straight to a third-party reseller in New York, which sent payments to her company, Maziv Entertainment LLC. This arrangement racked up millions of dollars of profit, all at Yale’s expense.

Suspicious Spending Hiding in Plain Sight

While Jamie carefully hid the paper trail, she did not hide the results. She drove multiple luxury vehicles, including a Range Rover Autobiography and a Mercedes G550. She amassed four homes and flaunted her lifestyle on Instagram. Even without a full investigation, her lavish, conspicuous spending should have raised questions.

According to the Association of Certified Fraud Examiners (ACFE), “living beyond one’s means” is the top behavioral red flag among fraudsters. Despite this common red flag, nobody at Yale confronted the glaring mismatch between her university administrator salary and her multimillion-dollar expenditures—until an anonymous whistleblower reported seeing her load stacks of computers into her Range Rover in 2021.

The Anonymous Tip and FBI Investigation

In August 2021, Yale received a tip about large quantities of computer equipment leaving its campus. After confirming that Jamie was ordering suspiciously high volumes of tablets, the university notified the FBI. Investigators got a search warrant and began tracking packages Jamie sent from a FedEx location in Orange, Connecticut, to a reseller in New York.

Within days, they intercepted several boxes containing 94 Surface Pro tablets. Records showed she had recently placed a $144,000 order for more hardware—far beyond any legitimate department need. Realizing the investigation was closing in, Jamie turned herself in on September 3, 2021.

Guilty Plea and Aftermath

Jamie eventually admitted to the scheme, telling investigators she had done it for years—perhaps as many as ten. In March 2022, she pleaded guilty to one count of wire fraud and one count of filing a false tax return. She had not filed tax returns at all from 2017 through 2020, and earlier returns falsely claimed stolen equipment as business expenses.

In October 2022, Jamie was sentenced to nine years in prison. She forfeited six luxury vehicles, four houses, and more than $560,000 held in her company’s account. Yale’s official loss totaled $40,504,200. The U.S. Treasury was also shorted over $6 million in unpaid taxes.

Lessons for Every Organization

This fraud shows how easily a single employee can exploit weak procurement controls—even at an elite institution with a $41 billion endowment. Here are some key lessons:

No One Is Above Suspicion: Long-term employees often have the trust and insider knowledge needed to commit major fraud. Familiarize yourself with employees’ roles and watch for unexplained changes in lifestyle.

Monitor Repetitive Sub-Threshold Purchases: Splitting one large order into many small ones is a common trick. Regularly examine patterns of similar purchases under approval limits.

Heed Behavioral Red Flags: Living beyond means, unusual personal expenditures, or unexplained wealth should prompt further review.

Take Every Tip Seriously: The ACFE’s research shows that most frauds are uncovered by tips. Encourage a culture that supports whistleblowers and investigates promptly.

Don’t Overlook Tax Implications: Illicit income is still taxable. Filing false returns or failing to file can lead to extra penalties and charges.

Hear the Whole Story and Earn CPE

For more details on this case—along with expert insights on fraud and ethics—listen to the full “Oh My Fraud” podcast episode. You can also earn free CPE credit by enrolling in the course on Earmark.

The story of how such a large-scale fraud remained hidden for so long offers valuable lessons about the power of small gaps in oversight—and the big price organizations pay when those gaps go unaddressed.

When Trust Isn’t Enough: The $17 Million Betrayal of Baseball’s Biggest Star

Earmark Team · May 12, 2025 ·

In the world of professional baseball, Shohei Ohtani stands as a once-in-a-century talent. Four-time all-star Justin Upton called him “the most talented player I’ve ever seen.” Derek Jeter put it simply: “It’s tough enough to just be a great hitter or an offensive player, or to be a great pitcher. For him to be able to do both is pretty remarkable.”

Yet in March 2024, this modern-day Babe Ruth made headlines for something far removed from his athletic prowess. Federal investigators uncovered a shocking betrayal: Ohtani’s personal interpreter and closest confidant, Ippei Mizuhara, had stolen $17 million from the superstar’s accounts to fuel a devastating gambling addiction.

