I was curious how this CEO was caught, so after doing some digging, I came across this story. It turns out that he was forging bank statements for over a decade. The auditors would send a request via snail mail, which was always intercepted by Wasendorf. He then sent back statements saying “We have the expected amount of money” when in reality they were $200M in the hole.
How’d it come crashing down? In 2012 the auditors called him up and said “Hey, so we’re finally getting rid of that snail mail stuff. Would you mind logging in to the bank and approving our request to review funds electronically? Thanks!”
After a few months of dragging his feet, he knew he was done for, and tried to commit suicide. He’s now in prison for 50 years.
The recent FTX implosion was an order of magnitude larger than this fraud, and the SEC are already investigating (see HN link). It’ll be interesting to find out what happens to the former CEO.