Embezzlement doesn’t always look like a dramatic theft. Sometimes, it looks like an ordinary accounting entry.
A recent federal case involving a Kansas City, Missouri executive illustrates how a trusted employee can use access to company finances to steal millions of dollars while attempting to make the company’s financial records appear legitimate.
Justin Marquardt, 55, was recently sentenced to 48 months in federal prison after admitting to embezzling approximately $1.5 million from his employer and failing to report the stolen funds as income on his federal tax returns. He was also ordered to pay restitution to his former employer and federal and state tax authorities.
According to the U.S. Attorney’s Office, Marquardt served as executive director and had access to the organization’s finances and financial accounts for nearly three decades. Between 1994 and 2023, he transferred money from the organization’s bank accounts to his personal accounts and wrote unauthorized checks to himself.
But the theft itself was only part of the scheme.
The accounting records became part of the concealment
One of the most important lessons from this case is how Marquardt allegedly used the organization’s accounting system to conceal the unauthorized transactions.
Marquardt provided QuickBooks records to the organization’s accountant and tax preparer. According to the federal government’s account of the case, he omitted the unauthorized transactions and recorded false and fraudulent payments as business expenses.
That distinction is important.
An embezzlement scheme does not necessarily require someone to completely bypass the accounting system. In some cases, the perpetrator uses the accounting system itself to disguise what is happening.
A transaction may be recorded. A check may clear the bank. An expense may appear in the general ledger. On the surface, everything can look routine.
That is why simply having accounting software—or even having financial statements prepared—does not necessarily mean an organization has effective fraud controls.
Where forensic accounting can make a difference
Traditional accounting generally focuses on recording and reporting financial activity accurately.
Forensic accounting asks a different set of questions:
Does the financial activity make sense?
Who authorized the transaction?
Who benefited from it?
Does the accounting entry agree with the underlying bank activity?
Are there transactions that don’t fit the organization’s normal business operations?
These questions become particularly important when one individual has extensive control over multiple parts of the financial process.
In this case, the alleged scheme involved transfers to personal accounts, unauthorized checks and misleading accounting entries. A forensic examination could compare bank statements, canceled checks, electronic transfers, and QuickBooks activity to identify transactions that were inconsistent with legitimate business expenses.
Access creates opportunity
The case also demonstrates a fundamental principle of fraud prevention: concentrated financial authority creates risk.
Marquardt’s position gave him access to company finances and financial accounts. When the same individual can initiate transactions, access bank accounts, maintain accounting records, and provide financial information to an outside accountant, there may be fewer opportunities for an independent person to identify irregularities.
Effective internal controls are designed to create checks and balances. No control system eliminates fraud entirely. The objective is to make fraud more difficult to commit and more likely to be detected.
Fraud often hides in ordinary transactions
Perhaps the most significant lesson is that financial statements can only be as reliable as the information and controls behind them.
If unauthorized transactions are deliberately recorded as legitimate expenses, a financial statement may not immediately reveal that money has been stolen.
The Missouri case involved nearly $1.4 million in restitution to the former employer. The alleged spending included personal travel and gambling, but the underlying mechanism was much less dramatic: bank transfers, checks, and accounting entries.
That is a useful reminder for business owners, nonprofit leaders and boards of directors.
Fraud does not always announce itself.
Sometimes it is hidden in a familiar account, buried among hundreds of legitimate transactions, or disguised as an ordinary business expense.
Regular independent review, strong segregation of duties, and thoughtful analysis of financial data can help organizations identify problems before losses become catastrophic.
And when something doesn’t add up, don’t simply ask whether the numbers balance.
Ask whether the transactions make sense.
That is often where the real story begins.
Photo by Guy Joben