The Oh My Fraud podcast episode “Sho Me the Money” dives into this extraordinary case of violated trust and circumvented financial safeguards. What began as casual $50 wagers for Mizuhara spiraled into an all-consuming addiction that saw him placing an average of 21 bets per day—a staggering 19,000 wagers over just 29 months—while chasing losses that eventually totaled $40 million.

From Trusted Interpreter to Master Manipulator

When Shohei Ohtani arrived in America in 2018, he faced the challenge that confronts many international athletes—navigating a new culture and language under intense scrutiny. Ippei Mizuhara wasn’t just an interpreter; he became Ohtani’s lifeline in America.

Born in Japan but raised in the Los Angeles area since age seven, Mizuhara was well-positioned to bridge two cultures. He first met Ohtani in 2013 while working for the Hokkaido Nippon-Ham Fighters in Japan. When Ohtani signed with the Los Angeles Angels in 2017, Mizuhara came along as his personal interpreter.

Their relationship moved beyond professional boundaries. Wherever Ohtani went, Mizuhara was by his side—at the ballpark, at restaurants, even during high-profile events. Mizuhara wasn’t just Ohtani’s voice in interviews, he was his closest confidant, personal assistant, and in many ways, his best friend in America.

This extraordinary access created the perfect conditions for fraud. During Ohtani’s rookie season, Mizuhara helped him open a Bank of America account, acting as the interpreter during the setup process. By 2021, Mizuhara had consolidated control by intentionally excluding Ohtani’s agent, accountant, and financial planner from accessing the account—claiming it was due to “Ohtani’s desire for privacy.”

With exclusive access established, Mizuhara replaced Ohtani’s contact information with his own anonymous email and phone number in the banking system. When banks flagged suspicious transfers, Mizuhara took an even bolder step—he impersonated Ohtani himself on calls with bank representatives.

The Addiction that Consumed Everything

Behind Mizuhara’s elaborate fraud stood a gambling addiction that had spiraled out of control. What began as modest $50 wagers evolved into bets worth hundreds of thousands of dollars at a time.

Between September 2021 and January 2024, Mizuhara placed a staggering 19,000 bets. That’s an average of 21 bets per day. Every day. That’s one bet per hour for 882 days…betting all day, every day.

During his 29-month betting spree, Mizuhara won approximately $142 million—an enormous sum that might seem like success. But those winnings were overwhelmed by losses totaling $182 million, leaving him with a catastrophic $40 million hole he had no legitimate way to fill.

His bookie was Matthew Bowyer, an illegal bookmaker with his own troubled past. Bowyer had filed for bankruptcy in 2011, claiming he had lost $425,000 gambling in Las Vegas over the previous two years. His extermination business had collapsed, leaving him with over $2 million in liabilities. But Bowyer transformed himself from a bankrupt bettor into a gambling kingpin, running his operation through offshore websites and call centers in Costa Rica.

As Mizuhara sank deeper into addiction, his communications with Bowyer revealed classic desperation. “Can I get one last bump? This one is for real, last one for real,” he texted Bowyer in June 2023, only to ask again the next day. He assured the bookmaker, “You don’t have to worry about me not paying,” even swearing on his mother that his next request for credit would be his last. Of course, it wasn’t.

By late 2023, Bowyer was demanding a $2 million payment, but Mizuhara was in too deep: “I’m trying my best, but I just don’t have it right now,” he admitted.

The Betrayal Uncovered

The scheme began unraveling in March 2024, just as the Dodgers were preparing to open their season in South Korea. The Los Angeles Times reported that Ohtani’s name had surfaced in a federal investigation into an illegal gambling ring, sending shockwaves through the sports world.

Before the full story was known, Mizuhara gave an interview to ESPN, trying to control the narrative. He claimed Ohtani had willingly paid off his gambling debts: “Obviously, he wasn’t happy about it and said he would help me out to make sure I never do this again,” Mizuhara claimed. “He decided to pay it off for me.”

The statement raised more questions than answers. Soon after, Ohtani’s camp denied the claim, and the truth emerged—Mizuhara had been lying. The money transfers weren’t a favor from Ohtani. They were theft.

