I had a five-hour Uber ride from San Antonio to Fort Worth once. Long story on why. But I get in the car, and this gentleman spent about four and a half of those five hours telling me about his girlfriend.
Then right at the end, I find out she lives in China. They’ve never met.
I was like, no. No way, man. I need another five hours to talk you out of this.
That story stuck with me because it’s the same pattern Dr. Kelly Richmond Pope described on The Decidedly Podcast: the red flags are right there, and we just don’t see them. Or worse, we see them and choose to ignore them because we want to believe the story we’re being told.
Trust is not a fraud prevention strategy.
Dr. Pope is one of the leading experts on corporate fraud. She studies how it happens, why people do it, and what companies miss. And the thing she said that hit me hardest was this: the businesses most vulnerable to fraud are the ones with the most trust.
That sounds backwards. But think about it. In a family business, you trust your bookkeeper because she’s been with you for 15 years. You trust your partner because you started the company together. You trust your operations manager because he’s practically family.
And that trust becomes the exact thing that lets fraud happen. Because nobody’s checking. Nobody’s verifying. Nobody’s putting systems in place. It feels like an insult to the relationship.
Even if you have an amazing company culture and you trust everybody, putting policies in place isn’t there to prevent people from doing wrong. It’s there to protect the already established trust.
The red flags nobody wants to see.
Kelly talked about the concept of “red flags we’re not paying attention to.” In fraud, these are classic:
- One person controls the finances with no oversight
- Employees who never use their vacation (they can’t risk someone else looking at the books)
- Lifestyle changes that don’t match the salary
- Resistance to audits or outside review
- Missing documentation that’s always “being worked on”
In a big corporation, there are systems and compliance teams to catch this. In a family business? It’s usually just you. And you’re busy running the business, not policing it.
What the whistle looks like.
Kelly talked about whistleblowers, and the uncomfortable reality that sometimes people blow the whistle and nobody listens. The friend whose dad got caught up in an online scam, she told him everything. Showed him the evidence. He wouldn’t believe it because he wanted to believe the story was true.
In a business context, this happens when an employee raises a concern and the owner dismisses it because “that person would never do that.” The owner’s loyalty overrides the evidence. And by the time the truth comes out, the damage is done.
Policies protect trust.
Here’s the reframe that changed how I think about this: fraud prevention policies aren’t about suspicion. They’re about protection.
When you have clear financial controls, dual signatures, regular audits, separation of duties, mandatory vacations, nobody can even be suspected of wrongdoing. The rules are so clear that the trust stays intact. You’re not watching people. You’re protecting them.
For family businesses, this is especially important because the stakes are personal. If your bookkeeper of 15 years is stealing, it’s not just a financial loss. It’s a betrayal that rips through the whole organization. The policies prevent you from ever having to face that.
What this means for your exit.
If you’re planning to sell your business, clean financial controls aren’t optional. Every buyer and every due diligence team will look at your internal controls. A business with sloppy financial oversight is a business that sells for less, or doesn’t sell at all.
This is part of what we help with at Decidedly Wealth Management. Our exit planning process includes getting your financial house in order, not just the numbers, but the systems behind them.
If you’re a family business owner who’s been running on trust alone, it might be time to have a conversation about what protection looks like. Your first conversation is free.
This article is based on a conversation from The Decidedly Podcast. Insights, advice, and comments provided by Sanger Smith, Shawn Smith, and guest speakers should not be considered personalized financial advice or recommendations. This content is produced solely for informational and educational purposes. For personalized guidance, book a free conversation.