The theft wasn’t limited to direct payments to bookmakers. In a secondary scheme, Mizuhara used Ohtani’s account to purchase approximately 1,000 baseball cards worth $325,000 through eBay and Whatnot (a live shopping marketplace). He had these cards shipped to the Dodgers clubhouse under the alias “Jay Min”—possibly to monetize some of the stolen funds or create deniability for missing money.

Baseball’s Gambling Demons Return

For baseball, the scandal reopened old wounds concerning the sport’s complicated relationship with gambling. When the Ohtani-Mizuhara story broke, it echoed baseball’s darkest chapters.

In 1919, eight Chicago White Sox players conspired with gamblers to throw the World Series. The “Black Sox” scandal nearly destroyed America’s pastime. Baseball’s first commissioner, Kenesaw Mountain Landis, banned all eight players for life. The message was carved into baseball’s bedrock: gambling meant permanent exile.

Then came Pete Rose, baseball’s all-time hits leader. In 1989, an investigation revealed Rose had bet on baseball games, including ones he managed. Despite his legendary status, the punishment was absolute: permanent banishment from baseball. To this day, even after his death, the game’s hits king remains ineligible for the Hall of Fame.

When news broke that millions had moved from Ohtani’s account to a bookmaker, baseball held its collective breath. As the podcast explains: “The sport could handle murder scandals, doping scandals, even cheating scandals. But gambling—that was different, that was existential.”

There was a collective sigh of relief when Ohtani was cleared—he hadn’t bet on anything. He was a victim, not a perpetrator.

The Consequences and Lessons

In June 2024, Mizuhara pleaded guilty to bank and tax fraud. By February 2025, he received a 57-month prison sentence. The court ordered him to pay $16.7 million in restitution to Ohtani and $1.1 million to the IRS for unpaid taxes on the stolen funds.

Matthew Bowyer also pleaded guilty to operating an unlawful gambling business, money laundering, and subscribing to a false tax return. As of the podcast’s recording, he was still awaiting sentencing.

At its heart, this story isn’t just about gambling—it’s about the failure of financial controls at every level. The banking systems that should have detected suspicious transfers, the oversight that should have spotted irregular patterns, and the basic protections that should have prevented unauthorized access all failed.

The podcast distills the central lesson into four simple words: “Trust is not a control.” No matter how close the relationship, proper financial controls must always be maintained. As the host suggests, perhaps high-profile individuals like Ohtani need to consider an unusual role: “If you’re making that kind of money, shouldn’t the best paid person in your entourage be the person who keeps an eye on everyone else in the entourage?” While that might sound cynical, it could have saved Ohtani $17 million.

The Ippei Mizuhara saga joins a long list of gambling-driven frauds. Jonathan Schwartz stole millions from his clients. Amit Patel embezzled funds from the Jacksonville Jaguars. All three perpetrators convinced themselves that redemption lay just one lucky wager away—a delusion that drives the vicious cycle of addiction, loss, and escalating fraud.

The patterns are always the same: what starts as casual betting transforms into an obsession so powerful it destroys careers, relationships, and lives.

Listen to the full Oh My Fraud episode to learn more about this remarkable case, which blends America’s pastime with a powerful cautionary tale about addiction, trust, and financial controls.

From Sponsorships to Fake Consultants—Inside the Airbus Bribery Scheme

Earmark Team · February 17, 2025 ·

Modern corporate bribery rarely looks like someone handing over a briefcase of cash. It often masquerades as something legitimate: a sports sponsorship, an inflated “consulting” contract, or a generous commission payment.

As discussed in an episode of Oh My Fraud, one of the most striking examples is the Airbus bribery scandal, which resulted in the largest bribery fine in world history—€3.6 billion.

From Watergate to the FCPA

Corporate bribery isn’t new, but its legal and ethical landscape changed significantly in the 1970s after the Watergate scandal revealed a web of illicit corporate payments. In response, Congress passed the Foreign Corrupt Practices Act (FCPA) in 1977, prohibiting bribery of foreign officials and requiring accurate financial records. The FCPA doesn’t just apply to U.S. companies; it also covers foreign companies listed on U.S. stock exchanges or operating within the United States. This means that industry giants like Airbus can face American prosecution if they’re caught bribing, no matter where they are located.

Airbus Takes Flight—and Then Self-Reports

Founded in 1970 by French, German, and British aerospace firms (Spain joined later), Airbus’s mission was to compete with American manufacturers like Boeing. By 2003, Airbus surpassed Boeing and became the world’s largest commercial aircraft maker.

Yet in 2016, an internal Airbus audit discovered a systemic bribery operation: “secret agents” were allegedly bribing officials to secure plane sales worldwide. Faced with French laws that would revoke operating licenses for bribery convictions—and an even steeper potential fine of €8 billion—Airbus surprised everyone by self-reporting to the Parquet National Financier (PNF), France’s financial crimes investigative body.

Inside the Massive Bribery Scheme

The Airbus bribery setup was surprisingly elaborate:

Secret Agents and Shell Companies
Airbus hired intermediaries—sometimes called “secret agents”—to close deals. These agents requested large “commissions” Airbus paid to shell companies with opaque ownership. A portion of that money went to officials in Ghana, Sri Lanka, Malaysia, Taiwan, Indonesia, China, and elsewhere.

Sports Sponsorships as Kickbacks
In one example, Airbus paid $50 million to sponsor a sports team owned by an airline executive. In return, the airline ordered 180 planes. Even if each plane were the least expensive model (over $70 million apiece), Airbus captured a staggering deal in exchange for a $50 million bribe concealed as “sponsorship.”

Consulting Contracts for Spouses
Another scheme involved hiring an airline executive’s spouse as a highly paid consultant. The spouse had zero aviation experience, making it clear the contract’s real purpose was to influence purchasing decisions.

These arrangements gave Airbus “plausible deniability”: officially, they were paying for legitimate-sounding services.

The Record-Breaking Settlement

By cooperating fully after their self-disclosure, Airbus negotiated a Deferred Prosecution Agreement (DPA) rather than face trial. Under the DPA:

Historic Fine
Airbus agreed to pay €3.6 billion—the largest bribery fine ever imposed. If they hadn’t turned themselves in, estimates suggest it could have topped €8 billion.

Three-Way Split
The French PNF, the UK’s Serious Fraud Office (SFO), and the U.S. Department of Justice (DOJ) shared the settlement. The DOJ alone collected roughly half a billion euros.

Leadership Shakeup
Although he wasn’t forced out, CEO Tom Enders resigned, expressing genuine remorse and a desire for Airbus to reform. An ongoing class action lawsuit from Airbus shareholders claims the company misled investors about its business practices.

Is It Marketing or a Bribe?

One reason corporate bribery is so insidious is that it can closely resemble legitimate business development. From event tickets to lavish client dinners, there is often no bright line defining when hospitality veers into bribery. Private-sector organizations don’t always have a rigid gift limit—like the $20 rule, the U.S. military has—making it even harder to police.

According to the 2024 ACFE Report to the Nations, the median loss to corruption is $200,000. Yet tracking actual losses is complicated. In Airbus’s case, officials needed new aircraft either way, so the “loss” might be seen as switching from one vendor to another for questionable reasons. It underscores how intangible “costs” can be when bribes drive commercial decisions.

Lessons for Finance Professionals

The Airbus scandal highlights a rapidly evolving corruption landscape:

Structural Sophistication
Bribes are concealed through sponsorships, commissions, and consulting contracts rather than suitcases of cash.

Gray Areas vs. Bright Lines
Understanding intent is crucial. Based on purpose and scale, the same “thank you” gift can be innocent or corrupt.

Robust Compliance Measures
Basic compliance and traditional red flags may fail to uncover cleverly disguised bribery. Periodic internal audits, detailed transaction analysis, and cultural shifts emphasizing ethics are vital.

Global Enforcement
In an interconnected world, bribery probes are often multinational. Being listed or doing business in certain countries (like the U.S.) exposes companies to multiple layers of enforcement.

In the end, Airbus’s self-reporting likely saved the company from greater financial and operational damage, yet the scandal still cost billions and tarnished its reputation. To hear a more in-depth discussion of how Airbus got “AirBusted,” check out the full Oh My Fraud podcast episode.

DC Solar’s Billion-Dollar Green Energy Con

Earmark Team · February 7, 2025 ·

The following article is based on the “Burned by Solar” episode of the Oh My Fraud podcast, which provides a behind-the-scenes look at how DC Solar orchestrated one of the largest green energy frauds in U.S. history.

In December 2018, 175 federal agents from the FBI, IRS, and U.S. Marshals raided the headquarters of DC Solar and the California home of its CEO, Jeff Carpoff (sometimes spelled “Karpov” in news reports). This dramatic event unveiled one of the largest frauds ever prosecuted in the Eastern District of California—a scheme that claimed to sell 17,000 portable solar generators when, in reality, only about 6,000 existed.

Origins and Ambitions

Jeff Carpoff spent most of his life in Martinez, California. After failing to run successful auto repair shops and briefly selling drugs, he sobered up and co-founded a shop specializing in Land Rover repairs. Eventually, he latched onto a promising idea—creating portable, solar-powered generators he called the “Solar Eclipse.” This invention would supposedly replace traditional gas or diesel generators on movie sets, at disaster sites, and even in stadium parking lots during tailgates.

DC Solar marketed these generators as versatile, eco-friendly power sources that could be towed anywhere to provide clean energy. While the vision looked sound, it was the business model—centered on a lucrative federal tax credit—that truly turned heads among investors.

The 30% Tax Credit Hook

The U.S. government offered a 30% tax credit for investments in alternative energy equipment, including solar. DC Solar pitched a straightforward proposition to prospective investors:

Purchase DC Solar’s generators, sold at a hefty price of $150,000 each.
Pay only 30% of that cost upfront (the exact amount investors would recoup via the federal tax credit).
DC Solar would cover the remaining 70% of the purchase price through lease revenue.

In theory, investors could fully offset their upfront cost with tax credits—and possibly earn additional returns if leasing income exceeded loan payments. Companies like Sherwin-Williams, T-Mobile, and even Warren Buffett’s Berkshire Hathaway bought into the hype, hoping to cut their tax bills while backing a “green” initiative.

Early Warning Signs

Despite its promise, DC Solar’s operations quickly drew skepticism. During a visit to one of the company’s facilities, Sherwin-Williams representatives discovered only a few rows of fully assembled units. Behind them, dozens of unfinished generator shells suggested the product was far less complete than advertised. Confronted about it, Carpoff reportedly brushed the issue aside.

Other troubling red flags emerged:

Performance Failures: Some trailers lost power on major film sets and at concerts, forcing DC Solar to sneak in diesel generators to cover the outage.
Lease Rate Discrepancies: DC Solar claimed that 80–90% of its generators were leased out, but internal accounts put the rate closer to 5%.

Faced with cash flow pressures, the company devised a “circular” approach: using money from new investors to fulfill lease payments it had promised to earlier investors. Internally, DC Solar employees allegedly referred to this patchwork as “re-renting,” but investigators later described it as classic Ponzi activity.

Fraudulent Tactics

To sustain the illusion, DC Solar:

Faked VINs: Employees scraped VIN stickers off certain generators and reapplied them onto others, matching whatever batch investors expected to see.
Synthetic Tracking: GPS transponders were buried in vacant fields so investors believed their units were deployed.
Paper Leases: Executives fabricated large, long-term leasing contracts with major telecom and entertainment companies, sometimes enlisting outside patsies to sign phony agreements in exchange for sizeable payouts.

Meanwhile, Carpoff and his wife, Paulette, enjoyed the spoils. They amassed a fleet of 149 classic cars—many of them gas-guzzling muscle cars, paradoxically funded by a “green energy” enterprise—purchased stakes in a Napa winery, rented private jets, and even sponsored a NASCAR race (the DC Solar 300). They also bought the Martinez Clippers, an independent league baseball team, and emblazoned their company parking spots with initials like “JMFC,” short for “Jeff Motherf***** Carpoff.”

The Whistleblower and the Raid

The scheme began to unravel when a DC Solar employee, Sebastian Giuliano, realized the company was paying old investors with new investor money and filed a whistleblower report to the SEC. Suspicions deepened when the IRS audited some of DC Solar’s earliest deals, concluding that the actual fair market value of each generator was around $13,000—far below the $150,000 asking price.

In December 2018, armed with information from the whistleblower and their own investigations, federal agents descended on DC Solar’s facilities and the Carpoff residence. They seized $1.7 million in cash from a safe, confiscated the entire muscle car collection, and gathered further evidence of fraud.

Aftermath and Sentencing

DC Solar collapsed into bankruptcy by early 2019, owing millions to creditors, NASCAR, racetracks, and various vendors. Major investors, including Berkshire Hathaway, announced the probable loss of hundreds of millions of dollars in invalidated tax credits.

Criminal charges soon followed. In 2020, Jeff Carpoff pleaded guilty to conspiracy to commit wire fraud and money laundering; he was sentenced to 30 years in prison. His wife, Paulette, received an 11-year prison term. Several other executives, including the CFO and outside conspirators who fabricated leases or faked verification reports, also received prison sentences ranging from three to eight years.

Lessons and Oversight Gaps

DC Solar’s downfall highlights several vulnerabilities in green energy tax credit oversight:

Physical Verification: Authorities relied too heavily on documents without insisting on direct, thorough inspections. Fake VINs and strategically placed GPS devices allowed DC Solar to fabricate nearly 11,000 nonexistent generators.
Valuation Transparency: Inflated price tags ($150k vs. $13k real value) went unchecked, maximizing undeserved credits.
Circular Financing Scrutiny: Leasing revenue was artificially maintained with new investor funds, a hallmark of Ponzi schemes, yet it initially escaped scrutiny.
Due Diligence and Audits: Complex alternative energy incentives require rigorous checks to confirm the actual equipment, usage, and economic substance of each deal.

For accountants, attorneys, and investors, the DC Solar saga is a sobering lesson. Fraudsters can exploit these incentives no matter how appealing a tax benefit or environmentally friendly pitch may sound. Robust financial controls, thorough audits, and consistent physical verifications are key to safeguarding genuine green energy efforts.

For a more in-depth exploration of DC Solar’s rise and fall—and the comedic twists along the way—listen to the Oh My Fraud podcast episode linked above. The story of DC Solar stands as a testament to how easily good intentions and generous credits can be warped into massive fraud when accountability is lax.

When Trust Turns Toxic: Inside the World of Pink Collar Crime

Earmark Team · February 2, 2025 ·

Could your most trusted employee be secretly siphoning company funds?

In a recent episode of the Oh My Fraud podcast, fraud investigator Kelly Paxton shares how seemingly reliable staff—often overlooked for potential misconduct—can exploit organizational blind spots.

According to the Bureau of Labor Statistics, nearly 90% of bookkeepers in the United States are women. While many people assume women are less likely to commit fraud, Paxton warns that it’s not gender but position and access that matter most. By trusting certain employees implicitly and failing to establish strong controls, businesses inadvertently cause serious financial losses.

As Paxton’s cases illustrate, ignoring stereotypes and adopting “trust but verify” strategies are crucial steps toward preventing fraud.

Kelly Paxton’s Path to Fraud Investigation

Kelly Paxton did not start out in law enforcement. She began her career in financial services as a commodities and bond trader. One day, a U.S. Customs agent called her brokerage firm asking about a suspicious client. Kelly alerted the agents, which led to a deeper conversation—and ultimately, a job offer. She joined U.S. Customs and conducted investigations into money laundering, narcotics, and other major crimes before moving into background checks for federal agencies.

Her investigative focus shifted when she joined a local sheriff’s office and noticed that nearly all the embezzlement suspects she encountered were women. Wanting to understand why, she discovered criminologist Kathleen Daly’s 1989 work referencing “pink collar crime,” a term describing embezzlement often perpetrated by those in bookkeeping or finance positions. Paxton’s takeaway: Access plus trust is the real key—90% of bookkeepers may be women, but it’s the opportunity that matters most.

Understanding Pink Collar Crime

Pink collar crime typically involves smaller amounts stolen over extended periods—fraudsters who make subtle “lifestyle” upgrades rather than lavish purchases. This can happen when the organization deeply trusts an employee. In many cases, they’re seen as family, invited into the home, and never suspected of wrongdoing. Victims are often embarrassed when they discover the truth and hesitate to report it—what Paxton calls “no victim shaming”: the more we shame victims, the less they come forward.

Key characteristics include:

Position-based access: Bookkeepers and finance staff control incoming or outgoing funds.
Incremental theft: A pattern of small transactions that grow larger over time.
Rationalization: Fraudsters may plan to “pay it back” but rarely do.
Deep trust: Employers assume loyal staff, especially women, “would never steal.”

When Pink Collar Crime Turns Deadly: “Red Collar” Cases

Most pink-collar crimes involve embezzlement without violence. However, some cases escalate to “red collar crime,” where financial fraud intersects with homicide. As Paxton explains, desperate fraudsters may resort to extreme measures when they fear exposure.

The Lori Isenberg Case

One chilling example is Lori Isenberg, a nonprofit executive director in Coeur d’Alene, Idaho. Her organization provided housing for low-income individuals—hardly the type of place where you’d suspect significant embezzlement. Yet over three years, Lori allegedly stole between $500,000 and $2.5 million by creating fake accounts, forging checks, and misusing her daughters’ and husband’s names.

When investigations closed in on her scheme, Lori took drastic action. In February 2018, on the same day local news broke a story about her suspected fraud, she took her husband out on a boat trip in the freezing Idaho winter. He mysteriously fell overboard and drowned. An autopsy revealed a lethal dose of Benadryl in his system. Lori claimed it was a suicide attempt gone wrong—an explanation contradicted by digital evidence showing she researched how to drug someone with Benadryl.

After disappearing for four months, Lori was eventually caught and accepted an Alford plea, which essentially concedes that a jury would likely find her guilty without formally admitting guilt. She received 30 years for second-degree murder, with an additional 5 years for her financial crimes, making it highly unlikely she will ever be released. The Lori Isenberg case underscores how far a fraudster might go to avoid being exposed—a stark reminder that misplaced trust and weak internal controls can have devastating consequences.

The Role of Trust, Bias, and Access

Society is conditioned to trust women—parents instruct children to seek a “nice lady” for help if they’re lost, for instance. This assumption carries over into workplaces, where female employees handling finances often face less scrutiny.

Paxton recalls her own days in U.S. Customs: “You put two women in a Honda Accord, and no one thinks anything is unusual. You put two men in a Ford Focus, and they’re pegged as cops.” Similarly, a “helpful bookkeeper” can escape suspicion for years.

What About Sentencing?

Sentencing for embezzlement and related fraud varies widely:

Federal Cases: They follow sentencing guidelines based on dollar amounts and other factors.
Local Cases: Judges can have broad discretion. Some jurisdictions impose tough sentences, while others might view fraud as a “civil matter,” limiting law enforcement intervention unless there are other serious elements (e.g., homicide).

This inconsistent approach can embolden perpetrators who believe they can dodge severe penalties—until a high-profile case, a dogged investigator, or a high-stakes victim (like a large corporation) brings full prosecution.

Avoiding Blind Spots: Trust but Verify

Rather than assuming anyone is “too nice” or “not smart enough” to steal, Kelly Paxton encourages businesses and nonprofits to focus on position-based controls:

Segregate Duties: Ensure no single person handles every financial task.
Surprise Audits: Don’t just check large transactions; occasionally review smaller ones.
Vendor Verification: Confirm that vendors and accounts are legitimate, especially if newly created.
Encourage Transparency: Cultivate a culture where employees and clients can report suspicious activity without fear.
No Victim Shaming: Publicizing embezzlement—when safe to do so—helps others learn and prevents repeat offenders from quietly moving on to the next company.

Learn More from Kelly Paxton

Kelly Paxton now hosts the Fraudish Podcast (formerly Great Women in Fraud), interviewing fraud investigators, victims, and even fraudsters themselves. She also covers topics like red-collar crime, employee embezzlement, and how biases impact investigations. Her new book, Embezzlement: How to Detect, Prevent, and Investigate Pink Collar Crime, is available on Amazon.

For a deeper look at Lori Isenberg’s story—and other fraud sagas—listen to the full episode of Oh My Fraud. You can also earn CPE credit by downloading the Earmark app and completing a short quiz related to the episode.